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"Price fixing at its worst," JPMorgan Chase (JPM) CEO Jamie Dimon says of debit-card interchange...

"Price fixing at its worst," JPMorgan Chase (JPM) CEO Jamie Dimon says of debit-card interchange fee limits set for later this year. The "middle of the night" change - which could slash the $12B/year in fees that banks get by 84% - "penalizes us for having debit cards." A delay campaign may be bearing fruit as the Fed is behind schedule on the caps.
Comments (43)
  • coloneldebugger
    , contributor
    Comments (890) | Send Message
     
    so what, light your stogies with a $50 instead of a $100 jamie,
    30 Mar 2011, 01:38 PM Reply Like
  • new slang
    , contributor
    Comments (163) | Send Message
     
    agreed... and someone tell Jamie he's actually being penalized for oligopolistic practices
    30 Mar 2011, 02:40 PM Reply Like
  • DianeLee
    , contributor
    Comments (346) | Send Message
     
    The part NObody seems to mention is the SERVICE provided by the bank. We the consumers haven't the need to handle the actual money, and the retailer hasn't the need to handle the money or deal with NSF checks.
    30 Mar 2011, 01:41 PM Reply Like
  • D_Virginia
    , contributor
    Comments (2280) | Send Message
     
    And these services are, for the most part, fixed costs to the banks.

     

    Yet many of them currently charge fees as a % of each transactions.

     

    If these rules take effect, they can still charge for the services, just not insanely so.
    30 Mar 2011, 01:48 PM Reply Like
  • D_Virginia
    , contributor
    Comments (2280) | Send Message
     
    Whenever Jamie Dimon throws one of his media tantrums, I know that someone is trying to do something good for consumers.
    30 Mar 2011, 01:41 PM Reply Like
  • tigersam
    , contributor
    Comments (1711) | Send Message
     
    Goverment should not get into price fixing. I rembered when goverment fixed cable tv prices. I used to pay $10 everymonth. Now I pay over $150 every month. I always blamed goverment for that.
    30 Mar 2011, 01:44 PM Reply Like
  • OptionManiac
    , contributor
    Comments (3304) | Send Message
     
    It's much better to let companies fix prices amongst themselves.
    30 Mar 2011, 01:55 PM Reply Like
  • tigersam
    , contributor
    Comments (1711) | Send Message
     
    Goverment should stay on the sideline and watch these companies. Always scrared them but do not make any laws. These companies have better lawyers to get around the laws.
    30 Mar 2011, 01:46 PM Reply Like
  • Joe Morgan
    , contributor
    Comments (1500) | Send Message
     
    We go down the path to socialism.....fixed pricing what the?
    30 Mar 2011, 01:49 PM Reply Like
  • coloneldebugger
    , contributor
    Comments (890) | Send Message
     
    price fixing or price gouging. pick your poison
    30 Mar 2011, 01:53 PM Reply Like
  • OptionManiac
    , contributor
    Comments (3304) | Send Message
     
    You are right, coloneldebugger, we live in an imperfect world. Our pesky human frailties constantly railroad free enterprise. If we all played by the rules you wouldn't have seen any refs working the NCAA tournament.
    30 Mar 2011, 01:59 PM Reply Like
  • OptionManiac
    , contributor
    Comments (3304) | Send Message
     
    Ouch, three thumbs down for reminding you all what species you are?
    30 Mar 2011, 02:31 PM Reply Like
  • RE Vines
    , contributor
    Comments (17) | Send Message
     
    Let the market determine the level of fees, not the government. The banks charge the merchants interchange fees for card usage. The merchant can move from one provider (bank) to another to obtain the best deal, under the current system. If the government mandates a certain level of fee, it may not be sufficient to cover the bank's costs and / or it might be excessive to debit card users. Reminds me of wage and price freeze of the 1970's and we all know how that worked out. One size fits all legislation sounds good, but can have many unintended consequences.
    30 Mar 2011, 01:57 PM Reply Like
  • D_Virginia
    , contributor
    Comments (2280) | Send Message
     
    > The merchant can move from one provider (bank) to another to
    > obtain the best deal, under the current system.

