Tip:
Highlight text to annotate it
X
VOTE:
ARE
THERE ANY SENATORS WISHING TO
VOTE OR TO CHANGE A VOTE?
IF NOT, ON THIS VOTE THE YEAS
ARE 52, THE NAYS ARE 48.
UNDER THE PREVIOUS ORDER
REQUIRING 60 VOTES FOR THE
ADOPTION OF THIS MOTION, THE
MOTION IS WITHDRAWN.
MR. PRESIDENT?
THE
MAJORITY LEADER.
FACED A --
THE
MAJORITY LEADER WOULD SUSPEND.
THE SENATE WILL BE IN ORDER.
THANK YOU,
MR. PRESIDENT.
SEVERAL YEARS AGO WE FACED A
CONFIRMATION CRISIS HERE IN THE
UNITED STATES SENATE.
THE MAJORITY -- AT THE TIME THE
REPUBLICANS -- WERE FRUSTRATED
WITH THE INEFFICIENT WAY THE
SENATE WAS PERFORMING OUR
CONSTITUTIONAL DUTY OF
NOMINEES.
MANY OF MY COLLEAGUES ON THE
OTHER SIDE OF THE AISLE
PASSIONATELY ARGUED THAT ALL
JUDICIAL NOMINEES DESERVE AN
UP-OR-DOWN VOTE ON THE SENATE
IN THEIR FRUSTRATION, THEY
THREATENED TO DRAMATICALLY
CHANGE THE PURPOSE OF THE SENATE
AND THE MINORITY PROTECTIONS FOR
WHICH IT WAS DESIGNED.
THAT WOULD HAVE IN A MANNER OF
SPEAKING BLOWN UP THE
THAT'S WHY IT WAS KNOWN AS THE
IN THE HEAT OF THIS BATTLE
SEVERAL COURAGEOUS SENATORS,
DEMOCRATS AND REPUBLICANS,
AGREED TO A STANDARD --
IF THE
SENATOR WILL SUSPEND.
THE ASSISTANT MAJORITY LEADER IS
THE SENATE IS NOT IN ORDER.
SENATORS WILL TAKE THEIR
CONVERSATIONS OFF THE FLOOR SO
THE MAJORITY LEADER CAN BE
THE MAJORITY LEADER.
IN THE HEAT OF THAT
BATTLE SEVERAL COURAGEOUS
SENATORS, DEMOCRATS AND
REPUBLICANS, AGREED TO A
STANDARD THAT WOULD PRESERVE THE
TRADITIONS OF THIS GREAT BODY,
THEY --
--
THEY ENSURED THE
SENATE WOULD ADVISE THE
PRESIDENT'S ADVICE AND CONSENT.
THE AGREEMENT WAS SIGNIFICANT
BUT VERY SIMPLE.
IT WAS THIS: EXCEPT IN
EXTRAORDINARY CIRCUMSTANCES,
THOSE NOMINATED TO BE FEDERAL
VOTE.
THE MINORITY WOULD NOT STAND IN
THE WAY OF THAT VOTE.
THE AGREEMENT WAS GROUNDED IN
COMMON SENSE.
SO FAR IN MOST CASES BOTH SIDES
HAVE GENERALLY UPHELD THAT
THE NOMINATION BEFORE US,
HOWEVER, IS NOT ONE OF THOSE
CASES.
AND THAT IS I WILL FILE CLOTURE
SHORTLY ON THE TPHOLGS OF GOOD
WIN -- NOMINATION OF GOODWIN LIU
WHO IS A RHODES SCHOLAR, CLERK
OF THE SUPREME COURT, WHICH IS
SOMETHING THAT JUST A SMALL
PERCENTAGE OF GRADUATES FROM LAW
SCHOOL HAVE THE OPPORTUNITY TO
DO.
THAT IS BE A SUPREME COURT
CLERK.
GOODWIN LIU SERVED AS ASSOCIATE
DEAN AT THE CALIFORNIA BESHLY
SCHOOL OF LAW AND IS NOW
PROFESSOR THERE.
HE HAS DONE A SIGNIFICANT A. PRO
BONO WORK.
HE EVEN HELPED LAUNCH
AMERICORPS.
ON TOP OF THAT, HE'S LIVED THE
AMERICAN DREAM.
HE'S THE HIGHLY SUCCESSFUL SON
OF IMMIGRANTS.
I THINK PRESIDENT OBAMA WAS WISE
TO APPOINT HIM TO THE NINTH
CIRCUIT.
SO DO A LOT OF DEMOCRATS AND SO
DO A LOT OF REPUBLICANS.
KEN STARR, INFAMOUS AS FAR AS
DEMOCRATS GO, THE FORMER WHITE
HOUSE SPECIAL PROSECUTOR, CALLED
LIU, WHO SERVED IN THE CLINTON
PERSON OF GREAT INTELLECT,
ACCOMPLISHMENT AND INTEGRITY."
FORMER REPUBLICAN CONGRESSMAN
BOB BARR, AN EXTREMELY
CONSERVATIVE FORMER FEDERAL
PROSECUTOR, ALSO REVIEWED LIU'S
WRITINGS.
HE CAME AWAY IMPRESSED WITH, AS
HE SAID -- QUOTE -- "HIS
COMMITMENT TO THE CONSTITUTION
AND TO A FAIR CRIMINAL JUSTICE
SYSTEM."
ONE OF PRESIDENT BUSH'S FORMER
WHITE HOUSE LAWYERS SAID LIU'S
VIEWS -- QUOTE -- "FALL WELL
WITHIN THE LEGAL MAINSTREAM."
I COULD GO ON WITH MORE QUOTES
FROM LEGISLATORS ALONG THE
RIGHT, LEFT AND INDEPENDENTS BUT
YOU GET THE PICTURE.
RIGHT, LEFT, CENTER -- THEY
THINK VERY HIGHLY OF THIS GOOD
EVERYONE AGREES THAT GOODWIN
LIU'S NOMINATION IS FAR FROM THE
EXTRAORDINARY CIRCUMSTANCE THAT
WOULD WARRANT A FILIBUSTER.
THE ONLY EXTRAORDINARY THINGS
ABOUT LIU ARE HIS EXPERIENCE,
INTEGRITY.
HE SHOULD BE CONFIRMED.
AT THE VERY LEAST, HE SHOULD
UP-OR-DOWN VOTE.
SENATE REPUBLICANS HAVE ALREADY
FORGOTTEN THE LESS OFTEN THE
NUCLEAR OPTION.
TODAY THEY'RE THREATENING TO
BLOCK THIS HIGHLY QUALIFIED
NOMINEE FROM CONFIRMATION.
VACANCIES ON THE FEDERAL BENCH
DELAY JUSTICE FOR CITIZENS
SEEKING HELP FROM OUR JUDICIAL
SYSTEM AND IT ISN'T FAIR TO
LEAVE IN LIMBO WELL-QUALIFIED
NOMINEES.
SO I'M FORCED NOW TO FILE
CLOTURE IN ORDER TO ENSURE
GOODWIN LIU GETS THE VOTE HE
IT'S REGRETTABLE THAT IT'S COME
TO THIS.
AS I FILE CLOTURE, I REMIND MY
REPUBLICAN COLLEAGUES ONCE AGAIN
THAT PUBLIC SERVANTS ARE NOT
POLITICAL PAWNS.
GOODWIN LIU HAS DEDICATED HIS
LIFE TO JUSTICE AND FAIRNESS.
AS WE CONSIDER HIS NOMINATION,
WE OWE SOMEONE OF HIS CALIBER
THOSE SAME CONSIDERATIONS.
SO, MR. PRESIDENT, I ASK CONSENT
TO PROCEED TO EXECUTIVE SESSION
AND CALENDAR NUMBER 80, THE
NOMINATION OF GOODWIN LIU OF
CALIFORNIA TO BE A UNITED STATES
CIRCUIT.
IS THERE
OBJECTION?
