Interchange reform is necessary and it is long overdue.
April 13, 2011 11:42 AM Subscribe
Open Letter TO JPMorgan Chase CEO Jamie Dimon. The Democrat from Springfield responds to the Chase CEO's letter to shareholders.
It's nice to see a real public debate on this, I'd love to see more discussions between government and business out in the open.
posted by furiousxgeorge at 11:53 AM on April 13, 2011 [3 favorites]
posted by furiousxgeorge at 11:53 AM on April 13, 2011 [3 favorites]
he knows his shit, and he's completely right.
posted by zombieApoc at 11:53 AM on April 13, 2011 [7 favorites]
posted by zombieApoc at 11:53 AM on April 13, 2011 [7 favorites]
I'd love to see more discussions between government and business out in the open
I'd love to see all discussions lobbyists hold with a member of congress transcribed for the public :)
posted by zombieApoc at 11:54 AM on April 13, 2011 [18 favorites]
I'd love to see all discussions lobbyists hold with a member of congress transcribed for the public :)
posted by zombieApoc at 11:54 AM on April 13, 2011 [18 favorites]
I'd love to see more discussions between government and business out in the open
I'd love to see all discussions lobbyists hold with a member of congress transcribed for the public :)
And see the government get sued for distributing pornographic writings?
posted by blue_beetle at 11:57 AM on April 13, 2011 [3 favorites]
I'd love to see all discussions lobbyists hold with a member of congress transcribed for the public :)
And see the government get sued for distributing pornographic writings?
posted by blue_beetle at 11:57 AM on April 13, 2011 [3 favorites]
Wait... are those... balls? I can't tell, but there might just be a couple of little shriveled raisins. Or maybe Chase just didn't send a big enough fruit basket last Christmas?
posted by seanmpuckett at 12:01 PM on April 13, 2011 [4 favorites]
posted by seanmpuckett at 12:01 PM on April 13, 2011 [4 favorites]
And see the government get sued for distributing pornographic writings?
YES. Oh, God, yes. YES! YES!!
posted by scaryblackdeath at 12:01 PM on April 13, 2011 [1 favorite]
YES. Oh, God, yes. YES! YES!!
posted by scaryblackdeath at 12:01 PM on April 13, 2011 [1 favorite]
One analogy he makes about the rules that might force banks to stop offering certain products: “If a restaurant that sells burgers can’t sell French fries, it risks losing all of its customers.” Dimon says.
One of the many problems with this analogy is that french fries are actual tangible things, as opposed to "innovative" banking products, which are just bullshit ways to make something out of nothing.
posted by pwally at 12:04 PM on April 13, 2011 [3 favorites]
One of the many problems with this analogy is that french fries are actual tangible things, as opposed to "innovative" banking products, which are just bullshit ways to make something out of nothing.
posted by pwally at 12:04 PM on April 13, 2011 [3 favorites]
In conclusion, I recognize that Chase will likely see decreased revenue from interchange reform, but I urge you to keep some perspective. Last year Chase had $17.4 billion in profits – up 48 percent from the previous year - and a 15 percent profit margin. Your own personal compensation “jumped nearly 1,500 percent to $20.8 million in 2010” according to Reuters. In contrast, middle-class American families are struggling to get by in a tough economy – an economy that went south because of the banking industry’s unregulated excesses.
I like this paragraph.
posted by SpacemanStix at 12:07 PM on April 13, 2011 [44 favorites]
I like this paragraph.
posted by SpacemanStix at 12:07 PM on April 13, 2011 [44 favorites]
About time too. I'm pretty sure that most consumers would be livid if they knew that ~3% of every purchase they made was being garnished by the banking industry.