     

    That is overly simplified and effectively untrue.

     

    Yes, the merchant can move from one bank to another, but all the big banks charge more or less the same, and all the smaller banks, that may offer slightly lower fees, don't have the market share to do much good for the merchant.

     

    You see, the market HAS determined the level of fees, and for the most part, it's highway robbery on what has become a simple commodity service.

     

    Much like phone and cable companies, regulation may guard against "monopolies", but it does nothing to prevent duopolies (or tri-opolies, hex-opolies, etc), where a small number of industry leaders can effectively control prices by mirroring each others' moves -- they each make more by cooperatively raising prices than they would make by individually competing.

     

    Ironically, it's kind of a corporation's union, if you think about it. You /do/ hate unions, right?

     

    Competition is great for consumers -- when it actually exists in a practical way.
    30 Mar 2011, 02:23 PM Reply Like
  • Tom Armistead
    , contributor
    Comments (5219) | Send Message
     
    Maybe it would be better to encourage competition by downsizing the likes of JPM. Break them, BAC and some of the other big ones down into 7 or 8 pieces, then watch them fight for the business.

     

    That and as far as "middle of the night" escapades, how about when Congress passed CFMA, giving these same too big to fail banks an exemption from any form of regulation on CDS. In broad daylight CFMA should be repealed and CDS regulated as insurance.

     

    Plus all those files that JPM, BAC et al have been refusing to show until they are forced to in court, the records of the mortgages they packaged into MBS, they could use a little exposure to broad daylight too.
    30 Mar 2011, 01:59 PM Reply Like
  • OptionManiac
    , contributor
    Comments (3304) | Send Message
     
    Correct, not enough players to make free enterprise "free".
    30 Mar 2011, 02:23 PM Reply Like
  • catamount
    , contributor
    Comments (374) | Send Message
     
    Could also increase competition by allowing a lower barrier to entry for a bank charter. I have a friend that tried to get a bank charter just for our state, and they have effectively minimized the ability for new banks to enter. It's not impossible, it is difficult, however.

     

    Another friend told me their attempt in Arizona was pretty much met with, "we are not issuing any charters at this time, not under any circumstances." This was before the melt down in 2007.

     

    Paypal operates the way it does (i.e. without a bank status) for exactly this reason. More startups are coming, and they are going squarely after these incumbent businesses that refuse to innovate and provide reasonable service. I root for all the startups and innovation, but it takes time, as the old businesses have built moats.
    30 Mar 2011, 04:14 PM Reply Like
  • DavyJ
    , contributor
    Comments (414) | Send Message
     
    On the other hand, the Fed seems perfectly at ease with the 2 1/2% to 3 1/2% fees for credit cards.
    30 Mar 2011, 02:25 PM Reply Like
  • new slang
    , contributor
    Comments (163) | Send Message
     
    With credit cards these companies are assuming some credit risk, hence the fees. With debit cards they're assuming... well they're just ripping us off with debit cards
    30 Mar 2011, 02:34 PM Reply Like
  • DavyJ
    , contributor
    Comments (414) | Send Message
     
    That's true. But the credit risk is supposedly covered by the interest charged. There's no interest charges on debit cards.
    30 Mar 2011, 02:56 PM Reply Like
  • new slang
    , contributor
    Comments (163) | Send Message
     
    I guess I'm talking about the fees they charge stores, that's for credit risk. The interest is for the consumer that is borrowing from the card company.
    30 Mar 2011, 03:02 PM Reply Like
  • coloneldebugger
    , contributor
    Comments (890) | Send Message
     
    sure seem to be a whole lot of panties getting twisted on this subject. maybe jamie's crew should be working instead of checking out websites in the middle of a wednesday afternoon.
    30 Mar 2011, 02:26 PM Reply Like
  • Hubert Biagi
    , contributor
    Comments (689) | Send Message
     
