There’s an old expression that states the “path to hell is paved with good intentions.” In the case of big government paternalism, it’s pretty thick pavement. I don’t think Ronald Reagan could’ve fully grasped the prophetic nature of his good natured jab at liberalism that the “nine scariest words in the English language are ‘I’m from the government and I’m here to help.’” Legislation currently being debated in the U.S. Senate illustrates the truthfulness of such a statement in a whole new way.
In yet another hollow populist appeal, liberal Senators are seeking to exert more control over the financial services industry, ignoring the fact that it will hurt American consumers. Senator Dick Durbin (D-Ill) is advocating for a new financial reform measure, which will cap the amount banks can charge merchants on debit card transactions at twelve cents. Advocates, like Durbin, have attempted to argue that their bill will benefit small businesses across the Country…ignoring the fact that many smaller community banks are, in fact, small businesses. Currently, most banks offer free checking accounts to consumers, because income from debit card swipes earns the bank enough to off-set the costs of maintaining the account for the customer. If Durbin’s bill becomes law, however, the days of free checking accounts will be in the history books.
In a stunning example of why government shouldn’t meddle in free markets, this bill would eliminate much of the nearly $16 billion banks across America earn in debit card fee income, only to have it passed on to every small business and individual bank customer in the country. Banks, many of which are already struggling with a sluggish economy, will simply raise fees on personal and business checking accounts, to make up for such a severe loss of revenue. This will end-up costing financial services consumers billions in account fees annually. Durbin asks “are we going to stand here and say we can’t protect small businesses across America struggling to survive?” The man has answered his own question: he cannot protect businesses from the cost of financial services, as they will be assessed in checking account fees if not debit card fees (banks aren’t charities, after all), and he’ll actually destroy many small community banks in the process. This will led to a contraction in the community bank industry which, in turn, will make it more difficult for small businesses to obtain credit and conduct banking operations, further restricting their ability to survive and thrive.
This sort of government “do goodery,” which often leads to economic stagnation and skyrocketing costs, is something the American People could do without. Congressional interference in the private sector rarely accomplishes its intended purpose, and usually ends up inflicting more pain than it alleviates. This inane effort reminds me of fmr. President Bill Clinton’s 1993 inaugural pledge to ensure that nearly 22 million uninsured Americans became insured by the time he left office. This was, of course, to be accomplished by government mandates on the insurance industry. By the end of his term, the number of Americans without health insurance coverage rose to over 44 million, doubling the 1993 figures! It looks like government programs didn’t do the trick then, and it’s highly unlikely they’ll do the trick this time.
The end-game for folks like Senator Durbin isn’t the protection of consumers; it’s the growth of government. They want to claim consumer protections, while consolidating the banking industry by regulatory fiat. At the end of the day, if the Federal government controls the financial industry, they control the economy. Such is the aim for secular-progressive central planners like Durbin. Ultimately, consumers are to Dick Durbin what children are to the National Educators Association: pawns in their endless game for power and personal profit.
Further reading from Fox News: http://www.foxnews.com/us/2011/06/08/senate-showdown-over-limiting-debit-card-fees/