WITHOUT OBJECTION, THE CLERK
NOMINATION, GOODWIN
LIU OF CALIFORNIA TO BE UNITED
STATES CIRCUIT JUDGE.
REID: I SEND A CLOTURE
MOTION TO THE DESK WITH RESPECT
TO THE LIU NOMINATION.
THANK YOU.
THE CLERK
WILL REPORT THE MOTION.
CLOTURE MOTION.
WE, THE UNDERSIGNED SENATORS IN
ACCORDANCE WITH THE PROVISIONS
OF RULE 22 OF THE STANDING RULES
OF THE SENATE, HEREBY MOVE TO
BRING TO A CLOSE THE DEBATE ON
THE NOMINATION OF GOODWIN LIU OF
CALIFORNIA TO BE UNITED STATES
CIRCUIT JUDGE FOR THE NINTH
CIRCUIT.
SIGNED BY 17 SENATORS AS
FOLLOWS.
REID OF NEVADA, LEAHY, SCHUMER,
BLUMENTHAL, AKAKA, FRANKEN,
DURBIN, WHITEHOUSE, FEINSTEIN,
MERKLEY, ***, BEGICH, GLOBE
CHER, BOXER, REED OF RHODE
ISLAND, STABENOW, AND BROWN OF
OHIO.
I ASK UNANIMOUS
CONSENT THE MANDATORY QUORUM
UNDER RULE 22 BE WAIVED.
WITHOUT
OBJECTION.
MR. PRESIDENT, I ALSO
ASK UNANIMOUS CONSENT THE SENATE
RESUME LEGISLATIVE SESSION AND
PROCEED TO A PERIOD OF MORNING
BUSINESS FOR DEBATE ONLY WITH
SENATORS PERMITTED TO SPEAK FOR
UP TO TEN MINUTES EACH.
WITHOUT
OBJECTION.
THE
SENATOR FROM OHIO IS RECOGNIZED.
YOU.
YESTERDAY THE WHITE HOUSE
ANNOUNCED THAT IT WILL NOT
SUBMIT THREE PENDING FREE TRADE
AGREEMENTS, THE F.T.A.'S WITH
SOUTH KOREA, COLOMBIA, AND
PANAMA, UNTIL -- UNTIL CONGRESS
REACHES A DEAL ON REAUTHORIZING
THE TRADE ASSISTANCE
ADJUSTMENTS -- THE TRADE
ADJUSTMENT ASSISTANCE FOR
WORKERS PROGRAM, THE SO-CALLED
I APPLAUD PRESIDENT OBAMA FOR
PUTTING WORKERS FIRST BEFORE WE
DO THESE TRADE AGREEMENTS.
THE TRADE AGREEMENTS ARE VERY
CONTROVERSIAL, AS THEY ALWAYS
ARE.
THE PROMISES ARE ALWAYS THAT
THEY WILL CREATE JOBS AND THEY
RARELY DO.
THEY USUALLY RESULT IN A NET
DECREASE IN JOBS.
YET TOO OFTEN CONGRESS JETTISONS
THE SAFETY NET TO PROTECT THOSE
WORKERS WHO LOSE THEIR JOBS
BECAUSE OF THIS AGREEMENT --
THESE AGREEMENTS.
THAT'S WHY I APPLAUD PRESIDENT
OBAMA FOR MAKING THIS POINT
HE WILL NOT SEND THESE TRADE
AGREEMENTS TO CONGRESS UNTIL
CONGRESS HAS SENT TO HIS DESK --
NOT TALKED ABOUT IT, NOT DEBATED
IT, NOT PASSED ONE COMMITTEE OR
ONE HOUSE -- BUT SENT TO HIS
DESK TRADE ADJUSTMENT ASSISTANCE
EXPANSION.
AS MY COLLEAGUES KNOW, SINCE WE
LET THIS PROGRAM EXPIRE IN
FEBRUARY BECAUSE OF REPUBLICAN
OBJECTIONS, SENATOR CASEY AND I
WENT TO THE FLOOR DAY AFTER DAY
AFTER DAY IN DECEMBER,
FINALLY -- AND THEN AGAIN IN
FEBRUARY, AS REPUBLICANS
CONTINUED TO OBJECT TO JUST TO
CONTINUE TRADE ADJUSTMENT
ASSISTANCE AS WE HAD BEGUN IN
THE RECOVERY ACT TWO YEARS
EARLIER.
SO WHAT HAPPENED, BECAUSE OF
THESE REPUBLICAN OBJECTIONS, WE
SHUT OUT SERVICE WORKERS AND WE
SHUT OUT MANUFACTURING WORKERS
WHO HAD LOST THEIR JOBS TO
COUNTRIES WITH WHICH WE DO NOT
HAVE A FREE TRADE AGREEMENT.
SO WHEN WORKERS LOST THEIR JOBS
BECAUSE OF OUTSOURCING OF JOBS
TO CHINA OR INDIA, THOSE WORKERS
COULDN'T GET TRADE ADJUSTMENT
ASSISTANCE UNTIL THE RECOVERY
ACT AND SO THEY COULD GET IN
2009, IN 2010.
BECAUSE OF REPUBLICAN OBJECTIONS
TO CONTINUATION OF THAT, THEY
CAN'T GET IT NOW.
ALSO, SERVICE WORKERS, PEOPLE
WHO LOST THEIR JOBS THAT WERE IN
THE SERVICE -- SERVICE
INDUSTRIES EXPERIENCED THE SAME
KIND OF ENDING -- THE -- THE
SAME KIND OF DEADLINE ON THEIR
THEIR -- ON THEIR ELIGIBILITY.
SINCE CONGRESS MADE REFORMS TO
T.A.A. IN 2009, MORE THAN
185,000 ADDITIONAL
TRADE-AFFECTED WORKERS BECAME
ELIGIBLE FOR TRAINING UNDER THE
T.A.A. FOR WORKERS PROGRAM.
IN 2010 ALONE, MORE THAN 227,000
WORKERS PARTICIPATED IN T.A.A.,
RECEIVING TRAINING FOR JOBS THAT
EMPLOYERS ARE LOOKING TO FILL.
THESE ARE PEOPLE THAT WANT TO
WORK, THEY LOST THEIR JOBS
BECAUSE OF A TRADE AGREEMENT.
THEY CAN PROVE THEIR LOST THEIR
JOBS BECAUSE OF A TRADE
AGREEMENT -- THEY LOST THEIR
JOBS BECAUSE OF A TRADE
AGREEMENT, A COMPANY SHUTS DOWN
IN STEUBENVILLE, OHIO, AND GOES
TO NEW DELHI, A COMPANY SHUTS
DOWN IN LIMA, OHIO, AND GOES TO
SHANGHAI.
WHEN YOU CAN PROVE THAT, AS YOU
CAN IN MANY, MANY CASES, THOSE
WORKERS SHOULD BE ELIGIBLE FOR
ASSISTANCE FROM THE GOVERNMENT
TO GET BACK -- TO GET TRAINED TO
GET BACK TO WORK.
THE PROGRAM ALSO, OFOF COURSE RECEIVED STRONG
SUPPORT FROM BUSINESSES WHO KNOW
THAT A SKILLED WORKFORCE IS
CRITICAL TO THEIR ECONOMIC
JUST 11 DAYS AGO, BECAUSE OF
THESE REPUBLICAN OBJECTIONS, AND
BECAUSE T.A.A. -- THE T.A.A.
LANGUAGE WAS TRUNK INDICATED.
IMU JUST 11 DAYS ARC THE LABOR
DEPARTMENT DENIED THE FIRST
THREE PETITIONS FILED BY GROUPS
OF WORKERS ASKING T.A.A. AND
ASSISTANTS UNDER PRE-2009 RULES,
INCLUDING THREE WORKERS IN
UNIONTOWN, OHIO.
THE REASON: THEY ARE SERVICE
WORKERS.
IN ADDITION, THE ENHANCED HEALTH
COVERAGE TAX CREDIT PROGRAM ALSO
EXPIRED IN FEBRUARY.
