For Visa, MasterCard and Merchants, It’s Deja Vu All Over Again

September 18, 2018 at 9:16 am 2 comments

Image result for deja vu all over againIt took me a lot longer than I expected to research today’s blog because when I read the news this morning that Visa and MasterCard had again reached a settlement of their decade old anti-trust legal dispute with the merchants., I had to refresh my aging hard drive of a memory about just how we got here.

For example, if you’re like me you remember what a big deal it was when, in 2013, a settlement was reached under which $7.25 billion was to be handed over to the merchants and other financial institutions had to surrender a portion of their credit card fee income to merchants. Remember, this was the price we had to pay for peace in our times. It didn’t last very long.

The settlement was stillborn. Some of the largest retailers objected to the deal and eventually the Court of Appeals for the 2nd Circuit agreed (In re Payment Card Interchange Fee & Merch. Disc. Antitrust Litig., 827 F.3d 223, 236 (2d Cir. 2016), concluding that a significant proportion of merchants were either legally or commercially unable to obtain the benefits extensively negotiated on their behalf.

As the settlement terms become available it will be interesting to see what additional concessions merchants were able to obtain as part of the new settlement.

Teachers Discusses Melrose Deal

Yours truly is not in the best position to know who got the better end of the deal when Teachers Federal Credit Union on Long Island recently finalized a deal to absorb much of Melrose Credit Union but the next time I’m buying a house I want Teachers FCU to do my negotiating.

As CEO Bob Allen explained in the Credit Union Times, NCUA is keeping all of Melrose’s medallion loans, meaning that in return for taking on the remainder of Melrose’s assets, the $6 billion credit union has obtained the last of New York State’s open charters. This charter permits the credit union to operate anywhere it wants without regard to field of membership restrictions.

What remains to be seen is how great an impact medallion loans will have when they are absorbed into the Share Insurance Fund. As the article notes, “no one really knows whether the value of medallions has bottomed out and betting on their value would have put the credit union in too much risk.”

 

Entry filed under: General, Legal Watch. Tags: , , .

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2 Comments Add your own

  • 1. William Spearman  |  September 18, 2018 at 9:59 am

    Kudos to Teachers but how does a state issued open charter help a FCU?

    Reply
  • 2. Henry Meier  |  September 18, 2018 at 11:32 am

    Hello Bill. Nice to know you are still reading the blog. I hope all is well.

    This was an emergrncy merger situation since Melrose was insolvent. Chapter 2 Section II of the Chartering and FOM manual stipulates thas “An emergency merger may be approved by NCUA without regard to common bond or other legal constraints” Furthermore, “as a stipulated condition to an emergency merger, the field of membership of the merging credit union may be transferred intact to the continuing federal credit union without regard to any common bond restrictions.

    In this case the FOM of Melrose is an open charter which has been transferred to Teachers.

    Reply

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Authored By:

Henry Meier, Esq., Senior Vice President, General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association. In addition, although Henry strives to give his readers useful and accurate information on a broad range of subjects, many of which involve legal disputes, his views are not a substitute for legal advise from retained counsel.

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