Remember the “Durbin Fee” while using your debit cards
When
I first read that headline I thought they were talking about Durbin, South Africa, and this was about some UN Plan that accessed a small free on purchases to deal with AGW or Malaria or some such thing. I thought it was one of those Internet stories about an International conspiracy of do-gooders.
I was wrong. This is about the fact that BofA will soon be charging me $5.00 a month to use my bank card. Why are they doing that? Initially I thought they were doing it because they could. This is not the same bank I started using 50 years ago. Gone is the spirit of Mr Giannini, who started the bank out of his pushcart, in San Francisco.
♠ Since they merged with that East Coast bank it has been different. That said, if my Father was alive today he would tell me the rot set in before that and would regale me with his story of how he was fleeing BofA, changing from this bank to that, with BofA in hot pursuit, buying up a bank almost as soon as he shifted his money to a new account there.
It turns out that this is the response by BofA, and other banks, to a little item US Senator Dick Durbin (D-IL) slipped into a bill that gave regulators the authority to regulate credit card fees. I am sure it seemed like a good idea at the time. At any rate, Opinionator Ed Morrissey, at
Hot Air linked to
an editorial in The Washington ExaminerDuring the debate over the Dodd-Frank financial reform bill, when Democrats controlled Congress, Durbin insisted on including an amendment that had nothing to do with Dodd-Frank's stated aims of stable banks and consumer protections. The Durbin amendment granted regulators the authority to establish price controls on what banks could charge merchants that accepted their customers' debit cards as payment. The resulting regulations, which took effect Oct. 1, limit what banks can charge merchants to no more than 24 cents per debit card transaction.
Critics pointed out that banks, facing $6 billion annual losses from this change, would shift the costs of debit cards from merchants to bank customers. Sure enough, Bank of America and several of its largest competitors -- including Wells Fargo, PNC, HSBC, SunTrust, TDBank, and Chase -- will be imposing various new fees on their customers to make up for Durbin's folly
But, my point is, the 535 Congress Critters, neither collectively nor individually, are smart enough to anticipate all the new machinations the markets will come up with. Nor are the Federal Regulators they empower. Thus, market regulation needs to be lightly applied, in broad sweeps, and not focused on this or that item, which might well be a passing fad. Otherwise, we could kill the golden goose.
Regards — Cliff
♠ I think that is actually a bit of hagiography. Actually, he managed to get money out of the vault of his bank in San Francisco during the earthquake and was able to set up shop when most of the other banks could not. He operated off of a table made up of a couple of planks over some barrels.