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Thursday, Apr 28, 2011 10:20 PM UTC

How swipe fee politics have crippled Washington

In the midst of a lobbying war between banks and retailers, there's no time left for governing the country

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Topics: Bank Reform, How the World Works, Wall Street,

How swipe fee politics have crippled Washington

Anyone who thinks the Huffington Post isn’t committing acts of real journalism needs to carve out some time to read Zach Carter and Ryan Grim’s epic three-weeks-in-the-making 8000-word saga on interchange fee reform, “Swiped: Banks, Merchants And Why Washington Doesn’t Work For You.”

I’ll be honest — when I saw my first tweet this morning recommending this story, I whined to myself, but I don’t wanna read 8000 words on a lobbying battle between big banks and big retailers. But by the fifth tweet, I knew I had to suck it up — the Internet’s echo effect had kicked in: Read this: It’s important.

And I’m very glad I did — because “Swiped” isn’t just a story about a savage fight to control the billions of dollars of revenues that accrue from the fees charged every time we use our debit cards — it’s an explanation of why our government is so crippled, so unable to forthrightly confront our real problems.

The swipe fee debate, as mundane as it may appear, is emblematic of how Washington works today — and helps explain why Congress hasn’t passed an appropriations bill in years, can’t write an annual budget, is flirting with defaulting on the country’s debt and effectively gave up on job-creation efforts in the midst of a brutal economic downturn. There are, to be sure, a variety of reasons that Congress is zombified, but one of the least understood explanations is also one of the simplest: The city is too busy refereeing disputes between major corporate interest groups….

“Every time we go in to an office and tell them we’re here to talk about interchange, they cringe,” says Dennis Lane, who makes regular lobbying trips to Washington and has owned a Massachusetts 7-Eleven for 37 years. “I think there’s been more lobbying — there’s been more hours and minutes spent on Capitol Hill discussing interchange reform — than there has been talking about a shutdown of the government.”

Read it. It’s important.

Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21. More Andrew Leonard.

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After thirty years in which the principle that markets know best ruled economic policy-making in the United States, the great financial crisis of 2007-2008 brought the deregulatory era to a shrieking halt. The challenge now facing lawmakers and the Obama administration is whether they can craft a new set

of rules that will prevent an out-of-control Wall Street from dragging the entire global economy into the gutter once again.
But expectations for bank reform are low. The proposals being debated in Congress don't do enough to solve the problem of too-big-to-fail financial institutions, or to protect consumers. Even worse, to gain enough Republican votes to guarantee passage, Democrats will likely make compromises that further weaken the bill. Despite the greatest financial crisis in more than 70 years, the U.S. government still doesn't have much appetite for meaningful reform.
See also: Bank Bailouts, Ben Bernanke, Goldman Sachs, Mortgage Crisis, Timothy Geithner, U.S. Economy, Wall Street

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