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The giant Wall Street Banks fund a lot of groups. One of them is the Bank Policy Institute (whose Board includes the CEOs of JPMorgan Chase, Bank of America, Citi, and Wells Fargo, among others).
These big banks are raining money on a new strategy to pretend that only large retailers care that swipe fees are the result of cartel price-fixing:
- Of course, they ignore that virtually every Main Street small business group supports the Credit Card Competition Act – including the National Federation of Independent Business (NFIB) which has had to debunk the banking industry multiple times for pretending to represent the interests of small businesses
- They also ignore that small businesses pay the highest swipe fee rates today because that’s how the credit card cartel sets them
Maybe this is because it turns out that the banks’ other ad campaign has not only been proven false, but also makes more people support the Credit Card Competition Act than oppose it.
And, the bankers’ examples inadvertently show that their monopoly pricing position is a problem.
- The big bank ad campaign website compares their payment pricing to electricity and water (“retailers use goods and services like water, electricity and the payment system that help them run their businesses” – be aware that they might change the language and run away from these examples now that we’ve pointed them out).
- Um, electricity prices are largely regulated by public service commissions because electricity markets are run by monopolies and a similar structure regulates water pricing for the same reasons
So, the big banks’ argument for why they should never face any regulation is that they are a lot like services that have their prices directly regulated by government agencies?!?
The Credit Card Competition Act doesn’t even regulate prices. It would only ensure that the credit card companies compete like other free markets, rather than continue to block that competition.
- That is a far cry from what happens every day with electricity and water pricing regulation, but we should at least have competitive market pricing in the payments system.
- The big banks will fight that all the way, but the fact that they use regulated, monopolized services as their examples shows just how hard it is to justify a lack of competition.
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