Two lawmakers target bank Bank of America
WASHINGTON — Two congressional Democrats are pushing customers to quit doing business with Bank of America Corp. and one of them is aiming to make it easier for people to stop after the biggest US lender said it will levy a new debit-card fee.
Representative Brad Miller of North Carolina, a member of the Financial Services Committee, introduced a bill yesterday that would bar banks from imposing fees on people who close accounts. He said it was a response to the Charlotte, N.C.-based company's plan to charge some debit customers an additional $5 a month for using the cards.
"As megabanks flirt with menus of new fees, an increasing number of Americans will want to switch banks," Miller said in a statement. "That is the way things work in a competitive, free market as unrepentant banks are still trying to rake in vulgar profits."
Miller's criticisms echoed those of Senator Richard Durbin, an Illinois Democrat who successfully pushed for legislation restricting the amount banks could collect from retailers for debit transactions.
The two lawmakers spoke out after President Obama questioned whether Bank of America has an "inherent right" to charge the new fee, which the company said was aimed at making up revenue lost because of new rules.
JPMorgan Chase & Co., Wells Fargo & Co., and SunTrust Banks Inc. are also rolling out new charges for debit-card users as Dodd-Frank Act rules take effect this month. New limits may reduce annual revenue at the biggest US banks by about $8 billion, data compiled by Bloomberg Government show.
The new rules cap the fees at 21 cents, plus 5 basis points of the total and a conditional 1 cent for fraud prevention. That replaces a formula that averaged 1.14 percent of the purchase price.
"New regulations on debit card interchange fees — which provide no apparent benefit to consumers — will further reduce revenue by additional billions of dollars," Larry DiRita, a spokesman for Bank of America, said in a statement.
"Your decision to charge a new monthly debit fee is an overt attempt to make even more profit off the backs of your customers," Durbin wrote to Bank of America's chief executive, Brian Moynihan.
On the Senate floor Monday, Durbin called on Bank of America customers to "get the heck out of that bank."
Miller's bill would ban closing fees when customers move their accounts. It also would require the bank to close the account within 48 hours and limit a lender's ability to report negative balances from closed accounts to credit reporting firms.
Miller would need support from Republicans who opposed Dodd-Frank to advance his bill. Obama said it was his "hope that you're going to see a bunch of the banks say this is not good business practice."
Richard Hunt, president of the Consumer Bankers Association, said he was disappointed by Obama's remarks.
"Recent announcements from banks across the country regarding new fees for debit purchases and eliminating free checking are all widely predicted consequences from the government price controls," Hunt said.