Editore"s Note
Tilting at Windmills

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June 15, 2010

QUOTE OF THE DAY.... Conference committee members continue to debate the details of a Wall Street reform package, and one of the contentious issues of the week involves limiting debit fees banks can charge retailers.

This problem isn't new -- retailers have long complained that unreasonable fees undermine profits, and lead to higher prices for consumers.

Sen. Bob Corker (R-Tenn.), a participant in the conference committee talks, spoke to the Tennessee Bankers Association last week, and explained why he's on the banks' side. (thanks to reader R.P.)

"You have these retailers, gas station owners paying these debit card fees and your heart goes out to them,'' Corker, R-Tenn., said. "But the federal government getting involved in setting prices, I just voted against it."

Of course. Corker feels bad about the burdens on retailers and customers, but not so bad that he's willing to allow the government to intervene on their behalf.

It gets back to a point I like to emphasize from time to time. For the left, political goals relate to policy ends. We want to expand access to quality health care. We want to lower carbon emissions to combat global warming. We want to reform the lending process for student loans so more young people can afford to go to college. We want to help retailers who can't afford unfair fees. There are competing ways to get to where progressives want to go, but the focus is on the policy achievement.

The liberal worldview is not necessarily about increasing the size of government or raising taxes; those mechanisms are only valuable insofar as they reach the desired end-point. Whether the government increases or shrinks in the process is largely irrelevant.

For the right, it's backwards, since the ideological goal is the achievement. Corker's comments are straightforward -- the goal isn't about helping retailers or consumers; the goal is to limit government. Why? Because limiting government is good.

As Jon Chait explained a few years ago, "[I]f you have no particular a priori preference about the size of government and care only about tangible outcomes, then liberalism's aversion to dogma makes it superior as a practical governing philosophy."

Steve Benen 1:25 PM Permalink | Trackbacks | Comments (16)

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I guess I'm against this amendment too. Why is it being put into a bill for Wall Street reform. Dropping that 1% fee on debit cards will hurt small community banks and credit unions but will do nothing for consumers and will not regulate Wall Street in any way. It will benefit Walmart and major retail chains, but that's about it. Durbin's amendment should be dropped.

Posted by: Richard on June 15, 2010 at 1:42 PM | PERMALINK

Corker, in layman's language:

"Lady it's awful that you are being raped, and my heart goes out to you. But if I call 911, it will involve the government, and we don't want that, do we? If only you had paid for a private security company, this wouldn't be happening to you!"

Posted by: DAY on June 15, 2010 at 1:45 PM | PERMALINK

Hey Richard your full of shit.

Posted by: Gandalf on June 15, 2010 at 1:54 PM | PERMALINK

If a bank doesn't want to be regulated don't take deposit insurance, in effect don't be a bank. They can only get deposits with that insurance so they should be regulated.

Posted by: KK on June 15, 2010 at 2:01 PM | PERMALINK

I always distinguish between real conservatism and the kind of horseshit that passes for conservatism in the Republican party.

But this, however, is an example of real conservatism in action. Conservatives would rather think deontologically (i.e., in terms of innate right or wrong) than consequentially. This actually makes some sense in some contexts, such as criminal law. But it is a hell of a way to run an economy.

Posted by: Joe S. on June 15, 2010 at 2:07 PM | PERMALINK

My libertarian friend would explain that he doesn't want the government infringing on his right to charge fees in case he ever creates his own debit card company. That he is more likely to create his own retail business, and have his right to his profits infringed on by debit companies, is besides the point. The only oppression that exists to Republicans is government oppression.

BTW - A local gas station charges 5 cents extra per gallon when you use a debit/credit card. Debit surcharges are one way for retailers to combat the trend.

Posted by: inkadu on June 15, 2010 at 2:16 PM | PERMALINK

Navy Federal Credit Union (The largest CU in the US) has a big banner ad on their home page (www.navyfederal.org) asking members to call Congress to oppose the Durbin bill. They claim lowering the fees will take money out of their pocket, causing them to reduce benefits to members, or raise fees to members. I feel for mom and pop businesses, but I want my frequent flyer miles. /sarcasm

I guess this explains why they keep trying to get me to use a Visa Check Card (which generates interchange fees for them and Visa when used) instead of a pure debit card, which does not.

Posted by: Anon Anonymous on June 15, 2010 at 2:25 PM | PERMALINK

This is lame. This is the government deciding what is a "reasonable" fee and forcing banks to charge that fee. But why not do the same for gas? Why should retailers be allowed to charge "unreasonable" prices for gas?

