CUNA Comment Letter

CUNA Comments on Proposed Changes to ACH Services

January 6, 2000

The Honorable Roger W. Ferguson, Jr.
The Honorable Edward W. Kelley, Jr.
Board of Governors of the
Federal Reserve System
20th and C Streets, NW
Washington, D.C. 20551

Re: Docket No. R-1037, Proposed Changes to ACH Services

Dear Vice Chairman Ferguson and Governor Kelley:

The undersigned banking and credit union organizations are writing to express our concern over proposed modifications to the Federal Reserve Banks' Automated Clearing House (ACH) operations and pricing practices regarding private sector operators. Following receipt of comments received from the Request for Comment (Notice) published in The Federal Register, the Federal Reserve System convened a meeting on December 9, 1999 of those organizations that responded to the Notice. While we appreciate the opportunity to voice our concerns, we believe that many issues remain unresolved following that meeting.

The purpose of our letter is to urge you to release for public comment the pricing models that were presented at the December 9 meeting, and subsequent models developed by the Federal Reserve System in response to reactions from the meeting. According to the Board's pricing principles,

"Public comment will be requested when changes in fees and service arrangements are proposed that would have significant longer-run effects on the payments system."

Due to the significant changes likely to result for receiving depository financial institutions and others from new pricing and delivery schedules, we believe that before specific changes are made, the Board should release them for public comment. Changes to pricing models that would result in pricing privileges to private-sector operators and/or modify pricing structures for those institutions that use the Federal Reserve Banks as their sole ACH processor should be subject to review by the public prior to their implementation.

In addition, in each of the suggested models the key definition of an "operator" which will affect how interested parties are treated in the ACH system, is still unclear. If the Board believes any changes are necessary, we urge the Board to first develop a detailed model, complete with definitions, and then permit the public to provide feedback.

If you have any questions concerning this letter, please contact Mary Mitchell Dunn, Senior Vice President and Associate General Counsel for CUNA at (202) 682-4200 or Viveca Ware, Director of Payment Systems for the ICBA at (202) 659-8111. Thank you for your consideration of our request.


David E. Hayes Stanley C. Hollen
Chairman Chairman
Payments Task Force Payments System Subcommittee
Independent Community Bankers of America Credit Union National Association

cc: Louise L. Roseman
Director Division of Reserve Bank Operations