The President suggested it could be targeted by the new financial watchdog agency. For his part, Senator Durbin felt the need to tell customers that they should respond to incentives:
“Bank of America customers, vote with your feet. Get the heck out of that bank. Find yourself a bank or credit union that won’t gouge you for $5 a month, and still will give you a debit card that you can use every single day.”
According to Obama and Durbin (who introduced an amendment to the Dodd Frank Wall Street Reform Act designed to cut the fee merchants pay for transactions from an average of 44 cents per transaction to no more than 24 cents for debt issuers with over $10 billion in assets), we need to prevent banks from imposing transparent fees on debit card transactions even though consumers can (and should according to the Senator) choose another bank if they are charged those fees.
Consider me confused. If consumers can punish banks that charge them fees they do not like, why exactly do we need to prevent them from charging those fees in the first place? Those consumers who stay with Bank of America surely won’t like the fee, but they will apparently be willing to pay it for other advantages they might get from remaining a customer. Those who do not believe those benefits are worth the fee will leave.
Richard Green believes there is no reason to be upset with Bank of America. I might not go that far, but he’s right that if Bank of America wants to charge for a service, they have a right to do so. Their customers have a right to find another bank. Where, then, is the legitimate role for government to cap the fee?
On October 2, 3 and 4, PBS will be running a 3-part series on the Prohibition era. There are some great photographs online here. For some background on the economic history of prohibition, here is Jeff Miron’s article at EH.net.