Marx on Capitol: How Interchange Battle Was Lost
President Kennedy famously said after the Bay of Pigs debacle that "victory has a thousand fathers; defeat is an orphan."
Fortunately for all involved, the fight over debit interchange didn’t involve any attempts to overthrow a foreign dictator. Though given how credit unions have fared on Capitol Hill lately, there are no doubt a few folks at CUNA and NAFCU wish they could find some way to achieve their goals by circumventing the democratic process.
However, barring Debbie Matz, Fred Becker or Bill Cheney becoming king or queen for a day (which has about as much chance of happening as Elizabeth Warren does of being confirmed to run the Consumer Financial Protection Bureau), credit unions have to win their battles the old fashioned way, by lobbying and counting votes.
Therefore, reviewing the strategy during the debit interchange fight might help in future battles.
First, the good news.
Credit unions and banks received a majority of the votes for their position (54). The bad news is that while in most legislative bodies that would have been enough, the Senate is different and you need a super majority (60) for almost anything short of a resolution declaring the virtues of motherhood and apple pie. Come to think of it, some lawmakers might object to apple pie, saying that it is too caloric.
Banks and credit unions can also take some solace from the fact that they received more votes for their position this time than the 33 who opposed the Durbin amendment passed last year. Though a nattering nabob of negativism might argue that if banks and credit unions had worked a bit harder last year, this year’s fight wouldn’t have been needed.
Now, the bad news.
Financial institutions were unable to make their case sufficiently sympathetic to enough lawmakers to drag them over the finish line. Merchants were able to talk about hidden fees and savings to consumers. Credit unions and banks were stuck talking about fraud costs and more arcane issues that made their case seem less relevant to the lives of everyday citizens.
In addition, credit unions and community banks were weighted down by being on the same side as two of the most disliked groups in America: credit card companies and big banks.
Also, financial institutions were asking lawmakers to do something that they hate most: changing their votes. When describing a series of votes on the Iraq war, Sen. John Kerry (D-Mass.) famously said during his 2004 presidential race, "I was for it, before I was against it."
We saw how well that approach turned out for him.
Ironically, Kerry was one of the senators banks and credit unions targeted as a possible vote switcher this time. It didn’t happen with him or several other senators, including Kent Conrad (D-N.D.) and Mark Pryor (D-Ark.). Of course, if the credit unions and banks had picked up a few more votes it might have had a cascading effect that could have netted 60.
National Retail Federation Senior Vice President David French said in an interview that banks and credit unions didn’t always have a consistent argument when lobbying.
"They applied a spaghetti strategy. They threw as many ideas as possible out, and some of them stuck, but a lot of them didn’t,’ French said.
CUNA Senior Vice President John Magill dismissed that critique.
"To the contrary, we had a number of ideas that were simple and understandable and obviously a majority of the Senate understood them. Otherwise, why would their strategy have resulted in their going from 64 to 45 votes and our strategy caused us to go from 33 to 54," Magill said.
While interchange won’t be a congressional issue during the next year and a half, credit unions’ vote counting skills will be tested on other issues, including the long-time goal of raising the cap on member business loans.
It remains to be seen whether they will devise and execute a message that will help them to finally be able to beat the banks. Any idea that promises to create as many as 100,000 new jobs is likely to get a warm reception in the halls of Congress at a time of high unemployment.
Warm receptions are one thing. Getting 60 votes is quite another.