    It's sad that our government keeps dumbing down our society. There's already plenty of competition and plenty of options for people. Most are simply too lazy to figure stuff out for themselves. JST like mortgages. And if you are really too stupid to understand the terms or get some real advise on what you are signing, than you shouldn't be taking on the responsibility of a mortgage, or a credit card. Fact is, many people don't really care anymore. All they want to know, is what will this cost me per month. Long term planning is irrelevant, why worry about next year, let alone 30 years? Even bankruptcy doesn't mean anything.
    30 Mar 2011, 02:29 PM Reply Like
  • D_Virginia
    , contributor
    Comments (2280) | Send Message
     
    > if you are really too stupid to understand the terms or get some
    > real advise on what you are signing

     

    Most financial advisers, lawyers, accountants, and of course lenders, realtors, and brokers, ALL gave the "advice" that everyone should take out what we now all realize were stupid loans.

     

    The problem came from the top down, not from the bottom up.

     

    It was as if most doctors suddenly telling their patients to eat a cupful of sugar and a cupful of fat with every meal. If most doctors said it, most people would do it.

     

    Fortunately, we have malpractice laws for the medical industry.

     

    We're still waiting on such laws (and enforcement) for the financial industry.
    30 Mar 2011, 02:47 PM Reply Like
  • Hubert Biagi
    , contributor
    Comments (689) | Send Message
     
    Wow, it sounds like we all were stupid, lol. Or perhaps, we all became greedy and jumped on the housing bandwagon. As far as doctors (and bankers), we could all practice more common sense, and less herd mentality. Health, whether financial, or medical, starts with the individual and their lifestyle choices.
    30 Mar 2011, 04:02 PM Reply Like
  • Joe Morgan
    , contributor
    Comments (1500) | Send Message
     
    So now I need the nanny of big government to take care of me, no showing responsibility for MY actions, hence MY consequences?

     

    That's why this Nation is going thru the crappers....
    30 Mar 2011, 04:27 PM Reply Like
  • D_Virginia
    , contributor
    Comments (2280) | Send Message
     
    > no showing responsibility for MY actions, hence MY
    > consequences?

     

    Borrowers are actually the only ones facing ANY consequences.

     

    Your corporate bank buddies got all their bills paid by the government (well, the taxpayers), and got extra large personal bonuses too -- all for fucking up the whole economy. How's THAT for "responsibility"?

     

    Tell you what Joey boy, the people will stop asking for the government to help them get a fair shake, just as soon as the government stops waiting on corporations hand and foot, turning down their beds, fluffing their pillows, and tucking them in at night like the whiny little babies they are.
    30 Mar 2011, 10:31 PM Reply Like
  • OptionManiac
    , contributor
    Comments (3304) | Send Message
     
    You don't think it's easy for a slick loan broker to scam someone whose math is borderline? So if you are math deficient, you are fair game? No honesty needed because we are all in this whole thing alone? We have laws (big government) to prevent humans preying on humans.
    31 Mar 2011, 06:47 AM Reply Like
  • Bill Burtchaell
    , contributor
    Comments (403) | Send Message
     
    Excuse me, the real question is do you as consumers want the service? If you prefer to continue writing checks, or withdrawing cash then don't pay the fees. I use nothing but my debit card and don't have a problem. Here is a network created by the banks as a competitive service with ATMs everywhere, costing literally billions of dollars in a very tough market place. Now here comes the long, over reaching, all knowing all seeing federal government to fix one more thing created by free markets and competition, that ain't broke. If banks are forced to provide this service as Durbin and his price fixers demand AT COST, then watch the service diminish and slowly disappear. This Durbin amendment could also puts a cloud over any other convenience/technology that could come available in the future. The government spent nothing, created nothing, slid a quiet little Durbin amendment into the bill under cover of darkness allowing big bro to ruin yet another consumer service.
    30 Mar 2011, 02:47 PM Reply Like
  • catamount
    , contributor
    Comments (374) | Send Message
     
    You and your ilk need to go ahead and retire. If you think we have had zero technical innovation over the last twenty years, where efficiency has decreased, and things should cost the same as in the '60s, I just don't know what to say to you.

