Tuesday, October 11, 2011

Bank of America—Debit Card Villain or Not

I received an e-mail from Senator Dick Durbin Monday calling for action against Bank of America. I’m not a fan of Bank of America. I’ve never banked with them but when I was a trustee for one of my clients, he had an account with the bank. I’m also not a fan of debit cards. I’ve never used one and I don’t plan on it. I have self control, I use credit cards and don’t spend more than I have, and I don’t like having a simple swipe of a plastic card allowing someone to access my checking account. A couple years ago, I had to help a fellow Christian clean up her checking account because she continually used a debit card for small purchases but did NOT keep an accurate record of her use of the card. She was paying fee upon fee for overdrawing her account.

I’m posting Senator Durbin’s e-mail plus other articles on the debit card situation. In the end, who caused the problem?

From: Illinois Senator Dick Durbin

“Subject: No way, B of A
Date: Oct 10, 2011 1:30 PM

It’s just outrageous. Last week, Bank of America announced it will start charging its customers $5 a month just to access their own money with a debit card. (Why did Bank of America make this announcement? Could it be because Senator Durbin placed an amendment onto a banking bill that cut the fee banks could charge retailers for debit card transactions? Could it be that this fee will cost banks over 6 billion dollars? Could it be that banks need to make a profit to stay in business? Could it be that banks are trying to make up for that loss of 6 billion plus dollars? Could it be that Congress has NO Constitutional authority to regular the fees that banks charge for anything?—my addition)

If you’re a Bank of America customer who doesn’t appreciate being gouged with excessive fees (When did Senator Dick Durbin become qualified to determine whether or not a private company is gouging its customers or when a fee is excessive? This is the same Senator Durbin who called unsuccessfully for a “Windfall Profit” tax on oil companies. Problem is, there is NO such thing as a “Windfall Profit!”—my addition) , you should show Bank of America what a competitive marketplace looks like and find a bank or credit union that values their customers. (If he believes in competitive markets, why is he trying to tell us what to do? Can’t we figure out our economic activities by ourselves? Obviously NOT, in his opinion!—my addition)

We (Who are we?—my addition) can’t let B of A get away with this—and we’ve got to speak out, loud and clear, to show other banks that it is unacceptable to pad already excessive profits on the backs of hard-working Americans. (Why doesn’t he just add another amendment on to another bill preventing banks from charging fees for the use of a debit card? Oh, that’s right! The Democrats lost their majority in the House of Representatives in the last election and most Republicans actually believe in and support the free market system!!!—my addition)

Forward a message to CEO Brian Moynihan right now: Urge him to reverse his decision to charge debit card customers a $5 monthly fee, and send a powerful message that every bank will hear.


I see this ending up one of two ways:

Outcome #1: Bank of America gets an earful from so many customers and potential customers—like you (Not like me. I am not a Bank of America customer and have no intention of being a Bank of America customer with or without the fees—my addition.)—that it decides against making monthly fees the new ‘normal’ for American debit card users. (Does Bank of America determine the fees for all banks? I thought we were a free market economy where every bank makes its own determination on what fees will be charged and how much will be charged?—my addition)


Outcome #2: Too few folks notice and speak up about the new fees, sending a message to other big banks that they can charge this monthly fee to their debit card customers, too. (They can now! Some have chosen to and some have not. Senator Durbin, that’s known as the free market. Congress should have NEVER restricted how much could be charged for debit card transactions!—my addition)

Outcome #2 is completely unacceptable (According to whom?—my addition)—but I need you to speak out to make sure it doesn't happen.

In 2007, we sent thousands of emails to convince BP’s CEO to give up his company’s plan to dump more toxic chemicals into Lake Michigan. The DickDurbin.com community has proven that we can take on some of the biggest special interests around. (Please!—my addition)

Now let’s put that same kind of pressure on Bank of America’s CEO to make sure he knows these new debit card fees are simply unacceptable—and to make sure every single bank gets the message.

Forward a message to CEO Brian Moynihan right now.


