January 06, 2014

Hunt: Let industry lead on payment system reform

Jan. 7, 2014 – NAFCU Senior Vice President of Government Affairs and General Counsel Carrie Hunt, in an editorial in CUInsight Monday, called on the Federal Reserve Banks to allow financial institutions to lead the way in payment system reform instead of instigating government-directed reform.

Hunt was responding to a white paper from the Federal Reserve on the prospect of government involvement in reforming the country's payment system.

"We at NAFCU agree that the payment system has gaps and that there are many opportunities for innovation and reform," Hunt wrote. "We appreciate the Fed's reaching out to the industry to determine features that would help both financial services providers and their customers. But we believe it's best for industry to lead the way in reform rather than for the Fed to attempt its own reforms and risk unintended consequences in doing so."

Hunt praised credit unions' history of innovation and member-focused reform, and noted that one-size-fits-all reform would likely not benefit the credit union industry as much as reform that occurred organically based on the industry's specific needs. For instance, she pointed out that speed of payment – one of the main concerns of the Fed' white paper – is not the top priority for all users.

NAFCU wrote the Fed a letter on Dec. 13 on this subject, urging it to participate in continued dialogue on reform rather than intervene.