By comparison, if the federal government levied a 3% tax on all credit/debit transactions, there would literally be rioting in the streets.
posted by schmod at 12:09 PM on April 13, 2011 [13 favorites]
By comparison, if the federal government levied a 3% tax on all credit/debit transactions, there would literally be rioting in the streets.
posted by schmod at 12:09 PM on April 13, 2011 [13 favorites]
On the whole, it seems like a very good idea, but this bit seems ... well, wrong:
In contrast to the current U.S. interchange system which rewards banks for promoting fraud-prone signature debit, my amendment will allow interchange fee increases only to those banks that successfully prevent fraud. The Federal Reserve can implement this in its final rulemaking by setting target fraud prevention metrics and allowing increased interchange for banks that meet those targets.
I'm sure I'm missing something here, but that's bizarre... prevent fraud, and we'll let you charge more? How about just not letting them charge more, and making sure they bear the costs of fraud? That'll make it magically disappear on its own.
When you start allowing price increases based on metrics, that means that a whole bunch of smart people will start thinking about how to game the metrics. If you just make them bear the cost of fraud, they'll work on actually reducing fraud, instead of LOOKING LIKE they're reducing fraud.
posted by Malor at 12:11 PM on April 13, 2011 [3 favorites]
In contrast to the current U.S. interchange system which rewards banks for promoting fraud-prone signature debit, my amendment will allow interchange fee increases only to those banks that successfully prevent fraud. The Federal Reserve can implement this in its final rulemaking by setting target fraud prevention metrics and allowing increased interchange for banks that meet those targets.
I'm sure I'm missing something here, but that's bizarre... prevent fraud, and we'll let you charge more? How about just not letting them charge more, and making sure they bear the costs of fraud? That'll make it magically disappear on its own.
When you start allowing price increases based on metrics, that means that a whole bunch of smart people will start thinking about how to game the metrics. If you just make them bear the cost of fraud, they'll work on actually reducing fraud, instead of LOOKING LIKE they're reducing fraud.
posted by Malor at 12:11 PM on April 13, 2011 [3 favorites]
Related: JPM in the headlines: a) April 13 (Bloomberg) -- U.S. regulators, as part of a broad probe of how Wall Street firms bundled mortgage-linked financial products as the housing crisis worsened, notified a former JPMorgan Chase & Co. executive he may be sued for his role in selling the securities. b) April 12 (Bloomberg) -- The judge overseeing the liquidation of Bernard L. Madoff’s defunct investment firm maintained the seal on JPMorgan Chase & Co.’s banking practices...
posted by The Emperor of Ice Cream at 12:14 PM on April 13, 2011 [1 favorite]
posted by The Emperor of Ice Cream at 12:14 PM on April 13, 2011 [1 favorite]
For once, I'm proud to be an Illinois resident. I'm old and cynical now, so my expectations of members of legislatures are usually measured in negative numbers, but Durbin's always been a middle-of-the-road, common-sense kinda Senator. I don't want to read too much into this one circumstance, but damn, it's satisfying to see.
posted by OneMonkeysUncle at 12:28 PM on April 13, 2011
posted by OneMonkeysUncle at 12:28 PM on April 13, 2011
By comparison, if the federal government levied a 3% tax on all credit/debit transactions, there would literally be rioting in the streets.
No there wouldn't. There would be grumbling on the internet.
posted by headnsouth at 12:29 PM on April 13, 2011 [8 favorites]
No there wouldn't. There would be grumbling on the internet.
posted by headnsouth at 12:29 PM on April 13, 2011 [8 favorites]
SpacemanStix: "I like this paragraph."
I was going to lead with that, but I didn't want to ruin the surprise.
posted by boo_radley at 12:31 PM on April 13, 2011 [1 favorite]
I was going to lead with that, but I didn't want to ruin the surprise.
posted by boo_radley at 12:31 PM on April 13, 2011 [1 favorite]
I <3 Dick Durbin.
posted by shakespeherian at 12:37 PM on April 13, 2011 [1 favorite]
posted by shakespeherian at 12:37 PM on April 13, 2011 [1 favorite]
"I hope you'll take a moment to share your thoughts so that I may continue to serve and represent your interests and concerns. An email form has been provided below linked to for your convenience."