Thanks for helping us chalk up another victory for the DickDurbin.com community on behalf of the American people (Not a chance that you are acting on behalf of the America people! You are trying to destroy the free enterprise system of this country!!! And every Democrat who supports this regulatory nonsense should be removed from office!—my addition).


Dick Durbin
U.S. Senator (Prayerfully, not after the 2014 election!!!—my addition)

My e-mail sent through Dick Durbin’s e-mail system to the CEO of Bank of America:

“Mr. Moynihan,

Bank of America is still a private business, as far as I know. You have every right to charge fees for services offered. DON’T let the Dick Durbins of the world bully you into doing their bidding.

Dick Durbin and Congress should have never placed a limit on the fees charged to retailers. Congress does not have the Constitutional power to regular your fees and prices. Congress is violating their oath of office and the Constitution!

Thank you.”

I hope Bank of America actually takes the time to read the e-mails instead of believing every e-mail is in opposition to its change. I could not find the e-mail address of the CEO so I’m using Senator Durbin’s system.

Other articles and a video in relation to this issue:

Dick Durbin in the Senate against Bank of America

From: http://online.wsj.com/article/SB10001424052970204138204576600800330404330.html

“Banks Plan New Fees for Using Debit Cards

The nation’s beleaguered banking industry, which has been raising fees and doing away with free services, has a new target: debit-card users.

Bank of America Corp. is laying plans to charge millions of customers a $5 monthly fee to use their debit cards, and other big banks are expected to follow suit. The industry says it needs the fees to recoup revenue it will lose because of new government regulations taking effect Saturday that cap what they can charge merchants for debit-card transactions.

Bank of America, the largest U.S. bank by assets, disclosed the plan on Thursday in a memo to its senior staff. It intends to begin collecting the fees nationwide early next year.

Several other large banks, including J.P. Morgan Chase & Co. and Wells Fargo & Co., are testing or plan to. Regions Financial Corp., a Birmingham, Ala.-based lender, has said it will start charging a $4 monthly debit-card usage fee on certain accounts on Oct. 1.

New federal limits on debit-card ‘swipe fees’ are expected to cost U.S. banks an estimated $6.6 billion a year in lost revenue.

To offset that lost revenue, many banks have eliminated or scaled back debit-rewards programs, added monthly fees for checking accounts and raised minimum balance requirements for customers to avoid certain fees.

The limits on debit-card swipe fees—one of the most contentious regulations to arise from the financial crisis—were finalized by the Federal Reserve Board in June. The new rules will cap at 24 cents the fee merchants pay banks each time a customer buys something with a debit card, down from the current average of 44 cents. The rules apply to banks with $10 billion and more in assets. (Thus, the rule does not apply to those banks that Senator Durbin wants you to change to. The change already gives the smaller banks a competitive advantage since they can continue to charge the higher transaction fees!—my addition)

Bank of America has said it expects the caps, which the industry lobbied against for months, to erase $2 billion in revenue annually.

‘The economics of offering a debit card have changed with recent regulations,’ a spokeswoman for Bank of America said Thursday.

In its internal memo, Bank of America said it will levy the $5 fee each billing cycle in which a customer uses a debit card to make a purchase. The fee will not be triggered by transactions at automated-teller machines.

The fee will apply to standard checking accounts, but not most premium accounts held by affluent customers. Banks typically exempt their premium accounts from many fees because they tend to be more profitable than standard accounts with lower balances.”

“As banks were lobbying against some provisions of last year’s Dodd-Frank financial-reform (Debatable if it was actual reform legislation!—my addition) legislation, they warned that the new rules would force them to raise fees on some products, hitting consumers with higher costs.

Trish Wexler, a spokeswoman for the Electronic Payments Coalition, a trade group that represents Visa Inc., MasterCard Inc. and several large banks, said the new fees are an ‘unintended consequence’ of the new rules.”

“Bank of America declined to comment on reaction to its plan.

