President Barack Obama had some soothing words for business leaders at the White House today, telling them that, despite some impressions to the contrary, he was really on their side after all. Financial regulatory reform was necessary, but “it is important now that there is a period of healing and consolidation and implementation that is less disruptive.”
Presumably the head of American Express was not invited to the meeting, on the day that the Justice Department decided to sue the company, saying its rules preventing merchants from encouraging consumers to use cheaper, rival cards violate antitrust law. It is the latest salvo in the administration’s battle with credit card companies, who it accuses of scalping consumers. Amex typically charges higher fees to merchants than rival cards, with the justification that its clients are richer and spend more.
Advocates of the government’s action say credit cards cost significantly more in the United States than abroad, and tough measures are required to open up the market and protect consumers. But the American Bankers Association expressed some valid doubts that merchants would actually pass on any savings from the Justice Department’s action to those consumers.
At the Chamber of Commerce, wounds are also still raw. It is waging its own legal battle with the Securities and Exchange Commission over a rule to give shareholders more power to influence corporate boards, a rule it called arbitrary and capricious. A small victory for the Chamber today, after the SEC announced it would delay implementation of the rule pending the outcome of the legal challenge.
Here are our top stories from Washington today…
U.S. sues Amex; Visa and MasterCard settle
The U.S. Justice Department sued American Express Co, saying its rules preventing merchants from encouraging consumers to use cheaper, rival credit cards violate antitrust law. Simultaneously, the Justice Department settled with Visa Inc and MasterCard Inc, which agreed to allow merchants to offer discounts to consumers who use less expensive types of credit or debit cards.