The Fed enters the skirmish over debit card fees. –The Federal Reserve’s proposed regulation governing transaction fees for debit cards is best understood as the latest skirmish between bankers, merchants, and consumers over the future of money. In the beginning—well, maybe not the very beginning, but, say, prior to 1950—there were two ways to buy most items. You could pay cash, or you could write a check. After 1950 you could pay with a charge card like Diners Club, Carte Blanche, or American Express. These were all cards where you could run up a tab, but only for one month. Then, in 1958, there appeared, like the tree of knowledge in the Garden of Eden, the credit card. With BankAmericard (later Visa) and Master Card, you could run up a tab for as long as you liked, up to some dollar limit established by the issuer. Monthly payments were required but they didn’t have to cover what you owed; indeed, the bank preferred that you didn’t cover what you owed, because then it could charge you interest on that.

 This Bonus Season on Wall Street, Many See Zeros – Bonus season is fast approaching on Wall Street, but this year the talk does not center just on multimillion-dollar paydays. It’s about a new club that no one wants to join:  the Zeros, as they have come to be called, are facing a once-unthinkable prospect: an annual bonus of … nothing.  In some ways, a zero bonus should not come as a surprise to many bankers. As a result of the 2008 financial crisis, Wall Street firms like Goldman Sachs and banks like Citigroup raised base pay substantially in 2009 and 2010. They were seeking to placate regulators who had argued that bonuses based on performance encouraged excessive risk.  At Goldman, for instance, the base salary for managing directors rose to $500,000 from $300,000, while at Morgan Stanley and Credit Suisse it jumped to $400,000 from $200,000.  Even though employees will receive roughly the same amount of money, the psychological blow of not getting a bonus is substantial, especially in a Wall Street culture that has long equated success and prestige with bonus size. So there are sure to be plenty of long faces on employees across the financial sector who have come to expect a bonus on top of their base pay.

Obama to blink first on Social Security – The tax deal negotiated by President Barack Obama and Senate Republican leader Mitch McConnell of Kentucky is just the first part of a multistage drama that is likely to further divide and weaken Democrats.  The second part, now being teed up by the White House and key Senate Democrats, is a scheme for the president to embrace much of the Bowles-Simpson plan — including cuts in Social Security. This is to be unveiled, according to well-placed sources, in the president’s State of the Union address. The idea is to pre-empt an even more draconian set of budget cuts likely to be proposed by the incoming House Budget Committee chairman, Rep. Paul Ryan (R-Wis.), as a condition of extending the debt ceiling.

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