Economic Development Revitalization Act Of 2011
Mr. President, I believe we are on the pending amendment? Let me compliment Senator Boxer for her leadership on this bill. She pointed out this EDA bill brought forward is about jobs. It is about offering jobs in underserved areas. These…
Mr. President, I believe we are on the pending amendment?
Let me compliment Senator Boxer for her leadership on this bill. She pointed out this EDA bill brought forward is about jobs. It is about offering jobs in underserved areas. These are areas in which it is difficult to create jobs in good times, but in hard times they get hit even harder. The EDA program leverages a small amount of public support for private sector investment that creates jobs in underserved areas.
In my State of Maryland, EDA projects have been very successful in bringing jobs to the rural parts of Maryland--to western Maryland and to our eastern shore. They have leveraged private sector investment, and we maintained and created jobs.
Yesterday on the Senate floor I gave specific examples of EDA projects in western Maryland and on the eastern shore of Maryland. I talked about an old manufacturing plant that was saved under an EDA grant, leveraged 10 to 1 with private sector investment, saving over 100 jobs and creating another 20. These are jobs that are important for economic growth in our community.
We all understand this recovery has been a very difficult one for us to get moving at the pace of job growth that we know we need for this Nation. We all talk about what we can do for our budget deficit, but I hope we all would agree the most important thing we can do would be to create more jobs.
The majority leader has brought forward three major bills now to create jobs. We would like to have a little cooperation from the other side of the aisle so we can get these bills to the President for signature. The FAA bill, which deals with the modernizing of our air system, which will create jobs and will make air transportation safer, is caught up in conference. Let's get it done and bring it to the President. We had the SBIR bill before us that will help small businesses that are in innovation as far as job growth. We had so many nongermane amendments offered to it we could not get it to the floor of the Senate.
Now we have an EDA bill that came out of the Environment and Public Works Committee by a near unanimous vote, that over the history of the EDA has not been controversial in its reauthorization, and now it looks as if we are going to see numerous nongermane amendments offered in an effort, basically, to just ignore the importance of the underlying bill that can create jobs for our communities.
I urge my colleagues to, yes, come forward with their amendments. Let's debate them. If they are not relevant to creating jobs under the EDA bill, then let's be reasonable. Let's not have a whole series of amendments that are totally beyond the scope of this bill, such as the debt limit issue or repeal of our financial reform of last year. I don't mind debating those issues, but they should not be debated at this particular moment.
I do hope we will be able to get to the reauthorization bill. I pointed out yesterday that one of the highest priorities, from our local people in Maryland, on need was additional help from the Federal Government for planning dollars. Planning dollars allow local communities to develop a strategy that can help them with economic growth in a community.
I can tell you, having recently been out to Cumberland, MD--a great and beautiful part of our State of Maryland--they used to have a lot of manufacturing jobs. Many of those jobs have
moved on. They do have a strategy, but they need the planning help to put that together so they can come forward with a game plan, attracting more private sector interest in order to create more job opportunities for families to stay in the western part of our State. It is that type of assistance that is critically important to America.
I come back to the point Senator Boxer raised. The purpose of this bill is to create jobs--save jobs and create jobs. We need to get on with that business in the Senate. That is why I am proud to have worked on the Environment and Public Works Committee to bring this bill forward. I hope my colleagues will be judicious with their amendments so we can get this bill through the Senate, to the House, so we will have an opportunity to get this to the President in the very near future.
I suggest the absence of a quorum.
Madam President, I ask unanimous consent that the order for the quorum call be rescinded.
Madam President, I ask unanimous consent that the pending amendment be set aside so I can offer amendment No. 407.
I ask unanimous consent that the reading of the amendment be dispensed with.
Madam President, I will speak at a different point about this amendment, but it is an equitable amendment dealing with the interest charges on government loans that are paid off in the middle of the month to prorate the interest. It is a consumer issue. I think it will help American families. I will explain it in more detail in a later part of the proceedings.
With that, I suggest the absence of a quorum.
Madam President, earlier today, I voted against the interchange fee amendment, Senate amendment No. 392 offered by the junior Senator from Montana and I would like to explain why. Before I do that, I would like to acknowledge two important points about Senator Tester. First, I appreciate the fact that he made significant changes to his amendment in an attempt to reach a middle ground on this issue. And the concern he has for small community banks and credit unions is beyond question. Having said that, I did not reach the same conclusion he reached that we should delay the regulatory process with regard to interchange fees.
