Kudos to Chris Cannon
By CBanks Posted in Congress — Comments (3) / Email this page » / Leave a comment »
My hat's off to Rep. Chris Cannon. He introduced a bill last week called the Credit Card Fair Fee Act.
It's a necessary bill, that will help merchants and small businesses by giving them the ability to negotiate with Visa and MasterCard over the fees charged whenever they process a credit card. There's a PDF version of the Credit Card Fair Fee Act, and like all legislation it's a little dry. But if you're interested in this debate, it's worth checking out.
Here's the background, from the independent/family broadcaster KSBI-TV of Oklahoma:
Currently, credit card interchange rates are set in secret and hidden from view. Raising interchange fees is how Visa and MasterCard encourage banks to issue more credit and debit cards -- as long as rising rates are kept top secret, consumers have no way of knowing the extra costs they are paying through higher prices.
"As entrepreneurs and businessmen, we want market based solutions to our issues," said Richard Oneslager, president of Balmar Petroleum and chairman of the National Association of Convenience Stores, an MPC member. "The Credit Card Fair Fee Act is the free-market solution to the battle over interchange rates."
Interchange fees amount to approximately $2 of every $100 spent using credit cards. These fees inflate the cost of nearly everything consumers buy even when they pay by cash.
With a collective market share of approximately 80 percent, Visa and MasterCard operate like price-fixing cartels, each one imposing oppressive credit card interchange fees and rules on merchants on a 'take-it-or-leave-it' basis. Credit card industry policies and practices make it practically impossible for merchants to know how much they are really paying in credit card fees or why.
Visa and MasterCard are hurting competition by using their market power to dictate prices to merchants. If you have a merchant account, you know exactly what I'm talking about. There's no way to refuse to accept cards, and AmEx isn't suited to most retailers, or most customers for that matter. It's not surprising that Cannon has eight other co-sponsors on the bill. What's surprising is that no greater liberal than John Conyers has put his name to it.
This is a good fight and an issue that's been coming around, and has the potential to become bigger, however obscure it is now and as esoteric as it may remain. It affects everyone, but it's not obvious, unless you're familiar with the industry.
But it's an issue Republicans can lead on, and Cannon should be commended for picking it up.
What's surprising to me is that Conyers is signing on to what is essentially a Republican bill.
But that isn't my main point. I certainly agree that government interference in the market is to be avoided in most all situations. The threshold should be high for regulators to step in.
But when the market is fundamentally broken, like here, it can be necessary. Visa and MasterCard are the only two cards with ubiquitous market penetration, and the problem is that they are not competing with each other. They both set their prices, in secret, and simply tell merchants how much the fees will be. They can do this because merchants can't avoid accepting these cards, and there is no meaningful competition. What's more, the market is next to impossible to get into. The banks aren't interested, they've already got Visa/MC.
I recommend this paper (note: PDF) as a good backgrounder. Complex subject, I know. That's why I'm trying so hard to get this across. It's counterintuitive, but ultimately it means you and I are getting screwed by the credit cards, even if you don't use one.
Speaks for itself. Monica is the congressman's wife.
Wednesday, March 5, 2008
City billed for aide's trips with Conyers
Christine MacDonald / The Detroit News
DETROIT -- City Council President Pro Tem Monica Conyers authorized nearly $12,300 in taxpayer money so her chief of staff could accompany her to pension-related conferences last year including to Lisbon, Portugal; Hong Kong; and elsewhere, according to expense reports obtained by The Detroit News.Sam Riddle, a longtime political consultant, said he went with Conyers to educate himself and offer her educated investment advice. Conyers has been a member of Detroit's General Retirement System since November 2006. The board oversees the retirement fund for city workers, other than police and firefighters.
"My work is more than cost effective," Riddle said. "We more than pay our own way in terms of what we deliver for the pension board."
But some question the wisdom of billing the city's budget for the trips -- with hotel stays at the Four Seasons Hotel in Lisbon and the W New York - Times Square -- when the pension system, which has assets of $4.5 billion, is the beneficiary.
The pension board only pays the travel expenses of its own employees and trustees. Some members say it is rare for personal aides to accompany trustees on trips. Council members are allotted nearly $650,000 to run their offices and there are few restrictions on how they spend that money.
"It's an area where I would want answers," said former city auditor general Joe Harris. "What's the benefit? That's the bottom line."
Pension board chairman David Clark said he has never traveled with personal staffers on convention trips. And City Council President Kenneth Cockrel Jr. said he rarely traveled when he was a pension trustee and didn't take his personal staffers when he did.
Councilwoman Barbara-Rose Collins was appointed as a trustee of the Police and Fire Pension Board in January. She hasn't attended any conventions, an aide said.
Full story is at http://detnews.com/apps/pbcs.dll/article?AID=/20080305/METRO/803050403/1...
This is basic government interference in the market. I mean, argue if you will that it's justified by necessity of some sort, but don't pretend to be surprised that liberals like government interference in private contracts.
"No compromise with the main purpose, no peace till victory, no pact with unrepentant wrong." - Winston Churchill