10/02/2011

Senator Durbin attacks banks for charging a fee that he is forcing them to charge

Even the Chicago Tribune isn't very happy with Durbin on this one.

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. . . .

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9 Comments:

Blogger Carteach0 said...

Some few years ago, I was in a local tire shop making a purchase. There was a customer there settling up his bill.... a state lawmaker. The man was raising a stink about being charged a 'Tire Disposal Fee'.

The shop manager let the man bluster a while, and then let loose a blast:
"It's a state tax that YOU VOTED FOR. so SHUT UP AND PAY IT!"

We laughed for days over that.

10/02/2011 7:10 AM  
Blogger John said...

Wow, really? You think the retail is so oligarchical (it's a word, look it up!) that they have any choice but to pass along the savings? Really?!!! Did you even pay attention in Econ 101? Wow, thanks. I no longer feel any need to further consider your opinions! Awesome!

10/04/2011 10:19 PM  
Blogger John said...

Wow, really? You think the retail is so oligarchical (it's a word, look it up!) that they have any choice but to pass along the savings? Really?!!! Did you even pay attention in Econ 101? Wow, thanks. I no longer feel any need to further consider your opinions! Awesome!

Also, nice that I have to DOUBLE confirm my comments, ensuring the minimum of retort for yourself!!

10/04/2011 10:21 PM  
Blogger Kevlar said...

I may be missing something here but have banks stopped lending my money out and charging for that without paying me anything? Because at one time that was how they made their money. Of course that was before they found you can't just trust every despot, drug lord and dictator to pay their debts.

10/04/2011 11:03 PM  
Blogger John Lott said...

Dear John:
Thanks, I already knew what the word "oligarchical" meant. As to the rest of your comment, I am an economist, but I really have no idea what you are arguing. Even a monopoly will lower prices if its costs fall. But I don't understand your points so if you could explain them, I would appreciate it.

10/05/2011 12:19 AM  
Blogger Unknown said...

Back in the day, banks gave you a toaster and a decent interest rate to use your money. Of course you were never charged for visiting the bank.

Now, apparently, banks want your money for free, and charge you to give it back to you. Go banks!

10/05/2011 12:02 PM  
Blogger John Lott said...

Dear Unknown:
The reason why banks used to give away toasters is because the government regulated the interest rates that they could pay, not allowing them to pay more than a certain maximum. Since backs wanted to pay more than the regulated maximum, they offered people things such as toasters.

10/07/2011 4:44 AM  
Blogger Kevlar said...

People don't vote for laws. They vote for Law Makers. Law Makers can do whatever they want until the next election

10/07/2011 5:10 PM  
Blogger dbo88or said...

It's ridiculous that you are trying to blame anyone other than the banks for raising fees or creating new ones. That's the banks bs excuse for ripping people off. It behooves them for consumers to be angry with politicians, not with them. The poor bank is a victim. Yeah right! B of a posts profits in the billions of dollars. The reason for the fees is greed not necessity. However even if government manages to block the debit card fee the bank will find a new fee. The only thing that will work is for a large number of Americans to take their money out of these banks and deposit it in those that have reasonable policies. Try a credit union or even an online bank.

10/10/2011 11:43 PM  

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