Senators back delay in crackdown on fees that yield billions for banks

Why am I not surprised? (0.00 / 0)

Last year year I wrote a series of diaries over at 4&20 outlining our junior senator's dabbling in the Wall Street money and lobbying games during the runup to the FinReg legislation. I'm sure that reminding the good readers of this blog of Tester's dalliance with the corrupt forces in D.C. won't win me any friends, but I have to let the chips fall where they may. Jon made his bed, and now he gets to sleep in it--bedbugs, leeches and slimy reptiles included.

One of them was about Tester's sell-out to Wall Street on the Brown-Kaufman amendments to FinReg, Senator Tester Backs Wall Street on Brown-Kaufman "Too Big to Fail" Amendment:

"The Brown-Kaufman amendment was the one strong point of regulation that would cut to the heart of why Wall Street has become immune to the will of the people. Crony capitalism, and corrupt corporatism are the guiding forces in Washington D.C. these days. It is no longer the will of the people-or the best intentions of once-innocent politicians-that governs our nation. It is corporate money and the influence it buys direct from Wall Street that has taken a stranglehold on our political and economic system. We are entering an era of plutonomy, the likes of which this country has never seen. We are being governed from Wall Street."

And the real kicker story about Tester's wining and dining with Wall Streeters and lobbyists at a fundraiser for him during the markup and votes on FinReg, 'Two-step' Tester Dances with Lobbyists over Wall Street FinReg:

It seems that Montana's junior Senator and Banking Committee member, Jon Tester, has been resorting to some two-stepping to add to his double-speak with his newest routine with Wall Street Lobbyists. Despite Jon's contentions that he is doing what is best for his Montana constituents, it seems that a series of votes on the Financial Regulation package that just cleared the Senate speak volumes about his true intentions: preserving Wall Street campaign contributions...

Well, after Tester's latest attempt at foofaraw with his OpEd, I decided to take a look at what else is going on in the Senator's world. It seems that he not only voted against Brown-Kaufman, he voted against Sen. Durbin's bank card transaction fee amendment, which would have capped the fees we pay when we use our debit cards at the checkout counter. Those fees amount to a $19.71 billion dollar industry, with 80% being paid back to the issuing banks as profit. So your bank is profiting on you to the tune of 1.63% on each transaction. Which is more than your bank paid you for interest for a whole year of holding onto your money...

Now let's get on with the two-step. It seems that on March 16th, our good Senator, who campaigned as a man of ethics and transparency, was the recipient of a "Pre-St. Patrick's Day Reception" put on by a host of lobbyists-including bankers and Wall Street insiders. Now that couldn't have had anything to do with any of his votes and attempts to sidestep any backlash from them, would it?

As the NY Times put it:

"And this was not an easy vote. Lobbyists for the wounded but formidable banking industry made clear to some senators that this decision would affect future campaign donations, according to people who participated in those conversations."

Let's just say that I'm not surprised at the current legislation Tester is proposing. Makes me think it is time to head back on over to the Sunlight Foundation and elsewhere to see just who has been filling Jon's campaign coffers with cash, and helping him figure out how to legislate.

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by: JC @ Wed Mar 16, 2011 at 20:28:07 PM UTC

I've asked before. (0.00 / 0)

In all seriousness, JC.  Who do you have to primary Tester?

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by: Rob Kailey @ Wed Mar 16, 2011 at 22:45:37 PM UTC

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This isn't about a primary (0.00 / 0)

It's about corruption. It's about transparency. NOtice I didn't say anything about an election here. Or Rehberg. Jhwygirl has a good comment about the primary issue over at 4&20 today that I happen to whole-heartedly agree with:

"The MT Dem Party has done everything they've possibly can to ensure that Tester gets the nomination. I'm talking party machinations within their own rules. I don't know, really, why we need a primary.

And that last sentence is certainly made with a healthy dose of sarcasm, but still."

Why even pretend that a primary, or primary candidate is a possibility or worthwhile? What I would like to see would be a third-party candidate emerge to try and bring some choice into the system, and some honesty to the process (and I know I'm going to get major flame-age for that position).

But I'm not going to look the other way when I see Wall Street buying our politicians and political process. If Jon and his Democrat supporters want to pursue a campaign of "the lesser of two evils" so be it. But that is not a campaign I'm interested in getting involved with.

But you can bet the Rehberg will make a campaign issue out of this. Take this as a heads up for Jon and his team to figure out a way to whitewash his shenanigans with FinReg, and his move to embrace Wall Street money. Somebody will figure a way to use it against him without making Rehberg look like a hypocrite.

He'd be a much stronger candidate if he took the populist approach and publicly committed to not accepting any money from Wall Street, and advocated for his constituents and strong regs instead of his lobbyist and corporate east coast funders with their self-serving and loophole-ridden ideas.

