Last time you bought a Big Slurpy and a moon-pie at the C-store, included in the $5.00 purchase price was the merchant's cost for settling the financial transaction - called "interchange". Senator Durbin in his now infamous amendment to the Dodd-Frank Bill sought to protect consumers from these "abusive" interchange fees. Good goal, unfortunate results...
What Senator Durbin has actually done is assure that every American consumer will now pay twice as much for interchange as before - a multi-billion dollar penalty on consumers in the worst of economic times!
How so? Well, Senator Durbin most definitely did lower the amount of income financial institutions will earn from interchange; but he forgot to mandate that the costs incurred by financial institutions, in providing interchange settlement services, would also be lowered. Congressional accounting often works out this way!
Hope nobody doubts that financial institutions have already started looking for ways "to make up" that lost income by increasing fees and charges for other services. Consumers will end up paying - one way or the other - for the costs of the financial services we use. Haven't heard anyone - for or against interchange - dispute that economic fact.
And, what about the price of that Big Slurpy and moon-pie on your next visit to the C-store? It will cost less - right? Wanna bet....
So, now you and I will pay those abusive interchange fees twice - once at the merchant and once again at the financial institution.
Thanks, Senator! But I'm not real sure how much more of this consumer protection I can afford.....
3 comments:
Was asked what is a "moon-pie"? It is a traditional Southern snack-food delicacy. If you would like to enjoy a similar experience, cut a three-inch square out of a cardboard box, dip it in chocolate, and eat it.
Guess I should have used "a Big Slurpy and a two-pack of diet Twinkies"....
In my day, it was a RC Cola and moon pie!
....or Cheerwine.
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