Simon Johnson: Why Would Small Banks Oppose Debit-Card Reform?

The New York Times:

It’s not hard to understand why large banks oppose any attempt to overhaul the financial arrangements currently surrounding credit cards and debit cards. In the duopoly run through Visa and MasterCard, big banks earn fees that far exceed their costs.

Read the whole story: The New York Times

Comments

[oldsquare]

08:08 AM on 05/13/2011

Why would anyone expect banks, large or small, not to be caught up in the greed of the nation? Wall St. is doing it, corporations are doing it, big banks are doing it. The lure of the big profits is what got us where we are now and unless the rules change that lure will continue to drive the actions of the banks, businesses and even individuals. Credit card fees illustrate how an organization can increase profits by "nickel and dime" actions that fail to result in open hostility from the customer. Retail establishments already pay to support the credit card business. Sticking on other fees here and there is just another way of producing revenue over and above the cost of the service. Either way, it comes out of the consumer's pocket. Things will not change without either stricter regulation or a major alteration of how we do business. Those with money have discovered over the past thirty years that they can make more money faster using that money than they could by providing goods or services. Certainly they will oppose any attempts to change that.

[J T K]

11:08 PM on 05/14/2011

Welcome to capitalism where everyone is free to try to make a profit.

[Fairand Informed]

06:29 AM on 05/13/2011

Both Bernanke and Bair believe the small bank exemption is problematic and will stress small rural banks. They don't have a dog in this fight and they see that the Durbin amendment is flawed. If you think this issue is as simple as big banks being manipulative, you really don't understand it.

[WorldEdition]

02:49 PM on 05/12/2011

Simon nails another one.

I wish more people woke up and paid attention.
The unproductive banks and their many vigs (esp usury interest) are destroying the nation, like it has destroyed so many nations in history. The lack of historical context in our modern media and the lack of detail about usury interest - is alarming.

[Nosybear]

02:09 PM on 05/12/2011

Small banks oppose credit card reform because they make money on credit cards. Next in the Department of Duh, Rain has swollen the Mississippi River.

[halfpricefaustian]

02:07 PM on 05/12/2011

Seems like the author could have found some small bank president who would provide the survey questions anonymously. If the small bankers association is not fairly representing its members, the banks should cancel their membership.

[MickleVonTickle]

02:04 PM on 05/12/2011

If a "megabank" is "too big to fail" they should break it up into parts that aren't. I don't want to guarantee operations for any institution. Second, if the "duopoly" is controlling the market and is charging fees far in excess of their costs, that also seems to me to be a sign of collusion -- even if never explicitly performed by meeting together and setting prices. They also should be broken up.

That being said, my guess is "too big to fail" also means "too powerful to control" or split up. Pity.

[ran6110]

01:44 PM on 05/12/2011

Because the bank executives want to be bought by big banks..