posted by hal9k at 12:38 PM on April 13, 2011
posted by hal9k at 12:38 PM on April 13, 2011
Point by point rebuttal - I wished Obama worked like this.
posted by Benny Andajetz at 12:40 PM on April 13, 2011 [6 favorites]
posted by Benny Andajetz at 12:40 PM on April 13, 2011 [6 favorites]
Whoops. Only Illinoisians can comment. Go ahead and delete my previous comment.
posted by hal9k at 12:42 PM on April 13, 2011
posted by hal9k at 12:42 PM on April 13, 2011
Dimon knows he's overreaching. That he's successful at it is why he gets the big bucks. Durbin knows this, too, which is why this is just kabuki while the little guy gets screwed again. What do the banksters care about what happens now? They got theirs already.
posted by rhizome at 12:49 PM on April 13, 2011 [1 favorite]
posted by rhizome at 12:49 PM on April 13, 2011 [1 favorite]
The bankers would like very much to get some more, and more, and more....
posted by VTX at 12:53 PM on April 13, 2011 [1 favorite]
posted by VTX at 12:53 PM on April 13, 2011 [1 favorite]
I'd like to propose An American Day of Socialism, where every 50 years, for one day, we redistribute the wealth of America equally to all citizens. Then for the next 50 years, everyone can go back to grabbing everything they can for themselves without guilt.
Come on, it'll be awesome!
posted by Aquaman at 12:54 PM on April 13, 2011 [10 favorites]
Come on, it'll be awesome!
posted by Aquaman at 12:54 PM on April 13, 2011 [10 favorites]
Come on, it'll be awesome!
Hey, it's in the Bible!
posted by TheWhiteSkull at 1:02 PM on April 13, 2011 [3 favorites]
Hey, it's in the Bible!
posted by TheWhiteSkull at 1:02 PM on April 13, 2011 [3 favorites]
Aquaman: "where every 50 years, for one day, we redistribute the wealth of America equally to all citizens."
Dimon: "Hey, what is this dried bean in my cake? And where are we going?"
posted by boo_radley at 1:04 PM on April 13, 2011 [3 favorites]
Dimon: "Hey, what is this dried bean in my cake? And where are we going?"
posted by boo_radley at 1:04 PM on April 13, 2011 [3 favorites]
Wow, that was pretty strongly worded for a career politician. I think the thing I like best is imagining that Jamie Dimon is livid, frothing, apoplectic, at reading this.
posted by Xoebe at 1:09 PM on April 13, 2011
posted by Xoebe at 1:09 PM on April 13, 2011
Wow, that was pretty strongly worded for a career politician. I think the thing I like best is imagining that Jamie Dimon is livid, frothing, apoplectic, at reading this.Either that or they have a good ribbing next time at the fancy-peoples' club over scotches. "Good show, Dick, you really stuck it to me!"
posted by rhizome at 1:20 PM on April 13, 2011 [4 favorites]
Hey, it's in the Bible!
Only if you're some kind of dirty socialist Jew. Real God-fearing Christians* know that jubilees were totally superseded by New Testament, and that usury refers to... well, something worse than the interest rates check cashing companies and credit card issuers charge. And certainly not the interchange fees under discussion.
(*i.e., those who live by the rules of the Prosperity Gospel aka Mammon)
posted by namespan at 1:20 PM on April 13, 2011 [2 favorites]
Only if you're some kind of dirty socialist Jew. Real God-fearing Christians* know that jubilees were totally superseded by New Testament, and that usury refers to... well, something worse than the interest rates check cashing companies and credit card issuers charge. And certainly not the interchange fees under discussion.
(*i.e., those who live by the rules of the Prosperity Gospel aka Mammon)
posted by namespan at 1:20 PM on April 13, 2011 [2 favorites]
he knows his shit, and he's completely right.
