Wednesday, June 29, 2011

The Banks Are In Bed With The Obama Administration

Normally, I try not to delve into political issues, but this latest injustice is too much to take. Just the other day, businesses across America won a reprieve from the high swipe fees charged by the Banks and Credit Card firms. The swipe fee was $0.44 per transaction. This may not seem like much, but it really hurts small business people who allow their customers to use their debit cards for small transactions.

For example, a retail customer buying only a cup of coffee would take a big bite out of the retail business owner's profit potential. Let us assume the cup of coffee costs $1.99. The retail business owner would have to pay $0.44 cents out of that $1.99 to the Banks and Credit Card firms. This is a 22% fee to the retail business owner for allowing his customer to use the debit card. This is why you have seen some businesses institute a minimum amount of purchase before they will let their customers use a debit card. On a cup of coffee transaction like above, the retail business is most likely losing money on the debit transaction. They cannot continue to do this and stay in business. Something had to change.

The retail business owners successfully pushed through Congress a limitation on the swipe fee reducing it to $0.12. This obviously made the retail business owners very happy, but not the Banks and Credit Card companies. They fired up their lobbying machine and went to work on the Obama Administration.

Today, the Federal Reserve is instituting some kind of special rule allowing the Banks and Credit Card companies the right to charge up to $0.24 for a swipe fee. Keep in mind, legislation was just passed making the maximum fee $0.12. Who cares about the law these days? Obviously, the Obama Administration does not care about it. The Banks and Credit Card companies obviously lobbied the Obama Administration for some relief to this legislation. Does it really surprise anyone to know that the Banks and Credit Card companies have pulled a fast one on the retail small business owners?

Why are we Americans allowing this to continue? These Banks are responsible for the recession that we are in. They are responsible for the federal funds rate being little or nothing so they can borrow free money to shore up their balance sheets for the mistakes that they made. Of course, all this is at the expense of the American public who are earning 0.01% on their money. Now, the retail small business person is getting the shaft on swipe fees, even after getting a law passed in their favor!

The Banks get what they want whenever they want and it is blatantly apparent that average Americans and retail small business owners are handed the bill.

This next election cycle is more important than ever. Do not assume that everyone will show up at the polls and vote the way you would have. You have to show up and vote. Otherwise, more injustice will continue at your expense.