Durbin: Hey, who’s up for a bank run on BofA?

posted at 1:25 pm on October 4, 2011 by Ed Morrissey

Economic indicators are falling. The Fed issued a gloomy report on the future of the economy, saying that the so-called recovery may be “faltering.” Greece has only enough cash to make payroll for a few weeks before it defaults and flattens the European banking system. The only thing missing from a collapse is a good, old-fashioned bank run.

Enter Dick Durbin (h/t Ryan K):

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Holding up a plastic debit card on the Senate floor this afternoon, Sen. Dick Durbin, D-Ill., had some advice for Bank of America customers angry about the new $5 monthly fee: leave.

“Bank of America customers, vote with your feet, get the heck out of that bank,” Durbin said on the Senate floor. “Find yourself a bank or credit union that won’t gouge you for $5 a month and still will give you a debit card that you can use every single day. What Bank of America has done is an outrage.”

Durbin said consumers are rightfully outraged about last week’s announcement.

“It is hard to believe that a bank would impose such a fee on loyal customers who simply are trying to access their own money on deposit at Bank of America,” he said. “Especially when Bank of America for years has been encouraging their customers to use debit cards as much as possible.”

Durbin unleashed this tirade in response to BofA’s use of the expression “Durbin rule” to explain the debit-card fee that will now be charged to users of that service. As ABC reports, taking money out of BofA won’t keep customers from getting charged fees for debit cards anyway. His bill capped the price banks can charge retailers, which means that they have to recoup their costs with the other party to those transactions. This is nothing more than an attempt to gin up outrageous outrage over Durbin’s own actions, which resulted in entirely predictable fee-shifting from retailers to consumers.

Meanwhile, Ben Bernanke told Congress that, in the words of McClatchy, “happy days are not here again”:

The weak U.S. economic recovery shows no signs of significant improvement and instead there’s an increasing likelihood of “more sluggish job growth” in the months ahead, Federal Reserve Chairman Ben Bernanke warned Tuesday in congressional testimony.

Appearing before the Joint Economic Committee of Congress, Bernanke was blunt. Happy days are not here again.

“Consumer behavior has both reflected and contributed to the slow pace of recovery. Households have been very cautious in their spending decisions, as declines in house prices and in the values of financial assets have reduced household wealth, and many families continue to struggle with high debt burdens or reduced access to credit,” Bernanke said. “Probably the most significant factor depressing consumer confidence, however, has been the poor performance of the job market. Over the summer, private payrolls rose by only about 100,000 jobs per month on average — half of the rate posted earlier in the year. Meanwhile, state and local governments have continued to shed jobs, as they have been doing for more than two years.”

The economy remains stuck in a negative feedback loop, he suggested in a grim outlook, where slow growth dampens hiring, which in turn keeps growth slow.

Bernanke’s outlook for hiring was gloomy, noting “recent indicators, including new claims for unemployment insurance and surveys of hiring plans, point to the likelihood of more sluggish job growth in the period ahead.”

Well, I guess Durbin thinks that a bank run will bring back the “happy days” of the Great Depression. And he may just be right, if anyone paid attention to Durbin’s fiscal advice.

Update: Via William Amos in the comments, BofA isn’t the only bank charging for the debit card:

Bank of America isn’t alone. Wells Fargo has made noise about a new $3 per month fee for debit card usage and J.P. Morgan Chase has signaled that they would impose a similar fee. …

The Durbin Amendment, named after Sen. Dick Durbin (D-IL), was added to the bill after flopping around for the better part of a year. The law applies to those big banks – the ones over $10 billion in assets – and was ostensibly passed as an effort to increase competition. It was supposed to be pro-consumer.

But here’s the kicker: the Amendment gave the Federal Reserve the power to regulate debit card interchange fees and other bits of banking admin, which they’ve done. Over the summer, the Fed released the final rule on the matter. The combination of fees, restrictions and caps is thought to cost banks subject to the amendment nearly $14 billion annually.