Brian Riley, a senior research director of bank cards at research group TowerGroup, said the new fees are not a surprise given the amount of revenue on the line for Bank of America and other banks with lots of debit-card customers.

‘Bank of America has a real challenge,’ he said.

Bank of America, which has been rocked by large losses on its mortgage portfolio, said it has more than 58 million banking relationships with consumers and small businesses. Its customers are projected to make $260 billion in debit-card purchases this year, according to Mr. Riley’s research.

Bank of America’s planned $5 fee is higher than what most other banks are testing or planning to charge. San Francisco-based Wells Fargo said it will charge a $3 fee for some debit-card customers in Nevada, Washington, Oregon, New Mexico and Georgia, starting Oct. 14. Wells Fargo’s fee also applies to debit-card use, not ATM transactions.

A Wells Fargo spokeswoman said that the fee is part of a pilot program, and that the bank has not determined whether it will roll it out to all customers. Wells Fargo has said it expects to lose $250 million each quarter from the new caps on swipe fees.

J.P. Morgan has been testing a $3 fee in a small market in Wisconsin since February. SunTrust Banks Inc. has begun charging a $5 monthly fee for ‘unlimited debit-card purchases.’ The fee has been in effect since June for new customers that open an ‘Everyday Checking’ account, and will go into effect in November for existing customers who choose that account.

Citigroup Inc. said last week it was raising fees on certain checking accounts but would not charge fees for using debit cards.”

From: http://enews.earthlink.net/article/top?guid=20110930/5269d873-db2b-4249-a8f4-1a1f757351c1

“Bank of America debit fee is only the latest
From Associated Press
September 30, 2011 2:42 PM EDT

NEW YORK (AP)—Angela Malerba, who works in public relations in Boston, carries a debit card because she likes to know when she buys something that she has enough in her account to pay for it. But paying $5 a month to use her own money? That’s too much.

So when Bank of America starts charging the fee next year, Malerba figures she’ll rely more heavily on her credit card. Or, in a strategy that seems almost quaint in these swipe-and-go times, she may just carry more cash.”

“The 38.7 million people who carry Bank of America debit cards will face a similar decision in the latest example of banks raising fees or establishing new ones—not just for debit cards but for checking accounts, visiting ATMs, even talking to a teller.”

Bank of America’s announcement hits particularly hard because banks have spent the past decade encouraging their customers to go for the ease of debit cards, which deduct purchases immediately from a checking or savings account.

In 1995, debit cards accounted for only 1 percent of the transactions when people pulled a card out of their wallet to pay for something, with credit cards making up the rest.

Debit cards grew steadily, hitting 50 percent in 2006. Today, two-thirds of the time someone reaches for plastic, it’s debit, according to the Nilson Report, which tracks the card industry.

Credit cards still make up 56 percent of the money spent, according to the report. So when people use debit, it’s for the forgettable, smaller transactions of everyday life—a pack of gum or a cappuccino.

Banks have cashed in big. They collect about $19 billion a year from swipe fees, the pennies they collect from a store every time you run your card through a magnetic reader at the checkout counter.

On Saturday, that revenue will be cut almost in half. Federal rules will cap the amount banks can charge merchants at about 24 cents per transaction, down from an average of 44 cents.

It’s the latest regulation imposed on banks (REGULATION IMPOSED ON BANKS!!! The free market system according to Democrats!—my addition). Last year, strict rules on credit cards limited when they could raise interest rates and virtually eliminated customer fees for going over credit limits. Then the Federal Reserve tightened up when and how often banks could charge for checking account overdrafts.

Each regulation is aimed at reducing the costs for consumers, but they’ve chipped away at bank revenue—and left banks going so far as to make the customer pay for services that had been offered at no charge.

Bank of America, for instance, created a checking account that is free only if the customer banks online and at ATMs. Get a paper statement or visit a teller, and there’s an $8.95 fee for the month.” (And we can thank the federal government for these charges! Banks HAVE TO make a profit to stay in business!!!—my addition)

“The regulation doesn’t apply to banks with $10 billion or less in assets, which may give some community banks and credit unions an edge.” (May?—my addition)

From: The Heritage Foundation

“Ready for A Debit Card Tax?

