CUNA Comment Letter

March 31, 2000

Roger W. Ferguson, Jr.
Vice Chairman,
Board of Governors of the
Federal Reserve System
Washington, D.C. 20551

Dear Mr. Ferguson:

The Credit Union National Association (CUNA), which represents more than 90 percent of the nation’s 10,600 state and federal credit unions, appreciates your letter on the work of the Payments System Development Committee. CUNA commends this committee for undertaking the project of reviewing the national payments system and, in particular, check truncation, electronic check presentment, technical standards, and the legal foundation for new payment forms.

CUNA and its Payments System Subcommittee, which is chaired by Stanley C. Hollen, President and CEO of the Golden 1 Credit Union in Sacramento, California, are able to provide meaningful input into your review of the payments system. This subcommittee meets periodically to review and form policies on the payments system that serve the interests of the credit union movement. For this reason, the subcommittee and CUNA can contribute insights relevant to the actions you plan to take within the next two years.

As a result, CUNA, its Payments Systems Subcommittee and other credit unions would like to assist the Federal Reserve in identifying steps that the Federal Reserve could take to address legal and regulatory issues associated with emerging electronic payment and commerce technologies; examining the clearing and settlement structure for electronic retail payments; and sharing information regarding gaps in standards that inhibit development of the payments system.

To further the efforts of the Payments System Development Committee, CUNA respectfully requests that a representative sampling of credit unions be included in all your surveys, so that the information collected is representative of all financial institutions. To help in this effort, CUNA and its Payment Systems Subcommittee is willing to help you identify credit unions and CUNA representatives interested in participating in your surveys, interaction groups, standards setting groups, and any legal or regulatory groups that will address payments issues.

Through its Payments System Subcommittee, CUNA focuses on payments issues important and unique to credit unions. As a result, CUNA respectfully requests that the Federal Reserve System maintain the nationwide accessibility of the payment system and prohibit vendors and financial institutions from using emerging technologies to discriminate against credit unions. For example, CUNA is aware that there are merchants who participate in check truncation programs that will not accept share drafts drawn on checking accounts from credit unions. Our input on when problems such as this occur and other relevant payments issues can provide to the Payments Systems Development Committee the information necessary for it to review and improve the payment system for all financial institutions.

In closing, CUNA commends the Payments System Development Committee for conducting this review of the payments system and accepting our comments. Please do not hesitate to call Mary Mitchell Dunn, Senior Vice President and Associate General Counsel or me at (202) 682-4200 if you have any questions or would like information on obtaining more credit union participation on your committee.

Sincerely,

Michelle Q. Profit
Assistant General Counsel