[Congressional Record Volume 157, Number 81 (Tuesday, June 7, 2011)]
[Senate]
[Pages S3517-S3518]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                         DEBIT CARD SWIPE FEES

  Mr. DURBIN. But before that, I would like to address what is known 
affectionately as the Tester-Corker amendment, which was brought up on 
the Senate floor earlier this morning by Senator Corker of Tennessee.
  One year ago--to be more specific, about 11 months ago--we had a big 
debate on the floor of the Senate about Wall Street: What are we going 
to do about Wall Street and the practices on Wall Street which hurt our 
economy? Especially we were worried about the last recession and some 
of the things that happened on Wall Street at the biggest banks and 
biggest insurance companies that hurt Americans across the board; that 
reduced the value of our savings and caused us as a Congress, with 
President Bush's cooperation, to pass a basic bailout bill sending 
billions of dollars to these banks that had made stupid, reckless 
decisions that wrecked the economy; to try to save them from going 
under.
  Think about that. Here are the biggest financial institutions in the 
United States that have made terrible decisions--some failed, such as 
Lehman Brothers--which harmed our overall economy--we are still 
suffering from it--harmed individual families and businesses across the 
board, and then, as they were about to sink out of sight, they said: 
You have to save us. Send us taxpayers' money.
  Well, I will tell you something: I voted for that. I am not proud or 
happy about that, but that is the situation. But when the Chairman of 
the Federal Reserve and the Secretary of the Treasury came and said, as 
they did to us: This could be a catastrophe equal to the Great 
Depression if you do not do something--I thought to myself: This 
violates every value I have about these Wall Street financiers and the 
way they operate, but I cannot let the American economy go down. I 
think many Senators felt the same way on both sides of the aisle.
  So we sent them billions of dollars to keep them afloat after their 
terrible decisions. How did they reward us? What was the thank-you card 
they sent to the taxpayers of America? They gave themselves bonuses--
multimillion-dollar bonuses. These same banks, in their reckless 
stupidity, driving us into a recession, bailed out by taxpayers, then 
came back and announced they were giving each other rewards for great 
performance--millions of dollars. It finally ended up being billions of 
dollars to these big banks. Outrageous.
  So last year we sat down with the Wall Street reform bill, the Dodd-
Frank bill, and said: We are going to change some of the rules you play 
by up on Wall Street so you never have a chance to do this to America 
again.
  We went through a broad array of things we considered. One of the 
things we considered affects virtually every single American; that is, 
the use of something called a debit card.

[[Page S3518]]

