WASHINGTON–Several large credit unions that have card portfolios that would be affected by a new interchange proposal are now preparing internally for the reality of the proposal becoming a rule, even as others are working to head it off.
During a media call, America’s Credit Unions’ chief advocacy officer, Carrie Hunt, noted that the CFPB’s rule capping credit card late fees to $8 would put a dent in the income streams of four credit unions that would be affected by the limits.
Those credit unions are already planning for the hits to their balance sheets, as well as making other internal changes, according to Hunt.
Would be Supportive of CRA Action
Hunt said America’s Credit Unions would be supportive of a Congressional Review Act action, as Sen. Tim Scott (R-SC) has proposed, which would delay implementation by requiring the GAO to report on what the Fed’s actions would mean for financial institutions.
Although the rule would apply to fewer than a handful of CUs, Hunt said, “We firmly believe that this is going to have a trickle-down effect and potentially impact all credit unions.”
The Biggest Concern
Hunt said the “biggest concern” is that the credit unions will have to pass on the additional costs to members.
“The vast majority of consumers do pay their credit card bills on time. There are about 30% who do not and we certainly do not want those consumers to be caught in a cycle of debt,” said Hunt. “When you look at what the CFPB has done relative to fees and product lines, the CFPB has long been against overdraft protection…But credit cards are an affordable option (to more expensive lenders). Now, the CFPB is impacting credit cards so it it's almost as if there's this funnel, all these products and services that are being offered by financial institutions, and the CFPB is slowly chipping away and eliminating all of these options and forcing consumers into less choice.
What It’s Ultimately About
“Ultimately, we do not think consumers having fewer choices is going to lead to them being able to have wealth-building options,” Hunt continued. “We think that credit unions provide the best and affordable credit and it should be up to the credit union to provide those products.”
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