The U.S. Senate passed serious tweaks to the 1,400-page financial reform bill, amending credit card fee and credit-rating rules.
An amendment that gives retailers some power over credit card fees,introduced by Sen. Richard Durbin-D-Ill, passed with a 64-33 vote, The Washington Post reported Friday.
The amendment, which failed to find support when the Senate passed its credit card reform bill last year, gives retailers the right to set a minimum purchase threshold for accepting credit cards, as fixed fees take a larger percentage of small purchases than large ones. It also allows retailers to offer discounts based on what card customers use or for customers paying in cash.
The amendment was opposed by banks that are trying to protect each profit-generating angle they can, and supported by retailers who say the credit card companies force them to raise prices for their customers.
“Small businesses and their customers will be able to keep more of their own money. Making sure small businesses can grow and prosper is vital to putting our country back on solid economic footing,” Durbin said in a statement.
Retail groups have kept up a long campaign to convince the public that credit card companies were preying on their business. “It begins to reverse the hijacking of the U.S. payment system,” said Mallory Duncan, an attorney with the National Retail Federation.
The amendment also charges the Federal Reserve with setting rules to ensure credit card swipe fees are “reasonable and proportional,” which could have put the squeeze on mid-sized and smaller banks, as their fees are naturally higher than fees issued by national banks. As such, credit card issuers holding assets less than $10 billion were made exempt from the rules.
A second amendment introduced by Sen. Al Franken, D- Minn., will force banks seeking positive credit ratings on securities to submit their securities to a clearinghouse, which would specify which rating agency would get the businesses.
The measure is meant to prevent banks from shopping around for the credit-rating agency they believe would give them the best rating or fashioning deals customized to fit a credit-rating agency’s parameters, which have been made public.
The amendment, which passed 64-35, “will incentivize accuracy — imagine that,” Franken said.
But Standard & Poor’s spokesman Ed Sweeney said the amendment would give credit-rating agencies “less incentive to compete with one another, pursue innovation and improve their models, criteria and methodologies.”
“This could lead to more homogenized rating opinions and, ultimately, deprive investors of valuable, differentiated opinions on credit risk,” he said.
In international markets Friday, the Nikkie 225 index in Japan fell 1.49 percent, while the Shanghai composite index in China dropped 0.51 percent. The Hang Seng index in Hong Kong lost 1.36 percent, while the Sensex in India shed 1.57 percent.
In Australia, the S&P/ASX 200 slid 0.9 percent.
In midday trading in Europe, the FTSE 100 in Britain dropped 1.71 percent, while the DAX 30 in Germany fell 1.31 percent. The CAC 40 in France lost 2.46 percent, while the pan-European DJ Stoxx 50 lost 1.97 percent.
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