Miller Denounces Efforts to Delay New "Interchange Fee" Rules

Press Release

Miller Denounces Efforts to Delay New "Interchange Fee" Rules
Says consumers and small business owners need relief now
from unfair debit card swipe fees.

Citing his concern for the impact on middle class consumers, Rep. George Miller (D-CA) today announced his opposition to bank-sponsored legislation pending in Congress that would delay implementation of new rules that would limit so-called "swipe fees" levied on a retailer whenever a consumer uses a debit card.

Miller said his position is a result of the impact of the high and hidden swipe fees on consumers and local small businesses and the unjustified windfall that a handful of big Wall Street banks reap from them. Miller's opposition comes as the Wall Street banks continue their high-priced lobbying campaign to stop the new rules from taking effect and as consumer advocates and lawmakers gear up on behalf of middle class families.

"Because these swipe fees are hidden, and because there's almost no competition between the card companies that charge the fees, swipe fees in the U.S. are the highest in the world, and rising rapidly," Miller said. "These fees add up to big profits for the card companies and the banks at a direct cost to small businesses and to families struggling to pay for everyday necessities. Working families have a right to know there is real competition on these fees when they're purchasing basic goods like gas, milk, or groceries. They deserve to know if prices are being driven up because of hidden fees to big banks."

The provision to lower debit card swipe fees was included as part of the Wall Street reforms passed by Congress and signed in to law by President Obama last year. Sen. Dick Durbin (D-IL) was the main sponsor of the provision that is now under attack.

Miller's announcement comes at an inopportune time for big banks and their allies in Congress, as recent reports of enormous bank profits and ongoing high gas prices have already called attention to the impacts of swipe fees on consumer goods. Miller's opposition, and others like his, is contributing to the momentum against an upcoming Senate vote that would delay the enactment of the swipe fee caps.

It also follows in the wake of other events that have turned momentum against banks and their allies in Congress.

Last week, the Federal Deposit Insurance Corporation reported that FDIC-insured banks had received a $29 billion profit in the first quarter of 2011, a 66.5% year-over-year increase and the highest level of bank profits since 2007, despite ongoing struggles impacting many other parts of the economy. Meanwhile, news reports have noted that, with continued high gas prices of around $3.80 per gallon, banks earn more in swipe fees and make it difficult for individual retailers to provide any price relief to consumers.

In the face of these struggles, Montana Senator Jon Tester, the leading Senate proponent of delaying the swipe fee rules, was forced to shorten his proposal for delaying the rules from 24 months to 15 months. It remains unclear whether even Tester's new proposal will have sufficient support to pass the Senate.

A copy of his letter to constituents is below:

June 7, 2011

Dear Friends:

I wanted to give you a quick update on last year's Wall Street Reform and Consumer Protection Act. The big Wall Street banks are trying to kill one of its very important provisions. The new law would lower the fees that Visa, MasterCard, and American Express can charge when people use their debit cards to make purchases. Those charges have hurt small businesses and consumers alike. Lower "swipe fees," as they are called, are set to go into effect on July 22 -- unless Congress gives in to the big banks.

Whenever you make a purchase with a credit card or a debit card, the store owner has to pay the swipe fee -- officially called an interchange fee. Because these swipe fees are hidden -- and because there's almost no competition between the card companies -- swipe fees in the U.S. are the highest in the world, and rising rapidly. These fees add up to big profits for the card companies and the banks -- more than $48 billion in 2008 alone.

Swipe fees mean big costs for small businesses and for consumers like you and me. That's why the Democratic-controlled Congress and President Obama took action in the Wall Street Reform bill last year to require that these swipe fees stay in line with the actual cost of processing the transaction. We exempted community banks and credit unions from the caps, to ensure that local banks can compete with the big Wall Street firms. The rules are tough, though, and they will ensure that big banks -- that make half of all swipe fees -- can only charge reasonable fees to the small businesses that are struggling in today's economy.

But now the big banks and their allies in Congress are fighting hard to prevent these regulations from going into effect. Maybe you've seen or heard their ads. They are trying to delay the regulations for a year, or two years, or as long as they can get away with. It's a classic attempt to put off new rules until the issue has faded from the public's eye and they can try to stop the regulation entirely.

Lowering swipe fees on debit cards is good policy, good for our economy, and is long overdue. This is just one of the many high-stakes battles on the horizon as financial interests on Wall Street try to undo the important reforms we enacted last year to help prevent another financial crisis like the one that caused our most recent recession. And in this fight, I'm on the side of the hard-working families and small businesses in my congressional district.

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