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The Tim Carney piece is excellent and gave me the "rest of the story" (as Paul Harvey used to say) whereas my newspaper (Seattle Times) was utterly remiss
Thank Wal-Mart for your new bank card fee | Campaign 2012 (http://campaign2012.washingtonexaminer.com/article/thank-wal-mart-your-new-bank-card-fee - broken link)
Basically Dick Durbin's former PR person went to work as a lobbyist for WalMart and got Dick to put this law thru which greatly benefits WalMart at the expense of the banks. The stories in the Times did not even mention the WalMart connection.
The whole saga could really be a poster-child for how our system is broken. Walmart invests a few thousand bucks in campaign donations, and gets in return a law that benefits them to the tune of millions (Carney reports that a Home Depot exec told investors that he thought it would be worth $35 million per year to them). Where else do you invest 4 figures and get a return of 8 figures?
I guess if you're a Solyndra it's 9 figures. And if you're a Gibson Guitars, and haven't made the 'correct' donations, you get raided by a SWAT team. That's our system, in a nutshell.
I wish Carney would explain to us what the cost of the debit cards is to the banks? It's not a credit card, so the bank isn't putting up cash. It saves the banks money in personnel and overhead, because customers are handling their own transactions rather than having banking personnel process those transactions. The debit card's fraud protection certainly isn't up to the standads of credit card protection. Visa and Mastercard assume the majority of the processing labor involved through their computer systems. So, what's the cost of debit cards to banks?
Price controls don't work in Havana, don't work in Caracas and don't work in Pyongyang but alas the Dems what price controls in the USA. When Dems, like Durbin are confronted with the disastrous effects of their price controls they lash out. Something else is causing the disruption. In Caracas Chavez blames hoarders here in the USA Durbin is lashing out at BOA.
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Originally Posted by sanrene
No one else to blame but the democrats.....who included the restriction of debit card fees by retailers in the Dodd/Frank bill.
See, they were warned the banks would just pass on the loss in revenue to the consumer.
'Durbin fee' will cost bank customers billions | Campaign 2012 (http://campaign2012.washingtonexaminer.com/article/durbin-fee-will-cost-bank-customers-billions - broken link)
What's funny here is the amendment benefits retailers like Walmart, which the Left/dems despise.
So......the blame goes squarely on the shoulders of the democrats.
'Durbin Fees' are coming, thanks to 'progressives' | Examiner Editorial | Opinion | Washington Examiner (http://washingtonexaminer.com/opinion/2011/10/durbin-fees-are-coming-thanks-progressives - broken link)
Speaking of which, BOA was involved in raising Overdraft fees, as well as sued for deliberately posting charges to people's account, not following the bill date but largest to smallest amount, to get people to pay up NSF.
The idea that corporations work in people's interests should have died with Mussolini and his baby... fascism.
Actually it was a win win for everyone epecially retailers. Customers spend more when using cards as opposed to cash. They save on check handling costs and the associated fraud. Wait times decrease for lines saving money on cashiers. No wonder they pushed hard for this and the biggest retailer of all, WalMart pushed the hardest.
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Originally Posted by DC at the Ridge
I didn't forget to mention their convenience because it is irrelevant. The bank saves money, has saved billions of dollars, because consumers personally manage the transactions without using bank personnel. Billions of dollars that benefited banks, and did banks pass those dollars back to consumers? No. Now banks are going to have a revenue stream reduced, NOT eliminated, but reduced, and they are going to pass those costs on the consumer.
What services should be free? Are the banks still charging business a fee when a debit card is being swiped? Why yes, they are! And some businesses are being charged even more for those swipes.
There are a lot of businesses that have taken big hits in profits over the past two or three years. And banks share some of the responsibility for that. You know, a bank is a business. Maybe Bank of America shouldn't have compensated its CEO $10,000,000.00 in 2010. Maybe Bank of America stockholders should have looked at the amount being paid to top-tier management, and questioned just how this bank expected to remain profitable.
I doubt that Carney knows the costs. Certainly it's not trivial to build, maintain, & operate all that electronic equipment 24/7. The basic idea for any business is to get cost and sales price as far apart as possible.
But really, the cost of the debit card processing is not germane. As Carney points out, the old fees (to the stores) were not legislated. They were set by the banks, and stores could accept them or not. There's a chain of gas stations in my area (Seattle) that has always charged a fee for using debit cards. Any store could do this. Or they could refuse to take the cards, and go cash only, or store credit cards, and checks. I've worked at small retail businesses that still sell 'on account' settling up directly with the customer at the end of the month.
How much does it cost Justin Beiber to put on a concert? If it only costs him a penny for every 45 cents of ticket sales, does that mean Dick Durbin should step in and set ticket prices?
Actually it was a win win for everyone epecially retailers.
Retailers prefer cash. In fact, they don't want your credit or debit card unless the nuisance (cost) they bring is overshadowed by your spending. It is why a family run (tiny) restaurant I like to go to (which also uses a "pay that you think our food was worth" idea), prefers that you don't use your credit/debit card for purchases less than $10.
Running free ads for BOA, aren't you? Too bad, many of us know better. Small banks and credit unions rule. Not your style? Well, likes of BOA need you.
If I get the same services and freebies from BofA that you supposedly get, what's not to like?
I doubt that Carney knows the costs. Certainly it's not trivial to build, maintain, & operate all that electronic equipment 24/7. The basic idea for any business is to get cost and sales price as far apart as possible.
But really, the cost of the debit card processing is not germane. As Carney points out, the old fees (to the stores) were not legislated. They were set by the banks, and stores could accept them or not. There's a chain of gas stations in my area (Seattle) that has always charged a fee for using debit cards. Any store could do this. Or they could refuse to take the cards, and go cash only, or store credit cards, and checks. I've worked at small retail businesses that still sell 'on account' settling up directly with the customer at the end of the month.
How much does it cost Justin Beiber to put on a concert? If it only costs him a penny for every 45 cents of ticket sales, does that mean Dick Durbin should step in and set ticket prices?
The cost of the debit card processing is germane, when banks are arguing that it's to recoup those costs that they are charging their customers debit usage fees. If there are legitimate costs that exceed what the banks save in overhead and personnel, and those costs aren't already covered by the fees that banks have and continue to charge retailers, then there is justification for charging consumers. But if the banks are simply making billions of dollars of pure profit, and the amount of profit is being diminished during an economic period where virtually every business has suffered diminished profits, then the justification for charging consumers is tenuous. And since one of the defenses of these charges is that consumers can move their business to banks and credit unions that don't charge these fees, smaller banks and credit unions that didn't compensate their CEO $10,000,000.00 in 2010, it would seem the justification is indeed tenuous.
And as for operating all that electronic equipment---the consumer or store employee operates it, not the bank. Visa and Mastercard maintain the network in question, not the bank. And the bank isn't charging people for accessing the bank ATM's with their debit cards, just for using the debit cards in the store. The ATM's would be the part of the network that the bank actually maintains and supplies.
If I get the same services and freebies from BofA that you supposedly get, what's not to like?
As a bonus, you get "BOA". I get only small banks and credit unions. (Actually, I still have a JP Morgan Chase account which is likely to be moved as well).
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