An opinion article by Raddon Financial Group writer cites that recent announcement of new debit and other fees by the nation's biggest banks are not the unintended consequences of the Durbin interchange amendment, but rather a fully predictable reaction the move by Congress earlier this year.
Among the top ten largest retail banks, four offered a free checking product a year ago but today PNC is the lone free hold-out. Debit card rewards have completely disappeared from this group as well because it because of the Durbin mandated 45% decline in interchange income. Other institutions have made difficult staffing decisions in an effort to trim expenses in light of the projected interchange revenue decline. International Bancshares cited the debit card interchange revenue loss when they announced the closing of 55 branches the loss of 500 jobs. Bank of America’s plan to cut 30,000 jobs by 2014 has also been partially attributed to the cost of overregulation.
Fifth Third Bank is taking an innovative approach to replacing lost debit card interchange with their Duo Card, a debit and credit card combined in the same piece of plastic. Theoretically, if they’re successful in converting a good portion of existing debit card transactions to credit card transactions, they may limit their interchange losses.
Finally, the Raddon writer postures that Bank of America’s $5 monthly debit card activity fee should come as no surprise, with such a move being an utterly predictable of the Durbin amendment. The article reports that large retailers such as Wal-Mart greased Durbin’s wheels by announcing a $20 million donation to Chicago area charities (Durbin is from Illinois) on the eve of the Senate vote on the Durbin interchange fee in June 2010. While Durbin and Wal-Mart were busy downplaying this coincidence, Wal-Mart’s lobbyist groups were busy snapping up former Durbin aides to continue the fight. As reported here by the Daily Caller, Durbin’s former press secretary and a legislative aide joined the Podesta Group lobbying for Wal-Mart on the debit card interchange issue. Perhaps as a victory celebration, the Podesta Group hosted a fundraiser for Durbin a month after the passage of the Dodd-Frank bill, with the two former aides in attendance. In gratitude, Senator Durbin received a $5,000 check from Podesta lobbyists and another $5,000 from Wal-Mart’s PAC (political action committee). The writer says he is not suggesting illegality in any of these donations, but that they do suggest that the best interest of consumers may have been lost somewhere along the way in this battle of giants merchants and banks.
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