Why does corporate America keep caving to Democrats? How, after everything Republicans have done for them for decades, are big businesses folding like The Flash on laundry day to every crazy, woke demand? Even Walmart – the last company you’d think to go woke – is brainwashing their employees with Critical Race Theory dogma these days.
This must be good news to Sen. Dick Durbin (D-Ill.) Who has been looking for years for ways to break big business away from the GOP. Mr. Durbin hardly needs to try these days, but for one creative idea he’s come up with, you have to give him credit.
I know to speak.
Mr. Durbin has been the driving force against the credit card industry, pushing for the government to essentially eliminate credit card rewards. It’s Democrats’ own disgusting Rule 34 for bad governance: If something good exists, it must be taxed or regulated out of existence.
In the legendarily bad 2010 Dodd-Frank Wall Street reform law, Mr. Durbin first scored a major victory – for him, not us – now known as the Durbin amendment, which killed debit card rewards: Banks can’t make money on these transactions so they don’t do them anymore. Now Mr. Durbin wants to cap the amount banks can charge retailers each time a customer uses a credit card, known as swipe fees or interchange, which will have comparably negative effects.
The Democrats insist the government should send a new price control because they believe that credit card payments that are secure, fast, and convenient are also too expensive.
It’s a political sleight of hand.
But the premise that credit cards are pricey while other forms of payment are free is false. Paying with cash is very expensive to a retailer because cash has to be deposited and is much easier to steal than invisible 1s and 0s, which are factored into retail insurance rates. When consumers get cash, they have to pay ATM fees and more. One alternative, personal checks, are increasingly not accepted at all because of the risk if they bounce.
By regulating the largest institutions and payment networks, the bill will force changes in the whole credit card ecosystem. That means credit unions will have to pay for things like updates to technology and reissuance of cards. It will cost billions of dollars and it will disproportionately affect community banks and credit unions that do not have the resources of big banks.
This is all a bait-and-switch by retailers, who want to save themselves money by not paying credit card companies for providing the service of allowing, well, modern life to flow as smoothly as it does. If retailers can get Democrats to cap fees on credit card interchange, they pass those savings on to themselves.
Every time the government imposes a price cap there are problems: Long waits at gas lines, price restrictions, shortages, on and on when you have something as inelastic as the demand to finance commerce. Indeed, it’s been proven that credit card caps in the EU have not saved consumers any money.
Sleight of hand is the last thing you want someone to do when you give them your credit card.
Alas, Mr. Durbin has conned Sen. Roger Marshall (R-Kan.) To come along with him on this ride. Mr. Marshall explained recently that capping credit card fees helps “retailers and community banks,” but community banks oppose his bill by him. Despite Mr. Marshall’s claim that the bill would increase competition, his proposal by lui would harm consumers, small businesses and community banks in Kansas, writes the CEO of the Kansas Bankers Association, all to pad the profits of retail giants who want to rob Peter to pay themselves.
These are retailers who really don’t seem to need any help. As a result of this month’s big earnings report, Walmart’s stock boomed. They seem to be doing fine with a system that allows people to use credit cards. It’s all sleight of hand, sort of like pretending to care about “equity” with nonsense like CRT to cover up terrible working conditions for underpaid employees at home, bribing foreign governments, and not paying taxes.
• Jared Whitley is an award-winning columnist and longtime DC politician, having worked in the US Senate, Bush White House, and defense industry. He has an MBA from Hult International Business School in Dubai.