     

    My guess is that you don't know any startup founders, and are not aware of early stage businesses currently being built. These businesses will utilize technology to innovate and provide good service.

     

    I'm not a fan of the government stepping in, but I've seen too many financially focused startups hit a brick wall when trying to deal with all the regulations these big banks DO support. So, innovate or get out of the way, but don't give me that shit about free market because the US gov (FDIC, FTC, SEC, USPTO etc.) has been blocking innovation to protect these fat, greedy, old businesses that no longer possess a technological advantage (just lobbyists).

     

    Visa and AMEX _just now_ launched a competitor to Paypal. FFS!
    30 Mar 2011, 04:45 PM Reply Like
  • farmer448
    , contributor
    Comments (229) | Send Message
     
    Well shoot if you think that banks operate in a true free market then show me why all the interchange fees for debit cards are 2%.
    Could it be because the Network Built to move the electronic transactions around is owned by the big banks? And maybe just maybe they have monopolistic pricing power that Dimon would prefer to control. Can't blame him for that but a monopoly should also be subject to anti-trust.
    So as a consumer who to you trust to give you a square deal?
    A regulated monopoly or un-regulated monopoly?
    Of course they could just sell the network to the Fed.
    30 Mar 2011, 06:28 PM Reply Like
  • OptionManiac
    , contributor
    Comments (3304) | Send Message
     
    This whole thing may be blown away when we can all just wave our smart phone to make a purchase. Brother Apple will take care of us.
    31 Mar 2011, 06:49 AM Reply Like
  • kmi
    , contributor
    Comments (3984) | Send Message
     
    apple rimm google still have to make deals with someone for the payments, either through software (like itunes), the carrier (i.e. AT&T), or... a bank (like Citibank)...
    31 Mar 2011, 08:29 AM Reply Like
  • OptionManiac
    , contributor
    Comments (3304) | Send Message
     
    Or entities like Paypal? Who knows where this may be going.
    31 Mar 2011, 08:34 AM Reply Like
  • kmi
    , contributor
    Comments (3984) | Send Message
     
    Personally I think the carriers will win for what its worth heh, their next big hope for increased revenue per sub....
    31 Mar 2011, 08:43 AM Reply Like
  • OptionManiac
    , contributor
    Comments (3304) | Send Message
     
    So T and VZ may be the big winners?
    31 Mar 2011, 08:58 AM Reply Like
  • kmi
    , contributor
    Comments (3984) | Send Message
     
    Well we'll see; Google working with Mastercard and Citigroup already, but there's other stuff in the works like linking your payments to your SIM...

     

    Like you said who knows where it will go but somehow I think the SIM idea will gain traction....

     

    I want to see how RIMM does it.
    31 Mar 2011, 09:19 AM Reply Like
  • Bill Burtchaell
    , contributor
    Comments (403) | Send Message
     
    Pardon me, in one instance I hear positions of banks being protected by the gov and their sole purpose is the gouging of their customers, then those who feel the big banks are blocking the startups, then I hear that banks figured out a way of putting their stockholders capital at risks by finding unqualified borrowers and coercing them into doing a mortgage they can't possibly payback! Wow what a business plan. Could it be that government agencies mandated these social engineering affordable housing schemes and forced the lenders to include a minimum percentage of these subprime loans in their portfolios, and is now destroying the financial markets across the planet with toxic assets, derivatives, and the people who created the mess are now in charge of solving the problem while they sit in DC and blame the banks for all of it.
    31 Mar 2011, 09:51 AM Reply Like
  • new slang
    , contributor
    Comments (163) | Send Message
     
    So you're claiming these banks only held the minimum percentage of sub prime loans in their portfolios - and that's why they went down? Not because they took on entire portfolios of these high risk sub-prime loans? You listed a number of practices banks DID engage in; it's important to remember that by simply presenting it in a sarcastic tone doesn't make it untrue.