HCTC HELPS TRADE-AFFECTED
WORKERS PURCHASE PRIVATE HEALTH
INSURANCE COVERAGE TO REPLACE
THE EMPLOYER-SPONSORED HEALTH
INSURANCE COVERAGE THEY LOST.
HELPS THE RETIREES WHO LOST
THEIR BENEFITS WHEN THE COMPANY
FOR WHICH THEY WORKED GOES
BANKRUPT.
THE HCTC PREVENTS TENS OF
THOUSANDS OF AMERICANS FROM
FALLING INTO THE RANKS OF THE
UNINSURED.
RIGHT NOW IF WE DON'T ACT, WE'RE
SIMPLY GIVING THESE WORKERS THE
COLD SHOULDER.
SO I APPLAUD THE ADMINISTRATION
FOR SAYING YESTERDAY, WE WILL
PASS NO MORE FREE TRADE
T.A.A.
BUT THIS WILL REQUIRE MY
REPUBLICAN COLLEAGUES TO COME TO
THE TABLE AND AGREE ON A
WE'VE SEEN WHAT UNFAIR TRADE
DEALS LIKE NAFTA AND PNTR WITH
CHINA AND CAFTA DO TO
COMMUNITIES IN OHIO AND AROUND
THE NATION.
THESE ARE AMERICANS WHO LOST
THEIR JOBS, THEY LOST THEIR
PENSIONS, THEY LOST THEIR HEALTH
CARE -- MAYBE ALL THREE -- WHEN
THE COMPANY THEY WORK FOR MOVED
OPERATIONS OVERSEAS OR WENT TO
BANKRUPTCY COURT OR FACED TO
REDUCTION IN DEMAND FOR THEIR
PRODUCTS DUE TO UNFAIR FOREIGN
COMPETITION.
THESE AMERICANS NEED T.A.A. TO
GET BACK ON SOLID FOOTING.
THESE AMERICANS NEED CONGRESS TO
DEFEND AGAINST UNFAIR TRADE AND
TO STRENGTHEN TRADE ENFORCEMENT.
THERE ARE SEVERAL TRADE
ENFORCEMENT MEASURES THAT
SENATOR McCASKILL AND WYDEN
AND I AND OTHERS HAVE BEEN --
THAT WE'VE INTRODUCED AND I HOPE
THEY'LL GARNER BIPARTISAN
SUPPORT IN THIS CHAMBER.
SENATOR BLUNT, SENATOR
McCASKILL AND I TESTIFIED IN
FRONT OF THE SUBCOMMITTEE, THE
TRADE SUBCOMMITTEE THAT SENATOR
WYDEN CHAIRED THE OTHER DAY AND
TALKED ABOUT SOME OF THESE IDEAS
AND HOW TO ADDRESS THEM
BIPARTISANLY.
T.A. HABE A CORE PILLAR OF U.S.
TRADE POLICY.
IT HAS LONG ENJOYED BIPARTISAN
SUPPORT BECAUSE IT HELPS
AMERICAN WORKERS WHO LOSE THEIR
JOBS AND THEIR FINANCIAL
SECURITY AS A RESULT OF
GLOBALIZATION.
I THANK SENATOR CASEY AND
SENATOR STABENOW, SENATOR BAUCUS
AND SENATOR WYDEN FOR THEIR
LEADERSHIP ON TRADE ADJUSTMENT
ASSISTANCE LANGUAGE, IN GETTING
THIS LEGISLATION PUT FORWARD.
MR. PRESIDENT, JUST THE FAIRNESS
OF THIS -- AGAIN, PUT YOURSELF
-- SOMETHING WE DON'T DO ENOUGH
OF HERE -- PUT YOURSELF IN THE
SHOES OF A WORKER IN CHAMPAGNE,
ILLINOIS, OR IN BOULDER,
COLORADO, OR IN MANSFIELD, OHIO,
A WORKER WHO SHOWED UP FOR WORK
15 YEARS, HELPED HIS COMPANY
MAKE MONEY, PAID A MIDDLE-CLASS,
DECENT WAGE, THEN ALL OF A
SUDDEN THEIR PLANT SHUTS DOWN
BECAUSE IT'S THE -- THE JOBS ARE
OUTSOURCED TO CHIEFNLT THEY
DIDN'T DO ANYTHING WRONG.
ARE WE GOING TO DO NOTHING TO
HELP THEM?
ARE WE GOING TO DO NOTHING TO
HELP THEIR COMMUNITIES?
IT IS PRETTY CLEAR TO ME, THE
OVERWHELMING CONSENSUS OF THE
AMERICAN PEOPLE SAY GIVE THEM
THE OPPORTUNITY TO GET TRAINING
FOR ANOTHER JOB IF WE CAN'T SAVE
THEIR JOBS.
GIVE THEM THE HEALTH INSURANCE,
SOME ASSISTANCE AND HEALTH
INSURANCE SO THEY CAN REACH INTO
THEIR POCKET WITH SOME
ASSISTANCE THROUGH A SIGNIFICANT
TAX CREDIT TO CONTINUE THE
INSURANCE FOR THEIR FAMILIES.
IT WILL MEAN MANY OF THEM WILL
NOT LOSE THEIR HOMES.
FAR TOO MANY PEOPLE WHO LOSE
THEIR JOBS, THEY LOSE THEIR
HOMES.
WE HAVE AN OPPORTUNITY TO DO
SOMETHING ABOUT THIS.
SO THE PRESIDENT WAS EXACTLY
RIGHT.
DON'T BRING THESE THREE FREE
TRADE AGREEMENTS WITH COLOMBIA,
WITH PANAMA, AND WITH SOUTH
KOREA TO THE FLOOR UNTIL WE'VE
TAKEN CARE OF THE WORKERS WHO
LOSE THEIR JOBS FIRST.
NOT AT THE SAME TIME BECAUSE WE
KNOW WHAT HAPPENS WHEN WE TRY TO
ALL OF A SUDDEN THE ASSISTANCE
FOR WORKERS GETS JET I SONDE.
BUT IT MUST BE DONE FIRST TO
HELP THESE WORKERS WITH THEIR
HEALTH INSURANCE WITH THEIR
TRAINING, WITH RETRAINING.
IT WILL MATTER FOR LITERALLY
HUNDREDS OF THOWRKS PERHAPS
MILLIONS, OF AMERICAN FEASSMENTS
MR. PRESIDENT, I YIELD THE
FLOOR.
MR. PRESIDENT?
THE
ASSISTANT MAJORITY LEADER.
MR. PRESIDENT, I
MORNING BUSINESS.
OBJECTION.
MR. PRESIDENT,
FIRST LET ME SALUTE MY COLLEAGUE
FROM OHIO FOR BRINGING UP TRADE
ADJUSTMENT ASSISTANCE BECAUSE
EVEN IF YOU ARE A PROPONENT OF
EXPANDING TRADE IN THE UNITED
STATES, YOU KNOW THAT THE EBB
AND FLOW OF THE ECONOMY IS GOING
TO TAKE AWAY SOME JOBS IN THIS
COUNTRY, AS OTHER SUPPLIERS
ARRIVE.
AND WHAT THE SENATOR FROM OHIO
AND THE SENATOR FROM OREGON, RON
WYDEN, ARE TRYING TO ACHIEVE IS
TO MAKE SURE THAT TRADE
ADJUSTMENT ASSISTANCE IS THERE
TO HELP THESE WORKERS MAKE A
TRANSITION TO ANOTHER JOB IN
ANOTHER AREA THAT IS EXPANDING
IN OUR ECONOMY.
THAT IS THE THOUGHTFUL THING TO
DO FOR THEIR LIVES AND THE
FUTURE OUR ECONOMY.
IT'S ALSO A NECESSARY PART OF
ANY CONVERSATION ABOUT THE
FUTURE OF TRADE IN THE UNITED
STATES.
