Credit Unions Ask Fed to Pull Debit Interchange Proposal

The letter also urged the Fed to carefully evaluate risks tied to expanding access to Federal Reserve master accounts. Applicants that are not supervised like insured depository institutions “could pose risks to the reliability and safety of Reserve Bank payments infrastructure,” America’s Credit Unions wrote. The Fed is already reviewing its framework for granting account access to uninsured banks and nonbank financial companies, PYMNTS reported in May.

A third issue involved a request that the Fed engage with the Consumer Financial Protection Bureau to revisit check hold rules under Regulation CC. The current five-day hold window leaves credit unions exposed to fraud, the letter said. “The mismatch between the time when funds must be made available and the time needed to fully learn whether a check is payable continues to contribute to significant fraud losses,” the group stated. Advocates of reform have noted that the law forces institutions to release funds even for suspicious transactions, PYMNTS reported in June.

Warsh’s appearance before the House Financial Services Committee is scheduled for Tuesday.