On the eve of a key vote in the Senate on an issue in which Wal-Mart is deeply invested, the company announced it is donating $20 million to charities and opening scores of new stores in the Chicago area, in the home state of Sen. Dick Durbin, Illinois Democrat, the retail giant’s top ally in its push to cap credit card fees.
The plan includes opening “several dozen” new stores in Chicago and donating $20 million over five years to Chicago area charities “that work to eradicate hunger, curb youth violence and help all Chicago residents live better.”
At issue on Capitol Hill are so-called “interchange fees” charged by credit card companies to process purchases in stores.
Wal-Mart is a key player, lobbying for government price controls on the amount of the fees, which typically comprise about two percent of the purchase value. Retailers argue they do not have enough leverage to negotiate reasonable rates.
On the other side of the issue are credit unions and banks, whose profit models are built on the fees. They argue the purchases cost significant amounts to process and that their profit margins are within normal bounds for American businesses.
Today the Senate is voting on an amendment strongly opposed by retailers that would limit the government caps on the interchange fees to small businesses – excluding giants like Wal-Mart.
On the eve of the vote, which will take place in the next few hours, Wal-Mart announced the new boon to the Chicago area, home to Durbin.
One financial services lobbyist who is fighting Wal-Mart and other retailers on the interchange issue called the timing of the donation suspicious.
“Imagine if Tom DeLay was pushing an amendment to deregulate the energy industry, and on the eve of the vote, Enron donated $20 million to Houston. The left would go fucking bonkers,” the source said.
Wal-Mart spokesman Steve Restivo said the donation was unrelated to the interchange fees issue or Durbin, noting the announcement was long under development and the result of “countless discussions” with city leaders.
Restivo noted that Wal-Mart only has one store in the Chicago area and the donation announcement also comes as the retailer faces a key zoning vote in Chicago on Thursday.
Restivo also said the donation is unrelated to city politics. Instead, he said, it is part of Wal-Mart’s longstanding goal of “giving back to communities” it has stores in.
Restivo noted that Wal-Mart has donated $10 million in the last five years to causes in the Chicago area.