“Get the heck out of that bank.” That’s Sen. Dick Durbin’s advice for Bank of America customers, said Seung Min Kim in Politico.com. The bank announced last week that it would start charging customers $5 a month to use their debit cards. The fee was necessary, it said, because new federal regulations will take a deep bite out of bank revenues. Durbin said BofA customers should find somewhere else to park their money, calling it “an outrage” that the country’s biggest bank would “pad its profits by sticking it to its customers.” But BofA is by no means alone. Wells Fargo, Chase, SunTrust, and other large banks plan to introduce debit fees of their own soon.
Durbin’s bluster is a bit much, said the Chicago Tribune in an editorial. After all, BofA’s new fee is a “direct result of his lawmaking.” The Illinois Democrat personally pushed for an amendment to last year’s Dodd-Frank financial reform bill that caps what banks can charge retailers for debit transactions, cutting billions of dollars from their bottom lines. Is it any wonder, then, that banks aim to recoup the lost revenue by turning to customers? said National Review. “Running a debit-card network costs money, and banks are not going to do it for free or suffer reduced profits gladly.” This outcome was “almost universally foreseen” before Dodd-Frank passed; banks warned it would happen. So when you start paying that fee, just “thank Sen. Durbin.”
But thank him sincerely, said Kevin Drum in MotherJones.com. Because if “you actually believe that competition is good for consumers and eventually produces lower prices and better service, you should welcome these new fees.” They were always there, just hidden in the cost of transactions, and Durbin’s amendment has pushed them out into the open. That means “the free market has a chance to actually work: Consumers will abandon Bank of America if their fees are too high.” Other banks will be forced to compete openly, which will push prices down. And that’s a win-win for consumers. Even better, this could bring us the “much more boring banking system” we really need, said Daniel Gross in YahooFinance.com. Banks used to charge consumers for services, and banking only became cheaper when banks were able to make fat profits from reckless loans and “gambling in the capital markets.” At the end of the day, “charging for basic services is a more respectable—and less dangerous—business model.”