Well, at least whoever drafted the letter does, but a good leader has good help, and this guy has gooooood help.
posted by Mental Wimp at 1:33 PM on April 13, 2011
Well, at least whoever drafted the letter does, but a good leader has good help, and this guy has gooooood help.
posted by Mental Wimp at 1:33 PM on April 13, 2011
rhizome: "Either that or they have a good ribbing next time at the fancy-peoples' club over scotches. "Good show, Dick, you really stuck it to me!""
Like this? (completely not safe for work)
posted by boo_radley at 1:35 PM on April 13, 2011
Like this? (completely not safe for work)
posted by boo_radley at 1:35 PM on April 13, 2011
Cheers to Durbin for this. Too bad Obama can't seem to get over being Jimmy Carter II.
posted by klangklangston at 1:54 PM on April 13, 2011 [2 favorites]
posted by klangklangston at 1:54 PM on April 13, 2011 [2 favorites]
I hope this is a sign that people are finally fed up enough to stand up for what's right, for once.
I know, I know.
posted by Phire at 2:37 PM on April 13, 2011
I know, I know.
posted by Phire at 2:37 PM on April 13, 2011
A strongly worded letter, a good speech, hearings with no legal bite but lots of soundbytes: we need more than words, unfortunately.
posted by The Emperor of Ice Cream at 3:10 PM on April 13, 2011
posted by The Emperor of Ice Cream at 3:10 PM on April 13, 2011
Mental Wimp: "he knows his shit, and he's completely right.
Well, at least whoever drafted the letter does, but a good leader has good help, and this guy has gooooood help."
It would not surprise me in the least if Dick Durbin wrote this or at least most of it. He really knows his shit and isn't afraid to get all up in someone else's shit either. I've always liked his no-nonsense, cogent approach to issues. I'm sure there's skeletons or something somewhere but I still dig the guy.
posted by KevinSkomsvold at 4:02 PM on April 13, 2011
Well, at least whoever drafted the letter does, but a good leader has good help, and this guy has gooooood help."
It would not surprise me in the least if Dick Durbin wrote this or at least most of it. He really knows his shit and isn't afraid to get all up in someone else's shit either. I've always liked his no-nonsense, cogent approach to issues. I'm sure there's skeletons or something somewhere but I still dig the guy.
posted by KevinSkomsvold at 4:02 PM on April 13, 2011
That Chase guy just got Dicked! Hard! Politicians should learn that populistic bombast, speckled with sound bytes will score them points. Oh, yeah. I forgot that our political process requires huge sums of corporate money. Better play nice. Sigh.
posted by thebestusernameever at 4:16 PM on April 13, 2011
posted by thebestusernameever at 4:16 PM on April 13, 2011
What we need more than anything is campaign finance reform that doesn't allow the wealthy to write the laws and own the government for their benefit.
posted by Daddy-O at 4:28 PM on April 13, 2011 [3 favorites]
posted by Daddy-O at 4:28 PM on April 13, 2011 [3 favorites]
Sound BITES. Not bytes. This has been a public service announcement.
posted by anigbrowl at 6:17 PM on April 13, 2011
posted by anigbrowl at 6:17 PM on April 13, 2011
It would not surprise me in the least if Dick Durbin wrote this or at least most of it.
Wasn't disparaging the guy at all, and appreciate the awesomeness of the letter and his likely command of the technical details. But he'd be fool not to have his technical consultants help him with it, though.
posted by Mental Wimp at 8:37 AM on April 14, 2011
Wasn't disparaging the guy at all, and appreciate the awesomeness of the letter and his likely command of the technical details. But he'd be fool not to have his technical consultants help him with it, though.
posted by Mental Wimp at 8:37 AM on April 14, 2011
And a reply from his office:
"Thank you for contacting me to share your views on the Federal Reserve's implementation of the interchange reform law that Congress recently enacted. I appreciate hearing from you.