MR. PRESIDENT, I RISE TO SPEAK
ABOUT THE EFFECT OF INTERCHANGE
FEE REFORM ON SMALL BANKS AND
CREDIT UNIONS.
WELL-KNOWN.
THEY REFLECT THE AMOUNT MUCH
MONEY THAT IS PAID TO A BANK
EACH YOU USE THAT BANK'S BANK'S DEBIT
OR CREDIT CARD.
YOU DON'T KNOW YOU'RE BEING
CHARGED EXTRA WHEN YOU BUY
SOMETHING IN A STORE WHEN YOU
USE PLASTIC BUT THAT FEE IS
BEING PAID TO THE BANK EVERY
TIME YOU SWIPE THE CARD.
WHO ESTABLISHES THAT FEE?
YOU WOULD ASSUME THE BANK DOES.
IT IS NOT SOAVMENT THE FEE THAT
IS CHARGED EVERY TIME YOU SWIPE
A CARD IS ESTABLISHED BY THE
CREDIT CARD COMPANIES, THE BIG
MASTERCARD AND VISA ESTABLISH
HOW MUCH THAT WILL BE.
WHAT VOICE DOES A MERCHANT OR
RETAILER HAVE IN HOW MUCH THAT
FEE WILL BE?
VIRTUALLY NO NO VOICE.
IT IS A PRICE-FIXING MECHANISM
WHERE VISA AND MASTERCARD AND
THE MAJOR CREDIT CARD COMPANIES
ESTABLISH THE INTERCHANGE OR
SWIPE FEE TO BE PAID TO EACH
BANK, CREDIT UNION OR FINANCIAL
INSTITUTION THAT ISSUES THE
CREDIT OR DEBIT CARD.
IT'S A LOT OF MONEY.
EACH MONTH IN AMERICA JUST ON
DEBIT COAST CARDS NOW, EACH MONTH THEY
COLLECT ABOUT $1.3 BILLION IN
TRANSACTIONS WHERE PEOPLE USE
A DEBIT CARD IS LIKE YOUR
YOU'RE DRAWING MONEY DIRECTLY
OUT OF YOUR CHECKING ACCOUNT TO
PAY THE MERCHANT WHERE YOU'RE
DOING BUSINESS.
IT ISN'T LIKE A CREDIT CARD
WHERE IN FACT THOAF COLLECT THE
MONEY FROM YOU LATER ON.
THIS IS A SITUATION WHERE THE
MONEY IS TAKEN DIRECTLY OUT OF
YOUR BANK ACCOUNT.
AND YOU WOULD THINK AS WITH THE
USE OF CHECKS IN THE OLD ECONOMY
THAT THIS WOULD BE A LOW-COST
TRANSACTION, AND IT SHOULD BE.
IT USED TO BE BANKS WOULD
PROCESS CHECKS WRITTEN TO PAY A
RESTAURANT OR DEPARTMENT STORE,
CHARGING PENNIES ON THE
TRANSACTION, NOT A PERCENTAGE OF
THE TRANSAFNTLE WELL, THE
FEDERAL RESERVE TOOK A LOOK AT
WHAT'S BEING CHARGED FOR DEBIT
CARDS WHERE MONEY COMES RIGHT
OUT OF YOUR ACCOUNT.
TURNS OUT THE AVERAGE IS ABOUT
40 CENTS A TRANSACTION.
WE ASKED THEM, WELL, WHAT IS THE
REASONABLE AMOUNT THAT SHOULD BE
CHARGED IF YOU'RE GOING TO TAKE
INTO ACCOUNT EXACTLY HOW MUCH IT
COSTS A BANK TO PROCESS A DEBIT
CARD TRANSACTION.
THEY SAID IT WAS CLOSER TO 10
CENTS OR 12 CENTS.
SO MERCHANTS AND RETAILERS
ACROSS AMERICA ON EVERY SINGLE
TRANSACTION INVOLVING A DEBIT
CARD ARE PAYING AN INFLATED
AMOUNT OF SWIPE FEE OR
INTERCHANGE FEE, AND MOST OF
THOSE FEES GO TO THE LARGEST
BANKS IN AMERICA.
OVER 60% OF ALL THE DEBIT CARD
TRANSACTIONS REALLY FOCUS ON
THREE MAJOR BANKS.
THAT WOULD BE BANK OF AMERICA,
WELLS FARGO AND CHASE.
AND SO THERE'S A LOT OF MONEY TO
BE MADE IN THIS BUSINESS AS LONG
AS THEY'RE USING THE DEBIT COAST
GUARDCARDSAND GETTING THE SWIPE FEES.
I WOULD PUT IN A NEW LAW LAST
YEAR WHICH SAID THE FEDERAL
RESERVE SHOULD ESTABLISH WHAT IS
A REASONABLE AND PROPORTIONAL
AMOUNT TO BE CHARGED FOR THE
INTERCHANGE FEE FOR DEBIT CARDS.
AS I TOLD YOU, THE INITIAL
INVESTIGATION SUGGESTED IT IS
AROUND CENTS AND THE ACTUAL
CHARGE IS 40 CENTS.
NOW, THESE BANKS THAT ARE ABOUT
TO LOSE THESE MAJOR INTERCHANGE
FEE RECEIPTS ARE VERY UPSET
ABOUT IT BECAUSE, AS OF JULY THE
231st, THE NEW RULE WILL GO
INTO EFFECT WHICH WILL BRING THE
PROPORTIONAL LEVEL.
SO THEY ARE FIGHTING THIS WITH
TOOTH AND NAIL.
TODAY I WAS AT A BREAKFAST HERE
ON CAPITOL HILL AND A GROUP OF
LOBBYISTS WERE THERE.
ONE CAME UP TO ME AND SAID,
DURBIN, YOUR FIGHT ON THE
INTERCHANGE FEE HAS MORE
LOBBYISTS WORKING ON THE ISSUE
THAN ANY OTHER ISSUE ON BOTH
SIDES OF THE ISSUE.
THAT WASN'T MY GOAL.
MY GOAL IS TO HELP THE MERCHANTS
AND RETAILERS AND CONSUMERS.
YOU SEE WHEN THE RETAIL
REMEMBERS IN A COMPETITIVE
ATMOSPHERE, IF IT IS ONE GAS
STATION ACROSS THE STREET FROM
ANOTHER, THEN SAVING 30 CENTS ON
A TRANSACTION CAN REALLY BE PART
OF A DECISION BY A RETAILER TO
LOWER PRICES TO BECOME MORE
PRICE-COMPETITIVE.
IN A COMPETITIVE, FREE MARKET
THAT'S WHAT I'M LOOKING FOR.
ULTIMATE WINNERS.
I WANT RETAILERS AND MERCHANTS
TO BE TREATED FAIRLY.
FOR THE RECORD, WHAT IS THE
DEBIT CARD INTERCHANGE FEE
CHARGED BY VISA AND MASTERCARD
IT IS ZERO.
THERE IS NO INTERCHANGE FEE IN
CANADA.
BECAUSE THE GOVERNMENT THERE
SAID WE'RE NOT GOING TO STANDED
FOR THIS.
THEY'RE REALLY RIPPING OFF
MERCHANTS, RETAILERS AND
WE WON'T LET YOU DO IT.
SAME THING HAPPENED IN EUROPE.
THEY BROUGHT DOWN THE
LOW LEVELS.
IN THE UNITED STATES, THE BATTLE
IS ON, AND IF YOU HAD TO PICK A
GROUP WITH THE LOWEST LEVEL OF
CREDIBILITY WHEN IT COMES IN
THIS INSTITUTION OR CONGRESS,
MAYBE EVEN THE AMERICAN PEOPLE,
I GUESS NEXT TO POLITICIANS,
YOU'D HAVE TO SAY BIG BANKS,
PARTICULARLY THE BIG BANKS THAT
WERE BAILED OUT BY OUR FEDERAL
GOVERNMENT WHEN THEY MADE A MESS
OF THINGS A FEW YEARS BACK.