Most of the concern raised has been expressed against the Federal Reserve's December 2010 draft interchange fee rulemaking. It was a draft proposal. Let me repeat that: it was a draft proposal. The Federal Reserve received 11,000 comments on the draft rulemaking. The final rulemaking, due any day and scheduled to take effect in July, will reflect those comments and suggestions. We need to let the regulatory process work. If the final rule doesn't work as Congress intended, we have a number of options to fix it, up to and including a congressional resolution of disapproval. If the Senate had approved the Tester amendment, it may have been ``fixing'' a problem that doesn't exist.
The Federal Reserve's rulemaking was required by a provision contained in the Wall Street reform bill Congress passed last year. The senior Senator from Illinois was the author of that provision. He modified it to exempt smaller banks and credit unions with assets under $10 billion. Now we are being told the exemption is unworkable. Again, we haven't seen the final rule yet but I don't agree with the premise.
Andrew Kahr is a leading financial services expert. He was the founder and chief executive officer of First Deposit Corp, which later became Providian. He recently laid out the following arguments, which I find cogent, on the American Banker Web site:
One argument is that the clearing networks, of which there
are only four that matter, will not support the ``two-tier''
interchange system . . . Ridiculous. Visa is the largest of
the networks. It's already announced that it will implement
Durbin. (Maybe this is an object lesson as to why Visa
remains No. 1.)
For the small banks, MasterCard is the only other
significant player. If MasterCard finds it politic not to add
one more wrinkle to a skein of interchange levels that is
already of Byzantine complexity, then let the small banks
gravitate to Visa in order to benefit from Durbin.
A second argument of the big-bank lobbyists is that
merchants will reject the debit cards of small banks if these
carry a 1 percent interchange cost, versus 0.3 percent for
the large banks. Really? Then why don't these merchants
reject all credit cards, with interchange of 2 percent or
more, if the customer could instead use a debit card? When is
the last time a merchant politely asked you whether you could
pay with a debit card instead of a credit card?
Mr. Kahr concludes that if interchange fee revenue for the big banks drops but stays the same for the small banks and credit unions, the small banks will reap a competitive advantage. They will be able to impose lower fees, pay more interest, and give greater rewards to depositors. As he put it, ``anything that reduces revenue for big banks but not for small ones should help the latter compete more effectively against the former.''
Here is why I supported Senator Durbin's amendment to the Wall Street reform bill to regulate these fees in the first place. Banks do not compete with each other on the fees that merchants pay them for debit card use. Instead, Visa and MasterCard fix fee rates on behalf of all banks. There is no naturally occurring market force that keeps interchange fees at reasonable levels. The Visa and MasterCard duopoly is so dominant that merchants cannot refuse to accept their cards. Consequently, Visa and MasterCard don't lower interchange fees--they raise them, to entice banks to issue more of their cards. Retail merchants have no leverage to stop this escalation. As a result, the U.S. has the highest debit interchange fees in the world, averaging 1.14 percent of each transaction and amounting to over $16 billion per year. These fees affect merchants, universities, charities, government agencies, and everyone else who accepts debit cards as payment. The fees end up getting passed on to consumers in the form of higher retail prices for everything from groceries to gas to textbooks.
The Durbin provision stipulated that fees set by Visa and MasterCard on behalf of big issuing banks must be reasonable and proportional to costs incurred by the issuer that are ``specific to a particular electronic debit transaction.'' Some argue this is too narrow. The problem with the Tester amendment, well-intentioned as it may have been, is that it was too broad. It directed the Federal Reserve to let Visa and MasterCard set fee rates to ``all fixed and incremental costs associated with debit card transactions and program operations.'' The term ``program operations'' wasn't further defined and could have created a potentially enormous loophole. Rates could actually go higher under this standard.
I appreciate the hard work the junior senator from Montana put into his amendment. If the Federal Reserve's final rule truly presents problems for community banks and credit unions, I will join him in the effort to fix it. For the time being, I think we should let the regulatory process proceed and that's why I opposed the amendment. We helped out the banks; now it is time to help out consumers and America's small businesses.
Thank you, Madam President, and I note the absence of a quorum.