Mom-and-pop stores battle the banks — and win!
I’m a bit miffed at the small business lobby, but I’ll get to that later. I’m too busy applauding them right now. In classic David/Goliath fashion, the small business lobby — okay, okay, Wal-mart and Sam’s Club disguised as the small business lobby — won out over the banking industry’s deepest-pocketed pleaders, and got Congress to pass a law limiting the fees banks
can charge for debit transactions.
I’m not being totally foolish — I’m sure the big chains provided all of the money for the campaign. And sure, they have sporadically pointed out that the lower the fees they pay to banks, the better the chances they can lower prices. But they know that consumers don’t trust them not to pocket the savings. So, they were smart enough to recognize that it’s much easier to get public sympathy (and thus, public support for legislative action in your favor) when you couch it as helping the local dry cleaner.
Here’s how the New York Times said the politically-savvy campaign went down:
Lobbyists for the wounded but formidable banking industry made clear to some senators that this decision would affect future campaign donations, according to people who participated in those conversations.
But retailers mounted an unusually effective yearlong campaign to frame the issue as a chance for Congress to help small business. A leading trade group for chain retailers worked with small-business groups to make sure that every time a senator held a town hall meeting back home, a local business owner showed up to ask about card fees.
The winning margin was provided by several conservative Republicans. Senator Johnny Isakson, Republican of Georgia, told SunTrust, the largest bank in his state, that this time he planned to vote against the bank and with Coca-Cola and Home Depot, two other Georgia companies that had lobbied him fiercely.
“This was really a decision between helping out small business or helping out large banks,” said John Emling, a lobbyist for the Retail Industry Leaders Association.
For the most part, the new law doesn’t tackle credit card issues. But it does, in fact, officially strike down some bank rules that are already more honored in the breech than the actuality.
For example, the banking industry prohibits retailers from giving a discount for cash, or for insisting on a minimum charge for credit card use. Yeah, well, I didn’t even know those rules existed — at least once a day I’m facing a $5 minimum for card use, and I still see gas stations that offer cash discounts. The banks might as well simply suck it up and pick better battles.
The fight isn’t over yet, of course. The banking industry insists that they will have to curtail services, cut back on rewards programs, do all kinds of consumer-unfriendly things if debit card fees — a huge source of unearned profits — are curtailed. Somehow, I doubt that. Just as Wal-mart has to compete with Target for customers, BofA has to compete with Citigroup, etc., etc. I think competition will keep our bank perks intact.
So back to why I’m miffed at small business. As a group, they are coming out on exactly the wrong side of the health care reform issue. The National Federation of Independent Business, the top small business lobbying group, has joined in a lawsuit that is aimed at striking down provisions in the health care bill that would require everyone to buy insurance.
The lawsuits argue that the insurance requirement, by penalizing people for not purchasing a product, represents an unconstitutional extension of Congress’s power to regulate interstate commerce.
The federal government has responded in court filings that an individual decision to not purchase insurance is, in effect, a decision about how to pay for future medical care. Taken in the aggregate, those decisions substantially affect interstate commerce by shifting the cost of covering the uninsured to policy-holders, health care providers and taxpayers, government lawyers maintain.
I thoroughly agree with the government position on this. And I simply don’t understand the small business opposition. The health care reform bill provides all kinds of tax credits for small businesses to provide insurance to their employees. Since health insurance is often a major factor when people choose where to work, providing insurance could make small businesses far more competitive in terms of recruiting talent. You’d think they’d be applauding reform, not fighting it.