The banks could try to recoup this money from somewhere else – like merchants. But merchants now have the ability to shop around a bit more and of course, they could refuse to accept cards altogether. It was quicker, cheaper and easier for banks to go straight to the customer.

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Comment pages: 1 2

[wren on October 4, 2011 at 3:46 PM]

Welcome Wren. You had a great idea.

Dusty on October 4, 2011 at 4:05 PM

“Profits from Durbin revenue were up 17% for the year.”

[BobMbx on October 4, 2011 at 4:03 PM]

That would be hilarious.

Dusty on October 4, 2011 at 4:07 PM

The way some of you decry Durbin speaking out on behalf of consumers while practically lining up to get buttf**ked by hugely profitable banks is as puzzling as it is amusing.

Constantine on October 4, 2011 at 2:44 PM

Much like when you complain about high gas prices then turn around and embrace the very policies that cause high gas prices (ban on drilling for oil, new taxes on oil companies).

angryed on October 4, 2011 at 4:11 PM

Politician Pandering When A Price Goes UP

This is on page 4 or 5 of the demagogue playbook. Medicare scares, lynchings and some other things precede it.

Gee, $5 a month? And the customer can cancel?

How about a Senate that does nothing while our trading partners steal billions?

IlikedAUH2O on October 4, 2011 at 4:30 PM

Durbin fee. Durbin fee. Durbin fee.
Make it part of the lexicon.
Illinois… you should be so proud.

Sugar Land on October 4, 2011 at 4:33 PM

angryed on October 4, 2011 at 4:11 PM

Is B of A hugely profitable? No, couldn’t be. We would hear some liberal crying about obscene profits. Profits are wrong for oil but OK for big media.

Do you own B of A stock? Buy some — it used to be $50 and now is $5.

Lot of folks made rich there.

IlikedAUH2O on October 4, 2011 at 4:35 PM

Private enterprise. The more you regulate the less you get. So… unless you nationalize the banks, you can live in the fantasy world. BTW… how is that hope and change working for you?
antisocial on October 4, 2011 at 3:41 PM

So we enabled the Wall Street debacle through…

over

-regulation?

Hope and Change is working a hell of a lot better than (and mitigating the consequences of) the Spend and Destroy Bush years.

Constantine on October 4, 2011 at 4:38 PM

Wow…I got a hat tip! (Ryan K is me!)

Thanks a ton, Ed. I feel special now! :)

gryphon202 on October 4, 2011 at 4:43 PM

Hope and Change is working a hell of a lot better than (and mitigating the consequences of) the Spend and Destroy Bush years.

Constantine on October 4, 2011 at 4:38 PM

WTF? That is all I got…talk about a glittering jewel of colossal ignorance. I guess they’re not limited to talk show callers.

gryphon202 on October 4, 2011 at 4:47 PM

Anybody who honestly thinks we’re doing under Obama than we were under Bush desperately needs to see this.

gryphon202 on October 4, 2011 at 5:01 PM

Constantine on October 4, 2011 at 4:38 PM

Hey look… over there. Bishop is sawing your state :-)… he he he… thank you for the fun.

We are gonna have to run you over.

antisocial on October 4, 2011 at 6:13 PM

Hope and Change is working a hell of a lot better than (and mitigating the consequences of) the Spend and Destroy Bush years.

Constantine on October 4, 2011 at 4:38 PM

What possible criteria could lead to that determination? Not counting the “Democrats are in charge therefore everything is magically better even though it’s actually worse” criteria.

Merovign on October 4, 2011 at 6:15 PM

“Listen Dick. That is your name? Dick.”~~Holly McClane

mrt721 on October 4, 2011 at 7:02 PM

Economic indicators are falling.

NS.

Well, if we could only get our Knight in shining armor of the _____ Party in there to fix everything!

Uh huh, sure…

Dr. ZhivBlago on October 5, 2011 at 1:14 AM

Comment pages: 1 2