Swipe fee fight bristling with lobbyists
Jeremy Hobson: Well members of Congress are back in Washington this week. And Osama bin Laden’s death aside, lawmakers have some big issues to deal with — from budgets to deficits to gas prices.
And then there’s an issue that doesn’t seem all that big in comparison. But its getting a lot of attention in Congress because of a huge lobbying campaign by banks and retailers. I’m talking about the new federal regulations on swipe fees for debit cards.
Our Washington Bureau Chief John Dimsdale explains.
John Dimsdale: At Congress’s request, the Federal Reserve is proposing to limit the fees banks charge merchants when customers swipe their debit cards.
James Angel: There’s a lot of money on the line here.
That’s Georgetown University finance professor James Angel. He says nothing focuses the mind like the $14 billion that the regulation could swipe away. So banks have hired more than a hundred lobbyists to persuade Congress to scrap the limits on debit card charges — income they say subsidizes other bank services.
Angel: The banks are going, we have to charge more for checking accounts.
The banks have attracted some surprising allies, says George Mason University professor Todd Zywicki.
Todd Zywicki: Groups like the NAACP have noted that if you start getting rid of free checking, that’s going to drive a lot of people out of the banking system.
Meantime, the 100-plus lobbyists for retailers say caps on debit card fees mean cheaper prices in stores. Either way, consumers will have to pay up.
In Washington, I’m John Dimsdale for Marketplace.
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