Use a debit card? Now it’s really going to cost you. Bank of America announced last week that it will begin charging customers $5 per month for use of their debit cards. But if you’re looking for someone to blame, set your sights on Washington.

Bank of America is imposing the new fee in anticipation of a $2 billion annual loss brought about by the ‘Durbin Amendment’—a provision of last year’s Dodd-Frank Wall Street financial reform bill.

Signed into law in July 2010, the measure was intended to protect America from another financial meltdown, but in reality it placed a boatload of new burdens on financial institutions and their customers. The results? Increased risks to the financial system, increased regulations, and in this case, increased costs to anyone who uses a debit card.

Under the Durbin Amendment—named for its backer Senator Dick Durbin (D-IL)—the federal government now limits the amount of money banks can charge merchants when you swipe your debit card, costing them an estimated $6.6 billion per year in revenue. Rather than recoup their costs from merchants, banks are looking to consumers to pay the bill.

Enter Bank of America’s new fee. But they’re not alone. Wells Fargo expects to lose $1 billion, prompting it to adopt a $3 fee for debit cards in some areas. JPMorgan Chase is also rolling out new fees, as is Citibank. Smaller banks are getting into the game, too, as the Associated Press reports. Atlanta-based SunTrust recently instituted a $5 debit card fee, while Regions Financial in Birmingham, Alabama, will begin charging a $4 fee next month. In Texas, International Bancshares has announced last week the closure of 55 branches in grocery stores and the loss of 500 jobs.

Heritage’s Diane Katz explains that free debit cards aren’t the only things to disappear under the new law. Katz writes that a study fromBankrate.com found that the proportion of free checking accounts (of the non-interest variety) has fallen this year to 45 percent from 65 percent in 2010 and 76 percent two years ago. According to the 2011 Checking Account Survey, the number of free accounts ‘is likely to drop further as banks and their customers adjust to recent regulatory changes in banking.’ And, Katz says, those who can least afford it will pay the price:

‘The new fees will hit lower-income families the hardest. That’s because banks often exempt premium accounts from user fees to nurture more profitable customers. Faced with higher fees, some cash-strapped consumers will migrate to credit cards—if they can qualify. More stringent regulations have tightened the availability of credit while also increasing interest rates and fees.

In typical populist fashion, Senator Durbin sold his amendment as consumer-friendly. But any regulation that increases consumer costs and raises consumer debt is inherently anti-consumer and economically destructive.’

Bank of America is already seeing a backlash from its decision. Its stock dropped by more than 3.5 percent on Friday, and its website was hit with outages and glitches over the weekend (drawing speculation of attacks by disgruntled hackers). But that anger should be directed at Washington, which passed the regulations leading to the Durbin tax. And there’s one thing Congress can and should do to solve the problem: repeal it.”

What a good idea!!! And President Obama claimed he wasn’t going to raise “taxes” for the little guy!!! Along with it, repeal a lot of other controlling regulations that end up costing the consumer money but gives the federal government more control over private businesses! Can anyone say socialism!!!

“And for the support of this Declaration, with a firm reliance on the protection of divine Providence, we mutually pledge to each other our Lives, our Fortunes and our sacred Honor.” (Last sentence of the Declaration of Independence)

It is time, it’s past time to RESTORE THE CONSTITUTION!!!
It is time, it’s past time to RESTORE THE CONSTITUTION!!!
It is time, it’s past time to RESTORE THE CONSTITUTION!!!

It is time, it’s past time to OBEY THE CONSTITUTION!!!
It is time, it’s past time to OBEY THE CONSTITUTION!!!
It is time, it’s past time to OBEY THE CONSTITUTION!!!

It’s time, it is past time to TAKE BACK THE NATION!!!
It’s time, it is past time to TAKE BACK THE NATION!!!
It’s time, it is past time to TAKE BACK THE NATION!!!