The Senator, the Lobbyist, and the Debit Card Interchange Rule

DISCLAIMER: As always, this brief policy article represents my own research and opinions and does not purport to represent the opinions of nor was it funded by any third party organization.

"The only way that has ever been discovered to have a lot of people cooperate together voluntarily is through the free market. And that's why it's so essential to preserving individual freedom."  --Milton Friedman

"In general, if any branch of trade, or any division of labour, be advantageous to the public, the freer and more general the competition, it will always be the more so."  --Adam Smith


Q: What do you get when a United States Senator and a seasoned Washington Lobbyist meet at the Drive-Thru Window of Opportunity?

A: The Durbin Amendment, better known as the Debit Card Interchange Rule

As I had undertaken my research these past several weeks into the unconstitutionally confiscatory nature of the proposed rule, I began to more thoroughly question the impetus for the very inclusion of such an amendment to a financial reform measure largely spawned by the challenges posed by the mortgage market. What did debit card interchange fees have to do with protecting consumers from a few unscrupulous and irresponsible former mortgage lenders? And what motivated Illinois Senator Dick Durbin to bring his amendment to the Senate Floor be included in the Restoring American Financial Stability Act of 2010 when he did?


Initially it would appear that Senator Durbin, as a member of the Senate Leadership, simply recognized that the Congressional mood for financial reform legislation could easily absorb another "consumer protection" measure. Yet I couldn't help but question who/what had motivated this particular measure, since the public had not been clamoring for it and no definitive study of the debit interchange topic had concluded that it harmed either the consumer public or the sophisticated commercial enterprises that freely contracted to provide or benefit from debit card interchange services.

When a diverse array well-respected public responsibility groups, including the NAACP, the Hispanic Chamber of Commerce, the Black Chamber of Commerce, and the Conference of State Bank Supervisors, join together to urge Congress to revisit the well-funded and erroneous legislation, consumers immediately recognize that something is amiss in Washington.

The debit card interchange rule doesn't actually have anything to do with legitimate consumer protection. Financial services professionals have always supported the common-sense market-driven consumer protection measures and licensing requirements that protect the public from the few unscrupulous charlatans who engage in predatory practices. Since financial services professionals are simply honest, hard-working consumers with families themselves, they clearly recognize that protecting the integrity and public trust within the financial services industry has always provided a win-win outcome. The majority of potential misdeeds are squelched before any damage can be wrought due to internal control policies, ethics training, licensing requirements, and the self-policing nature of the industry.

The debit card interchange rule was a pro-business creation born upon a conference room table within Suite 1100 at 325 7th Street N.W. in Washington, D.C., home of the National Retail Federation, the National Restaurant Association, the National Council of Chain Restaurants, and the Merchant Payments Coalition. These trade associations represent corporate retail and restaurant conglomerates that have long sought to unilaterally renegotiate the debit card interchange fees to which they had contractually agreed. Apparently dissatisfied with their own business leaders' efforts employing commercial negotiation in the free market, these organizations turned to trade association lobbyists to continue the effort using Federal Government confiscatory action.

Enter Rob Green, Executive Director of the National Council of Chain Restaurants (NCCR), who succeeded Jack Whipple last month to manage all NCCR government relations advocacy. Preceding his move within the confines of Suite 1100, Green was Vice President, Government and Political Affairs at the National Retail Federation (NRF), where he served as a senior lobbyist for the world’s largest retail trade association during the influential time leading up to Senator Durbin's introduction of the debit card interchange "consumer protection" rule.

Lobbyist Green immediately recognized that a perfect storm would briefly open the display window of opportunity for the NRF during which time he would propose a government price-fixing rule that would amount to a  72.7% reduction in interchange revenue for the financial services industry that had built the networks and provided the fraud reduction technology that facilitated cost-savings for consumers and businesses. Imagine if the NRF had found themselves on the receiving end of proposed legislation that would have mandated reducing their retail prices by 72.7% to those very same consumers? Would the NRF have simply "embraced" that legislation? We think not.