Anyways, I just wanted to put some info out there, let the readers judge for themselves. You asked me for some opinion, and I gave it to you in this comment.

And I'm not going to argue any of this any further with you. I know where that will get us, and I don't like it, and won't go there. As it is, I posted this against my own best judgement, knowing that it is wildly unpopular in dem circles to criticize anything that Jon Tester does, particularly with a tough election coming up.

But if he can't handle it from the left, then he sure as hell won't be able to handle it from the right. And as he chose triangulation as a political strategy, he's just going to have to live with the results.

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by: JC @ Wed Mar 16, 2011 at 23:12:10 PM UTC

[ Parent ]

Assumptions (0.00 / 0)

JC, you're making a whole lot of those, many of which I'm not sure I agree with.  You call for a populist approach, completely devoid of context.  Do you have evidence that his stances aren't 'popular' with Montana?

I'm not interested in "argument".  Kindly can the defensiveness.  It's unnecessary.  Assuming that a stance you take is unpopular is at times wise.  Assuming that others will react in the manner you (hope for) believe is really not wise at all.

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by: Rob Kailey @ Wed Mar 16, 2011 at 23:51:23 PM UTC

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Banks vs consumers (0.00 / 0)

On this particular issue, Rob, I'm pretty sure the vast majority of Montanans are NOT in favor of Sen Tester doing the bidding of MasterCard, American Bankers Association, et al to protect their $16.2 billion in swipe fees...as opposed to standing up for Montana small business retailers, consumers and honest financial reform.

I mean, seriously, I'd really like to hear a compelling argument from Sen Tester as to why, with all the problems going on in the world, and with our country's economic crisis and threats to workers and the middle class, that we need his Debit Interchange Fee Study Act. Sure, I can see why MasterCard would issue this statement.

However, based on my progressive values, I'm more interested in this statement from Assistant Senate Majority Leader Dick Durbin (D-IL):

"Every month we delay limiting the amount banks and credit card companies charge merchants means another $1.3 billion bailout for Visa, MasterCard and their big bank allies. The $13 trillion banking industry doesn't need another handout - especially one paid for by small business and American consumers. I will strongly oppose any attempts to line the pockets of the credit card giants and Wall Street banks by delaying this common sense, pro-consumer legislation. "

Each month, card companies like Visa and MasterCard require small businesses, merchants, charities, universities and government agencies to pay more than $1.3 billion in non-negotiable debit interchange fees to the banks that issue debit cards. Of the $16.2 billion in annual fees, half is estimated to go to just ten giant banks. Interchange fees are fixed by Visa and MasterCard on behalf of their big bank allies. There is no competition in the interchange market and the Visa and MasterCard duopoly continues to raise fees which are passed on to consumers in the form of higher retail prices for gas and groceries."

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by: Matthew Koehler @ Thu Mar 17, 2011 at 13:46:32 PM UTC

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Kaily - dude you are out to lunch (0.00 / 0)

 Tester doesn't deserve to be in the Senate, Well no one does it should be Abolished! But Tester if you haven't been keeping up is OWNED by the Banking Industry from the day he got on the Banking Cmmt thank you herr Bahkass pond scum.
 Tester is a lying thieving dirt bag. i'd much rather see the Dem Party of Montana crushed by the weight of their own emptiness/ Tester going down down down in a burning defeat to Rehberg ( idiot jackass / narcissistic authoritarian) but at least you know what to expect from a Repug... Neo-Libs are by far and away more insidious...and should be crushed out.
  But essentially both parties are Capitalist Swine and for sure you'll never ever see Election/Campaign Finance Reform.
  Capitalism is the Problem. It Cannot be Fixed. And it too is beginning to be crushed by the weight of its own Capital/emptiness.
  At least Rehberg king of Ear Marks has something to  show to the people of MT ( i don't know what the Earmarks went for but he holds the record for last Session's Earmarks yeaaaaaaaaaa) Hey Denny why isn't your son in the Military? EConomic Conscription mean anything to you? MT is 49th on the Wage Scale for the last ten years before that it was 50th and before that it was 49th !!!
  Pleeeze don't try and salvage this impudent sod buster (pejorative - yes) but that's what BahkASS wanted...and that's who runs the Dem Party in Montana so WAKE UP DUDE    

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by: Darwin26 @ Thu Mar 17, 2011 at 06:52:40 AM UTC

Actually, I was 'done with work'. (0.00 / 0)

I don't take a lunch break. And keep in mind, please, that my blogging/commenting time is very limited.  If I don't respond, it's as much indicative of not having the time as anything else.

