Sweeping financial regulatory reform legislation under consideration in the U.S. House of Representatives would unfairly affect industries with no role in the recent financial meltdown, yet fails to bring meaningful reform to excessive credit card interchange fees harmful to retailers and consumers, according to the Retail Industry Leaders Association.
RILA is the trade association of the world's largest and most innovative retail companies. RILA members include more than 200 retailers, product manufacturers, and service suppliers, which together account for more than $1.5 trillion in annual sales, millions of American jobs and operate more than 100,000 stores, manufacturing facilities and distribution centers domestically and abroad.
The legislation, known as the Wall Street Reform and Consumer Protection Act (H.R. 4173), is before the House of Representatives this week.
"We understand that the objective of instituting certain corporate-governance reforms is to ensure that any of these practices that may have contributed to the financial meltdown last year are not repeated. Unfortunately, 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 recent financial crisis," said John Emling, senior vice president for government affairs in a letter to House lawmakers. RILA raised specific objections to governance provisions regarding proxy access and shareholder votes on compensation.
"RILA member companies have built strong relationships with their shareholders, and through positive dialogues between shareholders and company directors and management, RILA members have listened and responded to many shareholders' concerns and proposals to improve corporate governance in recent years," Emling said.
Interchange fees, also known as swipe fees, fall under processing credit and debit card transactions. According to a statement from RILA, the fees have tripled in the United States since 2001, totaling $48 billion in 2008. Today, for most retailers, the cost of processing paper checks is less than the cost of accepting credit and debit cards.
RILA's letter to lawmakers also objected to language that would treat retail gift cards as financial products and thus lead to their regulation under a Consumer Financial Protection Agency. Retail gift cards are today's version of gift certificates.
