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Jon Talton

Analysis and commentary on economic news, trends and issues, with an emphasis on Seattle and the Northwest.

September 30, 2011 at 10:00 AM

Banks and debit card fees: Not too big to gouge

One of the ironies of the big banks, led by Bank of America, planning to impose a fee on debit-card use is that they spent years trying to “migrate” customers from tellers and brick-and-mortar branches to electronic transactions. The reason: They could pad profit margins by closing branches and laying off tellers.

Customers have options: They can go to smaller banks and credit unions, which have an opportunity here. They can use more cash. They give up convenience. To stay and whine is like the Wal-Mart shopper who complains about the loss of American full-time jobs and wage growth. As a friend says, “there are no victims, only volunteers.” Big-bank customers who choose to keep their money in these behemoths are like spouses who loyally stay beside their sociopath gambler partner after the house, jewelry and retirement funds have been lost and now he’s thinking of new ways to fund the casino jones (burglary, perhaps?).

The banks will respond that the new fees are necessary to make up income lost when a new rule limits the amount they can gouge, er, charge merchants at the point of sale. But this overlooks the general rise in fees that’s been going on for years. Also don’t forget when banks started charging for “out of network” ATM use; “we built these networks, so we ought to be able to charge,” the bankers said.

The problem comes back to the fact that these institutions are too big, too politically powerful, too engaged in risky and unproductive behavior. And at the end of the day, they will expect their customers, as well as every other taxpayer, to bail them out again when their latest “innovations” blow up — and thank you very much for the extra fees.

This is what happens when Americans stop being citizens and start being “consumers.”

Quote of the Week: “Remember when teachers, public employees, Planned Parenthood, NPR and PBS crashed the stock market, wiped out half of our 401Ks, took trillions in TARP money, spilled oil in the Gulf of Mexico, gave themselves billions in bonuses, and paid no taxes? Neither do I.”

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