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Senate Proceeding on Jun 8th, 2011 :: 1:36:15 to 1:49:45
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Jon Tester

1:36:13 to 1:36:33( Edit History Discussion )

Jon Tester: senator from montana. mr. tester: i want to thank senator reed for his comments. he is one of the senators on the banking committee. i appreciate his comments. i do want to set the record straight on a couple of things. it's not a 12-month delay and a six-month study. it's a six-month study and then implementation of the rules. said senator said that chairman bernanke had plenty of information. the problem is he doesn't have

Jon Tester

1:36:15 to 1:49:45( Edit History Discussion )
Speech By: Jon Tester

Jon Tester

1:36:34 to 1:36:58( Edit History Discussion )

Jon Tester: much information from community banks and credit unions, and that is what this amendment is about. the exemption that is in the amendment that we passed last year called the durbin amendment, every regulator at the federal and state level has said they cannot make the exemption work because market

Jon Tester

1:36:59 to 1:37:22( Edit History Discussion )

Jon Tester: forces will determine where the customers are. madam president, i'm glad that we're here to vote on the amendment that senator corker and senator hagan, senator crapo, senator bennet and i have worked so hard on. this afternoon, we're finally going to have an opportunity to vote for an amendment that has been crafted the right way. senators hagan and crapo and bennet came to senator corker

Jon Tester

1:37:23 to 1:37:43( Edit History Discussion )

Jon Tester: and i are a month ago to chair their -- and i about a month ago to share the inintended consequences of the senate that was passed in the senate about a year ago. the amendment directed the federal reserve to issue regulations limiting the costs that banks can charge retailers when consumers use their debit cards to buy things. based on the law, the fed

Jon Tester

1:37:44 to 1:38:04( Edit History Discussion )

Jon Tester: intends to limit those costs to 12 cents. even though the actual costs of these transactions may be higher. now, the big wall street banks, they can handle that. they're not happy about it, but they can live with it. they have got plenty of tools that will help them make up the difference. the main street community banks or credit unions are a different story.

Jon Tester

1:38:05 to 1:38:26( Edit History Discussion )

Jon Tester: these small guys who had nothing to do with the financial crisis did not have that same flexibility that the wall street banks had. and these are the banks in montana. these are the folks that i want to make sure have a fair shake. so folks from both parties came together and they said how can i fix this to make this protect

Jon Tester

1:38:27 to 1:38:48( Edit History Discussion )

Jon Tester: the local banks and credit unions, since the original amendment does not? senator corker and i suggested initially a two-year delay, a study and then more legislating to fix any problems that were identified in the study. the senators who are here today with me thought we could do better, and we could and we did. after talking with our colleagues, we worked together

Jon Tester

1:38:49 to 1:39:10( Edit History Discussion )

Jon Tester: to reduce the study period down to, as i said earlier, six months. at that point, the fed and other regulators will decide if the rules can adequately prevent the small banks from getting hurt. i don't know what the study is going to find, and i don't think that anybody knows. if the agencies find that the

Jon Tester

1:39:11 to 1:39:31( Edit History Discussion )

Jon Tester: rules consider all costs, that consumers would not be harmed and that the small issuer exemption, those that applied to credit unions and community banks, if that exemption will work, then the pending rules would move forward as passed. and i will be the first person in line to tell senator durbin

Jon Tester

1:39:32 to 1:39:52( Edit History Discussion )

Jon Tester: that he was right about the two-tiered system. but if the fed and the other regulators find that the changes must be made to ensure that current rules don't include all costs or that small banks and credit unions and consumers might be harmed, then they will have to issue new rules within six months. and every two years, the fed

Jon Tester

1:39:53 to 1:40:13( Edit History Discussion )

Jon Tester: would have to tell us in congress whether these rules are still working for the small banks and credit unions. that's all we're asking for. before the fed's new rules get implemented, let's make sure we have them correct. the good senator from illinois yesterday said that this was not truly a compromise, but when you

Jon Tester

1:40:14 to 1:40:34( Edit History Discussion )

Jon Tester: sit down with folks who think you're on the wrong track and you work together to find middle ground, well, to me, that's the definition of compromise. some other changes have been made about -- some other charges, i should say, have been made about this amendment, and i'd like to take a moment to discuss those. some say it's a favor to the big bank.

