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Bank?s Want Higher Debit Card Fees

By Andy Miofsky, Illinois Bankruptcy Attorney

More is what banks want.  More debit card fees, more profits.  Banks also want less, less government safeguards protecting bank customers.  Banks threaten to increase other fees if they do not get their way.  Bank lobbyists sing a familiar song whenever they are faced with reform legislation.  They repeat a chorus that reform will cost consumers more money as banks have to increase fees on other services and some consumers will lose access to easy credit.  Keep those lyrics in mind the next time a banker opens his mouth.

In early 2009 Senator Dick Durbin [D IL] championed the rights of consumers in an effort to reform student loans, mortgage loans, usury and credit card fees charged by banks.  Along the way at every turn he was met with fierce opposition from banking industry lobbyists.  After learning his attempt to let federal bankruptcy court judges review and modify underwater mortgages was failing, he told Progress Illinois “And the banks — hard to believe in a time when we’re facing a banking crisis that many of the banks created — are still the most powerful lobby on Capitol Hill. And they frankly own the place.”

In 2010 Durbin successfully promoted legislation that would reduce the interchange fees some banks charge debit card users.  Banks make an estimated $16 BILLION annually on these fees, according to St. Louis Post Dispatch Washington Bureau Chief Bill Lambrecht.  A St Louis 7-Eleven owner, Mike Foster, says the fee is his third highest business expense.  “All of a sudden they’re [banks] squealing that it’s the end of the world,” Foster said.   And the Missouri Petroleum Marketers & Convenience Store Association says the law will reduce the cost consumers pay at the pump.

But banks are trying to gut the law before it takes effect in July 2011.  “In fevered behind-the-scenes lobbying in recent weeks, financial institutions have been working to delay new rules that would lower by billions of dollars what they reap from debit card transactions” writes Lambrecht.

And what do the banks say?  Do they ever say they are making enough money?  No.  “A spokesman for the Independent Community Bankers of America said customers could see fees on services offered now for free, including checking accounts and online banking.”   There is that song again.

 

 

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Full post as published by Credit Law Network on March 23, 2011 (boomark / email).