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View Diary: House Democrats ask Justice Department to investigate banks over debit card fees (71 comments)

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  •  I'm not sure what there is to "investigate" (8+ / 0-)

    Unless there was communication between the banks resulting in an agreement of some kind that they'd all impose these fees, the President is right -- there's nothing illegal here.

    What happened is that Dodd-Frank took away one source of revenue from the big banks -- revenue that covered the costs of administering debit cards plus some profit.  So, they all did what one would expect a business to do when a source of revenue is cut off -- look to make it up elsewhere. Really, it's kind of foolish to think that, if regulations cut off one source of profitability for a business, the business will just sit back and accept the fact that their profitability, or their return on investment numbers, will go down.  That's just foolish thinking.  Business needs to maintain a certain level of profitability (measured NOT in overall dollars but on ROI).  The banks absolutely were going to make up those lost revenues.  This was the most straight-forward way to do that.  Dodd-Frank cut off some revenues associated with covering the costs of administering debit cards and assuring some profitability on the supplying of debit cards, so a fee for debit card use (unless you had high enough deposits for you as a customer to make up that profitability there) was the obvious solution. Once one bank did it, it just made it easier for the others to follow.

     Two points:  (1) imposing a fee on customers -- as long as it is clear what you are doing -- is not illegal, as those customers are free to take their business elsewhere; (2) following in the footsteps of your competitor is not illegal, as long as there's no prior agreement to all do something like this together, which would be an antitrust violation.  (And, I can assure you that big businesses like that are always aware of the big stick of an antitrust investigation and so are mindful that they DON'T have any communications like that with competitors.)

    I completely understand why a lot of people are upset about the fees.  But there's nothing illegal about them.  If you don't like them, you have choices: (1) keep the minimum balance or (2) move your business elsewhere.

    Frankly, the big banks obviously had to know that the fees would cost them some customers.  They apparently don't really mind losing those accounts that don't have some minimum amounts with them -- the small dollar accounts (which are not as profitable to them).  They obviously want to focus on (1) the larger depositors; and (2) people for whom the extra convenience and features the big banks offer are worth the $5 or so a month.  

    •  the hotel business is similar. (2+ / 0-)
      Recommended by:
      coffeetalk, hayesb

      Hotels check each other's occupancy rate, then low, high and average room rates.

      A certain (ahem) 'equinox of the year' named hotel was once said to make its highest room rate higher than anyone else. When it found out a competitor was more expensive, it simply added a few bucks because the price suggested they were the best.

      So it wouldn't be stunning to find that banks look to see what fees they charge, which the customers tolerate or complain about. And then choose to do the same, come close, or just not do it for other reasons.

    •  This is true (0+ / 0-)

      This kind of thing happens all the time in the airline industry.  One carrier makes a change on luggage fees, the others follow....etc.

      But then, if during an investigation it was found that the banks have colluded, it's illegal.  Might have happened....thus the investigation.

      - If you don't like gay marriage, blame straight people. They're the ones who keep having gay babies.

      by r2did2 on Thu Oct 13, 2011 at 02:18:25 PM PDT

      [ Parent ]

      •  I would be astonished if that happened (4+ / 0-)
        Recommended by:
        VClib, kaekee, hayesb, erush1345

        These banks have very very large and sophisticated legal staffs who keep them away from anything that could get them into trouble on the collusion front.  They knew that these fees would cause a lot of publicity and certainly had no reason to collude here.  Believe me, every big business is constantly aware of not even appearing to collude with competitors.  

      •  Really? (0+ / 0-)

        A couple of months ago I flew from DFW to Birmingham.  Five airlines fly between the two cities, and all five have the EXACT SAME FARE (despite the fact that on one of the airlines you can fly direct.)

        That sounds like collusion or a really bizarre coincidence.

        27, white male, TX-26 (current), TN-07 (originally), liberal-leaning independent

        by TDDVandy on Thu Oct 13, 2011 at 03:13:02 PM PDT

        [ Parent ]

        •  Hmmmm..... (0+ / 0-)

          I fly a great deal.  What you said you found is contrary to anything I've ever seen.  No matter where I've gone, when there were many carriers there were many prices.  Yep, sounds like there was some kind of collusion there for sure.

          - If you don't like gay marriage, blame straight people. They're the ones who keep having gay babies.

          by r2did2 on Thu Oct 13, 2011 at 03:22:11 PM PDT

          [ Parent ]

    •  Yup (1+ / 0-)
      Recommended by:

      On a macro/national level, and as someone that thought Dodd-Frank overall was good legislation, I suppose it's better to cut costs on the merchant side and push the banks to get that revenue directly from the cardholders.  

      On the personal side, though -- while my bank hasn't yet rolled out debit fees -- they did cancel what was a pretty good rewards/points program so that it's no longer as good a deal for me personally to use my debit card as it once was.

      Beyond a desire to view it all through a bank-punitive lens, I'm not sure I really have much of a dog in this fight... I have zero expectation of any savings being passed along to me -- this is strictly a matter of whether the banks collect the debit card convenience fees directly from me or indirectly via the merchants whose goods and services I purchase with my debit card.

      Full Disclosure: I am an unpaid shill for every paranoid delusion that lurks under your bed - but more than willing to cash any checks sent my way

      by zonk on Thu Oct 13, 2011 at 02:22:38 PM PDT

      [ Parent ]

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