Fed Ticks Off Retailers With Debit Interchange Ruling

From: Time
The Federal Reserve Board isn’t really known for being shocking, but banks and retailers were shocked — and fighting mad — when the agency delivered its verdict on the contentious battle over debit interchange fees, capping fees at 21 cents per swipe — roughly half of the 44 cents banks currently collect every time a consumer uses their debit card.
This is a huge increase over the 12 cent-per-transaction cap the Fed initially said it would probably implement back in December, and the final ruling also gives banks another three months — until October — before the cap kicks in. The Fed also built in the chance for banks to collect an incremental additional amount to cover fraud-related expenses. From its statement:
When combined with the maximum permissible interchange fee under the interchange fee standards, a covered issuer eligible for the fraud-prevention adjustment could receive an interchange fee of up to approximately 24 cents for the average debit card transaction, which is valued at $38.
Retail trade groups are already firing away with indignant statements to the media, claiming this ruling is going to place a crushing burden on merchants, especially small mom-and-pop retailers. But while we love our mom-and-pop stores, too, the uncomfortable reality is that nobody was ever able to prove that lowering interchange fees would benefit customers at the cash register. What was clear was that consumers were likely to see their perks and services cut by banks if interchange fees were dropped as drastically as initially proposed.
While the retail camp is already positioning this as a giveaway to big banks, here’s the good thing: Now that banks will make a lot more money than they planned from debit swipe fees, it’ll be tough for them to claim that they have to punish consumers to make up for the shortfall by eliminating debit rewards programs, ratcheting up fees and adding restrictions. In other words, now that the Fed’s nearly doubled banks’ allowance, it’s going to be hard for them to cry poor.

1 in 4 Americans has no emergency savings

From: Bankrate.com

Home prices are still falling, unemployment is once again rising and the stock market lost ground every week in May.

But while the signs of a possible double-dip recession are increasing, this month’s Financial Security Index poll discovered a frightening fact: Roughly half of Americans are dangerously unprepared for a personal financial emergency.

Bankrate’s Financial Security Index poll for June found 24 percent of Americans have no emergency savings at all. Another 22 percent said their emergency savings would cover, at best, three months’ worth of expenses.

Community banks lament excessive regulation

By DAVID GOLDSTEIN, McClatchy Newspapers

WASHINGTON — Federal banking regulators said Wednesday that community banks should not face the same post-Wall Street meltdown scrutiny that mega-banks do, but local bankers said that’s exactly what’s happening.

At a hearing before a Senate Banking panel, community bankers said that in the wake of the financial crisis, the regulatory pendulum has swung too far and their institutions are under a tremendous amount of stress.

Senate Vote Highlights Need for Fed Consideration of Debit Card Cybersecurity Costs

Editor’s Note:  The Senate vote discussed in the story below further highlights the need for the Federal Reserve to determine the full data security costs associated with debit card transactions, as required by law, and to adjust allowable interchange fees accordingly.  CRE’s letter to the Board discussing cybersecurity costs may be found here.

From: Credit Union Times

Senate Defeats Debit Interchange Delay Measure

Credit unions’ efforts to delay the Federal Reserve’s rule regulating debit interchange fees by up to a year came up short today as the Senate defeated an amendment by Sens. Jon Tester (D-Mont.) and Bob Corker (R-Tenn.).

A Comment on the Proposed AT&T/T-Mobile Merger From A Reader

Editor’s Note:  The following comment was submitted to CRE by a Financial Forum reader.  The opinion expressed does not necessarily represent the views of CRE.  CRE will publish all substantive comments on the issue. 

AT&T merger

Thumbs DOWN.  Stop this reduction of competitors.  Just so you can build companies with OVERPAID bosses. Does not help the USA, reduces employment. and reduces customers cost. 

PLEASE JUST NO TO the AT& T Merger with “T” Mobile.

Thank you

[name redacted]

PS: A T-Mobile user..