Watch CBSN Live

Banks Have New Ally in Fighting Financial Reform

The danger in letting the genie out of the bottle is he tends to rip up the whole house.

So retailers are learning after previoiusly pressing for financial reform. A leading industry trade organization now is urging Rep. Barney Frank to oppose the Wall Street Reform and Consumer Protection Act on grounds that, hey, we're innocent.

The bill gives shareholders the right to vote on CEO compensation and to nominate corporate directors, among other things. And the Retail Industry Leaders Association is just fine with that. But only if it applies to financial services firms. In a letter to Frank, the group says:

. . . the legislation's new corporate-governance restrictions go well beyond financial institutions and affect all publicly traded companies, including those in the retail industry, which had no role in the financial crisis.

What RILA really wants is relief from onerous credit card interchange fees. And understandably so. These "swipe" charges, the fees merchants pay to card issuers when a consumer pays for a purchase with a credit or debit card, have tripled over the last 10 years. Smaller store owners, in particular, are getting killed.

But the financial reform bill doesn't do that, which RILA calls a "missed opportunity" to help businesses and consumers.

Something the measure does do, and which the organization also opposes, is treat store gift cards as financial products. That means such cards would fall under the steely gaze of the proposed Consumer Financial Protection Agency.

One can feel a smidgen of sympathy for retailers. Interchange fee practices do unfairly punish businesses. And as far as the financial crisis goes, the industry is innocent.

But the corporate governance changes the House is voting on today make sense not only for risk-loving banks, but all public companies. Be careful what you wish for.

View CBS News In