Visa, MasterCard and the big banks that took taxpayer bailouts have spent over $50 million in lobbying fees this Congress in a last-ditch effort to stop swipe fee reform, according to a RILA analysis of lobbying disclosures. The banking and credit card giants have also enlisted their smaller cousins -- credit unions and community banks -- to claim the Durbin-Welch amendment is going to hurt them, when in fact 98 percent per cent of them will be exempt from the amendment's provisions.
It's paying off: The amendment, which passed with overwhelming support in the Senate, is under threat in the House. A letter circulated by Rep. Debbie Wasserman Schultz (D-Fla.) opposing the measure has garnered 131 signatures of Democratic and Republican House members, her spokesman tells HuffPost.
"They've managed, essentially, to enlist our credit unions and our small banks, both of whom I support, to do their bidding," said Rep. Peter Welch (D-Vt.). "They're laying low. And yet the credit unions -- [which] have been exempted under this legislation, except for three in the whole country -- are making the case for the big banks. So this is about -- make no mistake about it --it's really a question of whether Congress can stand up and do something to put a cop on the beat, and provide some fairness to our local merchants and consumers."
The Durbin swipe fee amendment carves out banks that have less than $10 billion in assets. But big banks and credit card companies have spent millions on a disinformation campaign to imply that, not only would the amendment hurt community banks and credit unions but it would also burden consumers.
"Lobbyists for the big Banks say that if Congress includes Durbin's interchange fee provisions, the costs will be borne by everyday people," wrote political strategist Robert Creamer in a recent article. "If that were so, the big banks wouldn't be lobbying so hard to prevent it from being included in the final bill."
The information war is being fought in Congress: Welch, in a recent letter to colleagues, pointed out a number of factual errors in an earlier letter from Debbie Wasserman Schultz opposing the Durbin-Welch amendment. Wasserman-Schultz's letter claimed that the amendment "allows merchants to set minimum purchase levels for all forms of debit cards," when in actuality, the minimum purchase allowance would only apply to credit card transactions.
The Wasserman Schultz letter also quotes Ron Robinson, the convenience store owner who testified at a 2008 House Judiciary Committee hearing, as saying, "There isn't a businessman that does not intend to keep the margin." Welch points out that Robinson actually said, "There is not a businessman that doesn't attempt to keep the margin. But the competition always drives it back out. And when you have a competitive market -- and we definitely have a competitive market, unlike some others -- those benefits will go back to the consumer."
With the record corrected, several Democrats have taken the rather unusual action of removing their names from Wasserman-Shultz's original missive. "We have talked to several offices who have been very concerned that they were given something with clear inaccuracies in it, and as a result were getting off the letter," said Doug Kantor, a lobbyist for the merchants. "It's remarkable how you can walk through just about any fact that's in the letter and it's demonstrably wrong."
Jonathan Beeton, a spokesman for Wasserman Schultz, said that some members had dropped off the letter but that it was only "a few."
"It's been an information war, and the big banks and credit card companies have unlimited resources to push their distortions about what the amendment will do," said Taylor West, a spokesperson for the Merchant Payments Coalition.
"This isn't about protecting banks, it's about protecting consumers," said Beeton, who said Wasserman Schultz is concerned the "amendment is being shoved into the broader bill" without time to study the issue. Advocates counter that several hearings have been held on the swipe fee, but Beeton said those have focused only on credit cards, not debit cards.
Beeton said there is concern that merchants won't pass the savings on to consumers, though the merchants say market forces will require them to do so.
"There's no question that the real party in interest here are the big banks and Visa and Master Card," said Welch. "The central question is this: $50 billion industry, should you allow the prices charged to be set by a monopoly or should you have a cop on the beat to protect the consumer? And in this case the consumer is, by and large, the small merchants. Now, you ask anybody, they're going to tell you you're going to get a fairer price if there's a cop on the beat, rather than let the monopoly set the prices. Because economics 101: if there's a monopoly, the consumers lose and the monopolist wins. And that's the situation we have here. And this isn't just theory; every country has intervened. The United States is where individuals and merchants pay the highest credit card fees and debit fees in the world. And other countries have reacted because that's a rip-off. Prices have gone down and consumers and merchants have benefited."