J.D. Thorpe

Many – including the Occupy Wall Street (OWS) crowd – have expressed outrage over Bank of America’s recent attempt to charge customers a $5 monthly fee to use their debit card. These people deplored the move and used it as another symbol of greedy Wall Street “Robber Barons” sticking it to the little guy.

However, a remarkable turn of events occurred two days ago. Bank of America backed down and eliminated their upcoming debit card fee. So who’s responsible for this victory over the bank titan?

No, it’s not the degenerate OWS liberals gathered in major cities around the nation. Rather, it’s a victory that belongs to the free market.

Bank customers are not coerced into doing business; they choose to conduct business on a voluntary basis. Customers can choose from a wide variety of banking institutions, or they are free to hide their money under their mattress if they find that option preferable.

In the case of Bank of America, executives decided to quell the backlash from customers by canceling the new program. This happened because of pressure applied by a petition that garnered over 300,000 signatures and a flood of customers who threatened a mass exodus.

Bank of America wasn’t the only major institution attempting to implement the debit card fee. JPMorgan Chase and Wells Fargo were also preparing to test a $3 debit card fee in select markets – a measure they have subsequently canceled.

Thus, the monthly debit card fee project has gone down in flames, and the banks involved are in full damage-control mode now. But there’s a more salient point that shouldn’t be neglected.

The focus should be on demonizing banks that wanted to experiment with this new model. Instead, the question that needs to be raised is: Why were these banks attempting to implement this new fee? In other words, who was the real culprit?

And the answer to these questions is quite simple: the financial reform bill of 2010.

This bill – also known as Dodd-Frank – created a massive amount of new regulations and greatly expanding the federal government’s reach into the banking sector.

The genesis of the debit card fee debacle was Dodd-Frank’s authorization of the Federal Reserve to cap the rate banks can charge merchants for debit card transactions. Using its new authority, the Fed capped merchant fees at 24 cents per transaction – cutting the fee nearly in half from the industry average of 44 cents.

As a result, JPMorgan Chase and Wells Fargo reported potential revenue losses of $300 million and $250 million per quarter respectively. These banks are not run by inherently evil people that want to see lower-income and middle-class Americans suffer.