SO THE BIG BANKS THAT ISSUE THE
DEBIT CARDS CAN'T DMOM HERE AND
LOBBY FOR THEMSELVES.
THE CREDIT CARD COMPANIES
THEMSELVES DON'T ENJOY A VERY
GOOD REPUTATION HERE EITHER.
CONSUMERS KNOW WHAT A TOUGH TIME
IT IS TO PAY THOSE BILLS OFF AND
THE FINE PRINT THAT THEY HAVE TO
DEAL WITH IN CONTRACTS.
SO WHAT THESE GROUPS HAVE DONE,
THE CREDIT CARD COMPANIES AND
BIG BANKS, IS ENLIST SMALL BANKS
AND CREDIT UNIONS.
TO COME AND APPEAL US TO AND
SAY, WE'RE IN YOUR CITY AND
COMMUNITY.
US.
WHAT THEY DON'T SAY IS THE LAW
THAT WE PASS SPECIFICALLY
EXEMPTS -- SPECIFICALLY EXEMPTS
-- ALL BANKS AND CREDIT UNIONS
WITH VALUATION OF LOWER THAN $10
BILLION.
$10 BILLION.
SO OF THE 7,000 OR 8,000 CREDIT
UNIONS IN AMERICA, HOW MANY HAVE
A VALUATION OVER $10 BILLION?
THREE.
HOW MANY BANKS OUT OF THE 7,000
OR 8,000 HAVE A VALUATION OVER
$10 BILLION?
LESS THAN 100.
SO WE'RE TALKING ABOUT 100
INSTITUTIONS HERE WHO WILL BE
AFFECTED BY THIS LAW ENFORCEMENT
AND THE OTHERS ARE EXEMPT.
I RISE TO SPEAK ABOUT THE EFFECT
OF THIS INTERCHANGE FEE REFORM
ON THESE SMALL BANKS AND CREDIT
UNIONS.
RECENTLY THE BANKING INDUSTRY
AND SOME BANK REGULATORS HAVE
CLAIMED THAT THE SMALL ISSUE OR
EXEMPTION -- $10 BILLION
EXEMPTION -- IN LAFLT YEAR'S
REFORM LAW MAY NOT WONCH THE
BANKING INDUSTRY PEOPLE SAID
THERE ARE MARKET FORCES THAT CAN
UNDERMINE T THEY ARE WROFNLG I
RESPECT THEIR RIGHT TO SPECULATE
ON WHAT MIGHT HAPPEN WHEN REFORM
TAKES PLACE, BUT IN RESPONSE,
I'D POINT OUT THAT THEY SIMPLY
HAVE NOT PROVIDED ANY EVIDENCE
TO BACK UP THEIR CLAIMS.
IN FACT, ALL THE HARD EVIDENCE
ABOUT THE INTERCHANGE SYSTEM
LEAD TO THE OPPOSITE CONCLUSION.
INTERCHANGE REFORM WILL GIVE
SMALL BANKS AND CREDIT UNIONS
COMPETITIVE ADVANTAGES.
AGAINST THE BIGGER BANKS.
THIS ISN'T JUST MY CONCLUSION.
IT IS A CLIEWFTION A PROMINENT
ECONOMIST AND INDUSTRY ANALYST
LIKE ANDREW CARR WHOSE FRONTLINE
PROGRAM PROFILED AS THE CREATORS
OF THE MODERN CARD INDUSTRY,
PLASTIC CARD INDUSTRY.
AND FORMER I.M.F. CHIEF
ECONOMIST SIMON JOHNSON.
IN A RECENT SURVEY SEEN 60% OF
AMERICA'S BANKER SUBSCRIPTION
PAY READERS AGREE THAT
INTERCHANGE REFORM WILL HELP
SMALL BAIFNTLE THE MEMBERS WHO
SAY THIS TERRIBLE RULE CHANGE
THAT EXEMPTS BANKS WITH LESS
THAN $10 BILLION IN ASSETS IS
GOING TO HURT THEM, THEY'RE
OTOONLY WRONG ON THE FACTS,
THEY'RE WRONG IN PUBLIC OPINION.
THE KEY POINT TO REMEMBER SHEER
THAT THE DEBIT INTERCHANGE
SYSTEM ISN'T A PRORLT
FUNCTIONING MARKET.
THE INTERCHANGE SYSTEM HAS BEEN
DESIGNED IN A WAY SO NORMAL
MARKET FORCES DON'T APPLY.
NO TRANSPARENCY.
NO COMPETITION.
LAST YEAR A BIPARTISAN MAJORITY
OF MY COLLEAGUES RECOGNIZED THAT
REFORM NEEDED TO TAKE PLACE.
AFTER YEARS OF STUDIES AND HERE,
IT BECAME CLEAR THE INTERCHANGE
SYSTEM WAS NOT GO GOING TO CLEAR
IT WAS BROKEN AND UNFAIR.
ANDREW MARTIN SUMMARIZED THAT
THE DEBIT INTERCHANGE SYSTEM IN
AN EXPO SAIVMENT "COMPETITION OF
COURSE USUALLY FORCES PRICES
LOWER BUT FOR PAYMENT NETWORKS
LIKE VISA AND MASTERCARD,
COMPETITION IN THE CARD BUSINESS
IS MORE ABOUT WINNING OVER BANKS
THAN ACTUALLY ISSUING THE CARDS
THAT CONSUMERS WERE USING.
VISA AND MASTERCARD SET THE FEES
THAT MERCHANTS MUST PAY THE
CARDHOLDERS BANK AND HIGHER FEES
MEAN HIGHER PROFITS FOR THE
BANKS, FEIGN IT MEANS THAT THE
MERCHANTS AND RETAILERS HAVE TO
SHIFT THE COSTS TO CONSUMERS."
MARTIN WENT ON TO QUOTE CONG
CONGEOMIMENT, THE FORMER C.E.O.
OF THE STAR DEBIT NETWORK WHO
TALKED ABOUT THE STRUGGLE TO
COMPETE WITH VISA.
HE SAID, "WHAT WE WITNESSED WAS
TRULY A PERVERSE FORM OF
COMPETITION.
THEY COMPETED ON THE BASIS OF
RAISING PRICES.
WHAT OTHER INDUSTRY DO YOU KNOW
GETS AWAY WITH THAT?"
JAMES MILLER, FORMER DIRECTOR OF
O.M.B., CHAIRMAN OF THE FEDERAL
TRADE COMMISSION UNDER PRESIDENT
RONALD REAGAN, ELABORATED ON
THIS IN AN ARTICLE ENTITLED "THE
DEBIT CARD MARKET IS BROKEN AND
NEEDS FIXING NOWVMENT" "UNDER
THIS DYSFUNCTIONAL SYSTEM, THE
NETWORK'S COMPETITIVE INCENTIVES
ARE TO RAISE FEES RATHER THAN TO
REDUCE THEM.
ONE NETWORK
RAISES FEES HIGHER THAN THE
OTHER TO ENCOURAGE BANKS TO
ISSUE CARDS.
SOON AFTER THE OTHER NETWORK
RAISES ITS FEES FOR THE SAME
REASON.
THE RESULT IS RAPIDLY ESCALATING
THIS BROKEN SYSTEM WOULD NOT
SURVIVE WERE IT NOT FOR THE FACT
THAT VISA AND MASTER CARD
REPRESENT A COMBINED 90% OF THE
DEBIT MARKET.
MERCHANTS ARE POWERLESS TO
NEGOTIATE AND CAN'T TAKE THEIR
BUSINESS ELSEWHERE, SO THEY'RE
THESE FEES.
IN SHORT, INTERCHANGE IS AN
ABNORMAL MARKET WHICH HAS NO
NATURALLY OCCURRING MARKET FORCE
TO HOLD FEES IN CHECK.
VISA AND MASTER CARD WANT AS
MANY OF THEIR DEBIT CARDS TO BE
SWIPED AS POSSIBLE.
