Yay For Bank of America!

September 30, 2011 | Filed under Big government,Business | Posted by

Remember a little whie ago, when the Democrats in Congress said they were going to protect us from the big ol’ mean banks by limiting the fees they could charge merchants for processing debit charges? Well, ain’t that worked out just grand? Bank of America found a way to make up for their losses — now, they’re going to charge not the merchants, but the card holders for the service — five bucks a month.

 

This is a great thing B of A is doing for us. They’re reminding us of some very important principles.

 

First up, pretty much any time the government interferes in business to “help the little people,” it’s more than likely to end up boning the little people even worse.

 

Next, whenever the government decides that it needs to cut into business profits (either through increased taxes and fees, or limiting their ability to charge), the businesses will try to find a way to make up for the losses.

 

Finally, this presents a grand opportunity for other banks to steal away Bank of America customers by plugging how they don’t charge such fees, and actually care about their customers.

 

Under the law, corporations have a legal obligation to their shareholders to make as much money as they can. This isn’t a question of morality or fairness, but legal duty. And at Bank of America, they’ve calculated (accurately or not) that they will make more money by having this fee than they might lose from disgruntled current customers. And they’ve created an opportunity for the free market to test that theory — by giving B of A’s competitors a golden opportunity to score big PR points and look like “the good guys.”

 

The bankers involved have an opportunity to learn here, and show how well they understand market forces. And they have incentive — if they don’t learn, they will pay the price.

 

Sadly, the people who caused this situation — the politicians — not only probably won’t learn from it, but they won’t pay any price. Instead, they’ll keep bragging about what a wonderful thing they did for the little people — who are currently getting boned over by that “help.”

 

Thanks again, Democrats. Please, as a favor — stop trying to help us so much.

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Posted by on September 30, 2011.
Filed under Big government, Business.


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  • Anonymous

    After Dodd-Frank I knew this was going to happen.

    I am leaving BofA just before this comes into effect in January. Fed up with them and the Fed. ww

  • Anonymous

    They will lose customers, lose money and have to be bailed out because they are clearly too big to fail

    • Anonymous

      What a country!  There’s no way they can lose.

    • Anonymous

      http://www.zerohedge.com/news/citi-follows-bank-america-instituting-debit-card-fee-19-trillion-deposits-risk

      When we reported that Bank of America will be the first bank to institute debit card fees we made the following less than insightful observation: “The problem is that the bulk of depositor clients will simply walk away from Bank of America (which had $1,038 billion in deposits as of June 30), and any other institutions that piggy back on this, and from a game theory perspective, everyone has to do it, or nobody will do it.”

      Well, Citigroup, which had no other choice, has just decided to follow in BofA’s footsteps, which i) proves there is indeed a collusive move of desperation by the bank cartel, which in a normal country would see at least a statement from Eric Rip Van Holder, and ii) our thesis about America’s impatience with petty theft – they are more than ok with grand scale larceny such as that by the Fed via shadow inflation and currency devaluation, but when it comes to paying up an additional $5/month, well, just look at Netflix, which instituted a $6/month price hike two months ago… and is now fighting for survival. As for the exemption requirements, they will likely be the same as Bank of Countrywide Lynch’s: either have a mortgage with the TBTF behemoth, or have $20k in a deposit account – both which will likely not be much of a help to 90%+ of the bank clients. The biggest problem is that suddenly at risk are $1.9 trillion in deposits – $1 trillion at BofA, $866 billion at Citi.
      While the financial crisis did little to dent the banks’ deposit buffer, it will be highly ironic if it is an act of the banks themselves that begins the great bank run that resets it all… 

      • http://www.harlemghost.blogspot.com/ HarlemGhost

        what no black helicopters …  morons …  the winners in Dodd-Frank were the big retailers …   do you see them lowering prices ?   nope …  too stupid and ignorant to be commenting on this subject …

  • Anonymous

    Which is why I don’t use Debit Cards in any case.  I do it all on credit and then pay the card off.  No charges and no interest, and I use their money for a month for free.  Banks don’t like me very much.

