[Congressional Record (Bound Edition), Volume 157 (2011), Part 4]
[Senate]
[Pages 4789-4790]
[From the U.S. Government Publishing Office, www.gpo.gov]




                      DEBIT CARD INTERCHANGE FEES

  Mr. TESTER. Mr. President, I rise today on behalf of rural America. 
All of Montana is rural America. Despite good intentions, rural America 
too often gets overlooked when we pass bills here in the Senate.
  That is what happened when this body passed an amendment limiting 
debit card interchange fees last year. It was an attempt to address a 
problem. But like people on both sides of the aisle, I voted against 
it. I knew it was a mistake because it had unintended consequences that 
would hurt rural America.
  It is a mistake now. Since we took that vote, the regulators have 
said that the small issuer exemption for banks and credit unions with 
assets of less than $10 billion--which is what that amendment said and 
the reason why many Members supported the amendment--simply won't work.
  In a Banking Committee hearing back in February, Chairman Bernanke 
said:

       We are not certain how effective that exemption will be. 
     There is some risk that that exemption will not be effective 
     and that the interchange fees available through smaller 
     institutions will be reduced to the same extent that we would 
     see for larger banks.

  At that same hearing, FDIC Chairwoman Sheila Bair, referring to small 
banks and credit unions, said:

       I think it remains to be seen whether they can be protected 
     with this. I think they're going to have to make it up 
     somewhere, probably by raising fees that they have on 
     transaction accounts.

  The Acting Comptroller of the Currency has said that the Fed's 
proposed rules have ``long-term safety and soundness consequences--for 
banks of all sizes--that are not compelled by the statute.''
  The regulators who have been tasked with implementing these rules 
have said they simply cannot guarantee that small issuers can be 
exempted from these rules--small issuers being community banks and 
credit unions. Market forces will drive rates down for the community 
banks and credit unions that are supposed to be exempt from these 
rules.
  A lot of my colleagues, Republicans and Democrats, agree. 
Fortunately, we have the opportunity to fix things. I am asking for 
your help to apply the brakes so we can stop the unintended 
consequences that come with allowing

[[Page 4790]]

the Federal Government to set the price of swipe fees on debit cards.
  This morning, someone asked me: Why is a farmer from Montana leading 
the charge on an issue such as this? Well, it is simple, really. I am 
not in this fight for the big banks. I don't think these rules are 
going to help the consumers one lick. The cost of a hamburger isn't 
going down by a few cents if this is enacted. And there are no 
assurances that retailers would pass these savings on to consumers. 
Let's just say there is a reason Walmart is dumping in a ton of money 
to fight against this.
  I am stepping into the middle of this fight because when the 
government sets prices on debit card swipe fees, it is the little guys 
who get hurt. Rural America pays the price. Community banks and credit 
unions get socked. We can't afford to let that happen, and we can 
prevent it.
  Community banks and credit unions are a critical part of America's 
economic infrastructure. Without them, small businesses or family farms 
and ranches in America would go by the wayside. When farmers and 
ranchers need to invest in a new piece of equipment or buy feed or 
diesel fuel, who do they turn do? To the community banks and credit 
unions; organizations such as the Stockman Bank, the Missoula Federal 
Credit Union, the First Interstate Bank, or Yellowstone Bank. The list 
goes on and on.
  America's community banks and credit unions are the backbone of our 
small businesses. These financial institutions are the ones that help 
small businesses grow, help small businesses create jobs, and help keep 
rural America growing--not the Wall Street banks.
  These rules do not allow community banks or credit unions to cover 
legitimate costs associated with debit card transactions. These are 
guys who simply don't have the means to eat the cost of debit card fees 
that are limited by the Federal Government--and they don't have the 
volume to make up this revenue elsewhere, as the big guys do.
  For community banks and credit unions, this rule will only add to 
banking costs, and it will prevent community banks and credit unions 
from being able to compete with the big guys. If they can't compete 
with debit products, they will lose customers.
  It will also limit the use of debit, pushing folks toward credit 
instead. Already community banks are talking about limiting debit cards 
to $50 or $100, or ending free checking, or adding new fees to ATM 
withdrawals--measures that will, in the end, cost customers.
  This rule will further consolidate the financial industry, and that 
is the last thing we need in this country. But in rural America, what 
financial consolidation means is that community banks and credit unions 
will have to compete with Wall Street, with one hand tied behind their 
back. Not only will that hurt Montana's farmers and ranchers and small 
businesses, not only will that hurt the ability for rural communities' 
businesses to create jobs, it could result--and I think it will 
result--in community banks going out of business altogether. The same 
is true with credit unions.
  That is not what anyone would call ``reasonable and proportional.'' 
Yes, there is supposed to be a ``carve out'' in this rule for community 
banks and credit unions. But both Chairman Bernanke and Chairwoman Bair 
tell us this exemption simply will not work.
  Only in Washington will you get criticized for trying to make sure 
that legislation actually does what it is supposed to do. Only in 
Washington does this mean you are trying to ``kill the bill.''
  Some have said this means billions in interchange fees that 
multimillion dollar box stores will have to pay. But truly, these rules 
are going to put community banks and credit unions out of business--the 
same institutions that are the lifeblood of rural America.
  It is a fact that the folks who are going to be hurt--and this is the 
bottom line with this--will be the small businesses, the community 
banks, and the credit unions, not the big box retailers.
  That is why Senator Corker and I and a whole bunch of our colleagues 
on both sides of the aisle voted to stop this rule and take a look at 
the unintended consequences. Let's slow down, let's study the issue, 
and let's find a thoughtful and careful solution. If we do not do that, 
we will see our critical community banking infrastructure disappear. 
This issue is not about picking sides; it is about making sure we do 
not trample on the financial infrastructure rural America needs to stay 
in business.
  I ask my colleagues for their bipartisan support on a responsible 
bipartisan bill. Our economy cannot afford to let this rule go into 
effect until we study its impacts, both intended and unintended.
  I yield the floor and suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mrs. FEINSTEIN. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER (Mr. Sanders). Without objection, it is so 
ordered.

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