THAT'S HOW THEY MAKE THEIR
MONEY.
BY RAISING INTERCHANGE RATES
MERCHANTS MUST PAY TO BANKS, THE
CARD COMPANIES ENTICE BANKS TO
ISSUE MORE CARDS.
MERCHANTS CAN'T REFUSE VISA AND
MASTER CARD.
THEY CAN'T NEGOTIATE SO THEY'RE
STUCK WITH WHAT THEY HAVE TO
LAST YEAR CONGRESS DECIDED WE NO
LONGER TRUST VISA AND MASTER
CARD TO FIX INTERCHANGE FEES
HOWEVER THEY WANT.
WE AGREE THERE SHOULD BE
REASONABLE CONSTRAINTS PLACED ON
THE CARD NETWORKS TO PREVENT
THEM FROM USING THEIR MARKET
DOMINANCE TO SET UNREASONABLY
HIGH FEES ON BEHALF OF THE
NATION'S BIGGEST BANKS.
WE PASSED A LAW THAT SAID WHEN
VISA AND MASTER CARD FIX FEE
RATES ON BEHALF OF BANKS WITH
OVER $10 BILLION IN ASSETS, THE
RATES, ACCORDING TO THE FEDERAL
RESERVE, MUST BE REASONABLE AND
PROPORTIONAL TO THE AMOUNT IT
ACTUALLY COST THE BANKS TO
PROCESS THE TRANSACTION.
CONGRESS DIDN'T HAVE THE
INFORMATION ABOUT HOW MUCH IT
ACTUALLY COST BIG BANKS TO
PROCESS TRANSACTIONS.
THE BANKS ALWAYS KEPT THAT
SECRET, EVEN FROM THE GENERAL
ACCOUNTING OFFICE, SO WE
DIRECTED THE FEDERAL RESERVE TO
GATHER THE INFORMATION ON THE
COST, PUT OUT A RULE
IMPLEMENTING THE REASONABLE
PROPORTIONAL STANDARD.
THAT'S UNDERWAY RIGHT NOW.
THE FEDERAL RESERVE BELIEVES
THAT THEY'LL REPORT THIS RULE
TOWARD THE FIRST PART OF JUNE,
AND IT WILL GO IN EFFECT JULY
WHEN IT COMES TO SMALL ISSUERS,
WE SAID THEY'RE EXEMPT.
THIS MEANS VISA AND MASTER CARD
CAN CONTINUE TO FIX INTERCHANGE
RATES ON BEHALF OF SMALL BANKS
AND CREDIT UNIONS IN AN
UNREGULATED ENVIRONMENT LIKE
THEY DO TODAY.
IT'S STATUS QUO FOR THEM.
SOME PEOPLE MIGHT SAY WHY WOULD
YOU LET THE CREDIT UNIONS AND
SMALL COMMUNITY BANKS CHARGE A
HIGHER RATE TO SWIPE THE DEBIT
CARD THAN THE BIG BANKS?
YOU CAN MAKE THAT ARGUMENT THAT
IF YOU'RE GOING TO PROTECT
CONSUMERS AT EVERY LEVEL, IT
SHOULD AFFECT EVERY INSTITUTION.
BUT WE SPECIFICALLY EXEMPTED
COMMUNITY BANKS AND CREDIT
UNIONS WITH VALUATIONS BELOW $10
BILLION, BELIEVING THAT THOSE
COMMUNITY BANKS DESERVE A BREAK
AND HELPING HAND.
THEY'VE NOT SHOWN MUCH GRATITUDE
FOR THAT EXEMPTION.
VISA AND MASTER CARD HAVE NO
INCENTIVE TO VOLUNTARILY LOWER
FEE RATES FOR SMALL ISSUERS.
REMEMBER IN THE INTERCHANGE
MARKET, VISA AND MASTER CARD
COMPETE TO RAISE FEES TO WIN
BANK BUSINESS.
THEY WANT TO HAVE HIGH FEES SO
BANKS ISSUE MORE CARDS.
IF MASTER CARD DECIDES TO
VOLUNTARILY LOWER ITS SMALL-BANK
RATES, THOSE BANKS ARE GOING TO
SKWRUFRPB OVER AND -- JUMP OVER
AND START ISSUING VISA CARDS.
DOES THAT MAKE SENSE FOR EITHER
OF THESE TWO GIANTS?
OF COURSE NOT.
WHY WOULD THE SMALL ISSUER
THIS IS WHERE CREATIVE ARGUMENTS
HAVE COME INTO PLAY FROM THOSE
WHO SAY IT WON'T.
I WANT TO RESPOND TO THESE
ARGUMENTS I'VE HEARD.
FIRST, THE CLAIM HAS BEEN MADE
CARD NETWORKS WILL NOT MAINTAIN
SEPARATE TIERS OF RATES FOR BIG
REGULATED ISSUERS AND SMALLER
FACTS DON'T SUPPORT IT.
VISA, THE DOMINANT NETWORK,
ANNOUNCED IN JANUARY IT WOULD
OPERATE A TWO-TIER SYSTEM,
EXACTLY THE OPPOSITE OF WHAT THE
LOBBYISTS FOR COMMUNITY BANKS
AND CREDIT UNIONS ARE SAYING ON
CAPITOL HILL.
VISA SAID THEY WILL RESPECT THE
INTERCHANGE FEES FROM THE
SMALLER ISSUERS.
OTHER SMALLER DEBIT NETWORKS
MADE THE SAME ANNOUNCEMENT.
THE ONLY COMPANY THAT HASN'T IS
MASTER CARD, AND THEY ARE
EXPECTED TO.
SURE THE LAW DOESN'T REQUIRE
THEM TO OPERATE TWO-TIER
SYSTEMS.
BUT THE CARD NETWORKS WILL LOSE
MONEY IF THEY DON'T.
IF NETWORKS WANT SMALL BANKS TO
SHAOEURB THEIR DEBIT -- I ISSUER
THEIR DEBIT CARDS THEY HAVE TO
HAVE RATES THE SMALL BANKS WILL
BE ATTRACTED TO.
THE BANKERS ASSOCIATION CLAIMED
LAST WEEK -- QUOTE -- "HAVING
TWO DIFFERENT PRICES FOR THE
SAME PRODUCT IS NOT SUSTAINABLE
IN A COMPETITIVE MARKETPLACE."
THE CONTRARY.
MARKET.
ACCORDING TO G.A.O., IN 2009
VISA HAD 60 DIFFERENT CREDIT
CARD INTERCHANGE PRICES.
MASTER CARD HAD 243 DIFFERENT
FEE STRUCTURE FOR DIFFERENT
CARDS ISSUED BY DIFFERENT BANKS.
A MERCHANT THAT ACCEPTS VISA OR
MASTER CREDIT CARD MIGHT BE
CHARGED ANY NUMBER OF DIFFERENT
INTERCHANGE FEES TKPWEPBGD ON
WHETHER IT'S -- DEPENDING ON
WHETHER IT'S A CONSUMER OR
CORPORATE CARD AND THE TYPE OF
REWARDS PROGRAM.
IF YOU HAVE ONE OF THESE
FREQUENT FLIER CARDS, THERE
MIGHT BE A HIGHER INTERCHANGE
FEE THAT'S GOING TO BE CHARGED
TO THE RETAILER WHERE THEY
ACCEPT YOUR CARD.
FROM THE MERCHANT'S STANDPOINT,
THEY TREAT IT AS EXACTLY THE
SAME PRODUCT.
IT'S A CREDIT CARD.
BUT THERE ARE MANY DIFFERENT
INTERCHANGE PRICES THAT THE
MERCHANT MIGHT GET CHARGED.
VISA AND MASTER CARD HAVE
SUSTAINED THIS MULTITIERED
PRICING STRUCTURE FOR YEARS.
THE AMERICAN BANKERS ASSOCIATION
HAS TO KNOW THAT.
WHY WOULD THEY STATE EXACTLY THE
OPPOSITE?
