In what American Commitment President Phil Kerpen called “a gutless sacrifice of principle,” last week the House GOP capitulated to relentless lobbying from big retail interests by stripping language repealing price controls on debit card use from the Financial CHOICE Act.
This is not only wrong because the effect of the price controls has been to increase costs for those on the margins of the banking system – the underbanked – but because price controls are always harmful. They distort the normal working of supply and demand and generally benefit most those whom they were not intended to help in the first place. Thus, for example, the debit card price controls were purported to help small merchants, but in many cases they saw their costs go up, as they lost access to deep discounts they had before the price controls were introduced (the price ceiling actually became a floor.)