The President’s Perspective

​Credit union priorities to be aware of following the election. Plus, a SD credit union executive makes the most of his Summit Auction prize last weekend! 

The 2024 Election is behind us, now what?
The election results essentially make this a lame duck Congress for the remainder of the 118th congressional session. There are both credit union priorities and bills of concern that we need to get ahead of in the weeks ahead.
Credit union priorities as Congress completes its legislative work:

• The bipartisan Credit Union Board Modernization Act (H.R. 582/S. 610) that would update federal credit union board meeting requirements to no less than six meetings per year. 
• The CDFI Transparency Act (H.R. 2674/S.3161) which would require the Treasury’s Community Financial Development Institution Fund director to testify before Congress.
• The SAFE Banking Act (H.R. 2891/S.1323) which would provide a safe harbor for financial institutions serving legal cannabis-based businesses.
• Big Box Bailout bill, which would harm community financial institutions, including credit unions, by extending debit interchange routing.
• Legislation (S. 4943) that would expand Electronic Fund Transfer Act liabilities to financial institutions; and efforts to expand the NCUA’s examination authority over third-party vendors.

Let’s back up and highlight the CCCA, which we refer to as the “Big Box Bailout bill.”  Today, Senator Dick Durbin (D-IL) Chair of the Judiciary Committee, will be holding a hearing on this bill, which aims to increase competition in credit card processing by requiring card issuers to enable multiple networks for routing transactions, effectively reducing the dominance of Visa and Mastercard. However, as we know, the legislation has several potential negative impacts, as well as clear winners and losers, namely credit unions and consumers.
 
Negative impacts if the CCCA passes.
The ultimate downside of CCCA will mean Higher Costs for Credit Unions and Community Banks that rely on interchange fees to fund their operations, including fraud protection, credit card rewards, and other services. The mandated routing changes will lower interchange revenue and increase compliance and technology costs, squeezing already thin margins.
 
There will be Reduced Consumer Benefits, specifically on credit card rewards programs, which are heavily funded by interchange fees. These programs would be scaled back or eliminated altogether, negatively affecting members and consumers who rely on these perks. This has already been observed in debit card markets after the Durbin Debit Amendment was enacted in 2010, and we must not let history repeat itself.
 
Weakened Security Protections through alternative routing networks may not offer the same fraud detection and cybersecurity measures as established players like Visa and Mastercard, potentially increasing fraud risk for consumers and merchants.
 
Market disruption will force smaller financial institutions to adopt additional networks which may lead to operational inefficiencies, as well as diverting resources away from other member -focused services. Additionally, we could see reduced competitiveness as a disproportionate burden on smaller issuers struggle to keep up with regulatory changes.
 
Winners and Losers of the CCCA
The Winners

• Large retailers and the “big box’ stores like Walmart, Target, Cosco, and Amazon stand to gain significantly. They will save billions on interchange fees by routing transactions through lower-cost networks, increasing their profit margins. More importantly, we know firsthand that those savings will not likely be passed on to consumers.
• Alternative payment networks or emerging networks might see increased adoption as merchants are incentivized to use lower-cost options.

The Losers

• Credit unions and community banks will be top on the big loser list.
• Reduced interchange fee revenue will make it harder for smaller financial institutions to compete and provide affordable services to members and customers.
• Consumers with credit card rewards programs could shrink or disappear entirely.
• Fraud prevention and security through a fragmented network system could lead to even more fraud and less attention to fraud prevention capabilities, thus increasing risks for consumers and credit unions and other financial institutions.
• Small businesses and merchants are dependent on existing systems that lack the capacity to implement and manage multiple network systems might face increased costs and operational challenges.

 
Summit Auction Item results in a dream NFL game and ultimate family experience.
You may recall that there was an incredibly special and unique auction item up for bid last May during our Annual Summit. The item was a luxury suite experience at a home game of their choice at the NFL World Champions Kansas City Chiefs. I was able to secure the gift though my fellow America’s Credit Unions board member, Lisa Ginter, who kindly donated the item to benefit our Roger Heacock HTH Scholarship Funds. Lisa is the President/CEO of CommunityAmerica Credit Union in Kansas City, which serves as the official financial institution for the Chiefs. They also have promotional relationship with star quarterback Patrick Mahomes.

The kind donation of the tickets and signed football by their star tight end, Travis Kelce, helped raise a record $10,299 for our GAC fund! Those two items alone amounted to 41% of the total money raised.
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The winner of that item was Jerry Schmidt, President/CEO of Black Hills Federal Credit Union in Rapid City. Last weekend, he treated his family to the experience that also included field passes where they were allowed to get up close to the players as they prepared for the game. The game was extraordinary as well, as the Chiefs won their 9th game of the season in dramatic fashion with a field goal block as the clock expired. Congratulations, Jerry! We are so glad you and your family had a wonderful experience. 

Photos show Jerry Schmidt with his family; Jeff Olson with Jerry and Lisa Ginter; and Jeff with with "Mamma Mahomes," Patrick Mahomes' mother, Randi, and Patrick's brother, Jackson who stopped by to say hello.

DakCU Staff in planning session on Thursday
This Thursday, November 21 will be an in-house planning session for all DakCU staff in the Bismarck office. We will be laying out our agenda, priorities, and expectations for 2025. We will return any messages as soon as possible; thank you in advance for your understanding and patience.

Join us for Karla Clark’s open house.
I hope to see many of you at our open house honoring Karla Clark, who is retiring at the end of this month after 31 years with the association. Please join us for conversation and refreshments as we celebrate anytime from 2 – 4 p.m. on Wednesday, November 20. Our Bismarck office is located at 2005 N. Kavaney Dr., and we will gather in the conference room on the second floor.
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On a positive note,
Staff at Fargo VA recently participated in a veteran outreach community “Trunk or Treat” event in Fargo. The annual Halloween celebration is open to participating employers and employees, veterans, and the entire community, offering a safe and inclusive place to enjoy dressing in a favorite costume, socializing, and having fun! According to Fargo VA CEO Jana Thune, there was an amazing turnout at this year’s venue – the Fargo Air Museum parking lot, and they are already looking forward to next year’s event! Nicely done. 

​Congratulations to East River FCU
Finally, I want to send a shout out to Tanya Hobson and the entire staff at East River FCU (Madison, SD) for being recognized as the “Best of Lake County 2024” by the Madison Daily Leader. The award honors the credit union’s long-time service to their community and exceptional service, as demonstrated by a vote of individuals from their surrounding area. Congratulations!
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Have a wonderful week, 

DakCU President/CEO