I'm headed home to Nebraska this weekend for a family event, which reminds me of yet another Nebraska politician making a fool of himself on the national political stage (I'm not going to go through the embarrassing recent history here, it's too painful. I do want to say that William Jennings Bryan 115 years ago and George Norris in the 1930s made us proud).
Nebraska's State Treasurer, Shane Osborn, already has quite a history as State Treasurer, including allegations of spousal abuse and apparently moonlighting for a private company while serving as State Treasurer. But his most recent notoriety is flacking for his big banker friends while defending his ripping off of poor Nebraskans. Check out this great piece from the New Nebraska Network about this issue (which I have also been working on, naturally). Osborn isn't running for re-election, so maybe he's looking for a job with the banks with this latest job carrying their water.
The weirdest thing about all this is that Osborn is flying to DC next week to do an event on this issue with Sen. Mark Warner. Huh? I know Warner has been flacking for all the bankers on this issue, and in general on financial reform. But doing an event with a right-wing flake like Osborn is really over the top for Warner. Folks in Virginia really ought to give him some trouble about hosting Osborn. I know Warner wants to be Mr. Bipartisan, and I know he loves him some banksters, but he should mind the company he keeps.
I wrote this morning about how credit card companies get to charge exhorbitant fees- $48 billion worth- every time you use your credit card. Ever see those signs at, say, a coffeehouse- "Minimum $5 purchase to use your credit card"? That's because the credit card companies get to charge whatever they want at the point of sale. I am working with the Retail Industry Leaders Association and Americans for Financial Reform to get an amendment through conference that would regulate the amount they are allowed to charge. It was included in the Senate bill, but not in the House bill.
Today, it came to my attention that former Bushie press secretary, Dana Perino does a classic conservative bait and switch on the Durbin amendment (on FoxNews.com, of course):
While you were preoccupied with the oil spill, the Middle East crisis, the unemployment rate, and everything else in the news, the Senate has been trying to slip a fast one by you. This time, it has to do with your everyday purchases that you make on your debit cards. The changes may sound technical and innocuous when described by the author of the amendment to the financial industry regulation bill, Sen. Dick Durbin (D-Ill.), but peel back the layers and here's what have we've got:
The amendment would make the Federal Reserve Bank dictate debit card "interchange rates." What does that mean? Well, an interchange fee is money that a retailer's bank pays your bank when you use your credit or debit card at their store.
[...]
Much of what you'll find in the bill creates legitimate consumer protections. Durbin's amendment to the bill, however, would do the opposite. Imagine you're planning your monthly budget -- you can take anywhere from 2 to 6 percent right off the top. Retailers will be allowed to add a special charge to your bill if you decide to use your debit card...and given that option, don't you think they'll do that?
Other consequences: you can kiss that no-fee checking account goodbye. Your rewards program? It probably won't have much value if this amendment remains intact.
Another term for this would be "lying", but I'll go the polite route this time. What the Durbin amendment would actually do is help consumers and pump up to $48 billion back into the economy instead of going to the credit card industry- the same credit card industry that got beat with last year's law restricting some of the worst practices in the industry. It's simply bull that this is at all about interchange fees. It's like she simply made it up. And of course, Perino fails to mention that she is now working at Burson Marsteller, the big PR firm, and that a client of hers is none other than Visa.
I wouldn't normally ask you to go to FoxNews.com, but head on over there and leave a comment. One of the best ones I see is from Colorado:
The fact is that the card duopoly (Visa and MasterCard) is setting prices that advantage the banks and disadvantage merchants and their customers. If interchange were purely business-to-business, then banks would have to negotiate with merchants instead of having their card networks set the fee for them. A free market does not exist when a network sets the price and all of the merchants are forced to accept it.
Absolutely right, and if we can't break up the big banks with this bill, we can break up the monopoly the big credit card companies have on throttling small businesses and consumers with fees.
Along with Americans for Financial Reform (AFR) and many great progressive bloggers and activists, my most important task between now and the final passage of the financial reform bill is to try to keep this zombie-like army of lobbyists from picking every detail that matters off the bill and dumping all the good things in the trash. The thing about a subject this huge is that all these "details" and "side issues" are actually quite enormous. Even though this bill is disappointing on many centrally important issues (the biggest of which is to actually break up these monster banks), each provision the House and Senate conferees are currently negotiating over matter a lot.
One example of an under-the-radar side issue with big consequences is this swipe fee issue. I got intrigued by this issue a few weeks ago when my friends at AFR alerted me to it, I started writing about it, and have now managed to talk a bunch of retail business folks into paying me to work on it (is this a great country or what?) Here's the deal: every time a restaurant owner or taxicab driver, a small business person or, for that matter, a blogger, swipes a credit or debit card, the credit card company can charge a fee. Any fee they want. The bigger the business, the lower the fee that can be negotiated, so the folks this really screws over are the smallest businesses who use credit card machines. My cabbie the other day told me he gets charged 10 cents on the dollar, and I know a bunch of other small business people in the same boat. You know who else gets screwed by this? Charities. The swipe fee costs charities around $250 million a year, according to an analysis by the Huffington Post.
So 10 cents here, 10 cents there - not such a big issue, you say? Well, you know what, there are a lot of credit and debit card transactions in this country every day. The definitive estimate on the amount of money being taken out of the pockets of retail businesses and put into the pocket of the banks stands at $48 billion per year. And here's a shocker: 80% of all this money is received by the top 10 banks (actually, I'm a little surprised it is not even more concentrated).
In the world of trillion dollar Federal Reserve bailouts for the banking industry, $48 billion may not seem like much, which is why people call it a side issue in financial reform. But a $48 billion dollar infusion of cash into the real economy as opposed to the profits of the biggest banks would have a lot of benefit right now. And left unregulated, that number will inevitably get bigger, because the big banks' profits will likely be curbed 15-20% by the financial reform bill, and they will be looking for new ways to boost their profits. Any part of the financial industry left unregulated will be in for new rounds of price gouging and market manipulation. The amount Americans pay in swipe fees, who are already paying the highest fees in the world, has already gone up 3 times the amount it was in 2001. Left unregulated, it will go up a lot more.
So if we win this fight, and the banks don't get the $48 billion, what happens to it? Retailers say they will be able to lower prices as a result, so consumers will benefit, but it's hard to know whether or not that will be true. I suspect that some of the $48 billion will benefit consumers with lower prices; some will benefit business owners directly. Hopefully some of those businesses will use the money to hire more workers or even given the workers they have a much needed raise. The extra dollars gained by small businesses might be enough to keep some struggling restaurants and local businesses alive in these tough times.
Regardless of how that $48 billion pie gets sliced, though, getting that money pumping through the rest of the economy and out of the hands of the very biggest banks is a big plus. The big banks have too much power and too much concentrated wealth: anything that takes money out of their hands and puts it into the Main Street economy is a very good thing. This "side" issue matters a lot.