  We may not think twice about it, but for those of us who have been 
around a little while, there was a time when we had cash in our wallets 
and a checkbook. Those were the two ways we paid for things. Then came 
credit cards. Then came this new invention called a debit card. A debit 
card is basically a plastic check. When we swipe that debit card for a 
transaction, money comes out of our checking accounts and pays the 
merchant we are doing business with. It is a great convenience. I use 
them now. I think more than half of purchasers across America are used 
to using debit cards and credit cards every day.
  But at the same time there was this growth in debit card use across 
America, something else was happening that was entirely invisible to 
the public. Each time that debit card was swiped, the banks ended up 
taking a fee. Well, you say: That is not unreasonable. They should be 
taking a fee. They used to collect a fee for processing checks. Why 
wouldn't they collect a fee for using a debit card? Except something 
was going on that we were not aware of until we looked into it closely: 
they were raising the amount they were taking each time the debit card 
was used to now the highest level debit card transaction fees in the 
world.
  The Federal Reserve tells us they charge on average 44 cents every 
time someone swipes a debit card. In other words, if someone is running 
a little store in Springfield, IL, and a person walks in--and I have 
seen this happen--and says they want to buy a $1.29 pack of gum, hands 
over the debit card, and they swipe the debit card, that merchant in 
that little store has to look at it and say: I just lost money. I am 
not going to make 44 cents of profit on the sale of that pack of gum. 
Now I have to pay that to the bank and credit card company, 44 cents.
  So a year ago we said: Let's take a look and see what is a reasonable 
charge, not what they are charging but what is reasonable to pay to the 
bank and the credit card company. The Federal Reserve, which, if 
anything, has a strong bias toward the banking industry--always has; 
they are never viewed as a consumer protection agency--came back and 
said it ought to be closer to 10 cents or 12 cents, one-third or one-
fourth of what is actually being charged.
  So here is what we said: The Federal Reserve established a 
reasonable, proportional debit card swipe fee so consumers and 
retailers across America are not giving to the banks across this 
country, particularly the largest banks across this country, a windfall 
every time a debit card is swiped. It sounds reasonable to me. These 
merchants had no voice in determining how much was going to be charged 
on a debit card transaction. They were stuck with it. It was invisible, 
and it was killing them.
  Well, what happened? What happened after we passed this? The banks 
and credit card companies across America went on a warpath: We have to 
stop this debit card amendment.
  They have spent a fortune lobbying Congress, working the Members back 
and forth, saying: You have to protect us. You cannot let this new rule 
go into effect which reduces the fee we collect every time anyone uses 
a debit card.
  Why would they lose sleep over 44 cents? Add it up. Every month in 
America the banks are collecting $1.3 billion from consumers across 
America. Every time we use a debit card to buy gasoline, groceries, go 
to a hotel, restaurant, make a contribution to the Red Cross in the 
middle of disaster, pay tuition at a university, they are taking a 
percentage out of every transaction to the tune of $1.3 billion a 
month. That is why. They have moved Heaven and Earth to stop this new 
rule from going into effect which reduces the fees these banks--over 
half of them, the largest Wall Street banks--are collecting.
  We are going to have a vote on it this week. It is an important vote, 
and it is a vote I think will be a test as to whether we are going to 
come down on the side of consumers, small businesses, and retailers in 
America, or on the side of the Wall Street banks and the credit card 
companies.
  Interesting test, isn't it, to find out where the Senate is going to 
come down on this issue? I think it will be a close vote. I am not 
sure, but I think it will be close, and it is important.
  Senator Corker of Tennessee came to the Senate floor earlier and 
said: Well, we have come up with a solution. There is a new version of 
our amendment today which we are going to offer. Some Members have 
called it a compromise. It is not a compromise. A compromise suggests 
that both sides came together and agreed on something. There has not 
been any input from the retailers, small businesses, and consumers 
across America. The only compromise is among the big banks and the 
bigger banks in terms of what they are going to collect on these debit 
cards.
  I will tell you point blank, if the purpose of this amendment is to 
protect credit unions and community banks, there is a way to do it. We 
can give them more reassurances beyond what the law already says, which 
I think is totally adequate for what we need to do. This amendment, 
this so-called solution amendment, does not even address it. What it 
addresses is the overall issue and the billion dollars-plus that these 
banks want to keep collecting while a so-called study goes on for 
another year. They want to include, incidentally, in the ``reasonable 
cost'' for the debit card executive compensation, compensation of bank 
officials.
  How much compensation do we give to those who work at the Wall Street 
banks? It turns out last year it was $20.8 billion in executive 
compensation. They want to add that in as part of the operational cost 
of using a debit card. The bonuses? We are going to pay for the 
bonuses? That is a reasonable debit card cost?
  I want to tell you, this amendment is written by and for the banks, 
the biggest banks of all, and it is not written with the consumers in 
mind. Look through all the organizations of this new amendment and try 
to find one consumer group, one small business group, one group of 
retailers that were part of establishing what a reasonable fee is. You 
will not find them. They are all banking regulators--people who have no 
reputation for standing up for consumers.
  So the debate will ensue for the rest of this week on this amendment. 
I think it is a critical amendment. I hope my colleagues will stand by 
me and the Federal Reserve in the vote we took last year.
  I see the Senator from Vermont is here. I was told I had a few 
minutes to speak. He appears anxious, so I am going to make my remarks 
on the other subject brief.

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