I am certainly not accusing Senator Durbin or Rob Green of any violations of federal law, but FEC records detail that more than just burgers and fries were in the bag when the honorable Senator and his colleagues met the former-NRF lobbyist and current NCCR Executive Director at the drive-thru window of opportunity. You yourself may follow the money transfers disclosed in publicly-available documents. While some of the world's largest big box retailers represented by Green poured money into organizations associated with Durbin and his former aides lobbying for the rule, the good Senator wove the rule into the larger legislative framework intended to curb the egregious mortgage-related abuses perpetrated by the few.

From a corporate executive viewpoint framed to maximize shareholder returns, one can certainly understand why the investment into lobbying appeared (and continues) to be a prudent investment. But given the certain unfavorable financial impact that the debit card interchange rule would impose upon American families struggling to emerge from the recent financial downturn, I would urge Senator Durbin to assume a new ethical stance and join his colleague Representative Barney Frank to support further objective study of the issue in the light of day and allow the results of such studies to be fully disclosed to non-lobbyists to allow for a proper analysis of the real impact upon the American family's budget.


For leading this effort on behalf of our American families, I applaud the consistent and untiring effort being put forth by Frank Keating (ABA) and Fred Becker (NAFCU) nationally, as well as John Llewellyn (Michigan Bankers Association) and Jordan Kingdon (Michigan Credit Union League) to educate the public about the very real household economic effect that implementation of this dubious rule would wreak. Ultimately, our collective efforts to preserve consumer choice and to protect business from government unconstitutional price-fixing will prevail in the bright light of day.

FAMILY FOUNDATIONS BUILD UPON THE BEDROCK OF FAITH

One of the symptoms of an approaching nervous breakdown is the belief that one's work is terribly important. ~Bertrand Russell

To us, family means putting your arms around each other and being there. ~Barbara Bush



It's been an ironic paradox that the more I have been sought by my Friends, my clients, while continuing to maintain my Family balance and Faith as my core Principles, the less time I have devoted to writing. I jokingly remind myself that there will be time enough for writing when clients cease to engage me.

Reflecting back upon my last article nearly five months ago--and smiling at the mutually-profitable connections I have made with new Friends as a result--I find myself today once again applying those same timeless lessons to myself amidst a Family situation many of us have faced.

...Last evening, following a day focused upon a thoroughly-fulfilling Process Improvement engagement for a corporate client, I arrived home with just enough time to eat Supper and chat with my beautiful Bride before we were to depart for Mass. After Mass, I would have attended a Commission meeting before heading back home for the night.

God had a different plan for me and my Family the moment our six-year-old Daughter called us from upstairs following the sudden onset of a stomach bug. Details can be spared, but needless to say we embraced and comforted our tear-stricken Daughter, then set to sharing duties as my Bride attended to the bath and I to the carpet cleaning.

Without hesitation, I sent word soon after that I would not be in attendance at my meeting, and recognizing that the following day would not avail our daughter of school attendance, I cancelled my schedule for the following day to be exactly where I needed to be. My Bride made necessary phone calls to notify school, teacher, etc. of our Daughter's impending absence, and arranged to take the second day off if necessary.

Yes, we three were awakened several times throughout the overnight...changing bedding, washing up, comforting our Patient. Today I have laundered much bedding, bath linen, and clothing--not quite the project and meetings in which I had engaged the prior day. But today I have persevered and smiled as our Daughter, between uncharacteristic naps, has optimistically and whimsically declared war on the germs that have derailed her.

I am exactly where God, my Bride, and our Daughter need me to be today. We only have today, as there are no promises of tomorrow. In my business, I strive to always stay within the client's budget; to exceed expectations; to execute the deliverables ahead of schedule--BUT above all, I make no apologies for having built my Family's foundation upon the bedrock of our Faith. I am accountable to God today and at my final hour as I stand before Him at Judgment to faithfully recount my Stewardship of his Entrustment to me.

