Posted on 10/04/2011 7:13:16 AM PDT by SeekAndFind
The law of unintended consequenes accompanies every piece of legislation passed by congress. Conservatives recognize this fact of life; liberals don't.
That's how we get 3000 page health insurance "reform" bills and gigantic headaches like Dodd-Frank; a measure designed to "protect" consumers but whose unintended consequences will make credit harder to get for most, and cost consumers more in the long run.
The "Durbin fee" on debit cards is one such unintended consequence:
Durbin pitched his amendment, which empowered federal bureaucrats to fix the fees banks can charge merchants for each debit card transaction at 24 cents, as a blow to the "excess profits" of "big banks." Banks currently charge an average of just 44 cents per transaction, but for big retailers like Wal-Mart, all those transactions can add up. Analysts estimate that the Durbin amendment will be a $6.6 billion boon for the Targets and Walgreens of the world.
But big banks didn't become big by eating billion-dollar losses. Last week Bank of America announced it will start charging customers a $5 fee every month they make at least one debit transaction. And BofA is not alone. Wells Fargo, Chase and SunTrust are all instituting similar versions of the "Durbin fee." Washington Mutual says it is not adding any debit fees, but is tightening restrictions on free checking accounts. The bottom line is that whatever extra cash retailers are picking up from debit card transactions, consumers are losing from banks.
And it is not at all clear that consumers are going to recover any of the $6.6 billion more they will be paying banks in the form of lower prices from retailers. A study of Australian retail outlets after a similar regulation passed in that country found that none of the swipe-fee savings was passed along to consumers.
(Excerpt) Read more at americanthinker.com ...
I was at a credit card industry conference a few days after the Durbin Amendment was introduced in May of 2010.
The whole conference was in a panic about it, as Durbin’s stupid interference rendered the existing business models unworkable. Nobody had any idea how the card business would adjust.
One particularly egregious aspect of the Durbin Amendment was that it called for retailers to play different fees according to their size.
Durbin has no clue about the technical processing infrastructure that underlies the card system, and many were stunned about this “tiered rate” rule, which was seen to be an impossible nightmare in terms of the changes it would require to the electronic card processing infrastructure.
By the way, I don’t make my living in the card industry. I was only there because I was doing a study of it for a client. But it was amazing to see an entire industry thrown into turmoil by a stupid law that served no purpose. People at the conference were really disturbed.
I was at an intellectual property law conference the other day. Similare reactions to the patent law changes under the “America Invents Act.”
The law is ill thought out, and makes a royal mess of the US patent system for at least the next 20 years or so.
I was at an intellectual property law conference the other day. Similar reactions to the patent law changes under the “America Invents Act.”
The law is ill thought out, and makes a royal mess of the US patent system for at least the next 20 years or so.
I tend to disagree in as much I think that Durbin could know this and just not care! This is yet another case of political cronyism trumping real world and Congress adding yet another bad law when passing Dadd-Frank (just as bad).
By the way, this charge by BoA, being an obvious result of a new regulation, should be regarded as a regressive DEMOCRAT fee upon the poor and middle class US Citizens. Add to this the new losses of "free checking" in MANY financial institutions, and you should be able to say that the DEMOCRATS are making it worse for this population slice of which they purport to be the defenders.
I think we need to start referring to the debit card fee as “the Durbin Tax.”
I think the political reason Durbin made that speech criticizing the BoA monthly debit fee is the Dems in Congress are probably receiving flak from their BoA constituents and reading Fox media reports blaming them for Dodd Frank being the cause of the monthly fee. Durbin basically was casting BoA in the usual Dem argument of greedy corporations and banks to put the political onus on BoA rather than Dodd Frank.The taxpayers thru FDIC insure 1 trillion in BoA deposits and his encouragement for depositors to leave the bank only jeopardizes their stability and puts taxpayers at risk. Durbin is a piece of rotting meat.
Another thing to 'thank' liberals for - higher bank charges.
Great.
On the other hand, somewhere a liberal is 'feeling' smug and happy with themselves - - and doesn't that make paying the extra fees all worthwhile? /s
This story is spreading everywhere like wildfire today.
The Dems cannot allow that to continue. It cuts them off at the knees with the “little people”.
Look for B of A to come under some (-ahem-) very special regulatory attention until they think better of this and withdraw it.
B of A is NOT the only bank that is considering the Durbin Fee. The FEE itself will start to spread.
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