Debit Card Blues: Connecting the DotsCommentary by Bob McTeer
October 02, 2011
Conversation at my suburban barber shop is as rare as it is with my seat mates on airplanes these days, but yesterday a real conversation broke out. What had people all riled up was Bank of America’s announcement of a $5 per month fee for using your debit cards. The consensus was that it was outrageous, since it was for using their own money. Several vowed to change banks.
I knew better than to mention the connection to the Durbin Amendment or even Dodd-Frank, but I did mention recent legislation as a related factor. I got some affirmative nods, but nobody was willing to ease up on the banks.
It occurred to me to mention the D-F mandate to limit “swipe fees” which, while hurting banks, would benefit retailers. Somehow, I didn’t think the prospect of the retailers passing along their saving to them would be well received in their present state of mind. That argument wouldn’t have impressed me either. Those dots would remain unconnected.
At least the government-mandated loss in bank revenue on debit cards prompted the banks to attempt to offset that loss on those same debit cards. They could have, and may still, try to make up the loss on other products not as closely related–credit cards, for example, or monthly fees on savings or checking accounts. As an Obama “millionaire or billionaire,” given its low threshold, that would hit me harder.
Just as the incidence of taxation is hard to predict, so is the incidence of regulation. Who knows where the government’s war on banks will lead? Or the general anti-business environment? Those in my barber shop–not the right word anymore, but I can’t think of a better one–make no connection between what the government does to banks and what the banks do to them. I’ll go out on a limb and guess that that goes for all corporations, not just banks.
They probably think that corporations should bear a higher tax burden so they could be taxed less. They haven’t had that light go off yet. The one that reveals that you can pay taxes to the government on April 15, or pay taxes every day in the form of higher prices to firms passing along their taxes. They don’t quite get it that a tax may be spelled t-a-x or r-e-g-u-l-a-t-i-o-n.