ARLINGTON, Va.—A decade after the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Durbin Amendment has had an “unequivocally negative” impact on credit unions’ non-interest income, according to data compiled by NAFCU and included in its latest Economic & CU Monitor report.
“Moreover, in April 2021, North Dakota retailers filed a lawsuit against the Federal Reserve challenging its interchange rule,” NAFCU noted. “Soon after, the Federal Reserve reopened Regulation II to propose new limits on routing practices.”
In NAFCU’s latest Monitor survey (see related story) credit unions were asked what share of their non-interest income was derived from debit interchange and how interchange income had changed since the Durbin Amendment took effect.
“Roughly half of respondents reported a decline in interchange income per transaction, a finding which comports with prior NAFCU surveys,” the association said. “Notably, this negative impact has not been limited to covered issuers, who are defined as those with total assets of $10 billion or more. Exempt issuers have also experienced a decline in per-transaction interchange rates.”
Rosier View
Meanwhile, credit union executives are feeling slightly more positive toward what lies ahead.
As part of the Economic & CU Monitor, the latest findings in NAFCU’s Credit Union Sentiment Index (CUSI)–an index based on NAFCU member responses to eight questions on growth and earnings outlook, lending conditions and regulatory burden–found the overall score rose slightly in May, thanks to an improved outlook on growth.
Of note, respondents’ measured loan demand is at its lowest point in a year and is a growing concern in credit unions’ earnings outlook, NAFCU said.