During a congressional hearing today, Federal Reserve Chairman Jerome Powell was challenged on whether a Fed proposal to lower the cap on debit card interchange fees would come at the cost of providing affordable banking services. Powell testified before the House Financial Services Committee for the second of two days of congressional testimony. Committee member Nikema Williams (D-Ga.) raised concerns about the effects of the Fed’s proposed Regulation II revisions on the ability of banks to provide affordable services, particularly Bank On accounts that provide low or no-cost bank services to unbanked and underbanked individuals.
“I heard [from constituents] about the impact of a reduction in interchange fees proposed by this rule could have on Bank On certified accounts in my district and across the country…. Access and affordability are at the heart of the changes that you’re proposing, and I couldn’t agree more with those goals, but we have to make sure that programs designed to serve unbanked and underbanked individuals and marginalized communities continue to flourish,” Williams said.
The American Bankers Association and other banking associations have previously raised concerns about the effects of the Fed proposal on Bank On and other banking services. Responding to Williams’ question, Powell said Fed officials are “very focused” on Bank On and financial access to marginalized communities. “We’re hearing the comments and we’re reading them, and we’re taking those into account as we think about appropriate changes to the proposal,” he said.
