Pub. 5 2010-2011

www.nebankers.org 18 Extraordinary Service for Extraordinary Members. and driving up prices for consumers. Their addition by Sen. Dick Durbin (D-Ill.) late in the legislative process embodies for many bankers the influ- ence that special interests had on the legislative process. “Interchange income had no im- pact on nor was it the cause of the economic crisis, and it certainly will not prevent the occurrence of a future crisis,” noted Larry Marik, chairman of the Nebraska Bankers Association, in a recent op-ed piece. “It was just another example of ‘piling on’ tradi- tional community banks that did not cause the financial crisis.” Congress painted with a broad brush when crafting the legislation and, despite exemptions for small is- suers and government programs, the legislation is expected to impact most Q Financial Reform debit cards issued today. Under the law, the term “debit card” includes: (i) any card approved for use through a payment card network to debit an asset account, whether authorization is by signature, PIN, or otherwise, and (ii) general-use prepaid cards. Small issuers with less than $10 bil- lion in assets are exempt from the Federal Reserve rate-setting provi- sions (the “Small Issuer Exemption”). Government-administered payment programs using debit or prepaid cards (the “Government Program Exemp- tion”) and general-use, reloadable prepaid cards (the “Reloadable Pre- paid Exemption”) are exempt from the rate-setting provisions for one year. Thereafter, the Government Program Exemption and the Reload- able Prepaid Exemption are available only if the card issuer charges neither overdraft fees nor a fee for the first withdrawal per month at the issuer’s designated ATMs. The likely consequence of this framework: Banks with at least $10 billion in assets will see debit transac- tion revenue greatly diminished and will shift their focus from issuance of debit cards to credit cards and related services and technologies. Commu- nity banks that are “exempt” from the regulation either will face customer attrition as they struggle to compete with larger banks’ regulated debit transaction fees or will be forced to reduce their own fees to compete with the regulatory standard, both of which result in reduced fee revenue and higher operating costs. Processors and vendors relied upon by banks to implement debit card programs likely will force changes in their agreements designed to bring their systems into compliance with the law for all cus- tomers, regardless of size. Under the law, the Federal Reserve will be required to regulate debit 7OODMEN 4OWER s /MAHA .% s WWW BAIRDHOLM COM "AIRD (OLM ,,0 IS A MULTI SERVICE LAW lRM WITH ATTORNEYS PROVIDING RESULT ORIENTED COUNSEL FOR CORPORATE INSTITUTIONAL GOVERNMENTAL AND INDIVIDUAL CLIENTS 7E REPRESENT CLIENTS INCLUDING lNANCIAL INSTITUTIONS AND BANK HOLDING COMPANIES IN ALL ASPECTS OF BANKING AND LENDING LAW ,EARN MORE ABOUT OUR PRACTICE AND HOW WE CAN BE OF VALUE TO YOU BY CALLING 3TEVE 4URNER AT 402.636.8256. Multiple services providing you with multiple values. bcbsne.com $Q,QGHSHQGHQW/LFHQVHHRIWKH%OXH&URVVDQG%OXH6KLHOG$VVRFLDWLRQ