Senate Proceeding on Apr 14th, 2011 :: 2:45:40 to 2:57:45
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2:45:36 to 2:45:57( Edit History Discussion )

Jon Tester: mr. tester: i thank the senator from north carolina. madam president, i rise today once again on behalf of rural america. many folks don't understand rural america. we often get painted in broad brush strokes that often doesn't reflect the reality we face. the montanans who elected me sent me here to bring common sense over the issues that impact rural america. one issue where there is not a

2:45:40 to 2:57:45( Edit History Discussion )
Speech By: Jon Tester

2:45:58 to 2:46:19( Edit History Discussion )

Jon Tester: lot of common sense is the issue of debate interchange. there is also a lot of misinformation out there about this issue. i have been concerned about the unintended consequences of this proposed rule since the senate voted on the provision last year. that's why i voted against the amendment when it came to the floor for a vote. over the past few months, i have

2:46:20 to 2:46:40( Edit History Discussion )

Jon Tester: been attacked by the big box retailers and called just about every name in the book. my legislation to study the impact of the fed's proposed rule has been called a bailout. it's pretty interesting since i was the only democrat in the senate to vote against both bailouts, and only in washington do people say that you're killing a bill by making sure that it does what we want it to

2:46:41 to 2:47:01( Edit History Discussion )

Jon Tester: do. now, i certainly don't think the goal of the interchange amendment was to engage in price fixing. i don't think the folks are trying to hurt consumers or small community banks or credit unions. but now we know the impact of this provision is far different than the information that we had when we passed the amendment. now we know that the regulators

2:47:02 to 2:47:22( Edit History Discussion )

Jon Tester: tasked with implementing this rule think that it may not work at all. when we passed the amendment, we were told that small banks and credit unions would receive an exemption from the swipe fee rule. since there has been a lot of misinformation on this issue, let me share these comments

2:47:23 to 2:47:43( Edit History Discussion )

Jon Tester: directly with my colleagues. in a banking committee hearing in february, chairman bernanke referred to the exemption for community banks and credit unions, and he said, and i quote -- "we are not certain how effective that exemption will be. there is some risk that the exemption will not be effective and that the interchange fees available through smaller

2:47:44 to 2:48:05( Edit History Discussion )

Jon Tester: institutions will be reduced to the same extent that we would see for larger banks. that means as chairman of the federal reserve, the guy in charge of implementing the interchange rule does not think it will work for credit unions or for small mom and pop community banks. this is common sense.

2:48:06 to 2:48:26( Edit History Discussion )

Jon Tester: when you set a price gap, big box retailers will use their market share to force little guys to meet the lower fee. at the same hearing, fdic chairwoman sheila bayer confirmed this, once again a quote -- "it remains to be seen whether they -- this is credit unions and community banks -- they can be protected with this.

2:48:27 to 2:48:47( Edit History Discussion )

Jon Tester: i think they are going to have to make it up somewhere else, probably by raising the fees that they have on transaxby accounts. that means that our credit unions and small community banks will be cutting back, cutting back on free checking. charging more for loans, cutting

2:48:48 to 2:49:10( Edit History Discussion )

Jon Tester: back on services to low and moderate-income folks in rural america." despite being tasked with the job of implementing the small bank exemption, the fed cannot guarantee that the exemption will work in practice, because despite what some may say, the federal reserve cannot control markets. it cannot ensure that this provision will work since market

2:49:11 to 2:49:31( Edit History Discussion )

Jon Tester: forces will drive rates down with the community banks and credit unions. no one doubts that rural american small businesses will be significantly affected by regulating debit card interchange fees, yet the true and full effect of this regulation on small businesses are not being fully discussed or fairly portrayed. this amendment was an attempt to

2:49:32 to 2:49:52( Edit History Discussion )

Jon Tester: address a problem, but when you control prices, as this amendment does, you also invite unintended consequences. -- unintended consequences. at first it might make sense if you reduce debit card swipe fees that small businesses will benefit, but once you take a closer look, you find a host of potential problems for small businesses and no guarantees

2:49:53 to 2:50:14( Edit History Discussion )

Jon Tester: that consumers will benefit one lick. for instance, a recent study says that only 10% of small businesses are in retail and in a position to accept debit cards, but that same study also says that most small businesses have checking accounts and use debit cards to pay for things that they need to run their businesses.

2:50:15 to 2:50:35( Edit History Discussion )

Jon Tester: these businesses will end up paying more for basic services like checking accounts and they'll see more fees, and consumers will be no better off. in short, this limit is bad for small businesses and it's bad for consumers. which banking services are likely to be more expensive or disappear entirely as community banks and credit unions seek to

2:50:36 to 2:50:57( Edit History Discussion )

Jon Tester: make up lost revenue? well, free checking, for one. millions of americans have had checking accounts and debit cards because they're free. if banks and credit unions are forced to charge for these services, many business owners and consumers would suffer the consequences. and because the fed's rules don't allow banks to cover the

2:50:58 to 2:51:18( Edit History Discussion )

Jon Tester: costs of debit transactions, banks of all sizes are considering limits on debit card purchases. moms using their debit cards at the grocery store may have to limit their grocery purchases to to $50 or $100 on groceries. so what's the alternative? well, put it on a credit card, but that, madam president, is a tough option for struggling families.

