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  • Senate Considers Bills to Protect Consumers, Small Business

    The Senate is looking to do some more spending with a vote today on the Economic Development Revitalization Act, which will cost $1.5 billion through 2016 and an additional $760 million thereafter. The goal? Reauthorize funding for the Economic Development Administration — a vehicle for political pet projects, masked as a program that purports to give financial aid to economically distressed areas.

    While the bill is more unsavory spending from an already bloated government, two proposed amendments are worth mentioning: Sen. Olympia Snowe’s “Freedom Act,” which targets burdensome federal regulations; and Sen. Jon Tester’s amendment to delay for six months Federal Reserve-mandated caps on debit card “swipe” fees set by Visa and Mastercard.

    Heritage’s James Gattuso explains the provisions of the Freedom Act and its favorable impact on small businesses:

    The Freedom Act would tighten requirements that agencies consider the impact of regulation on small businesses. Among these: allowing small businesses to challenge rules in court when they are proposed, rather than waiting until they are finalized, and expanding the use of small business review panels to assess rules before they are adopted. It also includes an innovative approach toward getting agencies to conduct meaningful reviews of existing rules for small business impact. Such reviews are already required by law, but are rarely carried out in any serious way. The Snowe Amendment would dock an agency 1 percent of its budget, if its inspector general finds that it did not conduct an appropriate review.

    The incremental, common sense changes to protect small businesses should be non-controversial. But many supporters of more regulation are aghast. They say requiring regulators to follow all these rules would tie them up in paperwork, diverting resources from other areas, and make it harder for them to do their job. That’s overblown – the procedural hurdles are relatively mild. And, in any case, letting regulators experience some regulatory burdens of their own may be no bad thing. Perhaps then they might see the effect of red tape they impose on others.”

    Tester’s measure is intended to “prevent consumers and rural banks from experiencing serious harm.” Heritage’s Diane Katz explains what the fees are all about, and how consumers and banks will be impacted:

    The fees (a.k.a. “interchange fees”) refer to bank charges paid by retailers to process debit card transactions. At the urging of some of the nation’s biggest retailers, lawmakers fashioned a provision within the vast new regulatory regime known as Dodd–Frank that requires the central bank to impose new limits on the fees that have averaged about 44 cents per transaction (or 1.14 percent of total purchases).

    The Fed’s proposed cap of 12 cents per transaction—a reduction of 72 percent—has provoked an outpouring of comments from the banking sector and other “stakeholders.” And for good reason: the proposed limit translates into a potential loss of $12 billion in bank and credit union revenues . . .

    Financial institutions with less than $10 billion in assets would be exempt from the swipe fee regulation, but many small bankers still foresee problems. Higher swipe fees on their cards, they say, could undermine their competitiveness.

    The fee cap, in conjunction with a slew of other new credit card regulations, is also costing consumers in the form of higher fees on other banking services to make up for the lost revenues.

    Posted in Economics [slideshow_deploy]

    4 Responses to Senate Considers Bills to Protect Consumers, Small Business

    1. West Texan says:

      Freedom act? Why do any of these senators feel it's their right to have any say in intrastate business affairs. Last I checked, they were only to regulate commerce (mediate conflicts) between the individual states. Rep. Boehner did well to have the house read the constitution. It's apparent Reid must to do the same for his chamber. Besides, like an over prescribed medicine chest, it's time to eliminate the Fed's avalanche of onerous rules. That, my friends, is a true freedom act.

    2. Bobbie says:

      America doesn't need an expense to reauthorize non-necessities and unconstitutional governing. Deregulate so there will be no court time or costs necessary.

      "Snowe Amendment would dock an agency 1 percent of its budget, if its inspector general finds that it did not conduct an "appropriate" review"… that term seems awfully convenient for Ms. Snowe.

    3. West Texan says:

      PS: I do see Gattuso's point.

    4. George Colgrove, VA says:

      "While the bill is more unsavory spending from an already bloated government, two proposed amendments are worth mentioning: Sen. Olympia Snowe’s “Freedom Act,” which targets burdensome federal regulations; and Sen. Jon Tester’s amendment to delay for six months Federal Reserve-mandated caps on debit card “swipe” fees set by Visa and Mastercard."

      Make two separate bills that focus on Snowe's and Tester's work and stop the rest of the bill. Yes Snowe's and Tester's work need to be considered – they should be on their own merits. Regardless of these two considerations being added to the bill, "the bill is more unsavory spending from an already bloated government." We need to start being hard-lined about NEW spending. Our litmus test should be – is it funded with real cash? If it is not, then the legislation needs to add a corresponding cut elsewhere that totals double what the new spending is.

      The government is $61 trillion underwater. I think the work in front of them is not building new programs – it is getting rid of old ones.

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