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Big Wall Street banks love to jack up fees on consumers. And they like to blame anything else they can for their decisions to do so.
In fact, during the 2008 financial crisis, they blamed everything they could think of for increasing fees as this article pointed out at the time (and before debit card fees had ever been reformed):
- "In November 2008, the Wall Street Journal reported that "banks are responding to the troubled economy by jacking up fees on their checking accounts to record amounts." Other news outlets reported that the banks were charging record-high service fees and customer penalties to make up for losses from bad mortgage loans. Other banks said they would raise fees due to industry consolidation and proposed increases in FDIC rates for deposit insurance.”
When they ran out of other excuses for increasing customers’ prices, the big banks started blaming debit card swipe fee reform. But, the truth keeps getting in their way.
This article shows that what they say about debit reform – and, by extension, credit card reforms--just isn’t true. As the article notes:
- “In 2010, after the post-financial crisis overhaul of bank regulations, lenders warned that they would levy fees on debit cards because of a cap on some card charges – but few ended up doing so because consumer threatened to move their business.”
It points out that they are shifting blame once again to proposed limits on late fees and overdraft fees but that their excuses are out of step with reality:
- “The banks say that their only option is to pass on their costs to customers, but that’s not true,” said Dennis Kelleher, president of Better Markets, an economics think tank that is in favor of the proposed bank regulations. “Yet again, banks are dressing up their attempts to maximize their own profit under the guise of what’s good or bad for customers.”
- “The highly competitive environment for retail deposits means that banks might wind up needing to keep services free, no matter what the final rules end up looking like.”
It turns out that banks will increase prices whenever they can unless competition or policy prevents that.
Regardless of the big banks’ blame game, we need basic competition on swipe fees or they will keep growing out of control. And, boosting competition will not have any of the negative effects that big banks pretend it will – remember, those banks will jack up fees on consumers whenever they can regardless of what Congress does (or doesn’t do).
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