     

    I agree a lot of people who are complaining had a hand in creating the situation, but to pretend it's all the government and irresponsible consumers faults is as ridiculous as claiming it's all the banks fault.
    31 Mar 2011, 10:04 AM Reply Like
  • OptionManiac
    , contributor
    Comments (3304) | Send Message
     
    I just wonder where in between a Utopian or Orwellian world the SIM will take us.
    31 Mar 2011, 11:01 AM Reply Like
  • Bill Burtchaell
    , contributor
    Comments (403) | Send Message
     
    If you fellows think that the lending institutions, with 200 years of prudent loan experience, and successfully made mortgage backed securities one of the safest investments on the planet, all got up one morning and decided to go make bad loans! I am in the industry, I know what the guidelines were, I know when they changed, I know who changed them, and right everyone was happy, landowners were selling builders, were selling, it looked as if the grand social design was working, then defaults started to exceed all actuarial analysis. Now business is bogged down in the middle of a recission with Dodd-Frank, isn't it ironice that the legislation is named for the two senators who got us into this mess. This toxic crap was bundled and sold around the world, Fannie Mae and Freddie Mac, answered the banks complaints by telling them to write the paper we will buy the subprime loans and on it goes, nothing down, no credit history, all designed in Washington and mandated through bank regulators including HUD. You can blame anyone you want, but stop kidding yourself, do you really believe the banks got together and agreed to relax the guidelines and start writing bad loans, if you believe that, you need a refresher in basic economics.
    1 Apr 2011, 11:31 AM Reply Like
  • D_Virginia
    , contributor
    Comments (2280) | Send Message
     
    > I am in the industry

     

    Obviously, that's why you don't want to realize the truth.

     

    Did you know that less than a third of sub-prime mortgages were driven by CRA -- the rest were the banks making crappy loans of their own free will, competing with each other to see who could make the most crappy loans, er, I'm sorry, the most profits. Coincidentally, did you know that every developed nation in the world experienced the exact same housing and financial crisis as the US? And they had no Dodd or Frank to blame.

     

    Yes, the government told some banks to give loans to some people who probably shouldn't have gotten them.

     

    But the government, general failure that it is, never told anyone to dream up disasters waiting to happen like interest-only ARMs, nor to market those disasters to low-income borrowers. Ever look at the sub-prime default rate on 30-year fixed mortgages? It's not as bad as you think. But the default rate on ARMs is astronomical for both prime and subprime loans alike.

     

    Nor did the government ever tell anyone to package up mortgages such that the originating lenders no longer had any incentive to maintain healthy loan portfolios: they were going to sell the hot potatoes off to Wall Street before the ink was dry anyway, so they stopped caring.

     

    The government also never told anyone to leverage those hot potatoes to the hilt, turning a linear problem into an exponential one. Or was their a CDO bill that I missed? Or a CDS ammendment that never made the news? Didn't think so.

     

    > do you really believe the banks got together and agreed to relax
    > the guidelines and start writing bad loans

     

    Not in such an organized fashion, but they saw that there was money to be made in sub-prime, especially if they could pass the hot potato. So off they went, and went, and went, and went, and went.....

     

    Yes, the government deserves some blame, as do borrowers -- but Wall Street deserves more.

     

    Thanks for playing, better luck next time.
    1 Apr 2011, 12:41 PM Reply Like
  • OptionManiac
    , contributor
    Comments (3304) | Send Message
     
    Fannie and Freddie got into the act when they realized loan brokers were giving "better" loan deals than they were. If the two entities were never made public and pushed to give bigger and bigger returns to their investors, they would not be in this mess.
    1 Apr 2011, 02:17 PM Reply Like
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