Posted on 10/15/2011 12:41:39 PM PDT by tobyhill
A member of Congress and other House Democrats are asking the U.S. Attorney General to investigate whether American banks have illegally gotten together to raise fees charged to consumers for banking services.
Rep. Peter Welch of Vermont, the Democratic Chief Deputy Whip in the House of Representatives, told reporters Thursday he has sent a letter to Attorney General Eric Holder urging him to explore whether banks have engaged in what's called "price signaling," a tacit agreement not to compete on matters such as the strategy and implementation of what consumers must pay for services.
Welch's letter was co-signed by Reps. John Conyers (D-Mich.), Raul Grijalva (D-Ariz.), Keith Ellison (D-Minn.) and Michael Honda (D-Calif.).
Ellison said Bank of America's (BAC, Fortune 500) recent announcement to raise the monthly fee for using a debit card to $5 "may be a signal to others that, 'hey, lift up your prices and we'll all just do it,' but I think that's why we need the AG to inspect and investigate to find out whether the consumer's interest is being served."
At a news conference on Capitol Hill, Welch declined to illustrate how to distinguish between the normal business practice of charging what the market will bear and illegal collusion, which he says could be a violation of federal antitrust laws.
(Excerpt) Read more at money.cnn.com ...
Call out Sherlock Holmes for this mystery of the century!
Dear ___________________
Thank you for contacting me about new proposed fees for Bank of America debit card users. I appreciate hearing from you.
On September 29, 2011, Bank of America announced it would begin charging its customers a monthly fee for using their debit cards to access their own money. The new fee is neither justified nor necessary, as the swipe fees allowed under the Federal Reserve's new rule more than compensate banks for their transaction costs. Smaller banks, credit unions and even Citibank have determined that imposing a fee on customers for debit card use is not necessary.
Congress passed landmark legislation to reform the financial regulatory system last year. One small part of that was a change to the interchange fee system on debit card transactions in America. This bipartisan effort came after years of Congressional hearings and Government Accountability Office studies that made clear that the interchange system was on an unsustainable course. This reform is essential for the sake of consumers, merchants, and the American economy.
Debit and credit cards are rapidly replacing cash and checks in today's economy. Visa and MasterCard are the dominant players in the card industry, and their cards are used in about 80 percent of debit and credit transactions. Every time a sale is made with one of their cards, these card network companies take a cut out of the transaction amount. Some of this cut they keep, but most of it is routed along to the bank or credit union that issued the card as an interchange fee. Tens of billions of dollars are collected in interchange fees each year.
There is nothing wrong with fees that are transparent and set in a competitive market environment. That is not the case with interchange fees. Interchange rates are centrally fixed by the credit card companies. The system is unfair to consumers, who pay tens of billions per year in hidden fees passed on to them in the form of higher retail prices. It is unfair to merchants, who cannot negotiate interchange fees and who can no longer refuse to accept the dominant card networks.
Last year's Wall Street reform calls for debit transactions to charge a fair and reasonable swipe fee. In crafting this necessary reform of the interchange system, Congress took careful steps to protect small banks and credit unions. In recent months, some Members of Congress have attempted to delay implementation of this provision through the legislative process. Most recently an effort to delay the Federal Reserve's rulemaking process received a vote on the Senate floor. I opposed attempts to delay, and the measure was defeated.
In December 2010, the Federal Reserve Board issued a proposed rule on debit card interchange fees that would cap the fees on transactions made with cards issued by large banks at 12 cents per transaction. Substantial public comment was submitted in response to the rule. On June 29, 2010, the Federal Reserve Board announced and approved a final rule to cap the fees on transactions made with cards issued by large banks at a base of 21 cents per transaction.
The rules, which took effect on October 1, 2011, will give small businesses some relief from the unreasonably high fees that the Visa and MasterCard duopoly fix on behalf of the nation's biggest banks, and consumers will finally begin to benefit from the increased competition, discounts, and lower prices that reform will bring. But I am disappointed to see that the Federal Reserve yielded to the big banks in certain parts of its final rulemaking. The inflated cap will unnecessarily take money out of the pockets of consumers and small businesses and give it to big banks that neither need nor deserve it.
Thank you again for contacting me. I will continue to fight to ensure that big banks and credit card companies cannot take unfair advantage of their customers and small businesses. Please feel free to keep in touch.
Sincerely,
Richard J. Durbin
United States Senator
Typical of an oppressive government...create a problem then create a bureaucracy to deal with it.
Have cake...and eat it too!
That’s the way they work.
Another probe so they can steal the money earmarked for it and never do a thing; except, of course, steal the money.
Their new M/O ,,,,,,, Create a problem and then blame it on your adversaries .
Not really new ,,, isn’t that what happened with Fanny and Freddie ???
There should be hearings in the house; will Dodd testify?
Now there's a think tank for ya.
Someone might want to clue in Rep. Welch to the fact that Mr. Holder has other... uh... pressing matters to attend to.
It’s only a matter of time, if we continue on the present course, that the government sets all banking rules, then eliminates all banks and simply seizes the sum total of private assets and declares the Commune.
There can be no doubt at this point that it’s crossed Obama’s mind more than once.
Crafted by people who know nothing about running a business, economics, finance, or the industry they're trying to regulate, and who owe lobbyists all sorts of favors for all the money dumped into their campaigns, if not just outright bribes. Yeah, right.
Mark
I’d like to see clips of testimony before hearings on the bill, if they had them. If they did, I would guarantee you that the banks told them up front they would raise fees because of it.
I know the Independent Community Bankers of America fought tooth and nail against this legislation. This one can be turned on the Rats very easily and in a big way.
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