**Written by Doug Powers
Starting next year, Bank of America announced they’d be charging debit card customers a $5 monthly fee. The bank said it’s in response to an amendment to the Dodd-Frank bill that was pushed by Dick Durbin to limit the per-transaction fee banks charge retailers when their customers swipe debit cards (“interchange fees”). The regulation was effective October 1st.
First up for a very predictable reaction is President Obama:
President Obama slammed Bank of America’s $5 debit card card fee in an interview with ABCnews.com and Yahoo on Monday, calling the charge “not good business practice.”
“You don’t have some inherent right just to, you know, get a certain amount of profit, if your customers are being mistreated,” he said. Later, he added, “this is exactly the sort of stuff that folks are frustrated by.”
You don’t have the inherent right to get a certain amount of profit? And **who decides that?
(**the Rhetorical Question of the Day has been brought to you by AidRight Hearing Aids — when you don’t want to ask twice, make it AidRight!)
Obama’s under-taxed supporter Warren Buffett just sank $5 billion into Bank of America, so maybe the White House should see if Warren can do anything about BofA’s unseemly quest for that “certain amount of profit.”
Speaking of things that increase costs to the general public, here’s the inspiration for the so-called “Durbin fee”:
Sen. Dick Durbin of Illinois, the No. 2 Democrat in the Senate, said Bank of America customers who don’t want to pay a new $5 monthly debit card fee should “vote with their feet” and find a financial institution that won’t charge them for accessing their accounts.
“Get the heck out of that bank,” Durbin said Monday on the Senate floor. “Find yourself a bank or credit union that won’t gouge you for $5 a month. … What Bank of America has done is an outrage.”
Compared with the amounts of money Durbin has voted to spend and charge to taxpayers during his congressional tenure, calling $5 a month “gouging” is inviting a lightning strike from on high.
Sure, it’s up to the bank’s customers to decide if they should find another bank. The problem is that the costs of regulation will hit other banks, which will also pass the cost on to customers in one way or another. Ultimately the best solution might be to repeal the regulation, but you’d have more luck getting Durbin to lobby to build a monument to Dick Cheney than to admit the regulation was a counterproductive idea.
It’s too bad Obama, Durbin and others in government can’t look at this as an example of the real world’s reaction to their regulations and reel them back accordingly (pause for laughter). Costs to companies via regs are always passed on to consumers. Just wait until when (or if) the brunt of the health care law kicks in. “Affordable” health care will be more expensive than ever, just as the government’s “consumer protection” is bound to make banking more expensive for consumers.
Now Obama’s using the occasion to call for what sounds like some sort of fee czar or something:
Asked about the fee, Obama used the opportunity to tout the new Consumer Financial Protection Bureau (CFPB). Also established by the Dodd-Frank law, the bureau opened its doors in July but is still without a full-time director. The president nominated former Ohio Attorney General Richard Cordray for the position, but GOP senators are blocking any selection until the bureau is overhauled.
“This is exactly why we need this [CFPB],” the president said. “We need somebody whose sole job it is to prevent stuff like this.”
It’s bad enough now, but for a real job killer, start multiplying the layers of regulations by regulating the ways businesses can make up for the cost of the regulations that are asphyxiating their companies. Unfortunately that warning will have little influence over people who believe regulations are great job creators.
Fun fact: In 2008 and so far in the 2012 campaign, Bank of America has contributed an amount of their profits to Barack Obama that could have otherwise paid for a month of the new debit card fees for 83,440 customers.
**Written by Doug Powers
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