Pete the Banker: Your Complaints About Your Debit Card Fee Should Be Sent to: Dodd, Frank, Durbin & Those Smelly Hippies "Occupying" Wall Street

October 5, 2011

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This is the stuff Ronald Reagan was talking about when he said,  

“The nine most terrifying words in the English language are: ‘I’m from the government and I’m here to help.'” 

Mssrs Dodd, Frank and Durbin–Washington insiders all–wanted to reform banks to make them less ‘greedy’ and what we got was a transfer of the costs of using debit cards from small business to the individual. This was done to “help” consumers. They’re killing us with all this “help.”
 
Bank of America (B of A) announced a not unexpected monthly debit card charge of $5 for those using their cards for debit card retail transactions to help offset restrictions imposed under the Dodd Frank Bill, more specifically the Durbin Amendment. B of A is implementing to help offset some $6.6 B in revenue losses mandated by restrictions in the measure. Dodd Frank is also responsible for costing the banks $5.6 B in lost revenue through restricting overdraft charges (here). The Durbin Amendment was passed by the Democrat dominated Senate and House in 2010 (here).  
 
 
B of A’s action follows those of Wells, Chase and other banks that have similarly raised debit card fees for most customers.  Other fee increases are expected in an effort to help recover revenues losses.  Retailers, especially Big Box retailers like Walmart and Home Depot, are expected to increase their top and bottom lines by hundreds of millions of dollars as a result of enactment of this piece of legislation.  The Wall Street Journal suggests that up to a million individual consumers will drop out of the traditional banking sector because of increasing bank fees instead electing to rely upon pawn shop operators, check cashing operators and high fee prepaid credit cards. 
 
Beth Robertson, analyst at the research firm Javelin Strategy states, “the burden of debit card costs is being transferred from merchants to consumers.”  She goes on to elaborate, “It’s unlikely that merchants will reduce their prices for goods and services now that accepting debit cards will cost them less, but banks are certainly making up for their revenue losses.” Here.
 
In a statement in his own defense, Dick Durbin suggested small businesses would benefit and went on to say, “Swipe fee regulation will still allow banks to cover actual costs of debit transactions but will rein in the banks’ excessive profit taking”.This is truly news to community banks and credit unions that joined the larger banks to oppose the Durbin Amendment and who are highly dependent upon the health of the small business sector. Here.

President Obama blasted B of A for levying the fee stating, “This is exactly why we need this Consumer Finance Protection Bureau that we set up that is ready to go,” Obama said. “This is exactly why we need somebody who’s sole job it is to prevent this kind of stuff from happening.”  Perhaps Mr President you should have thought twice about signing the legislation last year. Here.


The Wall Street Journal suggests that, “The result is an estimated $12 billion of annual revenue losses at the same banks that politicians are berating for not extending more credit to more customers. Not that the bankers won’t seek to offset these losses by raising fees elsewhere.” (here).They further suggest that two changes will occur.  Millions of individual bank consumers will drop out of the traditional banking sector electing instead to rely upon pawn shop operators, check cashing operators and high fee prepaid credit cards.  Second, the trend over the past decade toward customer service including greater access through flexible bank hours and more branch offices will disappear. Here.
Consumers will incur yet another cost with little tangible benefit.  Courtesy of the Democrats, the money will simply flow from one industry to another representing a major wealth transfer from taxpayer supported banks to the retail sector.  Speaking of wealth transfer, no word yet on the major contributions to the upcoming Frank and Durbin campaigns from retailers like Walmart and Home Depot..  
 
So, how do you get rid of this mess? This situation reminds me of another Ronald Reagan quote:

No government ever voluntarily reduces itself in size. Government programs, once launched, never disappear. Actually, a government bureau is the nearest thing to eternal life we’ll ever see on this earth!”

Pete the Banker

Tell ’em where you saw it. Http://www.victoriataft.com