Last year, Congress passed landmark legislation to reform the financial regulatory system. One small part of that was a change to the interchange fee system on debit card transactions in America. This bipartisan effort came after years of Congressional hearings and Government Accountability Office studies that made clear that the interchange system was on an unsustainable course. While I know that many in the financial services industry have vigorously opposed this reform, I believe this reform is essential for the sake of consumers, merchants and the American economy.
Debit and credit cards are rapidly replacing cash and checks in today's economy. Over half of all retail sales in America are now made with plastic, and that percentage is growing. There are benefits that come from the increasing use of these cards, but there are also concerns that can no longer be ignored.
Visa and MasterCard are the dominant players in the card industry, and their cards are used in about 80 percent of debit and credit transactions. Every time a sale is made with one of their cards, these card network companies take a cut out of the transaction amount. Some of this cut they keep, but most of it is routed along to the bank or credit union that issued the card as an interchange fee. Tens of billions of dollars are collected in interchange fees each year from those who accept cards, including large and small businesses, charities, and government agencies.
There is nothing wrong with fees that are transparent and set in a competitive market environment. That is not the case with interchange fees. Interchange rates are centrally fixed by the credit card companies.
The system is unfair to consumers, who pay tens of billions per year in hidden fees passed on to them in the form of higher retail prices. It is unfair to merchants, who cannot negotiate interchange fees and who can no longer refuse to accept the dominant card networks.
Last year's Wall Street reform bill calls for debit transactions to charge a fair and reasonable swipe fee. In crafting this necessary reform of the interchange system, Congress took careful steps to protect small banks and credit unions. Neutral analysts agree that the law's small-issuer exemption will give those issuers competitive advantages over their regulated competitors.
In short, interchange fee reform is necessary in order to ensure competition, transparency and choice in the debit card system.
Thank you again for sharing your views about this important issue. Feel free to keep in touch.
"
posted by boo_radley at 1:03 PM on April 14, 2011 [1 favorite]
"Thank you for contacting me to share your views on the Federal Reserve's implementation of the interchange reform law that Congress recently enacted. I appreciate hearing from you.
Last year, Congress passed landmark legislation to reform the financial regulatory system. One small part of that was a change to the interchange fee system on debit card transactions in America. This bipartisan effort came after years of Congressional hearings and Government Accountability Office studies that made clear that the interchange system was on an unsustainable course. While I know that many in the financial services industry have vigorously opposed this reform, I believe this reform is essential for the sake of consumers, merchants and the American economy.
Debit and credit cards are rapidly replacing cash and checks in today's economy. Over half of all retail sales in America are now made with plastic, and that percentage is growing. There are benefits that come from the increasing use of these cards, but there are also concerns that can no longer be ignored.
Visa and MasterCard are the dominant players in the card industry, and their cards are used in about 80 percent of debit and credit transactions. Every time a sale is made with one of their cards, these card network companies take a cut out of the transaction amount. Some of this cut they keep, but most of it is routed along to the bank or credit union that issued the card as an interchange fee. Tens of billions of dollars are collected in interchange fees each year from those who accept cards, including large and small businesses, charities, and government agencies.
There is nothing wrong with fees that are transparent and set in a competitive market environment. That is not the case with interchange fees. Interchange rates are centrally fixed by the credit card companies.
The system is unfair to consumers, who pay tens of billions per year in hidden fees passed on to them in the form of higher retail prices. It is unfair to merchants, who cannot negotiate interchange fees and who can no longer refuse to accept the dominant card networks.
Last year's Wall Street reform bill calls for debit transactions to charge a fair and reasonable swipe fee. In crafting this necessary reform of the interchange system, Congress took careful steps to protect small banks and credit unions. Neutral analysts agree that the law's small-issuer exemption will give those issuers competitive advantages over their regulated competitors.
In short, interchange fee reform is necessary in order to ensure competition, transparency and choice in the debit card system.
Thank you again for sharing your views about this important issue. Feel free to keep in touch.
"
posted by boo_radley at 1:03 PM on April 14, 2011 [1 favorite]
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posted by parilous at 11:53 AM on April 13, 2011 [3 favorites]