Jon Tester

1:40:35 to 1:40:56( Edit History Discussion )

Jon Tester: well, it's not. in fact, this amendment corrects a very big problem that only affects the community banks and credit the senator from illinois said yesterday that he crafted this amendment with awareness that

Jon Tester

1:40:57 to 1:41:20( Edit History Discussion )

Jon Tester: major reduction of interchange fees would kill the small banks and credit unions. no one denies that the small banks and credit unions would be deeply harmed if they are forced into a system where they can only charge 12 cents per transaction. no one denies that. this is why senator durbin tried to establish a two-tier system.

Jon Tester

1:41:21 to 1:41:42( Edit History Discussion )

Jon Tester: under his proposal, big banks, big banks, the wall street banks could charge one rate, 12 cents per transaction. the small banks, community banks, credit unions, could continue to charge a percentage of the transaction, 44 cents on average. but there is a big flaw in the plan. the two-tiered system simply will not work.

Jon Tester

1:41:43 to 1:42:03( Edit History Discussion )

Jon Tester: let me repeat that. the two-tiered system simply will not work, and i didn't make that up. here's what the chairman of the federal reserve said. "it is possible that the merchants will reject the more expensive cards from smaller institutions or because networks will not be willing to differentiate the interchange fee for issues of different size.

Jon Tester

1:42:04 to 1:42:27( Edit History Discussion )

Jon Tester: it is possible that the exemption will not be effective in the marketplace." that was ben bernanke that said that. he went on to say that because the exemption will not be effective, small banks could be hurt or even fail.

Jon Tester

1:42:28 to 1:42:48( Edit History Discussion )

Jon Tester: here's what the head of the fdic said -- "the likelihood of this hurting community banks and requiring them to increase the fees that they charge for accounts is much greater than any tiny benefit that the retail customer may get." again, madam president, everyone agrees that if the fed rules go into effect, the small banks and credit unions will suffer

Jon Tester

1:42:49 to 1:43:09( Edit History Discussion )

Jon Tester: because the exemption simply will not work. so today we can stop and double check to make sure that that does not happen or we can just flip a coin and hope for the best and watch as more small banks and credit unions fail. reducing consumer choice and reducing banking options,

Jon Tester

1:43:10 to 1:43:30( Edit History Discussion )

Jon Tester: especially as they currently exist in rural america. these small banks and credit unions are the ones who make the loans to small businesses in rural america, they are in places where folks are still willing to put their money. they are the ones who folks in montana still trust. they don't trust the big wall street banks.

Jon Tester

1:43:31 to 1:43:51( Edit History Discussion )

Jon Tester: we probably won't lose to many banks in washington, d.c., or chicago, illinois, but we will in rural america. i don't want to see that happen. another good one that i've heard this week is the argument that the amendment will allow banks and credit unions to factor executive compensation into the cost of interchange fees.

Jon Tester

1:43:52 to 1:44:14( Edit History Discussion )

Jon Tester: it will not. in fact, the amendment specifically states that the federal reserve and other banking regulators must look at the costs associated with debit card transactions and program operations. we also know how dangerous it is to set a price for a product without understanding all of the

Jon Tester

1:44:15 to 1:44:35( Edit History Discussion )

Jon Tester: costs that go into that product. home depot would never allow the federal government to set the price of a garden hose simply by looking at the costs of manufacturing that garden hose. no, home depot charges us for the cost of manufacturing it, shipping it, keeping it in stock, having someone to tell you what aisle it's in, and the

Jon Tester

1:44:36 to 1:44:57( Edit History Discussion )

Jon Tester: list goes on and on and on. likewise, if we're going to be regulating debit interchange fees, we need to understand all of the costs associated with debit transactions and debit programs. when swreetd on this amendment, last year, we thought we were voting to allow the federal reserve to consider all costs. however, the reality is that