As to the comment re Tester, I just don't think we're going to agree about the man, and I really don't want to get into a shouting match over it.  In part, because I simply don't have the time, and in part because you've made up your mind about what you think and made it up for me as well. Those kind of things rarely end well. Through other means, I am attempting to find out exactly what his thinking is here.  I have seen how banking reforms in the past have hurt small population states disproportionately to the larger ones.  Also keep in mind, that I think you (and Matthew and JC) may well be right.  It may  be the case that Tester is putting this off for two years to collect banking money for reelection.  

If that is the case, I remind you that Democrats are running scared, and for good reason.  While you've hitched your wagon to a particular kind of idealism, the state of Montana is moving in a much different direction.  It strikes me that often those who favor populism seem to forget that the populace may not favor what they do.  I submit to you that Jon Tester has not done anything that he didn't intimate he would do when he ran for the office.  But yet those who favor populism are feeling betrayed.  Dennis Rehberg will not hurt for cash.  Jon Tester might, in part because the left is rooting for him to fail.  That he would seek that cash elsewhere is not that much of a mystery.  That may not be palatable to you, but then I've seen nothing that indicates that Tester the candidate was palatable to you either.

It might actually surprise you somewhat to find that we agree regarding Capitalism.  My senior honors thesis was written about the Marxist idea of "species being", and Gyorgy Lukacs ideas of class consciousness.  Don't be ageist.  I wrote that at the age of 29.  Capitalism removes us from ourselves as what Aristotle called a "social animal" in the Politics.  Stalinism (Communism) is the same.  Socialism is different because it actually deals with the idea of justice within and without class. We could probably discuss this for some time. Capitalism is a problem, but I disagree that it can't be fixed.  It can be fixed with a rational application of socialism.  Derek Skees, an idiot in the Montana legislature tweeted yesterday that 'The problem with Socialism is that you always run out of other people's money.'  Derek Skees is an idiot.  That is precisely the problem with capitalism.  Michael Moore is correct.  We are not broke as a nation.  It's just that the rich have stolen too much money and called it their own.  Now they're running out of money to steal.  I'll leave it up to you as to who supports those theft efforts more, Rehberg or Tester.

So, there's my two cents.

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by: Rob Kailey @ Thu Mar 17, 2011 at 23:17:49 PM UTC

[ Parent ]

Wait, what is the justification here? (0.00 / 0)

I know we all hate banks, alright.  But what is wrong with them making money?  Merchants choose to accept these cards, or not.  I realize it's difficult to allow the market to regulate this because the market is so outrageously restricted in the number of companies involved.  Nonetheless, I don't think banks making money on debits cards caused the financial crisis, and I don't really see what this would help.  Is it any less of a bail out to merchants than retaining it is a bail out for banks?  

Ideally, merchants would universally give discounts for those who pay in cash.  Ideally.  Until then, I'm going to continue my current policy of paying in cash whenever possible.  This just goes to show that SOMEONE has to pay for all the convenience of direct deposit and debit cards that mean I never have to keep track of my physical money for more than a few seconds.  Turns out its been us paying the whole time!

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by: The Polish Wolf @ Thu Mar 24, 2011 at 04:34:59 AM UTC

[ Parent ]

I had a great reply for you but lost it (0.00 / 0)

Here's the essence:

Taibbi was right. The behavior of banks on card fee, and the politicians that support them amount to being nothing more than: "a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money."

I tried to explain how much money is lost in a small business's payflow (upwards of 10% of transactions) and how it is ultimately passed on to the consumer. We get bled yet again, with the banks concentrating capital at the expense of our economic productivity and viability.

NOw go roll over, wag your tail, and hope you get your belly rubbed and you get thrown a table scrap.

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by: JC @ Fri Mar 25, 2011 at 16:23:17 PM UTC

[ Parent ]

But... (0.00 / 0)

If the merchants are accepting cards, they must think that it's worth sacrificing 10% of their revenue for the increased convenience and therefore customers.  Banks are offering a SERVICE, one we are free to take or leave.  

Now, if it is 10% of their sales, and the average charge is 44 cents, that means the average purchase using a debit card must be quite small.  How hard is it to carry around ten bucks?  

I for one never knew how much it costs merchants to accept debit cards.  I'm glad to have a real justification for my erstwhile irrational discomfort with using debit cards with anything besides an ATM.  But I do think that cutting this revenue stream for banks by 70%, a revenue stream that theoretically supports a convenience the majority of Americans use might well deserve a second look.    

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by: The Polish Wolf @ Sat Mar 26, 2011 at 03:02:11 AM UTC

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NIce to know (0.00 / 0)

you've got the banks back on this one...