WELL, BECAUSE THEIR BIGGEST
BANKS ARE THE ONES THAT ARE
GOING TO LOSE OUT IF THE
CONSUMERS PROSPER UNDER THIS NEW
HOW HAVE THEY BEEN ABLE TO DO
IT?
THESE CARD COMPANIES.
REMEMBER THE INTERCHANGE SYSTEM
MARKET.
IN THIS CASE, CARD NETWORKS
IMPOSE RULES ON EVERY MERCHANT
THAT REQUIRE MERCHANTS TO ACCEPT
ON IT.
IT MEANS IF YOU'RE RUNNING A
STORE IN SPRINGFIELD, ILLINOIS,
OR DENVER, COLORADO, AND
SOMEBODY SHOWS UP WITH A VISA
CARD, YOU HAVE SIGNED A CONTRACT
THAT SAYS I HONOR EVERY CARD
WITH VISA EMBLAZONED ON IT PUT
ON THE COUNTER.
EVEN THOUGH I PAY A HIGHER
INTERCHANGE FEE AS A RETAILER,
IF IT'S A BIG CARD WITH FREQUENT
FLIER MILES AND ALL THE REST OF
THAT'S THE LAW.
THAT'S THE CONTRACT LAW THAT
BINDS THESE MERCHANTS.
THIRD, THE AMERICAN BANKERS
ASSOCIATION HAS CLAIMED THAT IF
BIG BANK DEBIT FEES ARE REDUCED
MERCHANTS WILL DISCRIMINATE AND
FIND SOME WAY TO GET CUSTOMERS
TO USE BIG BANK DEBIT CARDS
INSTEAD OF MAUL ISSUER -- SMALL
ISSUER CARDS.
IF THIS WERE TRUE WE WOULD SEE
EVIDENCE OF IT BECAUSE OF
MULTITIER PRICING IN CREDIT CARD
FOR EXAMPLE, FOR A SUPER MARKET
A VISA CARD WITH NO REWARDS
PROGRAM CARRIES A FIEF 1.15%,
PURCHASE.
THAT'S THE INTERCHANGE FEE IF
IT'S A SIMPLE VISA CREDIT CARD,
NO REWARDS.
BUT A VISA SIGNATURE PREFERRED
REWARDS CREDIT CARD HAS AN
INTERCHANGE FEE OF ALMOST TWICE
THAT.
BY THE A.B.A.'S LOGIC
SUPERMARKETS WOULD BE
DISCRIMINATING AGAINST REWARDS
CARDS AND STEERING CUSTOMERS TO
NONREWARDS CARDS.
NO EVIDENCE OF THAT
DISCRIMINATION ANYWHERE.
I CHALLENGE THE AMERICAN BANKERS
UP.
IF YOU'VE GOT SOME EVIDENCE TO
THE CONTRARY, LET'S SEE IT.
IF YOU DON'T, RETRACT THE
SPECIOUS CLAIM.
WHY DON'T MERCHANTS
THE MERCHANT COMMUNITY SENT ME A
LETTER A FEW WEEKS AGO
EXPLAINING IN DETAIL HOW THEY
LACK THE CONTRACTUAL AUTHORITY
TO DO IT, THE PRACTICABILITY AND
ECONOMIC INCENTIVE TO
I WANT TO ADD A COMMONSENSE
POINT.
MOST AMERICANS ONLY HAVE ONE
DEBIT CARD.
IF A MERCHANT TELLS A CUSTOMER
NOT TO USE HIS DEBIT CARD
BECAUSE IT WAS ISSUED BY A SMALL
BANK THE CUSTOMER WOULD LIKELY
DO ONE OF TWO THINGS.
NOT MAKE THE PURCHASE AT ALL OR
PAY WITH A CREDIT CARD.
CREDIT CARDS CARRY MUCH HIGHER
INTERCHANGE FEES THAN DEBIT
CARDS.
HOW WOULD DISCRIMINATING AGAINST
DEBIT CARDS BE IN A MERCHANT'S
INTEREST?
WHEN I TALK TO THE MERCHANTS,
I'VE GOT WENDY CRONISTER WHO
RUNS A WHOLE SLEW OF GAS
STATIONNESS CENTRAL ILLINOIS,
TOOK THE BUSINESS OVER FROM HER
DAD, A GREAT YOUNG WOMAN,
EXECUTIVE, AND SHE SAID SENATOR,
THEY PUT THE PLASTIC ON THE
WE TAKE IT.
IF IT CLEARS, WE'VE GOT THE
TRANSACTION, MOVE ON TO THE NEXT
WE ARE NOT GOING TO DEBATE HOW
MANY OTHER CREDIT CARDS ARE YOU
CARRYING AND WHERE'S THE ONE
WITH THE LOWER INTERCHANGE FEE?
WE DON'T HAVE TIME FOR IT AND
ARE NOT GOING TO PUT THAT HASSLE
ON OUR CUSTOMERS.
SOME MAKE THE ARGUMENT THAT THE
NONEXCLUSIVITY ISSUE WILL CAUSE
EXCHANGE RATES TO GO DOWN.
THIS EXCLUSIVITY PROVISION IS
OFTEN MISUNDERSTOOD.
UNTIL RECENT YEARS NEARLY ALL
DEBIT CARDS WERE SET UP BY BANKS
BUT IN RECENT YEARS THE DOMINANT
NETWORKS PARTICULARLY VISA
FORMED EXCLUSIVE DEALS WITH BIG
BANKS SO THE TRANSACTIONS ON THE
DEBIT CARDS COULD ONLY BE RUN BY
ONE NETWORK.
WHAT THEY'RE TRYING TO DO,
CREDIT CARD COMPANIES ARE TRYING
TO DO IS MONOPOLIZE THE
TRANSACTIONS AS WELL AS THE
CARDS.
THESE EXCLUSIVITY AGREEMENTS ARE
THREATENING TO DRIVE SMALLER
DEBIT NETWORKS OUT OF BUSINESS.
THIS CREATES REAL BARRIERS TO
ENTRY FOR NEW NETWORKS.
ALL THE NONEXCLUSIVITY PROVISION
IN THE NEW LAW SAYS IS THAT
BANKS HAVE TO PICK AT LEAST TWO
UNAFFILIATED CARD NETWORKS TO
ENABLE ON EACH DEBIT CARD, AND
MERCHANTS GET TO CHOOSE WHICH
NETWORK THEY WANT.
YOU KNOW WHAT?
I WANT TO SAY TO MY FRIENDS AT
THE "WALL STREET JOURNAL" WHO
WRITE EDITORIALS SAYING WHAT A
BAD IDEA INTERCHANGE REFORM IS.
WHAT WE'RE TALKING ABOUT HERE IS
SOMETHING CALLED COMPETITION.
FOR THE BIGGEST BUSINESS
NEWSPAPER IN THE UNITED STATES,
YOU'D THINK THEY WOULD SUPPORT
SOMETHING LIKE THIS.
NONEXCLUSIVITY IS NOT NEW.
LAST MONTH THE PULSE NETWORK
RELEASED ITS ANNUAL SURVEY OF
DEBIT CARD ISSUERS.
PULSE SAID WHEN IT COMES TO THIS
NONEXCLUSIVITY REQUIREMENT MANY
ISSUERS COMPLYING AND WE VENT
SEEN -- WE HAVEN'T SEEN
RESULT.
THE NONEXCLUSIVITY PROVISION
GIVES THE FED BROAD DISCRETION
WORK EFFECTIVELY.
THE FED ALSO GETS TO CHOOSE THE
EFFECTIVE DATE.
IN SHORT, THIS PROVISION IS NOT
THE BOGEYMAN THAT SOME HAVE MADE
IT OUT TO BE.
IT IS SIMPLY A SAFEGUARD TO
ENSURE VISA DOESN'T BECOME THE
ONLY DEBIT NETWORK LEFT IN THE
WHAT I'VE LEARNED AFTER YEARS OF
WORKING ON THIS COMPLICATED
ISSUE IS THE FOLLOWING: BANKS
AND CREDIT UNIONS WILL
CONSISTENTLY OPPOSE ANY TYPE OF
REFORM.
