by Mark Rhoads
Sen. Dick Durbin (D-IL) had a fine education at Georgetown University from 1962 to 1969 in relatively narrow special fields such as foreign service studies and the law. But his primary career over the last forty years has been devoted to seeking and holding politcal office, not the practice of law. I think even some of his fans might admit that economics has never been his strong suit.
Durbin had no background in medicine either, but after he lost for Lt. Governor in 1978, Durbin somehow wound up teaching as a so-called "adjunct professor" for Southern Illinois Universtity School of Medicine. Still other versions of Durbin's resume say his title was "associate professor of Medical Humanities." That sure sounds like an impressive title on a resume, but one wonders what it really means.
As you might have guessed, when you ask Google for a standard definition of what the term "Medical Humanities" means, you come up with dozens of fuzzy college "definitions" that do not define and translate roughly from Gobbledygook to plain English as "whatever we think it means." Whatever Durbin did to earn his part-time salary at SIU, it did give him a place to land while he was out of office. SIU had a habit for many years of finding a nice warm and dry nest for out of work Democrats.
By some mysterious process, Dick Durbin last year used his expertise in foreign service studies and "Medical Humanities" to become an expert on banking and finance in general and what correct bank card swipe fees should be in particular. In May 2010, Durbin slipped an amendment (I have not been able to find public hearings on this) on to the Dodd-Frank financial reorganization bill to give the Federal Reserve, which Durbin must think has nothing else to do, the responsiblity to determine what are "proportional and reasonable" fees that a bank may charge for a customer to swipe a credit or debit card. In other words, the unelected and unaccountable staff at the Federal Reserve will vainly try to pick winners and losers in the credit card industry.
Does the law rquire the Federal Reserve to actually investigate cost factors such as maintenance and security in order to determine what is a "reasonable" fee? Of course not. The decision is as arbitrary as possible. Durbin comes from the "Let's just wave our magic wand" faction of the silly wing of the Democratic Party. This is the same silly wing that tried to use the wand on caps for ATM fees regardless of where the ATM was located, who managed it, and how much it cost to build, maintain, and keep secure.
Durbin wound up being a hero to some small retailers and some smaller banks who were interested in getting a negotiating advantage over big banks.
Are card swipe fees really going down? No they are not. In fact, Master Card is raising fees on small transactions of under $5, the kind you make when you swipe a card at a coffee shop or at McDonald's. When Dick Durbin, the intellectual giant expert on banking matters, studied at Georgetown Law School, he apparently never heard of the law of unintended consquences that often applies when the government tries to use its magic wand to set and control prices on goods and services.