For this blog to make more sense than normal, please go back three weeks and read or re-read my blog referencing Senator Dick Durbin’s proposed amendment to the Financial Regulatory Reform Bill currently pending in Congress.
After that message came out, I was called a “right-wing propagandist.” It would be laughable if it wasn’t for the tragedy of misinformation that led to such a conclusion.
Honestly, if voicing strong opposition to misguided legislation on Interchange fees that will ultimately hurt the members/consumers of our community defines me as a “right-wing propagandist” – then so be it. I, personally, feel as if a more appropriate term is “consumer advocate.” But, that’s just me.
To those who think that my motives are less than noble, it is essential that we get to the same starting point. Our primary concern at St. Louis Community Credit Union is increasing our members’ standard of living and bettering their lifestyle. We worry about putting more money back in our members’ pockets – that’s it! When we read the tea leaves and can see that something coming down the pike is going to hurt our members, their families, our staff and subsequently our community, then we’re going to fight for our folks’ rights to live better lives.
That being said, are we on the same page? Our interests are very simple, forthright, succinct and without compromise. Don’t read any “smoke & mirrors” into this. It’s not there. It’s not about politics – it’s about people.
To move forward, we should probably step back just a little. Did you read The Wall Street Journal this past week? The following headline appeared: “Card Issuers Outflank Law…Regulators Look Into Banks’ Novel New Ways to Levy Fees.” Here is the first sentence of Sudeep Reddy’s report:
“US banks are finding new ways to levy credit card fees and raise interest rates in the wake of a one-year old law that was designed to limit such charges.”
I assure you that one year after the enactment of Senator Durbin’s amendment S. 1212, there will be a similar headline and corresponding story that will study the new consumer charges instituted by the banking community to offset the lost revenue impact of reduced interchange on their respective debit card programs. In the words of the great (native St. Louisan) Yogi Berra: “It’s déjà vu all over again.”
How ‘bout another friendly wager? Banking program costs will be up and so will your costs of goods at the retailer. That’s right. You will never see (at the check-out counter) the reduced costs associated with the gratuitous kiss of reduced interchange rates for retailers. Why not? A basic tenet of for-profit (and/or stock-owned companies) is to make profit. Any additional revenues found in the efficiency of supply chains; return on investment; reduction in raw materials to produce said products; and/or REDUCED INTERCHANGE FEES will go to the stockholders not to the consumer(s). It is what it is. It’s as constant and impermeable as the Cubs losing year after year after year.
Here’s another surefire lock of a bet. You will be more frustrated than ever. Your costs at the bank will be up. Your costs at the retailer will be up. You will be confused as to which retailers accept your debit card and which ones don’t. You will have no clue what the minimums and maximums of your debit card activity will be because there will be no consistency among retailers.
As a result, you will carry more cash and more checks. Checks and cash cost you more to carry and come with an additional security risk. Remember, your liability risk for a lost or stolen debit card is ZERO. Your costs for lost or stolen cash is 100% yours. And, what about this double-dip possibility? You’ll use more checks at the check-out counter and the retailer will charge you a processing fee for doing it. (See, their handling of checks and cash are more expensive than debit cards.) You’ll pay for that, as well.
If this legislation is passed, I will mark my calendar to re-visit this issue a year after enactment. If I am wrong, I will eat the biggest piece of humble pie ever, including a public apology to everyone – starting with Senator Durbin. I must tell you that I’m extremely confident that an apology won’t be forthcoming. A year from now the Cubs won’t be winners either.
I’m going to keep talking in next week’s blog. I spent this week telling you about the for-profit world and how retailers will make their stockholders very happy; and how big banks will take the initial hit, come out swinging and make up the difference from you. Next week, I’ll tell you how the pressure of lost interchange income will hurt the not-for-profit world of credit unions.
Stay tuned for more real ideas, not propaganda.