Senator Durbin attacks banks for charging a fee that he is forcing them to charge
Sen. Dick Durbin must be forgetting that once you've dug yourself into a deep hole, you'd best stop shoveling.
How else to explain the Illinois Democrat's blustery reaction to the $5 a month that Bank of America Corp. plans to charge some of its customers who use debit cards? The charge, which other banks are likely to adopt, is a direct result of his lawmaking. Call it the Durbin Fee.
Last year, Durbin pushed an amendment to the Dodd-Frank financial regulation package that imposes a sharp cut in interchange fees, which banks charge retailers every time a customer swipes a bank debit card to buy something. That rule goes into effect Saturday. In essence, this strips money from banks and hands it to retailers, who will pay sharply lower fees. There's no guarantee that retailers will pass the savings on to customers.
Bankers told Durbin and his fellow lawmakers last year that the interchange fees subsidize free checking accounts and other services, including the convenient practice of making purchases with debit cards at no charge to the buyer. Slash fees to retailers, the banks said, and they would likely recoup the lost revenue by charging their customers for use of the cards. That's exactly what's happening now. . . .
UPDATE: Now this is too rich. Obama is going to try to stop the fee increase that he signed the bill that created it.
Responding to a question about Bank of America's recent decision to charge users a $5 fee for using a debit card, Obama said government should get involved and that he had worked to stop banks from charging hidden credit card fees. . . .