I was all set to write a post of the stupidity of BofA newly announced $5 monthly fee for using your debit card.
I was all set to jump on the greedy bankers bandwagon. Yes, I KNOW I've spent most of my career in that industry, which was why I was all set to get up in BofA's face about the increased costs that will result of people writing checks instead of using their debit cards.
I was all set to tell you readers to close your account.
I was all set to explain the inner workings of the banking industry to the executives making this stupid decision. I had half the post written
But I forgot.
I forgot that last year Dick Durbin's amendment to the Frank/Dodd bill was passed which limited the fees banks are allowed to charge retailers for electronic debit fees, cutting the fees in half.
Those fees are estimated to result in a loss of 6.6 BILLION dollars of revenue for the banks according to a WSJ article today.
I recalled the idiocy of the amendment when I heard the connection today on the radio.
This is where people JUST DON'T GET IT. If any company is now restricted in a certain aspect of their revenue by some clueless branch of the government, the company will find another avenue to make up the loss of revenue.
How hard is that to understand? Honestly?
You don't have to be the Amazing Kreskin to have predicted that the banks would find another route to revenue.
Yeah, it's all about those evil bankers. Unfortunately for those that voted for this amendment, the connection between their passage of stupid regulations and the increase in customer fees has been reported on all the news.
Oh, but I'm sure the retailers that are now profitting from the decrease in fees are going to pass that decrease down to their products, right?
RIGHT?
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12 comments:
Yes, the merchants had to ‘pay the fee’, but that fee was passed on to the customer within the price of the products. The merchant actually didn’t pay a thing, but the customers did as an imbedded cost. No the customer will be paying twice…the amount the merchant is losing, plus a $5 per month fee if you use your debit card. In effect, we will be paying more. Turban Durban has struck again.
Of course the fee was embedded in the price. All fees, all taxes are or else companies would go out of business. But once that fee is incorporated into the price, it will never go back.
If my bank decides to start charging this debit card fee, I'll hit them harder by not using it by writing checks, which takes teller time and a proof operator time, neither of those positions are involved when processing an electronic debit charge.
The bank's decision to charge on using debit accounts was obviously not based on facts. They incur more expense with processing physical checks. But I've worked with too many banking executives to even pretend most know the consequence of their actiions.
Hence the Jamie Dimon idiocy of supporting Obama in 2008. Obama didn't exactly hide his agenda against businesses.
Ah, the Law of Unintended Consequences... I don't know how many times I say it at home, say it at work, say it in my life - THINK IT THROUGH before making a decision (or a law/amendment, for that matter.) Of course the result of limiting the fees that banks can charge merchants is going to result in the consumer being soaked somewhere else.
I've never had a debit card. I am a bit of a Luddite, and honestly I am afraid of overdrawing my account, since I'm less likely to write down any expenditures with a debit card than I am with a checkbook. I still write checks, unless a store uses the EFT method. I refuse to do that, since it's almost as though the store then has direct access to my account. In that case, I use a credit card, and get points/miles in the process.
This fee is just another example of why I'm glad I never got a debit card in the first place. And another example of our politicians either being incompetent, or far worse, achieving their goals of re-making this country. God help us.
Merchants and banks have been engaged in Mutual Squabble about interchange and swipe fees for many years; had they gone on squabbling, most of us would never have known the difference. (I wrote a couple pieces on the subject many months back, but then I find entertainment value in watching businessmen playing chicken.) Only when the government decided to Do Something did it become a debacle.
Rita-
Actually, you'll notice my post on this topic is among my 10 most popular. I excoriated Dick Durbin, a Senator from my old home state, for taking money from retailers in order to screw the unpopular bankers.
You are correct on this one. BofA is being forced. You can find some more pieces about this on my biz blog.
-CN
I did miss your post on the subject. I remember (now) when the amendment passed thinking that it was just another case of over-regulating an industry as a method to vilify the bankers. The idiots marching on Wall Street have no concept what exactly would happen to this country if the banks were destroyed. They could not have possibly ever held a position in a company above basic entry level or they would understand the impact of the destruction they want.
They need to go live a year in one of the countries they want to emulate, AND not carry their parent's credit card when they go.
I git it. I always did git it. If'n the time ever comes when a hick is elected to Warshington, mebbe common sense will return since we live by the skin of our one tooth in life (cuz we can't 'ford a dentist). Rich folks have a tendency to not realize whut five bucks means: "Do we buy diapers, beer, or eat at McDonald's today?"
lmao Dana. I'd like to turn off the "git", but it's in my DNA. And I'll opt for the beer.
I'd write a check, too...I suppose we should expect more 'little fees' here and there from banks and other places we do business.........
what a MESS we're in.
Rita-
Thanks for the belated recognition.
Puts my hand to my forehead to divine your next post in advance.
You remarked in your reply to my earlier comment:
"They could not have possibly ever held a position in a company above basic entry level or they would understand the impact of the destruction they want."
Surely, you jest! What makes you think most Democratic Congress members have ever held a real private sector job, unless it was as a lawyer?
Work in a company? That's so..so....so.....dirty and money-grubbing.
Much better to have gone straight from law school to practice labor or enviro-law. Then onto a Rep's or Senator's staff (like Illinois' Paul Simon, I believe, did), or run for state legislature. Then vote present a lot.
Like, um, well, you know who....
-CN
My mistake. Here's some text from my Dick Durbin debit card post. It wasn't Simon who interned..it was Durbin for that equally numbskulled Simon:
"Care to guess his (Durbin's) pedigree?
You might have assumed, as I did, correctly, that his academic background was- law school. Meaning he has virtually no practical knowledge about anything regarding the US economy. But it's much worse than that.
Durbin interned with and apprenticed to one of the lesser lights of Illinois' contributions to the US Senate- Paul Simon. No wonder Durbin has a huge appetite for legislation which contrasts with his apparent non-existent common sense. A chip off the old uber-liberal block of bow-tie Paul, Durbin is essentially a lifer- a professional federal politician. His bio mentions no real work experience between being Simon's staffer, then running for a House seat.
The most vile, despicable breed of Congressional legislator- the lifetime federal hack."
Rita-
Btw, could you please email me to tell me what widget you use to generate that You might also like feature on your posts?
Tx.
-CN
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