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.”
The Week’s Links:
- The economy and the moral question || Robert Reich
- Charles Koch tells Friedrich Hayek: Use Social Security || The Nation
- Stagnant U.S. job market bodes ill for world economy || Reuters
- Amazon.com workers rediscover the Grapes of Wrath || Ezra Klein
- PIMCO’s El-Erian: The dirty secret of French banks || Wallstreeter
- While America is stuck in 1970, Japan readies super-fast maglev trains || Ecomagination
- Understanding “class warfare” hysteria || NY Mag
- Bad faith economic history and the Depression || Paul Krugman
- Food security and climate change: The true cost of carbon || The Atlantic
- The retirement heist: How firms trimmed pensions || NPR
- Recession-depression? The answer in nine charts || Business Insider
- Anxiety economics: How Americans feel about the economy matters || Slate
- The coming decline and fall of Big Coal || Rolling Stone
Today’s Econ Haiku:
Can Meg save HP?
She could sell it on eBay
Or just loot it more