Interchange fees: Obama’s next bank tax target

The law of unintended consequences is that actions of people—and especially of government—always have effects that are unanticipated or “unintended.” – Rob Norton, Fortune magazine

Beating up on the banks has a nice populist ring to it and so President Obama tailored this week’s proposed tax on banks to tap into public anger at Wall Street. Retailers’ might be concerned that Members of Congress sitting on the House Financial Services Committee confuse anger with Interchange fees and this populist anger. The White House press secretary would not discuss how a possible bank fee would fit into Obama’s fiscal year 2011, but Retailers can be sure that adding some of that $48 billion dollars in interchange fees to tax revenues will look like an appealing target.  

Meanwhile, in the debate over interchange fees, retailer’s predictions of lower interchange fees, meaning lower consumer prices, clashed with the opinions of those in the financial sectors with dueling articles in both the Wall Street Journal and New York Times.

2010 will bring high anxiety as congress schedules votes on both H.R 2695 & H.R. 2382. We can only wonder what kind of difference Scott Brown will bring to the debate. Can legislation or litigation succeed and what happens if these efforts fail, is it time to seriously consider competition? What if the Federal Government sees Interchange as a new source of General Funding, how will retailer fight for lower interchange fees if the Federal Government sees them as a source of tax revenue? (http://www.linkedin.com/in/peterguidi)