Thursday, October 6, 2011
Dick Durbin stood on the senate floor and bashed Bank of America for implementing a monthly debit card service fee. The “statesman” from Illinois exhorted BoA’s customers to cancel their accounts and find another financial institution that provides free checking. This kind of grandstanding is not only unprecedented, but highly unethical.
During his tirade, the senator forgot to mention who was ultimately responsible for this “outrage”. Why, it is Dick Durbin himself. It was his amendment in the Dodd-Frank bill that pushed banks to forgo free services:
Indeed, many of the free services long enjoyed by bank customers—and the source of competition among banks—are disappearing fast as a consequence of Dodd–Frank generally and Durbin in particular. A study from Bankrate.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.”
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.
The Democratic Party is good at class warfare. It’s too bad the poor haven’t realized which party declared war on them.