The P.A.

A weekly address from Patrick Adams,
President of St. Louis Community Credit Union

Durbin’s Trick Is Not Our Treat

On November 7th, 2011, posted in: Uncategorized by 1 Comment

It has been one month since the enactment of U.S. Senator Richard Durbin’s ill-guided legislation regarding interchange rate reductions to debit card issuers (banks and credit unions).  As painful as it is to re-visit, you might remember that Senator Durbin aligned himself with his retail buddies in a battle against banks.  His primary motive was to get debit card costs reduced at the check-out lanes – or so that was the ruse portrayed.  Somehow, the retailers convinced enough of the other misinformed legislators to vote the same.  In the name of consumer benefit, retailers would pass the cost savings on to consumers by lowering prices.  Remember?  We were going to get lower prices: all hail, Senator Durbin!

Well, my daily cup of Starbucks is up 10 cents.  My Costco membership fee has increased.  Movies from Red Box cost more, and peanut butter is on the way up, as well.  Candy is up 5.2% over a year earlier, according to a Labor Department report.  Even the kids can’t escape the Senator’s awful miscalculation.  They got little chocolate bars instead of the big ones for Halloween.

Senator Durbin, please answer the American consumer that you purport to care about so deeply.  Where’s the savings being passed on to us?  The average retail debit transaction was virtually cut in half by your legislation.  Call it 20 cents per swipe.  That’s a nice chunk of change!

So, according to Senator Durbin’s math, my Starbucks could have dropped a dime – not gone up 10 cents.  Really, I’m not kidding.  They saved 21 cents, and according to the Senator from Illinois and his retail posse full of profiteers, they were supposed to give us something back. Starbucks would still be a dime ahead if they shared 50% of their new found profit.  Instead, they’re 30 cents to the good and we’re getting whacked – at the retailer and at the local bank that is now charging consumers for checking services because of the lost revenue on their debit card program – all of which is compliments of Senator Durbin.

The Senator is mad at banks for raising fees.  Really, Senator, you didn’t see that happening?  Your lack of business acumen is as frightening as the looks on the poor kids’ faces that got a little chocolate bar instead of a big one at my door this past Halloween.

If two-thirds of the economy (of which we have heard nothing but bad for three years now) is made up of consumer spending, shouldn’t we be trying to figure out how to put more spending money in consumers’ pockets, not take it out?

Retailer stockholders are jumping for joy because the interchange savings is actually being used to pay down debt and/or being plowed back into earnings.  In either instance, the retailer and their respective stockholders are the winners.  The consumer is the loser.

You either got hood-winked, Senator, or you knew what was going to happen.  In either instance, shame on you!  Your trick is not our treat.

One Response to “Durbin’s Trick Is Not Our Treat”

  • Tim says:

    Preach on Reverend Pat. Senator Walgreens knew EXACTLY what he was doing and it wasn't for the benefit of consumers. Wonder where a whole lot of his campaign funds come from? Hmmm…

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