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Dodd, Frank and Durbin passed legislation that increases the cost of doing business and now Durbin is railing against the banks for raising their fees in response.
Duh!
What did you think was going to happen?
Were the banks supposed to count on "Hope" and "Change" for their revenues?
As Bank of America prepares to implement a $5 monthly debit card fee and Wells Fargo flirts with doing the same, the idea of a bank actually paying its customers to use a debit card seems almost laughable. But that's exactly what's happening at the Randolph Brooks Federal Credit Union in Texas. The credit union ordinarily pays free checking account customers 10 cents for every purchase they make with their Freedom Check Card. But last week the credit union upped the ante by bumping that reward up to 15 cents. The increase will last through Dec. 31.
While the promotion may seem perfectly timed to take advantage of the publicity surrounding Bank of America's fee increase, Sonya McDonald, RBFC's senior vice president of marketing, says plans had been in the works before Bank of America's announcement. "We'd been planning it since August, and we fortuitously made our announcement right after Bank of America made theirs," she says. "With the current state of the economy, members need to worry about their own business, not fitting extra fees into their budget."
The promotion comes as many Bank of America customers are threatening to leave the bank. In an informal poll by TheStreet, 83% of readers said they planned to leave the bank over the new fees. Experts say inertia is likely to keep many of those disgruntled customers from following through, but those who do decide to defect will likely take a hard look at small banks and credit unions. The Durbin Amendment, which capped debit card swipe fees and prompted the barrage of checking account fees from the major banks, does not apply to institutions with total assets of less than $10 billion. That means smaller institutions are more likely to continue offering free checking, as well as perks such as RBFC's debit card bonus.
McDonald says the credit union has indeed seen a significant uptick in membership in the week since Bank of America's announcement. "In the past week we've seen record numbers of people coming through the door," she says. "On a typical day we'll get 150 new members, but in the last week we've seen around 265 new members a day, and a third of those are coming over from Bank of America."
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The intent of the democrats with this bank fees thing is to attempt to limit the profits of big banks like BofA. Can anybody tell me where it says in the US Constitution that the US Gov't has the right to do that?
Here's a link regarding the issue to which I believe the original poster is referring: Durbin to customers: Dump Bank of America - Oct. 4, 2011
This particular legislation does not "increas[e] the cost of doing business" it prevents the charging of certain fees by the banks. That is, if anything, a decrease in revenue, not an increase in cost. The distinction is important, because higher costs are bad for everyone, all else equal, whereas blocking fees amounts to a legally-mandated transfer payment from the banks to their customers.
The bank behavior does seem duplicitous. Their justification for the fees is that because of the legislation they are now losing money on debit card transactions. In fact, based on numbers Durbin takes from the Fed,
Previous average charge on transaction: 44 cents
Current legal maximum charge: 21 cents
Cost to bank per transaction: 4 to 12 cents
So even with the cap, banks are making money on each swipe of the card, yet they claim to be losing money. Unless the numbers are wrong, I'm going to go with Durbin and say find a bank that doesn't charge you fees based on bad numbers.
The article does make the interesting point that since the old fees are charged to merchants and the new ones are charged to consumers, this is bad for consumers. Perhaps, but if so I primarily blame the banks, not the pols.
Here's a link regarding the issue to which I believe the original poster is referring: Durbin to customers: Dump Bank of America - Oct. 4, 2011
This particular legislation does not "increas[e] the cost of doing business" it prevents the charging of certain fees by the banks. That is, if anything, a decrease in revenue, not an increase in cost. The distinction is important, because higher costs are bad for everyone, all else equal, whereas blocking fees amounts to a legally-mandated transfer payment from the banks to their customers.
The bank behavior does seem duplicitous. Their justification for the fees is that because of the legislation they are now losing money on debit card transactions. In fact, based on numbers Durbin takes from the Fed,
Previous average charge on transaction: 44 cents
Current legal maximum charge: 21 cents
Cost to bank per transaction: 4 to 12 cents
So even with the cap, banks are making money on each swipe of the card, yet they claim to be losing money. Unless the numbers are wrong, I'm going to go with Durbin and say find a bank that doesn't charge you fees based on bad numbers.
The article does make the interesting point that since the old fees are charged to merchants and the new ones are charged to consumers, this is bad for consumers. Perhaps, but if so I primarily blame the banks, not the pols.
Here's a link regarding the issue to which I believe the original poster is referring: Durbin to customers: Dump Bank of America - Oct. 4, 2011
This particular legislation does not "increas[e] the cost of doing business" it prevents the charging of certain fees by the banks. That is, if anything, a decrease in revenue, not an increase in cost. The distinction is important, because higher costs are bad for everyone, all else equal, whereas blocking fees amounts to a legally-mandated transfer payment from the banks to their customers.
The bank behavior does seem duplicitous. Their justification for the fees is that because of the legislation they are now losing money on debit card transactions. In fact, based on numbers Durbin takes from the Fed,
Previous average charge on transaction: 44 cents
Current legal maximum charge: 21 cents
Cost to bank per transaction: 4 to 12 cents
So even with the cap, banks are making money on each swipe of the card, yet they claim to be losing money. Unless the numbers are wrong, I'm going to go with Durbin and say find a bank that doesn't charge you fees based on bad numbers.
The article does make the interesting point that since the old fees are charged to merchants and the new ones are charged to consumers, this is bad for consumers. Perhaps, but if so I primarily blame the banks, not the pols.
How is that my government's place? To limit income??
Here's a link regarding the issue to which I believe the original poster is referring: Durbin to customers: Dump Bank of America - Oct. 4, 2011
This particular legislation does not "increas[e] the cost of doing business" it prevents the charging of certain fees by the banks. That is, if anything, a decrease in revenue, not an increase in cost. The distinction is important, because higher costs are bad for everyone, all else equal, whereas blocking fees amounts to a legally-mandated transfer payment from the banks to their customers.
The bank behavior does seem duplicitous. Their justification for the fees is that because of the legislation they are now losing money on debit card transactions. In fact, based on numbers Durbin takes from the Fed,
Previous average charge on transaction: 44 cents
Current legal maximum charge: 21 cents
Cost to bank per transaction: 4 to 12 cents
So even with the cap, banks are making money on each swipe of the card, yet they claim to be losing money. Unless the numbers are wrong, I'm going to go with Durbin and say find a bank that doesn't charge you fees based on bad numbers.
The article does make the interesting point that since the old fees are charged to merchants and the new ones are charged to consumers, this is bad for consumers. Perhaps, but if so I primarily blame the banks, not the pols.
How is that my government's place? To limit income??
Well, I think the constitutional justification is clear. The moral justification for limiting income is that there are certain ways to obtain income that are considered immoral: thieving, mugging, engaging in fraud, etc. The way of obtaining income here is a less clearly objectionable one: using market power (there are many debit card holders, few issuers) and information asymmetry (almost no consumers know about the fees and how they relate to the costs) to get profits. I respect the view that this is never immoral, but I believe that if the asymmetries are bad enough then it does become immoral to earn income this way.
How is that my government's place? To limit income??
Well, I think the constitutional justification is clear. The moral justification for limiting income is that there are certain ways to obtain income that are considered immoral: thieving, mugging, engaging in fraud, etc. The way of obtaining income here is a less clearly objectionable one: using market power (there are many debit card holders, few issuers) and information asymmetry (almost no consumers know about the fees and how they relate to the costs) to get profits. I respect the view that this is never immoral, but I believe that if the asymmetries are bad enough then it does become immoral to earn income this way.
But the method of the earnings isn't in question. Only the amount.
