Businesses offer valuable goods and services in a marketplace, not out of philanthropy, but out of a desire to make money — which is great for consumers, because different businesses compete to supply our wants and needs and obtain our voluntary patronage at an efficient price. Specifically, we all use banks, credit unions, etcetera because they make it easier for us to manage our money, accrue interest, take out loans, and make purchases quickly and efficiently.
When the federal government steps in and decides to make it more costly for businesses to do what they do, however, that cost is always and inevitably transferred to us, the consumer.
The Obama administration and their cronies, of course, want us all to believe that we’re simply victims of corporate usury, and that the government is just here to help. Apparently, we’re to understand that banks have magical piles of ill-begotten cash hoarded in underground vaults from which they can and should draw when the government imposes myriad regulatory compliance costs that condescend to inform us all of what is and is not “fair” — which is pretty much exactly what the Dodd-Frank Wall Street Reform and Consumer Protection Act is. I’m not saying that there’s no place in this world for financial regulation, but Dodd-Frank is so encumbered with top-down control and unintended consequences, it’s egregious.
There was a huge uproar last fall when Bank of America and some other big banks announced that they were thinking about imposing monthly debit-card fees after lawmakers so auspiciously decreed the fair and proper amount (12 cents) that banks could charge retailers for debit-card interchange fees, via the Durbin Amendment, and the cap happened to be well below the industry average (44 cents). It was a move that retailers absolutely loved, but banks still had to figure out how to cover their transaction costs somehow. The major public outcry over the whole thing eventually got the banks to scrap the fee idea, but the problem remained, so it was once more unto the breach of finding ways to increase revenue. From the WSJ:
Bank of America Corp. BAC +0.31% has shelved plans for new fees that could have hit at least 10 million customers by the end of this year, skirting a potential replay of a 2011 uproar over consumer-banking charges.
The decision to hold off on new checking-account fees at least until late next year comes amid a sweeping review of the bank’s retail-banking business, said people familiar with the bank’s plans.
Many other big banks, including J.P. Morgan Chase and Wells Fargo have rolled out plans that aim to raise fee revenue or push customers to do more business with them as low interest rates, slow economic growth and tough new rules limit bank profits. …
Any move to increase fees in the post-financial-crisis climate is tricky. Bank of America retreated last fall from a monthly $5 debit-card charge following a customer revolt and a wave of criticism in Congress. The reversal, one of the worst fee debacles for a major lender since the 1990s, narrowed the bank’s options for new sources of income.
Take note, Obama administration — “narrowed the bank’s options for new sources of income,” as in, limiting their profitability a.k.a. their growth and the number of new jobs they can create.
I’ll never forget how aghast I was when I first heard President Obama say that “people have been using financial regulation as an excuse to charge consumers more” — the very idea is so woefully, insidiously wrong, but it’s a pretty apt summary of what his entire presidency has been about. Frightening, isn’t it?