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Interesting piece in Politico about the continuing debate in the US Senate over provisions in last year’s financial reform legislation that set up a process for capping swipe fees that banks can charge customers using debit cards - and the latest wrinkle, a new bill that would delay the issuance of new rules by the federal government.

The battle seems to come down to this: The bill was issued by a Democrat - Montana Sen. Jon Tester - and also is opposed by a Democrat - Illinois Sen. Dick Durbin, who sponsored and helped to craft the original legislation. Tester argues that a delay will allow the government to evaluate how swipe fee regulations will help or hurt small community banks and credit unions, though Politico notes that he also has been the recipient of significant donations from financial services companies. Durbin, on the other hand, continues to argue that regulation is needed to lower costs for retailers and consumers, which will be good for the economy and prevent banks from gauging their customers.

In a typical response from the retailing community, Jennifer Hatcher, senior vice president, government relations at the Food Marketing Institute (FMI), released the following statement:

“The latest Tester-Corker swipe fee language is no ‘compromise’ and was developed by big banks, for big banks without input from retailers or consumers who are counting the days until reforms take effect July 21. Masked as a delay bill, the new legislation would effectively kill swipe fee reforms. Any vote to delay the Federal Reserve’s swipe fee rule is premature at this point, since no one has yet seen the Federal Reserve’s final rule. The Federal Reserve is working on revision to a final rule that is expected to be published in the near future.”

More than 300 national and state trade associations have signed a letter opposing the Tester delay amendment, citing the harm it will do to Main Street merchants and consumers by costing billions of dollars and 95,000 jobs.

“This bill isn’t about delaying the regulations and ‘studying’ the issue,” said Lyle Beckwith, Senior Vice President of Government Relations at the National Association of Convenience Stores. “It’s about derailing a bill that will save Main Street business owners and consumers billions of dollars—and instead putting that money in the pockets of the country’s biggest banks. Senator Tester’s amendment is a blank check to Visa, MasterCard and their big banks—and gives them permission to continue to charge merchants any amount they want for swipe fees. This is nothing more than a handout to the big banks and a slap in the face to consumers and retailers.”
KC's View:
You’d think someone would be able to make a cogent argument that if swipe fees come down, there will be market pressure for retailers to lower their prices, which could drive consumer spending a help a still-troubled economy. This strikes me as a fairly simple argument to make, replete with populist rhetoric and capable of generating political support.

But instead, everybody prefers to talk about Rep. Anthony Weiner.

I know they say that our democracy is mankind’s last, best hope. But sometimes, you have to wonder...

I cannot understand why retailers have not been able to exercise greater clout on this issue. I agree with the point made by Michael Sansolo not too long ago - retailers in all venues ought to say the following: “You vote against swipe fee reform or you side with the people fighting against reform, and you don’t get our political contributions, you don’t get to use our parking lots for rallies, you don’t get food donations for your events. You get nothing from us. You need something - money, food or something else - go to the banks.”

Play hardball, dammit.