Banks are out of control and have been for a long time. Remember when the first ATMs came into being? Bank strongly encouraged people to use them, because each ATM transaction was a fraction of the cost of using a teller. Once they got people into the habit of using the ATMs, then ATMs suddenly became a major cost burden on the banks, requiring them to charge ATM fees. They encouraged people to use their debit cards instead of cash, knowing they could charge the merchants for each transaction and rake in what amounts to free money. Congress has now put a limit on that free money, so the banks are gonna make up that money somehow. Notice that it used to be called a "debit card", but now most banks have returned to calling it an "ATM card", and are charging a monthly fee if you use your ATM card for non-ATM transactions (as a debit card for purchases). Most banks have put in place limits on the number of checks you can write per month, to head off people moving back to checks instead of debit card usage. All the while the banks are engaged in a campaign to make people think the banks are the victims here.
Everson said the swipe fees, collected and paid by retailers, covered the costs to the banks of offering debit card services.
"There's nothing free about that," he said. "Banks have used the interchange fee income to subsidize the costs that they have."
The costs of offering debit card services is much closer to the cost to a cell phone company of offering text messaging, which is it costs them virtually nothing (fractions of a penny per transaction), and far, far less than a transaction make with a paper check (about 8 cents per, on the average).
"I took their votes to mean that they didn't think it was appropriate for the government to get into the business of setting the prices where businesses were perfectly capable of doing so," Everson said.
Oh, puhleeze. The banks have been allowed to become out of control precisely due to lobbying efforts by the banks to get Congress to allow the charging of outrageous fees. Now it's going the other way and the banks are crying foul. Boo hoo.
Everson said banks don't like to charge more fees and realize fees anger their customers.
So we're supposed to feel sorry for the banks because they are forced to charge more fees? That banks are somehow entitled to make huge profits in order to keep the financial system running smoothly, in spite of bad investment and loan decisions? Is that what this guy is saying? Horse hockey. Banks don't care what customers think.
Banks have long opposed Dodd-Frank, warning that if the debit card fees were lowered, the difference
would have to come from somewhere else. There's just no way around that, sorry folks, not out fault. The Dodd-Frank amendment limits the fees that banks can charge merchants when a consumer swipes their debit card to 24 cents, from 44 cents. What that means is, if someone swipes their debit card 25 times in a month, the bank loses about $5
it would have otherwise made before Dodd-Frank. Since it's unthinkable for a bank to be less profitable, most banks are charging between $3 and $5 a month to make up that difference. But the reality is, most banks fees are not recovering costs, they are going directly onto the bottom line, to investors and to the top executives in bonuses.
Most fees are more or less justified by the banks with the, "I think I should have it, therefore you should give it to me" mentality, and it's precisely why the check fees, ATM and debit card fees, electronic check fees, and a host of other fees were invented. It doesn't cost a bank 24 cents, much less 44 cents per debit card transaction. It's more like 1 cent. The rest is pure profit, because they want it, and people will pay it. They know that the $5 a month fee is something that that most people will pay without complaining, a few people will complain about it to the bank, and even fewer still will go to a different bank because if it. For every person who goes from Bank A to Bank B, someone from Bank B goes to Bank A. They don't care. Yet we're supposed to feel sorry for them because they are a victim in all this. Sheah, right. <snort>
