Talk was big in Washington about reining in Wall Street’s market casino after the disastrous financial implosion of 2008-09 landed the American and most European economies in the deepest recession since the Great Depression. Progress toward writing robust regulations for the financial industry and new consumer protection laws, however, has been exceedingly slow and has been put on an extremely bumpy path.
Congress finally managed to win the first major battle last summer, when it passed the Dodd-Frank financial regulation act after advocates for tighter regulation staved off a heavy lobbying challenge from Wall Street and the nation’s biggest commercial banks. True to their corporate benefactors, Republicans nearly defeated the reform act then.
Though they ultimately caved on the Frank-Dodd bill after a major attempt to filibuster reform to death failed, they’ve been busy since then trying to defeat reform on the next major battlefield – the effort to translate the act’s overhauled banking industry standards into practical, applicable regulations for banks. Republicans have also been busy trying to sabotage the new Consumer Financial Protection Bureau.
A major victory for reform nonetheless came last Wednesday when the Senate denied passage of a proposal to delay the imposition, for six months to a year, of rules that would sharply curtail swipe fees on debit cards issued by the nation’s biggest banks. The rules, written by the Federal Reserve, will now take effect as scheduled on July 21. They will sharply cut the amount of fees the large-bank issuers of debit cards now charge retailers for each separate debit-card transaction.
The debit-card processing fee per swipe at retailers’ cash registers would drop from an average high of 44-cents, down to 7-to-12 cents per transaction. That will put a huge dent in the $20 billion that banks now collect from retailers through debit-card processing fees. The savings may encourage more retailers to accept debit cards, and it certainly should improve retailers’ financial health.