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by: JC @ Sat Mar 26, 2011 at 21:00:22 PM UTC

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All I want to know is (0.00 / 0)

What is the justification for putting limits on voluntary contracts between commercial interests, besides that one of them is a bank, this seasons favorite pinata?  Merchants have decided that this is an acceptable price to pay for that convenience.  It's worth at least researching what is likely to happen if we cut that revenue stream by two thirds - will banks start charging customers higher amounts to use debit cards?  Will there be an annual fee to use a debit card?  Will banks eliminate rewards programs that encourage customers to use their cards?  All of those things seem quite possible.  

After further examination this may be a good idea.  But what bothers me is that the best reasoning from you and from Matt is 'This causes banks to make money, so we ought to limit it'.  

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by: The Polish Wolf @ Sun Mar 27, 2011 at 01:15:39 AM UTC

[ Parent ]

Dude (0.00 / 0)

Don't you think giving banks your money to hold and only get .75% interest in return is good enough? I mean, you want them to make money off of our desire for convenience, all the while they're turning around and lending our money to someone else for what? 29% on a credit card?

And I do happen to think that banks siphoning off wealth in an unbalanced political/economic environment isn't in the best interests of the American people.

Extending your argument, why don't we pay the teller at the bank for the convenience of them handing us twenty dollar bills? Which do you think costs the bank more? The teller? Or the debit card service? Maybe we should just pay them for the convenience of depositing money in their bank.

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by: JC @ Sun Mar 27, 2011 at 07:27:38 AM UTC

[ Parent ]

Here, go read (0.00 / 0)

this ProPublica report that came out this week. It contains vastly more information than any of us could bring here to debate.

And then folks can toodle on over to the banks sponsored "Don't Make Us Pay" to see where the roots of the propaganda lie: "no more rewards; higher fees; more restrictions; end of free checking." What they don't say is that the real victim of this regulation will be the bank exec and his yearly bonus. Maybe his third or fourth estate in the Caymans.

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by: JC @ Sun Mar 27, 2011 at 17:33:41 PM UTC

[ Parent ]

Thanks for the Link (0.00 / 0)

It is interesting...but it is also interesting to note that there is no guarantee that the money saved will be passed on to consumers.  So it is equally likely that the new rule will simply mean that the CEO of Wal-Mart gets a new jet, rather than the CEO of JP Morgan. And again - why is it more justified to limit this transaction cost than any other?  Why doesn't the government just set prices for music, movies, internet access, etc., while we're at it?  

The funny thing is that I understand that I'm the one suffering here - I rarely use a debit card, and yet I am constantly paying these higher prices.  But isn't a more elegant solution for merchants to give cash discounts or minimum debit purchase amounts, as noted in the article, rather than call on the federal government to 'negotiate' transaction fees for them?

You may well be right, but what bothers me is that the general reasoning on this seems to be 'banks are making money, thus it must be bad'.  I wanted to hear the actual logic.  So, thanks for that.  

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by: The Polish Wolf @ Sun Mar 27, 2011 at 18:28:39 PM UTC

[ Parent ]

You know (0.00 / 0)

i'm not a free-market ideologue. SO I don't have a problem with using unfettered profits by banks as a reason to attack them, and regulate the hell out of them. As long as the big banks are a bunch of rent seeking behemoths that hold the sway and balance of the world's economic system on their sheets, then I have no problem trying to limit their power and hand it back to the people, and use the government to do it.

You on the other hand, seem to be fine with the 19th century robber baron mentality running rampant today (along with certain 21st century dem senate candidates).

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by: JC @ Sun Mar 27, 2011 at 18:54:28 PM UTC

[ Parent ]

So (0.00 / 0)

You admit that this is more an ideological crusade against banks, and less a practical measure aimed at punishing banks for some nebulous wrong-doing.  

That doesn't mean it's not a good idea, but it's not a good precedent for governance.  

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by: The Polish Wolf @ Sun Mar 27, 2011 at 20:09:18 PM UTC

[ Parent ]

Precedent for governance? (0.00 / 0)

I don't govern anything. And I don't see the FinReg bill as an ideological crusade. I look at it as a tepid response to an industry out of control.

I think the reasons for opposing the banks' position on interchange are manyfold, many practical. I just don't have any problems admitting that I think banks need to be punished in their role for wiping out trillions of dollars of wealth among the middle class--world wide.  Nothing nebulous about the banks' roles in the Great Recession. Your referring to their role as "some nebulous wrongdoing" strikes me as rather naive. Either that, or you've got a lot of bank stock.

And actually, regulating interchange fees is a minor part of FinReg. I'd actually like to see a lot more punishment. And regulation. This is small potatoes. When Obama stated right after he took office that he was the only thing standing between the banks and the pitchforks, I knew that we were in for a long slog of timid reform posing as "hope and change." In my book, with that statement, Obama basically picked which constituency to whom he was most loyal.

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by: JC @ Mon Mar 28, 2011 at 00:57:02 AM UTC

[ Parent ]