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A federal judge's ruling on the Durbin Amendment is likely to cost the banking industry billions of dollars each year.
July 31 -
This newly discovered, expanded version of Aesop's most famous fable bears an eerie resemblance to the modern day and sheds new light on its tragic moral.
November 30
Editor's note:This is a work of fiction. Any resemblance to real merchants, bankers, lobbyists, or politicians, living or dead, is purely coincidental.
Once upon a time, there was a great kingdom. The subjects in this kingdom had a favorite pastime: shopping.
It was important for shopping to be easy. The merchants did not like to barter goods for their wares. So, the merchants went to the Money-Changer ("MC") and asked for help.
"MC," said the merchants, "our customers come to our shops and ask us to take a bushel of corn for payment. We try to accommodate them, but then we have to hold bushels of corn. Is there any way you can help us?"
"Suppose they brought the bushels to me instead," said MC. "I could give them something to show you that would prove they could afford the purchase. And then later, you could come to me and exchange a record of the sale for the goods I am holding."
The merchants liked this plan.
MC said, "Of course, I'll need a fee for this service. How about ten ears of corn from each bushel I am asked to hold?"
"OK," said the merchants, "ten ears per bushel it's a deal."
Since the kingdom had not invented plastic yet, MC gave out pieces of flat rock which the merchants would mark for each sale. It was a little cumbersome, but still easier than hauling around bushels of corn.
After a few years, the merchants had become so used to the flat rocks that they began to take them for granted. The ten ears of corn began to seem more and more of a burden. So they sent a representative to see the King.
"Your Majesty," whined the Merchant, "Doesn't ten ears of corn out of a bushel sound like too much?"
The King responded, "But did you not agree with MC that ten ears of corn was the fee?"
"Yes, Sire, but that was many years ago and now MC has built a large, elaborate network of warehouses to store our goods. The warehouses are all built, the workers are all trained, why, the cost of each new bushel hardly costs MC anything at all. Why, one ear of corn should be more than enough compensation."
The King asked, "If I grant your request, will my subjects benefit when they shop at your establishment?"
"But, of course, Sire! The extra nine ears of corn we don't have to pay MC will now allow our customers to buy more for each bushel of corn than they could before."
"So, if one of your customers comes to your shop to buy a new burlap dress for his wife, and it would normally cost him one bushel of corn, now he would be able to buy a new burlap dress and maybe a cloth handkerchief?"
"Oh, Majesty, now he could buy one new burlap dress, but it would be a nicer burlap dress, with more color and style."
"Merchant," the King demanded, "How much do you pay your landlord to rent your establishment?"
"Why approximately 12 bushels of corn each month, your Majesty."
"And," continued the King, "how much do you pay the Weaver who brings you his goods to sell?"
"It depends, Sire, on the quality of the merchandise, the color, the skill of the weaver "
The King continued, "If you were able to pay less to your Landlord and to the Weaver, wouldn't my subjects also benefit? Why do you wish me to change your arrangement with MC but not with the Landlord or the Weaver?"
The Merchant was puzzled. Even if the King issued a Royal Proclamation, the Merchant thought, the Landlord and the Weaver were too important to him to upset them. But MC what did he really do?
"What assurance do I have that my subjects will indeed benefit if I lower the number of ears of corn you pay to MC?"
"Why, your Majesty, you have my solemn word as your loyal subject."
The King thought about it. Well, I do dislike MC, he thought. The Landlord is part of the gentry and has connections to the Royal court. The Weaver is of little consequence, but since the Merchant is not asking to squeeze him, I'll let him be.
"Merchant, the crown directs the Money Changer to henceforth take only one ear of corn from every bushel delivered to him. Your plea is hereby granted."
John Costa is a managing director for Auriemma Consulting Group and runs the corporate finance practice.
