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Big DC names join bank fee fight

By David McMillin · Bankrate.com
Friday, October 7, 2011
Posted: 9 am ET

This week, the chorus of cries against bank fees added a few members you may know.

Illinois Sen. Dick Durbin published an open letter to Bank of America CEO, Brian Moynihan, disputing the bank's claims that new restrictions on debit swipe fees will not allow BofA to continue to reap profits. Consider this except from Durbin's letter:

Your bank has decided to impose a significant new fee on loyal customers who simply want to access their own deposited money through a card that your bank gave them and encouraged them to rely on. I challenge you to provide specific and credible data that justifies imposing this monthly card fee. If you cannot provide such data, I challenge you to do the right thing for your customers and reconsider your decision. Based on the data I have seen, your decision to charge this new fee cannot be justified by any reasonable measure.

Of course, Sen. Durbin has a big incentive to make his voice loud and clear: Banks are blaming legislation with his name attached to it as the reason for the new fees. I'm an Illinois resident, and I'm sure Sen. Durbin doesn't want me to associate the new $5 fee that shows up on my monthly statement with his work.

Durbin wasn't alone in blasting Bank of America. Treasury Secretary, Tim Geithner, echoed the Illinois Senator in a recent conversation with CNN's Erin Burnett about bank resistance to financial reform. His comments sound more like a country heading to war than a member of the federal government bickering with banking executives.

We are going to push back harder. And in the end, we are going to prevail because what we are doing is a reasonable, sensible thing.

It's good to see elected officials contributing their voices to this discussion and standing up for consumers. However, we've been hearing the Wall Street vs. Main Street debate for quite some time now without an overwhelming amount of results for those members of Main Street.

I'm anxious to see what the plan is to "prevail." This is a sticky situation for members of Congress. All of them want to score points in voters' books, but they also know that more meddling in the private sector can hurt them in the polls, too.

What do you think? Are you hoping the government will step in to help control banking fees? Or should everyday consumers take matters into their own hands and find new places to stash their cash?

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4 Comments
Marc
October 11, 2011 at 4:25 pm

I doubt that legislation such as this will help consumers. I do think that government oversight of business dealings is necessary to prevent things like Enron, Tyco and WorldCom from happening. But this attempt by the government to control bank fees is misguided. If consumers disagree with the fee one bank changes, they have many other options to choose from. The market should and will dictate if charging a fee is an appropriate strategy, not the government.

The real issue here is executive compensation. Government attempts to reign in bonus payouts are doomed to failure if they try to do it through legislation like this. CEOs should focus on a sustainable long term strategy, rather than reckless short term profits. Unfortunately, their compensation is more tied to the latter it seems.

Carolyn Jordan
October 09, 2011 at 4:46 pm

I find it interesting but not surprising that Sen. Durbin, who was the architect of the interchange legislation, is now on the defensive against Bank of America's proposed $5 debit card usage fee. This fee, which I oppose, is simply the unintended consequence that has occurred as a result of the legislation. Whenever the government interferes in the private sector, unintended consequences will most likely rear their heads with consumers being the unintended victims. I strongly disagree with government stepping back in to control fees. This never works. Let free enterprise and market forces do their jobs There are plenty of options for consumers so let them vote with their feet and take their business to community institutions such as credit unions which look out for their financial well-being unlike the megabanks. This will speak to the big banks of the world much more than any government legislation to control fees.

Dean
October 07, 2011 at 4:44 pm

The government has no place trying to tell a FOR PROFIT business what to charge. Let the banks charge whatever and let the customers decide if they want to stay or not with that bank. Easy as that!

Cole
October 07, 2011 at 9:41 am

The government shoud stay out of it. They should have stayed out of it in the first place.

Of course, banks are the big bad wolves that politician are using to garner votes byt proclaiming themselves the heroes of all of us poor defensless consumers.