Posted by: Alan Vanneman on June 15, 2010 at 2:33 PM | PERMALINK

"The left's aversion to dogma?" Bah! The left luvs it some dogma every bit as much as the right does. The only real difference is that the left doesn't put it's dogmatists into positions of power.

Posted by: Steve (Not That One) on June 15, 2010 at 3:09 PM | PERMALINK

I'd like to see all Congressional Republicans put their money where their mouths are and waive their "big gub'mint" salaries paid for on the taxpayers' dime.

Sure, the money saved would be negligible to the deficit, but I'm sick of hearing these virulently anti-government remarks made by people who are on government salaries, and who receive excellent government benefits. Why is it alright for our tax dollars to provide sustenance and benefit to them, but when it comes to using taxpayer money to benefit taxpayers, they're always singing the same song -- "No! We can't have that! That's "big gub'mint" or "socialism!"

Posted by: June on June 15, 2010 at 3:15 PM | PERMALINK

Benen points to an important advantage that right-wingers had over liberals during the health care reform debate. Universal health care was a liberal goal, not a conservative one so the conservatives were free to recommends pretty much whatever they wanted since, again, they weren't serious about the results.

That said, conservatives have goals as well; it's just that from the standpoint of this liberal, they're all pretty rotten and would leave us worse off than we currently are.

Posted by: leo on June 15, 2010 at 3:34 PM | PERMALINK

Sorry folks, but either way the consumer gets screwed. If you limit what banks charge for the transaction fee, then the bank customer will get charged for using the debit card. That leaves the consumer with the choice of avoiding the fee by paying with cash---the very last thing liberals should want because it encourages tax fraud by the retailers--or paying the banks directly without sharing the burden with the retailers. If you think this will lead to retailers passing on any savings to consumers I have a bridge to sell you. Retailers have lobbyists too and while it pains me to say it I think Corker is right on this point. The way it stands now the retailers and the banks have struck a balance. If the banks charge too much the retailer decides not to accept debit cards and the banks get no fees. If the retailers drive too hard a bargain, they will lose out to their competitors who do accept debit cards and pay the fee. The government will simply muck up the balance. Someone will win, but it will not be consumers.

Posted by: Terry on June 15, 2010 at 3:44 PM | PERMALINK

"Debit surcharges are one way for retailers to combat the trend."
Posted by: inkadu on June 15, 2010 at 2:16 PM

Surcharges for taking credit and/or debit cards are explicitly forbidden in every credit/debit merchant agreement I've ever been offered. So are discounts for paying in cash. So are minimum-purchase-amounts for the use of credit/debit.
And the card processors can and do enforce these provisions, especially against smaller merchants who have zero ability to fight back.
So smaller merchants often find themselves in an utterly no-win situation; not taking debit/credit cards in payment -- "cash only" (which you'll notice you've been seeing more of these past few years, haven't you?) -- costs them in lost sales revenue, often in significant amounts. But taking cards in payment often exposes them to charges that exceed the profit on smaller sales.
And, as with so many other industries, there's been so much consolidation that there are literally no alternatives available.
The only way smaller operators can win is when the banks get so greedy, shortsighted, and stupid as to piss off the big players -- such as WalMart. And even then, you can see how hard the pushback is from the banks and their bought-and-paid-for pols.

Posted by: smartalek on June 15, 2010 at 3:52 PM | PERMALINK

I've never understood why so many Republicans run for office. They don't believe that government works, so it's not surprising that their chief ideological goal is to limit something that they believe doesn't work. But why even get involved? Shouldn't they be shunning elective office?

Posted by: nj progressive on June 15, 2010 at 5:26 PM | PERMALINK

Smartalek is right. I have another proposal. Since the Thugs like competition so much, let the Federal Mint offer a credit/debit card. Plastic has taken the place of currency in this country. The private credit card companies, Visa and Mastercard, are mopping up the money, and have basically no effective controls on their fees. If they don't want the control over fees, let the federal government enter the game.

It would be a wonderful way for the government to get income without a new tax, and it could offer some real competition to credit card companies to keep down costs. After all, we have FedEx and UPS competing with the Postal Service; why not the Mint competing with Visa and Mastercard?

Posted by: candideinnc on June 15, 2010 at 5:27 PM | PERMALINK

American right-wingers' obsession with small, impotent government has less to do with their thirst for freedom than with their contempt for their fellow citizens. How dare the government restrict their right to exploit their customers, neighbors, environment, social inferiors ...?

That said, Terry sounds persuasive on why the card-fee transaction regulation won't work any better than the market. Anyone know how such restrictions have worked in other countries?

Posted by: beejeez on June 16, 2010 at 9:37 AM | PERMALINK
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