    • http://profiles.yahoo.com/u/EU5DQWQTTHTPO4A4ZYSL3AAV2U Adjoran

      I do the same thing.  I never carry cash, have full fraud protection, and get the miles/points/rebates without ever paying any interest. 

      Let them make their money off the merchants, who then pass the costs on to all customers.  Since I have to pay the higher prices to cover those anyway, I may as well be the beneficiary.

    • Anonymous

      I’m right there with ya on dat!

      Semper Fidelis-

    • Anonymous

      Ya got their measure.

  • Anonymous

    It’s amazing really, but everything Barney Frank touches, turns to crap.

    • Clay

      More amazing still: The people of Massachusetts keep him in office.

  • Anonymous

    Anyone who has an account at Bank of America is a chump.  Credit unions and small banks are the way to go.

    Debit cards are generally a rip-off, keep your ATM card and use cash. Or do what Bill_M does, pay off your credit card every month.

    • Anonymous

      Dang Chico… Some common sense. There may be hope for you yet!

  • Anonymous

    As you point out, a business can charge whatever they think the market will bear.  And the consumer is free to look around for the best price they can find.  Unfortunately, liberal politicians have this mindset that everything they do happens in a vacuum.  Impose costs on a business, the business will pass the cost on to the consumer.  EVERYONE appears to recognize this, except Democrats.  As for B of A – I can only hope that customers leave in droves.

    Years ago I made a payment on a Sears card.  Something like $43.00.  I use the card, like others, for convenience, and pay it off the end of the month, avoiding interest charges.  Well that particular month, I failed to take into account that it was Christmas time, with the resultant backlog of mail.  The next month I received a statement, acknowledging payment, AND A $35 LATE FEE!  When I called, I was told that my payment arrived ONE DAY past the due date.  After several minutes of polite (yes, polite – the woman I was talking to didn’t create the issue) back and forth, she said that she’d cancel the late fee on this occasion, seeing the many years I’d been a customer and paid my card off regularly.

    I then cut up my Sears cards in little pieces and sent them to Sears headquarters along with a note to pass them on to the executive who thought up this “late fee”.  I mentioned that I hoped that he enjoyed his big bonus.  Since then, I’ve never passed up an occasion to bad-mouth Sears.

    • herddog505

      WHAT???  You didn’t petition your member of Congress to pass a law to punish Sears for you AND make it illegal for companies like them to have late fees???  What WERE you thinking???

      / sarc

      I did much the same a few years ago when I looked at my bank statement.  Late fees.  Excessive ATM fees.  Out-of-network ATM fees.  Usage fees.  Etc., etc.

      I cut up my cards, pulled my money out, and went to a local credit union.  The emphasis (as it is in your case) is that I did this MYSELF: I didn’t expect or wait for my benevolent, helpful, lovable government to do it for me.

    • http://profiles.yahoo.com/u/EU5DQWQTTHTPO4A4ZYSL3AAV2U Adjoran

      I’m done with Sears after the second time they promised me an appliance mail-in rebate and then decided my purchase didn’t qualify after it was installed in my home and the old one carted off.  So I cancelled my Sears account . . . so I thought.

      Then I got their privacy notice again.  Didn’t think much of it UNTIL they later sent a change of terms notice.  How could they change the terms on a closed account?  So I called the opt-out # and sure enough they had NOT closed the account.  I demanded it be closed, and written acknowledgement that I had opted out of the changes and closed the account.

      I’ll never buy anything from Sears again.  And they wonder how they fell from the world’s #1 retailer . . .

  • http://twitter.com/swkenobi Studley WanKenobi

    Typical big government liberalism at work. I am fairly sure we can find far too many cases where a new regulation/law goes in place to fix a problem for us “regular folks” and ends up screwing us over. Any Republicans that went a long with this need to be replaced!

