Bloomberg has a story about how a movement in the US House of Representatives to kill the current cap on interchange fees - charged on credit card and debit card purchases by Visa and Mastercard and paid to the banks - has created a political debate.
Here's how Bloomberg frames the story:
"At issue is part of the 2010 law that limits how much money banks can collect from retailers when consumers use their debit cards. House Financial Services Committee Chairman Jeb Hensarling wants to get rid of the fee cap now that Republicans control Congress and the White House.
"But he’s facing resistance from other GOP lawmakers who either don’t agree with him or don’t want to pick sides in a high-stakes fight between corporate titans. Banks such as JPMorgan Chase & Co. have argued for years that it’s not the government’s role to set charges. Retailers such as Wal-Mart Stores Inc. counter that lower transaction fees lead to lower prices.
"The fight is coming to a head with the financial services panel set to vote on a Hensarling bill next week that would overhaul much of the Dodd-Frank Act. While Republicans are eager to start the process of rolling back post-crisis financial rules, some aren’t thrilled that Hensarling’s legislation would overturn the cap on card fees."
Of course, it may not matter, since even if the House of Representatives passes the bill, it would still have to get approved by the Senate, where a 60-vote majority would be required and would be highly improbable, seeing as Democrats have lined up against a repeal. In addition, major retailers and their trade associations have come out against a repeal of the swipe fee cap, and are exercising their considerable lobbying muscle.
Here's how Bloomberg frames the story:
"At issue is part of the 2010 law that limits how much money banks can collect from retailers when consumers use their debit cards. House Financial Services Committee Chairman Jeb Hensarling wants to get rid of the fee cap now that Republicans control Congress and the White House.
"But he’s facing resistance from other GOP lawmakers who either don’t agree with him or don’t want to pick sides in a high-stakes fight between corporate titans. Banks such as JPMorgan Chase & Co. have argued for years that it’s not the government’s role to set charges. Retailers such as Wal-Mart Stores Inc. counter that lower transaction fees lead to lower prices.
"The fight is coming to a head with the financial services panel set to vote on a Hensarling bill next week that would overhaul much of the Dodd-Frank Act. While Republicans are eager to start the process of rolling back post-crisis financial rules, some aren’t thrilled that Hensarling’s legislation would overturn the cap on card fees."
Of course, it may not matter, since even if the House of Representatives passes the bill, it would still have to get approved by the Senate, where a 60-vote majority would be required and would be highly improbable, seeing as Democrats have lined up against a repeal. In addition, major retailers and their trade associations have come out against a repeal of the swipe fee cap, and are exercising their considerable lobbying muscle.
- KC's View:
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I have to wonder if folks in the retail business are entirely comfortable with the fact that in the Senate, they will find themselves aligned with the interests of Sen. Elizabeth Warren (D-Massachusetts), who has been arguing vociferously against any such repeal.
I'm guessing they're willing to live with it, since fighting with financial services companies over swipe fees has been a fact of retail life for a number of years. It has been something of a slog, because the banks have put their backs and their money into fighting against any limitation on their ability to screw over consumers and retailers and charge as much as they want, and make it as opaque a process as possible.
Both political parties currently are in a situation where there are differing interests working within them toward sometimes opposing goals. In this case, it is the GOP, which has to choose between being the part of Wall Street interests and Main Street interests.
