Pogie at Intelligent Discontent has a great piece up explaining how Jon Tester is looking out for Montana community banks. You should read it, as it explains that Tester’s position on the swipe fee issue is about keeping Montana banks and credit unions from failing.
The issue is complex, and the way it has been reported hasn’t helped. Jon Tester is siding with Montanans in an issue that pits the well-funded Walmarts of the world, who stand to benefit from the fee change, against Montana consumers and small businesses, who will lose out. Lowering the swipe fees to a level below the cost of administering the transactions would put smaller banks and credit unions out of business–or force them to drastically raise other costs for them to stay open. The Chairman of the Federal Reserve says our small Main Street banks and credit unions could fail if this government price-fixing moves forward.
That leaves fewer banks and credit unions in Montana – we’d be left with only a couple of banks, and those would likely be of the big Wall Street variety. This hurts Montana customers and businesses.
It’s like what Montana farmers have seen with consolidation in agri-business and family farming in rural America. When big agri-businesses consolidated, they were able to dictate to farmers an ranchers how much (or rather how little) they would pay for the products of family farmers and ranchers, and because there was no where else to go, family farms had to take it.
With banks, we’d have a similar problem. With less to choose from, we’d give the fewer big banks that remain more power to set and raise prices on services we need, checking accounts, car loans, mortgages, and nowhere else to go if we didn’t like what they were charging. So it’s a good thing that Tester’s doing what he is doing – even though it’s hard to explain.