THE AMERICAN BANKERS ASSOCIATION
IS LEGENDARY.
IT REPRESENTS THE BANKING
INDUSTRY AND CREDIT UNION
NATIONAL ASSOCIATION WHICH
REPRESENTS THE CREDIT UNIONS
BOTH HAVE STATEMENTS ON THEIR
WEB SITE MAKING IT CLEAR THAT
THERE IS NO REGULATION OF THE
SUPPORT.
SENATOR KIT BOND OF MISSOURI,
NOW RETIRED, AND I TRIED TO
NEGOTIATE WITH THE BANKS AND
CREDIT UNIONS IN 2009, AND WERE
THINKING ABOUT DOING AN
AMENDMENT TO ALLOW FOR GREATER
INTERCHANGE TRANSPARENCY AND
DEBIT DISCOUNTS.
BANKS AND CREDIT UNIONS BLASTED
A LETTER OF OPPOSITION OUT
BEFORE WE EVEN DRAFTED THE
AND NOW THE OPPONENTS OF MY
AMENDMENT SAY WHAT WE NEED IS 30
MONTHS TO STUDY THIS.
STUDY IT FOR WHAT?
UP.
WE'VE BEEN THROUGH THIS BEFORE.
I'VE SEEN THIS MOVIE.
THE AMERICAN BANKING
ASSOCIATION, BANKERS ASSOCIATION
AND THE NATIONAL CREDIT UNION
ASSOCIATION NOW MARCHING IN LOCK
STEP ON ISSUES ARE GOING TO
OPPOSE ANY REFORM.
THE ENTIRE FINANCIAL INDUSTRY IS
MAKING A KILLING UNDER THE
CURRENT INTERCHANGE SYSTEM TO
THE TUNE OF $1.3 BILLION A
DO THE MATH AND FIGURE OUT WHY
THIS HAS EVERY LOBBYIST IN TOWN
WORKING TO DEFEAT THE DURBIN
AMENDMENT.
30 TIMES 1.3, THAT'S PRETTY
CLOSE TO $40 BILLION THAT'S AT
STAKE HERE IF THE AMENDMENT TO
STOP THIS DURBIN CHANGE IN THE
THROUGH.
THE CHANGE NEEDS TO GO THROUGH.
THERE'S WIDESPREAD CONSENSUS
THAT WE NEED TO REFORM
INTERCHANGE SYSTEM TO REIN IN
VISA, MASTER CARDS AND THE
BIGGEST BANKS ON WALL STREET.
WITH THAT.
IN FACT, I'VE SEEN POLLING
ACROSS THIS COUNTRY IN EVERY
STATE FROM VIRTUALLY EVERY
POLITICAL GROUP, LEFT, RIGHT,
AND CENTER WHERE THEY
OVERWHELMINGLY SUPPORT
INTERCHANGE FEE REFORM.
THE CREDIT UNIONS AND COMMUNITY
BANKS ARE SELLING A STORY WHICH
THE PUBLIC ISN'T BUYING.
IN CARRYING OUT THIS REFORM, I
BENT OVER BACKWARDS TO TRY TO
ADDRESS SMALL ISSUER CONCERNS.
I DON'T WANT SMALL BANKS AND
DEBIT CARD MARKET.
THAT'S WHY WE EXEMPTED THEM.
I WANT CONSUMERS TO BE ABLE TO
USE DEBIT CARDS.
I TRY TO PROTECT SMALL BANKS AND
CREDIT UNIONS EVEN THOUGH THEY
MADE IT CLEAR THEY DON'T SUPPORT
ANY REGULATION OF THE SYSTEM AND
EVEN THOUGH THEY FOUGHT ME EVERY
STEP OF THE WAY.
BY EXEMPTING SMALL ISSUERS FROM
FEE REGULATION, WE'VE LEFT
INTACT AN INTERCHANGE SYSTEM
THAT HAS WORKED QUITE WELL FOR
SMALL ISSUERS AND ALMOST CERTAIN
TO CONTINUE TO WORK WELL.
LET'S BE CLEAR, THERE'S ONLY ONE
WAY WE CAN PROVIDE THESE SMALL
ISSUERS WITH AN ABSOLUTE 100%
GUARANTEE THAT VISA AND MASTER
RATES THEY LIKE.
THERE IS ONLY ONE WAY TO DO IT.
THAT WOULD BE TO REGULATE THE
RATES THAT VISA AND MASTER CARD
FIX FOR SMALL ISSUERS AND MAKE
SURE THEY'RE APPROPRIATE.
I'M HAPPY TO EXPLORE THAT.
I CAN ALREADY TELL YOU THE SMALL
ISSUERS ARE GOING TO PUSH BACK
ON THAT IMMEDIATELY.
THEY WANT THEIR CAKE AND THEY
WANT TO EAT IT TOO.
THEY WANT NO REGULATION, THEY
WANT TO BE ABLE TO CHARGE
INTERCHANGE FEES THAT REACH THE
HEAVENS AND THEY DON'T CARE WHAT
HAPPENS TO MERCHANTS, RETAILERS
OR CONSUMERS.
I THINK WE TOOK CARE OF SMALL
ISSUERS IN LAST YEAR'S LAW.
IF THEY HAVE SUGGESTIONS ON
THOUSAND GIVE THEM MORE
ASSURANCE THAN VISA OR MASTER
CARD WON'T SET RATES AT
UNSUSTAINABLE LEVELS, I'M
BUT MAKE NO MISTAKE, I WILL NOT
SUPPORT DELAY OR REPEAL OF THE
OVERALL INTERCHANGE RULE MAKING
BECAUSE THEY WILL AT THE BIG
BANKS AND CARD NETWORKS OFF THE
HOOK.
WE ARE CLOSE TO FINALLY REINING
IN THE ABUSIVE INTERCHANGE
SYSTEM AND PROVIDING HELP TO
CONSUMERS AND MERCHANTS.
WE CAN'T LET BIG BANKS AND CARD
MERCHANTS AVOID BIG BANKS AGAIN.
THEY GET AWAY WITH TOO MUCH.
I STRONGLY BELIEVE WE NEED
INTERCHANGE REFORM.
WE NEED TO BRING FAIRNESS,
COMPETITION AND TRANSPARENCY TO
A BROKEN DEBIT SYSTEM.
I'LL WORK HARD TO MAKE SURE THIS
REFORM HAPPENS AND HAPPENS SOON.
I WOULD THINK THE FACT THAT THE
OPPONENTS TO MY AMENDMENT ARE
TRYING TO STOP IT BEFORE THE FED
EVEN ISSUES A RULE IS AN
INDICATION THEY DON'T EVEN WANT
TO SEE WHAT THE RULE LOOKS LIKE.
WHY?
WHY.
CHANGE IS GOING TO COST THE BIG
BANKS BIG MONEY.
THAT'S WHY THE CREDIT CARD
COMPANIES, THE BANKS ON WALL
STREET ARE FIGHTING IT.
I'VE TRIED TO APPROACH THIS
ISSUE IN A REASONABLE WAY,
FOCUSING ON THE FACTS.
I'M ALWAYS HAPPY TO ENGAGE WITH
OTHERS WHO SHARE THIS APPROACH
EVEN IF THEY DISAGREE WITH ME.
MR. PRESIDENT, I YIELD THE
FLOOR.
MR. PRESIDENT, I ASK
UNANIMOUS CONSENT THE SENATE NOW
PROCEED TO CONSIDERATION OF
SENATE RESOLUTION 186, SUBMITTED
EARLIER TODAY.
THE CLERK
WILL REPORT.
SENATE RESOLUTION
186, HONORING THE00th
ANNIVERSARY OF THE UNITED STATES
ARMY FIELD ARTILLERY SCHOOL AT