CHICAGO—While credit unions joined with banks in haling a judge’s decision this week in a case involving a new law in Illinois on interchange, the banking industry has more to applaud than credit unions, at least for now.
As the CU Daily reported, As the CU Daily has reported, America’s Credit Unions and the Illinois Credit Union Leaguejoined with the American Bankers Association and Illinois Bankers Association in applauding a ruling by federal judge who has ordered additional proceedings in the ongoing challenge to Illinois’ Interchange Fee Prohibition Act (IFPA) after recent actions by the Office of the Comptroller of the Currency (OCC) altered the legal landscape surrounding the case.
Not Applicable to Credit Unions
But the ruling doesn’t apply to credit unions.
“This ruling was expected and stems from the OCC’s recent action that applies to banks, not credit unions,” America’s Credit Unions President and CEO Scott Simpson said in a statement. “While it does not change the current status of credit unions under the IFPA, we remain encouraged by ongoing efforts to address the law’s significant operational challenges.
We are awaiting the NCUA’s rulemaking on preemption and will continue working with our partners at the Illinois Credit Union League to ensure credit unions receive the same clarity and protections afforded to other financial institutions in the payments system.”
In its ruling, the court granted a permanent injunction preventing Illinois from enforcing the IFPA’s interchange fee prohibition against certain banks, federal savings associations, and payment networks. The judge was responding to a recent Office of the Comptroller of the Currency (OCC) interim final actions confirming federal preemption of the IFPA.
Now Awaiting NCUA
As the CU Daily has been reporting, the NCUA is expected to issue a final rule similar to the OCC ruling shortly, confirming preemption for federally chartered credit unions. Once the NCUA releases its rulemaking, America’s Credit Unions said it will work to ensure credit unions receive similar legal treatment and relief from the Seventh Circuit Court of Appeals or again on remand before the district court.
The fate of state-chartered CUs outside of Illinois also remains in limbo.
Illinois lawmakers have approved legislation delaying implementation of the state’s controversial Interchange Fee Prohibition Act (IFPA) for an additional year, pushing the effective date to July 1, 2027, as legal and regulatory battles over the law continue.
