A Lesson in Unnecessary Regulation

[badlydrawnjeff.livejournal.com]

By now, you've probably heard about Bank of America's plan to begin charging $5/month on the customer side for debit card usage. What you probably haven't heard of is why:

NEW YORK (Dow Jones)--Bank of America Corp. (BAC), the largest U.S. bank by assets, plans to charge customers a $5 monthly fee for making debit card purchases starting early next year, according to an internal memo sent to bank executives Thursday.

...

Bank of America is trying to cushion revenue losses it expects to incur from new caps on the fees merchants pay when a customer uses a debit card at their stores. In June, the Federal Reserve Board finalized rules capping such fees at 24 cents per transaction, compared with a current average of 44 cents.

...

Other banks have introduced or are testing new fees in response to the debit fee caps, which stem from a provision known as the Durbin amendment in last year's Dodd-Frank financial regulation overhaul legislation.

This follows many banks ending free checking in large part to the regulations in the Dodd-Frank bill limiting debit overdraft fees. This will likely not be the last time we see banks making more adjustments, either.

Regulations matter. The negative impact of regulatory action when it's not needed only ends up hurting the rest of us in the long run. In a misguided rush by the left to "protect" the population from evil, predatory banks, all you've done is now made it harder for those who you profess to represent and care about the most to use banking services. Congratulations on another job well done.

Comments

[paedraggaidin.livejournal.com]

Eh...it's all a balancing act. I think specific regulations have little net impact. Reg 1 limits Fee X, so bank increases Service Charge Y; Reg 2 limits Service Charge Y, so bank increases Fee Z, and so on, and so forth.

Regulate everything, and banking stops working. Regulate nothing, and consumers are screwed left and right. There's a balance to be found somewhere between the two.

[telemann.livejournal.com]

Yeah exactly. I'm sure merchants pass the transaction fee along to their customers anyway. AND the original plan was to reduce the fee to .12 cents. The banks whined so much about it, they got double what they were originally going to get. Besides, it was banks that were pushing for all this debit card stuff years ago, and everyone thought it was going to be completely free. Haha! They sure fooled us!

[montecristo.livejournal.com]

Regulate nothing, and consumers are screwed left and right.

No, regulate nothing other than adjudicating contract dispute and penalizing fraud and you get maximum competition.

[kardashev.livejournal.com]

Regulate everything, and banking stops working. Regulate nothing, and consumers are screwed left and right. There's a balance to be found somewhere between the two.

This sounds way too reasonable to be on the internet. What's your real angle, sir?