[Vision2020] Durbin to customers: Dump Bank of America

[Tom Hansen]

Seeya round town, Moscow.

Tom Hansen
Moscow, Idaho
 

 

On Oct 4, 2011, at 12:23, "Art Deco" <deco at moscow.com> wrote:

> Durbin to customers: Dump Bank of America
> 
> By Steve Hargreaves @CNNMoney October 4, 2011: 2:24 PM ET
> NEW YORK (CNNMoney) -- Sen. Dick Durbin on Tuesday urged customers unhappy with Bank of America's new $5-a-month debit card fee to take their business elsewhere -- calling the fee a golden opportunity for other banks "not as greedy" to drum up new business.
> 
> "I believe in something called competition," the Illinois Democrat said on a conference call with reporters.
> 
> Last year, Durbin helped shepherd a law that limits how much banks can charge on debit card transactions -- a law that led Bank of America to recently switch to the monthly charge.
> 
> "If Bank of America wants to nail their customers with a monthly fee, I want their customers to make the conscious decision to go elsewhere where they are better treated," Durbin added.
> 
> Durbin said he's sending a letter to Illinois banks urging them to try to steal Bank of America's customers.
> 
> 9 most annoying bank fees
> 
> "This is an opportunity for banks and credit unions to win some customers over," he said. "That is not only good business sense, but common sense."
> 
> Bank of America (BAC, Fortune 500) did not immediately respond to a request for comment.
> 
> The so-called Durbin Amendment, part of a larger Wall Street reform law, limits banks to charging 21 cents for each debit card transaction. Previously the banks would charge an average of 44 cents, mostly to retailers.
> 
> Durbin, citing numbers from the Federal Reserve, said debit card swipes cost the banks between just 4 and 12 cents -- far below even the new 21 cent cap.
> 
> The 21 cent cap is expected to cost the banking industry $5 billion a year, and other banks are considering moves similar to Bank of America's.
> 
> Last month, Wells Fargo (WFC, Fortune 500) said it will test a $3 monthly fee in Georgia, New Mexico, Nevada, Oregon and Washington for customers who use their debit card for purchases. That test begins Oct. 14.
> 
> At the end of last year, JPMorgan Chase (JPM, Fortune 500) announced a similar test, in which it charged customers in northern Wisconsin a $3 fee for using their debit cards. A Chase spokesman said last month that the tests were still underway.
> 
> Durbin said banks were trying to make debit cards "more expensive."
> 
> "If they can push people away from debit cards and into credit they make more money. I think that's really the motive behind this."
> 
> But the industry disputes Durbin's argument and says the new cap is below what it costs banks to process transactions.
> 
> The losers are consumers, while the winners are retailers that no longer have to pony up as much money, Frank Keating, head of the American Bankers Association, said on Friday.
> 
> The cap "provided big-box retailers with $7 billion in windfall profits while forcing banks to lose money on every debit card transaction," Keating said.
> 
> On Tuesday, Keating reiterated that the cap has altered the economics of debit cards.
> 
> "As a direct result of the Durbin Amendment, consumers have started paying for financial services they previously enjoyed free of charge," Keating said.
> 
>  
>  
> ________________________________________
> Wayne A. Fox
> wayne.a.fox at gmail.com
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