To the Members of the Financial Reform Conference Committee:
I have worked all of my adult life as an advocate for the poor, the voiceless and the under-served. Two weeks ago, I came to Washington to meet with members of Congress about my deep concern of the unintended consequences that the Durbin Amendment would have on the poor in America. Since then I've heard a lot of talk but I'm increasingly concerned that the central issue, the affect on the the most vulnerable in our country is not fully appreciated by those making the decision. I want to point out what's at stake:
Debit cards are the entry point for millions of Americans into the American financial system. Debit cards are what keep the under-served -- including minorities, immigrants, the poor, soldiers, veterans and students -- from the claws of payday lenders and check cashers, from humiliating lines waiting to cash their paychecks and then more lines to pay their bills. Debit cards are giving the 80 million Americans, who would otherwise go to check cashing and payday stores, the convenience and respect that those with credit cards and bank accounts take for granted. This very system is being singled out for attack just when it should be favored over credit cards. Credit cards are out of reach for the under-served and they encourage you to borrow when you shouldn't be. Yet the alternative is being targeted.
As the owner of a debit card company, I know first hand how being part of the American economy can change someone's future. However, let me be clear, this is not about my company or me: in fact this amendment will have comparatively little and possibly a positive effect on my particular business. This is about ensuring that within our desire to create financial reforms, we do not do so at the expense of the poor.
I have studied the Durbin Amendment. I have spoken to Congressman, Congresswomen, Senators and their staffs. I have spoken to groups that have no hidden agenda: the Community Banks and Credit Unions -- the good guys in the financial system. I don't work for Visa or Mastercard and I don't give a damn about the profits of the big banks. Regulation is long overdue, and I support the "Move Your Money" campaign to support community banks, credit unions and specialist providers of debit card services. No one has yet been able to tell me how Senator Durbin's amendment will keep the under-served from being hurt by higher fees for the very basic service that debit cards provide or how the amendment will ensure lower prices for consumers instead of bigger profits for merchants. I can't believe financial reform has come down to this: big retailers in a money grab on the backs of the poor and under-served.
Is this the Democratic Party I know and support? Is this the Congressional Black Caucus? The Hispanic Caucus? The Progressive Caucus? The Obama Administration? Where is the fairness in this amendment? The rich keep their "interchange" subsidy from their credit cards, but the working people, the debit card customer -- sorry, you're on your own.
I have advocated on behalf of the poor for new language in this amendment that will protect them, and I have received assurances that it will come. However, until I see action behind the words, I will continue to fight for the needs of poor people. I will not let this issue go unaddressed. I will keep it alive in every election until you right the wrongs in this amendment and protect the poor.
Follow Russell Simmons on Twitter: www.twitter.com/unclerush
These are the banks that Simmons claims he'll protect me from, by charging me more?
Prepaid debit cards are suited for people who CAN'T GET CHECKING ACCOUNTS. A person can be disqualified from opening a checking account just like he can be turned down for a loan. You have probably never heard of Chex Systems...
Simmons' debit card company is a bank. It takes money from people and holds it without paying interest. It then charges people a series of different fees to access that money (including monthly fees, transaction "convenience" fees, atm fees, balance inquiry fees, and so on).
If Simmons really cared about the poor, he would educate his customers that many of them have the option of getting a regular account at a bank and refusing overdraft protection (which makes a checking debit card essentially the same as a pre-paid debit card). In fact, Simmons himself could offer that service at competitive rates.
You know that is a Republican/Conservative game calling them "Limo Liberals" to discredit anyone who tries to make the system LESS abusive to the poor.
So is that your game ?
Do you want everyone to be poor ?
Or do you want all wealhty people to advocate only for the wealthy ?
http://www.huffingtonpost.com/2010/06/21/swipe-fee-deal-merchants_n_619903.html
"The deal, struck between Sen. Dick Durbin (D-Ill.) and key House negotiators, leaves out some elements that consumer advocates had been fighting for. It allows fees charged to reloadable, prepaid debit cards -- generally used by the poor -- to remain unregulated."
"The compromise is a win for Simmons, who owns a debit card company. Last week, Simmons sent a letter to Durbin outlining his concerns, which he also ran on HuffPost."
http://dailycaller.com/2010/06/22/on-eve-of-key-vote-wal-mart-donates-20-million-to-durbin%e2%80%99s-home-state/
Whether the amendment would have ANY negative impact on consumers is hypothetical, and unsupported as well. The "they may not pass the savings along" argument is an old one, and not a very true one in practice. Merchants like WalMart and Kmart have a business model where they try to drive as much cost out as possible and then cut prices as far as possible below competitors. The fact is that if the fees are dropped and one does not drop their prices, then the other discount competitors gain an advantage.
Of course Wal-Mart wants the amendment, as it plays into their business model (and it wouldn't surprise me if your article were true). Small mom and pop stores who are struggling to get by and who are being squeezed by banks want it too, but they don't have the deep pockets.
The amendment is about taking these hidden fees out of the dark. Consumers are already paying for them in the form of higher prices. Today, one bank can charge a reasonable 1% and another can charge 2% and nobody knows. IF banks are going to raise other rates to compensate, at least it will be visible.
Banking customers think they are getting a better deal. However, they are still paying the fees in the form of higher prices. It is a hidden fee that consumers don't see. These fees have increased greatly over that last few years. Setting a reasonable rate that covers the cost of the debit card system prevents the abuse by banks.
On eve of key vote, Wal-Mart donates $20 million to Durbin’s home state
By Jonathan Strong - The Daily Caller 06/22/10 at 1:08 PM
On the eve of a key vote in the Senate on an issue in which Wal-Mart is deeply invested, the company announced it is donating $20 million to charities and opening scores of new stores in the Chicago area, in the home state of Sen. Dick Durbin, Illinois Democrat, the retail giant’s top ally in its push to cap credit card fees.
The plan includes opening “several dozen” new stores in Chicago and donating $20 million over five years to Chicago area charities “that work to eradicate hunger, curb youth violence and help all Chicago residents live better.”
At issue on Capitol Hill are so-called “interchange fees” charged by credit card companies to process purchases in stores.
Wal-Mart is a key player, lobbying for government price controls on the amount of the fees, which typically comprise about two percent of the purchase value. Retailers argue they do not have enough leverage to negotiate reasonable rates.
http://dailycaller.com/2010/06/22/on-eve-of-key-vote-wal-mart-donates-20-million-to-durbin%e2%80%99s-home-state/