2:51:19 to 2:51:39( Edit History Discussion )

Jon Tester: low and moderate income families may not have access to credit or may have already maxed out their credit card, and pushing consumers toward credit isn't good for small businesses either because the interchange fees on credit card purchases are higher than those on debit cards. in a recent survey, three quarters of community banks

2:51:40 to 2:52:00( Edit History Discussion )

Jon Tester: reported considering imposing annual or monthly debit card fees. 3/5 of them would consider imposing monthly fees on checking account customers. if they start charging folks for just having an account, you can bet these folks won't be customers for long. in the long run, that will devastate rural america. and what does this mean for

2:52:01 to 2:52:22( Edit History Discussion )

Jon Tester: small businesses that rely on those community banks and credit unions? without a doubt, the small businesses and communities across montana rely on community banks and credit unions to keep their doors open, to grow their businesses and to create jobs. these main street institutions are the backbone of this nation's small businesses. in fact, according to a recent national federation of

2:52:23 to 2:52:44( Edit History Discussion )

Jon Tester: independent businesses report, most small businesses do their banking with smaller institutions. community banks provide the bulk of small business lending in rural communities, and small business owners receive better treatment from community banks. that's because in rural america, a community bank is part of that community. a handshake still matters.

2:52:45 to 2:53:06( Edit History Discussion )

Jon Tester: and the folks on both sides of the table can look each other in the eye and be accountable to one another. you're not going to find that on wall street. community banks do the lion's share of lending with the youngest and smallest of small businesses. those best positioned to create new jobs as we emerge from this recession.

2:53:07 to 2:53:28( Edit History Discussion )

Jon Tester: make no mistake about it, the price gaps called for by this durbin amendment will lead to fewer debit cards offered by community banks and credit unions. it will limit the size of debit card transactions,al it will end free checking for small businesses as they rely on these institutions. these changes will limit the ability of small businesses to conduct daily business.

2:53:29 to 2:53:50( Edit History Discussion )

Jon Tester: they will increase banking costs and could limit lending capability of smaller institutions. these changes come at a time when many small businesses are already fully leveraged and have few other options available. so what does this mean for small businesses in montana? for a contractor, it means he won't be able to use his debit

2:53:51 to 2:54:11( Edit History Discussion )

Jon Tester: card to buy lumber. it will mean the end of free checking. i know of too many businesses that don't have the option of increasing their lines of credit with their bank or who have maxed out a credit card in this recession. those are the circumstances that folks are forced into and those are the circumstances that limit our economy. what will this mean for community banks and credit

2:54:12 to 2:54:33( Edit History Discussion )

Jon Tester: unions that are competing for small -- for the business of these small businesses? community banks and credit unions play an instrumental role in our economic recovery by providing loans to small businesses so that these businesses can grow and hire new employees. smaller banks treat small businesses better, but smaller banks don't have the means to

2:54:34 to 2:54:54( Edit History Discussion )

Jon Tester: make up for lost revenue from this federal mandate, and they don't have the volume to make up this revenue elsewhere like bigger banks do. one of the more troubling findings from the nfib report that i referenced earlier is the fact that community banks have been losing market share nationwide. the report found that the percentage of small businesses

2:54:55 to 2:55:15( Edit History Discussion )

Jon Tester: served by local banks fell from 31% to 25% between 2009-2010. my concern is that this proposed rule will further harm the loss of market share by community banks. it will lead to further consolidation in the banking industry. community banks and credit unions simply cannot compete against wall street unless they

2:55:16 to 2:55:37( Edit History Discussion )

Jon Tester: provide products like debit cards. they simply can't make this revenue up elsewhere, and they can't compete unless they provide these services. madam president, this notion that some have raised that these proposed rules are a slam dunk for small businesses, it is simply false. unfortunately, this is one of the many misconceptions that have been put out there.

2:55:38 to 2:55:58( Edit History Discussion )

Jon Tester: for example, based on statements that i have heard, some would have you believe that we have been working and analyzing the debit interchange issue for years. talking about all of the hearings that we have had on this topic. the truth is, however, quite different. there has been just one senate hearing on this issue since 2006, and it was regarding the interchange fees paid by the

2:55:59 to 2:56:19( Edit History Discussion )

Jon Tester: federal government. the judiciary committee has looked at antitrust issues, but they have never addressed the ramifications of this amendment, never. and no one has been able to explain to me why studying the impact of this rule is a bad idea. am i suggesting that the debit interchange system is without fault?

2:56:20 to 2:56:41( Edit History Discussion )

Jon Tester: absolutely not, but we should move forward with a rule that will create a whole new set of problems and will hurt community banks and credit unions until we have fully studied the impact. if we do not measure twice and cut once, we're bound to create a whole new set of problems that will hurt small businesses and consumers. i sure wouldn't have stepped in

2:56:42 to 2:57:02( Edit History Discussion )

Jon Tester: the middle of this fight if i didn't think it was critical for the survival of rural america and to the jobs and livelihoods of people who live there. i'm not in this -- i'm in this job not because i am known as a guy who stands up for big banks or wall street. far from it. i'm the guy in my party who voted against tarp and against the automaker bailout. i'm in this job because rural

2:57:03 to 2:57:23( Edit History Discussion )

Jon Tester: america needs a voice at the table. rural america needs someone on their side to make sure rural communities and main street businesses don't get stuck with the short end of the stick when the senate makes policies like this one. we need to stop. we need to study. we need to make sure we're doing the right thing. therefore, madam president, i ask my colleagues for their

2:57:24 to 2:57:44( Edit History Discussion )

Jon Tester: bipartisan support on a responsible bipartisan bill to delay this rule so we can have time to study the consequences of this rule, both intended and unintended. our economy cannot afford to let this go into effect. i yield the floor.

2:57:45 to 2:57:46( Edit History Discussion )

Jon Tester: the presiding officer: the