Kudos to lawmakers for standing up for businesses

Dear Editor,

Just when I thought that the powers-that-be in Washington finally found the intestinal fortitude to stand up to Wall Street, I was proven wrong.

Last month, the U.S. Senate defeated a massive lobbying effort by the big banks and credit card companies to override debit card fee reform. The banks have a virtual monopoly in this area, racking up $16 billion in annual “swipe” fees, and rates have increased more than 500 percent since 2001. Many merchants and small business, including in the restaurant industry in which I work, now are dealing with debit fees that can add up to thousands of dollars per month. Swipe fees work like a hidden tax, driving up the cost of everything.

In December, the Federal Reserve Bank said it would regulate these swipe fees at 12 cents. This was regarded as a welcome reduction from the 44-cent average fee that merchants and small businesses have been charged. The proposed reforms from the Fed were more than fair when you consider that it costs the banks around 4 cents per swipe to process the transaction.

But on June 29, the Fed announced that, beginning Oct. 1, swipe fees would be capped at 21 cents per transaction, almost double the original proposal. Not only did the Fed side with banks, but it dashed the hopes of a lot of people, owners and employees alike, who were hoping that swipe fee reform would have allowed businesses to get on a more stable foundation in a shaky economy and maybe even hire new workers.

A healthy restaurant industry, for example, is good for all Louisianans. Every $1 million spent in restaurants and bars in the state generates an additional 29 jobs, but not if earnings are being drained by bloated swipe fees.

I’m grateful to Sens. Landrieu and Vitter for standing up for local businesses and resisting the big banks’ effort to water down reform. I hope they keep up the good fight on behalf of consumers and businesses, not Wall Street. I just wish the Fed had followed their lead rather than caving to the big banks and credit card companies when drafting its final rules.

Constance Tullier,

Baton Rouge, La.