It appears National Bank Transfer Day did its job before even happening.
Bank of America announced last month it would begin imposing a new 5 dollar fee for the privilege of using your debit card to make purchases. Buy something once per month, get charged $5 for it. It was the latest in a string of public relations disasters as the company explores options to keep its revenue as high as possible in the face of new rules that govern its behavior under the Dodd-Frank financial regulations bill passed last year.
B of A—always the industry leader in pissing off customers—wasn’t the only bank to try such an idea. Wells Fargo began charging 3 dollars per month for debit card purchasing, Chase announced plans to do the same, and other big banks were reportedly exploring similar programs (lest they fall behind their competitors) and Citibank announced a new $15 dollar per month fee unless customers keep their checking account balances above $6,000.
The new fees stirred up so much rancor that even Treasury Secretary Tim Geithner called them “unconscionable” and backhandedly urged customers to switch their accounts away from Bank of America. And many customers listened. A movement called “National Bank Transfer Day” sparked up as thousands of customers planned to move their accounts from big banks to small credit unions on November 5th (Guy Fawkes day, appropriately enough). A Facebook fan page for Bank Transfer day has over 28,000 fans.
Today the Wall Street Journal is announcing that the banks are relenting on their plans. “J.P. Morgan joins U.S. Bancorp, Citigroup Inc., PNC Financial Services Group Inc., KeyCorp and other large banks that have said in recent days that they won’t impose monthly fees on debit cards.” JP Morgan Chase is one of the nation’s biggest banks, with over 26 million checking accounts.
Of course, ‘The Journal’ reports, “None of those banks said they made their decisions because of the outcry over Bank of America’s fees.” Yet at the same time Stephen Troutner, Citigroup‘s head of consumer and small business banking, said, “Our customers said that would be a massive source of irritation for them. Any time you hear that kind of emphatic feedback from customers, you’ve got to listen to them.”
And listen it appears they did.
But there is an underlying paradox in the tensions surrounding the banking industry right now: The banks are too big too fail—we established that in 2008. If they go down, we all go down with them. To that extent, they are a social service beholden to and at times supported by the taxpayer system. But at the same time they are publicly traded companies, motivated to maximize profits so that their share price stays healthy. On the one hand, we don’t want them to rip us off with exorbitant fees. On the other hand, we don’t want them post big losses, since that could endanger their well-being and by extension endanger us. And ‘The Journal’ reports “banks are expected to lose more than $6 billion in annual revenue as a result of the new rules, according to industry estimates.”
Our self-interest is literally divided against itself when it comes to finance. It’s as if we want them to succeed—but not that much.
And maybe this is a good balance to strike. It was probably the point of all the finance regulations that were systematically drawn down over the course of the 20th century as we began to think we didn’t need them and forgot why we instituted them in the first place. If nothing else, the current economic slump should jog our memory.
