Attempting to portray himself as the people's hero once again, Obama took a swipe at Bank of America's unfortunate $5 debit card fee during Monday's interview with ABC News. Our Demogogue-in-Chief tried to blame Evil Big Banks and Corporate Greed for the new policy, and plugged yet another bureaucratic pipedream as the solution:
Obama told ABC News that the charge is unfair to customers, saying, “My hope is that you’re going to see a bunch of the banks say this is not good business practice.”
“You can stop it because if you say to the banks: You don’t have some inherent right just to, you know, get a certain amount of profit, if your customers are being mistreated, that you have to treat them fairly and transparently,” Obama said.
The president said the $5 per month charge “is exactly why we need somebody whose sole job it is to prevent this kind of stuff from happening” and noted that the Consumer Finance Protection Bureau is the type of strong watchdog agency the U.S. needs to crack down on cases like this.
Nevermind that Obama has no right to speak the word "transparently" for a host of reasons. He's failing to remember that the fee is a direct result of Dodd-Frank, and, more specifically, the Durbin Amendment, which ate into banks' profits. As Forbes points out, "The combination of fees, restrictions and caps is thought to cost banks subject to the amendment nearly $14 billion annually." In other words, banks aren't trying to make more money, as Obama implied above; they're trying to recoup money the government has taken from them. The idea that BoA is using the fee to pay "fat cat executives" outlandish bonuses or turn an even more massive profit margin is absurd.
Indeed, as noted by American Bankers Association chief executive Edward L. Yingling, "In order for banks to cover their basic costs [such as maintaining infrastructure and protecting against fraud], it will have to be charged back to the consumer[.]"
But such an explanation would do no good for Democrats heading into an election year; after all, taking the fall for a highly publicized and unpopular new fee is hardly a winning strategy. Indeed, the Senate Majority Whip himself encouraged voters to jump the BoA ship in a floor speech given on Monday night:
“Bank of America customers, vote with your feet,” the Senate majority whip said in a floor speech Monday. “Get the heck out of that bank. 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,” he added.
However, the ABA's president responded to Obama's remarks this morning on POLITICO's "Morning Money," refusing to allow the government to abscond from all the blame. He called out Obama for his blantant fact-twisting, and pointing out that the fee is a response to Durbin's own amendment:
American Bankers Association President Frank Keating, responding to President Obama’s comments to ABC News criticizing Bank of America’s new $5 per month debit card usage fee: “It’s disappointing and puzzling that the President would attack a private corporation for responding to government price fixing that has fundamentally altered the economics of offering a debit card. As a direct result of the Durbin Amendment, consumers have started paying for financial services they previously enjoyed free of charge. Unfortunately, this proves that whenever government tries to control pricing of a product or service, consumers lose.”
It's a fine move of political scapegoating. Obama and Durbin have attempted to frame Bank of America as an evil, greedy, price-gouging company, out to squeeze all the money it can from consumers just to make a buck. As Tim Carney of the Washington Examiner noted, however, the real culprits guilty of avarice are retailers, especially Wal-Mart, which successfully lobbied Dick Durbin and the rest of Congress so they wouldn't have to pay processing fees on debit card purchases. Surely "corporate greed" is at play here, but it’s due to lobbying kickbacks, the inevitable partner of Senator Durbin’s financial regulations, not from the banks.
And while the banks are far, far from perfect, the reality is that the unpopular new fee was implemented in response to newly-imposed regulations, courtesy of its fiercest critics. And unfortunatley, the consumers will suffer.
Makes me wonder...will BoA be donating another quarter of a million dollars to Obama's campaign this time around, too?