The Fed Gives JP Morgan Chase Another Multi-Billion Dollar Bailout

Remember that swipe fee measure that passed the Senate twice? It lowered the amount credit card companies can charge merchants to $.12 a transaction. It was a stunning victory that retailers (which admittedly includes WalMart but also includes your locally owned business struggling to stay in business) won that battle twice.

Well, lucky for the banksters, they had one more ace in their pocket: The Federal Reserve, which just cut the baby in half and set transaction fees at $.21 plus some anti-fraud amounts.

The Federal Reserve is set to limit the fees that banks charge retailers for swiping debit cards to 21 cents, a higher cap than initially proposed.

Banks succeeded in convincing the Fed that its initial proposal of 12 cents was too low after a six-month lobbying blitz. They currently charge an average of 44 cents per swipe.

The Fed will formally adopt the rule Wednesday, which was required under the financial regulatory law enacted last year. The rule takes effect Oct 1, later than expected.

In addition to the 21-cent cap, the rule will also allow banks to charge a fraction more to cover the costs of fraud prevention.

Good thing the Fed is purportedly insulated from politics. Because otherwise that 6 month lobbying campaign would be responsible for the Fed caving where even our craven Congress did not.

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42 replies
  1. PeasantParty says:

    Good thing the Fed is purportedly insulated from politics. Because otherwise that 6 month lobbying campaign would be responsible for the Fed caving where even our craven Congress did not.

    It certainly is! I mean, Congress allows him to walk over them and then kick them in the face! He may be insulated from the backlash, but he certainly seems to be legislating from his extremely high perch.

    Oh hell, he will just throw another log on Fed fire that costs taxpayers a billion to keep congress from even mentioning it.

      • bmaz says:

        Yeah, that’s what I figured. They could have just set the initial mark at .12 for say two years and then adjustment by the Fed or something, but didn’t. Probably with the knowledge (and likely pre-understanding) the Fed would save the poor banksters.

        • DWBartoo says:

          Winkin and Nod have been busy of late, and early, as well, one imagines, bmaz …

          Whocoulda’magine?

          Ah, well … truly we’ve the best gummint … which money can buy.

          DW

      • Disgusteddan says:

        Why play this like the Fed did something the Congress didn’t want? Obviously, this was the plan all along. Congress was too scared to do it themselves. Rather than pass a law with a hard number, they passed a law which left it up to the thieves to determine how much they would continue to steal from us.

        SOP

    • PeasantParty says:

      Yes it was. However, they gave the banks and the Fed the priority on that issue. In the meantime, the repugs are trying to repeal most all of the sections of the bill.

  2. Brian Silver says:

    “Swipe” fees are aptly named. The banks basically threatened that if they can’t get their profits this way then they’ll use their monopoly power to get them some other way.

    • emptywheel says:

      Particularly since JPMC is such a big player in state-based benefit cards, I would have liked to see states more actively involved in the fight. JPMC was threatening to “unbank” millions, even while they were also “swiping” money from people on unemployment insurance.

      • PeasantParty says:

        Correct! They are holding the Unemployment Benefits cards, the Food Stamps cards, the temporary employment agency cards, and anything else they can get their grubby hands on.

  3. DWBartoo says:

    Hmm …

    “Fraud prevention”?

    Fraud?

    Banks alot, Fed.

    I cannot believe that the term, “fraud”, may even properly be used in the very same paragraph as the magical word, “banks”.

    This is far too close a juxtaposition and might well result in terrible misunderstandings and unfortunate mistrust.

    And the sly suggestion that “lobbying” had anything to do with this erudite and impeccable decision of a great privately controlled institutiopn is precisely an example of such misunderstanding, leading many to develop a distrust of the Fed and its unimpeachable pronouncements and proclamations.

    For shame!

    ;~DW

  4. newz4all says:

    OT and apologies if this has been covered / discussed previously

    Microsoft admits “Patriot” Act can access EU-based cloud data

    At the Office 365 launch, Gordon Frazer, managing director of Microsoft UK, gave the first admission that cloud data — regardless of where it is in the world — is not protected against the USA PATRIOT Act.

    Frazer explained that, as Microsoft is a US-headquartered company, it has to comply with local laws (the United States, as well as any other location where one of its subsidiary companies is based).

    Though he said that “customers would be informed wherever possible”, he could not provide a guarantee that they would be informed — if a gagging order, injunction or US National Security Letter permits it.

    He said: “Microsoft cannot provide those guarantees. Neither can any other company“. ( emp in original )

    http://www.zdnet.com/blog/igeneration/microsoft-admits-patriot-act-can-access-eu-based-cloud-data/11225

    http://www.zdnet.com/blog/igeneration/summary-zdnets-usa-patriot-act-series/9233?tag=mantle_skin;content

    ( via ) http://www.rawstory.com/rs/2011/06/29/microsoft-director-admits-e-u-data-not-exempt-from-patriot-act-spying/

    • PeasantParty says:

      So is Golden Sacs, er Goldman Sacks. In fact, all the major banksters are players with the Fed. That is why they all fought back against the Audit the Fed bills. They don’t want America to know what they have been up to.