...Yes, I conduct my business with that very same level of Integrity. Tomorrow I will be serving my Friends again in one-on-one and group sessions to achieve their outcomes, but ever at my core will be my Principles of which I have been most fully reminded this day. Thank You, Lord, for a Life: Fully Lived!

TODAY'S QUESTION:  Do we recognize God's Will for us in Life's "interruptions" and "inconveniences"?

VALUES-DRIVEN LIFE

"Selfishness is not living as one wishes to live, it is asking others to live as one wishes to live." ~Oscar Wilde


"To thine own self be true, and it must follow, as the night the day, thou canst not then be false to any man." ~William Shakespeare

Doris and I worked through several productive sessions as we plumbed her history to identify and dismantle the notions of "must", "have to", and "everyone does" that typify the externally-imposed value systems of those we modeled as we grew and matured.
 
Every one of us, whether we consciously identify and manage it or not, has a list of values that drive us toward certain behaviors and situations. Likewise, each of us has a list of values that drive us away from certain behaviors and situations. Doris also came to realize that while we each have a list of aspirational values that drive us toward our fully lived Life, habit and perceived necessity often work to override our aspirational values. We find ourselves climbing the ladder only to learn it was leaning against the wrong tree.
 
While love, integrity, commitment, family, achievement, and balance appeared on her list as she worked to identify the Life she intended to fully live, Doris also conceded that external expectations as well as her internal desire to please others had led her to live out the values of deference, control, independence, intensity, obedience, and significance. Let me be very clear: every individual can choose to live a full Life by the values most appropriate to him/her. It is not for I or any other individual to tell YOU what values YOU should choose to guide YOU how you should order them to achieve the fully lived Life. But, be absolutely certain that you are the architect of your own values system, and not that you are the laborer driven by someone else's values system.
 
I coach individuals and groups of varying sizes. Over time I have repeatedly encountered two commonly-observed causes of living out of congruence with one's own identified values list: (a) real or perceived financial obligations that no longer apply; and (b) fear of disapproval by persons perceived to have authority over us. Please note that both of those causes refer to perceptions that individuals may hold. Perception will lose its power over you once you bring it into the bright light cast by your own self-chosen values list.
 
I've long shared the guiding principle with my clients, "If you fail to consciously choose, then you succumb to the choices of others..." We will each be driven by values, so let us commit to living our own highest values, not those we believe someone or "society" expects us to have.
 
TODAY'S QUESTION: Have YOU committed to fully live your Life by your highest values...or are YOU continuing to live the life that YOU perceive and believe that others expect YOU to live?
 
Write the top 10 values that are habitually driving your daily routine.
Pause.
Then write the top 10 values that you are committed to adopting to fully live the Life of your own making.
We will then build from there together.

WIN BY LOSING

No, I haven't lost my mind. Like many of you, I enjoy my creature comforts and lifestyle perks. We live in challenging economic times full of societal upheaval. For many of us, the "rules" appear to have been broken. Good people are hurting, but instead of languishing in the pain of economic hardship, we collectively must strengthen the foundation upon which our lives have been constructed.

I am suggesting that you take a step away from your material world and close your eyes and imagine your world if your status symbols, titles, accolades and possessions were severely diminished or taken away from you.

Who would you be? Would you still be happy with yourself? Could you be? Certainly.

How would your friends and loved ones view you? Critical in that response would be the realization of who your real friends truly are. What about your spouse? Children? Parents? Would they still love you? Again, certainly.

Only you have the power to denigrate your personal power and potential to rebuild yourself. You spouse and children love you. Your intelligence and education, as well as your experiences, cannot be taken away from you. You must identify how much of your life you truly control. You must rewrite the rules while abiding by your integrity so that you can rise anew.

We often will not make critical changes in our lives until we are faced with crisis. Sometimes we can only win by losing.

TODAY'S QUESTION: If you lost every material possession and every mark of status, what would YOU be left with?