Mike Brownfield
The Morning Bell
Heritage.org
10/3/2011
Use a debit card? Now it’s really going to cost you. Bank of America announced last week that it will begin charging customers $5 per month for use of their debit cards. But if you’re looking for someone to blame, set your sights on Washington.
Bank of America is imposing the new fee in anticipation of a $2 billion annual loss brought about by the “Durbin Amendment” — a provision of last year’s Dodd-Frank Wall Street financial reform bill.
Signed into law in July 2010, the measure was intended to protect America from another financial meltdown, but in reality it placed a boatload of new burdens on financial institutions and their customers. The results? Increased risks to the financial system, increased regulations, and in this case, increased costs to anyone who uses a debit card.
Under the Durbin Amendment–named for its backer Senator Dick Durbin (D-IL)–the federal government now limits the amount of money banks can charge merchants when you swipe your debit card, costing them an estimated $6.6 billion per year in revenue. Rather than recoup their costs from merchants, banks are looking to consumers to pay the bill.
Enter Bank of America’s new fee. But they’re not alone…
The article continues at The Morning Bell.
Related: Blame Illinois Senator for Higher Bank Fees, Fewer Free Services
Thanks to Dodd-Frank’s Durbin Amendment, price controls on interchange fees — the so-called “swipe fees” that retailers pay to bank and credit unions that process debit card transactions — that went into effect Oct. 1, free checking and debit card transactions are going the way of the dodo bird.
“Like your free checking account? Prepare to say goodbye,” reads the headline of a recent USA Today story. The article cites new findings that “only 45% of non-interest bank checking accounts are free, down from 65% in 2010 and 76% two years ago” and that “the average monthly fee for a non-interest account is $4.37, up 75 percent from a year ago.”
To her great credit, reporter Sandra Block did not take the easy route of blaming the “greedy banks.” Not that banks are blameless for all their practices. But in this case, as the story notes in the second paragraph, nearly all the blame rests on a boneheaded and regressive regulation from the Dodd-Frank “financial reform” of 2010. “Banks are adding fees to recover from new regulations that could cost billions in lost revenue,” Block reports…