Jon Tester

1:44:58 to 1:45:18( Edit History Discussion )

Jon Tester: last year's interchange amendment limited the cost that could be included. some fraud costs were allowed to be included, others were not. some technology costs were included, but others were not. if we're going to be regulating this market, we need to be fair about it. so the amendment directs the fed to determine what is reasonable

Jon Tester

1:45:19 to 1:45:41( Edit History Discussion )

Jon Tester: and proportional, but it gives the fed the discretion to look at all of the costs associated with debit transactions. that does not mean executive pay. that does not mean special rewards programs. all costs will still need to be justified, and if they cannot be justified, they will not be considered.

Jon Tester

1:45:42 to 1:46:03( Edit History Discussion )

Jon Tester: the fed has been very clear with me. no executive pay, no bells and whistles. but the decisions about the costs of routing networks, the costs of fraud, and other technical details are much better left to the fed than decided by the united states senate. finally, madam president, some have said that the amendment hurts consumers. it does not.

Jon Tester

1:46:04 to 1:46:24( Edit History Discussion )

Jon Tester: as someone who voted against the wall street bailout, who wrote part of the credit card reform act, and who voted for the wall street reform bill, i can tell you that if this amendment was somehow bad for secures, is wouldn't offer it. in fact, the amendment requires the regulators to certify that the fed's rules address consumer

Jon Tester

1:46:25 to 1:46:45( Edit History Discussion )

Jon Tester: concerns. the current law does not require anyone -- it does not require anyone to look at the impact of interchange fee regulations on consumers. they're out of the picture. i am not aware of any specific

Jon Tester

1:46:46 to 1:47:06( Edit History Discussion )

Jon Tester: plans by any retailers to lower prices if interchange fees are lowered. one box store held a meeting where the company executive called the proposal to lower interchange fees a $35 million windfall. if i were a shareholder, that would sound pretty good to meevment as customer, it is not

Jon Tester

1:47:07 to 1:47:27( Edit History Discussion )

Jon Tester: clear how i would benefit. i understand that there are some folks who wish the amendment would go further to include additional consumer-oriented agencies like the federal trade commission. i would be happy to work with those senators to see how we can best protect consumers in the process. the only way to make it happen

Jon Tester

1:47:28 to 1:47:50( Edit History Discussion )

Jon Tester: is to get this amendment adopted today. otherwise the fed's rules will go into effect on july 21 regardless of what any consumer thinks. i'm looking forward today's debate. it has been a long time coming. because we have the opportunity to address an unintended consequence of the durbin amendment and make no mistake, those unintended consequences

Jon Tester

1:47:51 to 1:48:11( Edit History Discussion )

Jon Tester: will be felt all over rural america and not for the better. the folks who think that the two-tiered system will work, there is not a regulator out there that will tell you it will. the folks that will tell you that the durbin amendment has an exemption for community banks under $10 billion and credit unions under $10 billion, if

Jon Tester

1:48:12 to 1:48:32( Edit History Discussion )

Jon Tester: they think that will work, there's not a regulator out there that will tell you they can implement it, because the free market system will drive it to the lowest price. that's the system we live in. that's just the way it is. so i'm saying, let's slow down a little bit. let's make sure we get it right. if we're going to create

Jon Tester

1:48:33 to 1:48:56( Edit History Discussion )

Jon Tester: regulations, let's do it in a way that's fair and consistent with the intent. let's not try to solve one problem and create three others. and let's not take shots at folks in my neck of the woods who are not part of the financial meltdown. that's all i'm asking. i'm urlging my colleagues to with that, madam president, i

Jon Tester

1:49:01 to 1:49:23( Edit History Discussion )

Jon Tester: yield the floor. madam chair, i would ask consent that the time be divided equally during the quorum call between each side, and then i would -- the presiding officer: without objection. mr. tester: until the vote? the presiding officer: without objection. mr. tester: on all the quorum calls.

Jon Tester

1:49:24 to 1:49:38( Edit History Discussion )

Jon Tester: and with that, i ask for the example the absence of a quorum. the presiding officer: the clerk will call the roll.

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