  5. Bluetoe2 says:

    One can hope that somewhere in this country or perhaps at a cafe in some European capital, someone or group is setting out a rationale, foundation and strategy for overthrowing a corrupt system that has become incapable of self-correction or reform.

  6. kipchuk says:

    To be expected. They are not banksters (banking gangsters) for nothing. Bernanke and Geithner (and Obama) are in their pockets, having been spawned by the financial system banksters control.

  7. dagoril says:

    YOU are not paying the swipe fee…the merchant who lets you swipe is. They will of course just raise all of their prices to offset the fees. So even if you write a check or pay cash, you will still feel the sting of this.

    Which is no doubt why it was designed this way. Sting the poor and middle class to death so that the obscenely rich can get slightly more obscenely rich.

  8. prostratedragon says:

    This makes me growl.

    Wonder if he’ll get an office at the new Gary Becker Milton Friedman center* when it’s finished?

    ____
    * The addition of Becker’s name is new to me. They were trumpeting the Friedman center, whose creation, this being Chicago (and especially the U.) we’re talking, naturally involves the takeover of land already in use, for months leading up to the Olympic bid (which itself would have taken over most of the Olmstead park that’s 10min walk away from CTS/Rockefeller Chapel). Apparently that name focus grouped badly, but trusts being what they are, heh-heh, a deft solution was needed.

      • prostratedragon says:

        And a global take on the Friedman Institute from mainly the same group of faculty, this maybe familar to some as it’s published at Naomi Klein’s site. These professors, aided by the good news from the IOC, are to be commended imo for at least getting that triumphalist fff blare of sackbuts strutting down the Midway Plaisance down to maybe just a quick f accompanied by furtive glances.

  9. radiofreewill says:

    It’s times like these – when the survival of the empire hangs in the balance – that reasonable people of all diverse opinions need to put down their differences and come together in a unified block to reject the neo-cons’ Mad Max Irrationality as far-too-reckless a tactic in such gravely serious circumstances.

    All good people who really care about our America need to take their ‘jerseys’ off for just a minute here and consider that Boehner and McConnell are holding our entire monetary system hostage in a mutually-assured-destruction pact – in order to protect their greedy rich patrons.

    The wealthiest 5% are willing to destroy everyone else’s quality of life – if the rich have to pay a single dollar more in tax – in order to get us out of the situation that their very greed got us into to begin with.

    That’s Irrational behavior to the point of corruption and ideological martyrdom being the only possible explanations – neither of which should get their hands on the scales of our best considerations for the way forward in these dark times.

    To focus on our surface differences at the negotiation table and not see the lumpy vest under the suit of the ‘bad actor’ – would be to miss a genuine call to community action – before it was too late.

    “The history of the failure of war can almost be summed up in two words: too late.

    * Too late in comprehending the deadly purpose of a potential enemy.
    * Too late in realizing the mortal danger.
    * Too late in preparedness.
    * Too late in uniting all possible forces for resistance.
    * Too late in standing with one’s friends.”

    ~ General Douglas MacArthur

  10. harpie says:

    Arrests of top bankers finally begin; Glenn Greenwald; 6/30/11

    In Afghanistan

    Heh!

    […] While Afghanistan is hardly a model of the rule of law — the arrests were effectuated by a corrupt government under severe pressure from outside factions on which they financially rely — it’s nonetheless true that in the U.S., even that minimal level of accountability seems impossible […]

  11. harpie says:

    O/T but related to Koh’s testimony [and linked at GG’s]:

    The Lawless Presidency; Bruce Ackerman; The Daily Beast; 6/28/11

    Obama’s lawyers are foundering in explaining the legal rationale for his Libyan adventure. Bruce Ackerman on our broken system of giving presidents legal advice—and how to fix it. […]

  12. tanbark says:

    Thass okay, guys; God’s in his heaven and Bill Daley’s White House Chief of Staff…keepin’ close track of that $8 million in stock that he owns in Morgan-Chase.

  13. racetoinfinity says:

    The Fed is not insulated from anything but accountability to the public for its good. It’s the servant and tool of Wall St. and big Corpa, and always has been. We need a national bank – see Ellen Brown’s Web of Debt – http://www.webofdebt.com.

  14. Felix Branson says:

    The latest version of the Fed’s final debit interchange rule has not changed much. It is still good news for retailers and bad one for issuers. It is also still bad news for consumers who are already feeling the rule’s side effects, even before it has taken effect. Anticipating lower revenues, banks have begun creating new or expanding existing revenue sources. As a result, free checking accounts are going away, new bank fees are being introduced and old ones increased, interest rates are being hiked, rewards are being slashed, etc.

    So the damage to consumers is already done and it will not be reversed, even if the Fed eventually decided not to change the interchange status quo after all. What we have here is a government-mandated redistribution of revenues from one industry to another, something it has no business doing. http://blog.unibulmerchantservices.com/debit-card-fee-limit-lifted-to-24-cents-consumers-will-still-pay-for-it

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