  • Anonymous

    Mr. Tea,

    Lets see, borrow money from the Fed Discount window at 1/4 of One Percent; loan it out to the public at 19.87%.  Not enough profit there?  Arbitrarily change your customer’s monthly due date, so you can catch a calculated percentage with late fees, and then start using this late fee mechanism to jack up their interest rates to 31%.  

    What else?  Originate sub-prime mortgages and then bundle em up and have your credit rating buddies rate them AAA.  Slice and dice them into tranches and sell em off to your bankster buddies and quasi government entities all over the world (which gives you the added benefit of laying-off risk). 

    Oh yeah.  Have your own Prop Trading desk in the futures markets where you can buy up boat loads of petroleum products and park em off shore in anchored tankers, awaiting a more favorable price. Same with wheat, corn, soybeans, copper, silver, and any other commodity.  

    So, you think BOA is going to take delivery next month of a tanker ship full of aviation kerosene at Norfolk, Virginia?  How bout 10 million gallons of oil at the terminal hub in Cushing, Oklahoma?  Not a chance.  They never take delivery.  They are only interested in selling their contracts to someone else at a higher price, in the I win – everybody else looses, grand casino game. 

    In addition, our regulators have enabled them to mark-to-myth (instead of mark-to-market) any and all nonperforming loans on their books by suspending FASB (Federal Accounting Standards Board) rules.

    What a gig.  Charge usury rates, collect management fees on all those mortgages you service from the government entities you pawned them off to (can you say Freddie Mac and Fannie Mae?), and then park your proceeds at the Federal Reserve bank to draw some extra interest (up and above what you borrowed at the Discount Window in the first place).  I could write pages and pages on this egregious stuff… but I think I’ve laid out enough to make my point.

    Is this what you think your local community bank should be doing?  Truth is, its nothing more than a anything-goes rip-roaring gambling casino… such is the state of Too Big To Fail (TBTF) banking in America today. 

    Jay, nice predatory business model I just described there, using the “legal obligation… to make as much money as they can” justification.

    Semper Fidelis-

    • Anonymous

      You nailed it, Bruce. Unfortunately both parties, Demo and GOP, “liberal” and “conservative” are complicit in this. The government is an instrument of crony capitalist financial sector looters.

      The Demos just sell out like outright whores; some “conservative” Republicans try to put some Randian free-market intellectual gloss on these practices, forgetting that neither Rand, Hayek or anyone else ever said defrauding people and playing the equivalent of three-card-monte on banking customers had anything to do with a free market.

      The false partisanship of the two parties is a game; the real war is people vs. elites.

      • Anonymous

        Chico, its no game… nor is it theater.  Still holding those Government  Bonds you are so enamored with?  I have other asset classes which I am counting on to ensure my family’s livelihood.  Will it be enough?  A better question is: Will I be allowed to keep them?  Who the hell knows. 

        I believe a reckoning is approaching; millions and millions of everyday common Americans  are going to get hurt… bad.  You, I, and everybody else will all be in the same boat. Those perps who got us into this mess will have to answer for it, be they politicians, banksters, or their minions and regulators.

        Semper Fidelis-

      • Anonymous

        I don’t hold government bonds for myself, I’ve been buying real estate lately, now that the price is right.  I don’t think the government should be able to default on the bonds my FICA bought and pay the Chinese, though. 

        If I bought gold, I would do it anonymously and would not let the government take it away from me.  Right now, I’m trying to earn as much cash as I can so I can convert it into assets.  I’m looking at foreign real estate, too, in case things get too hairy in the USA.

        Your instincts are right – there is a reckoning coming.  I think the perps will do OK, though: money talks, they’ll just move elsewhere.  The rest of the people will fight each other.

        • Anonymous

          Chico,

          I got a condo in Guam I’ll sell ya.

          Semper Fidelis-

        • http://www.rustedsky.net Anonymous

          Nah, I think that once the perps become evident, sales of pitchforks, tar, and rope will increase greatly…

          • Anonymous

            I think your right about that JLawson.

  • Peter X

    JayTea:

    In the immortal words of Vince Vaughn from ‘Swingers”, this post is “so money, you don’t even know it.”

    –Peter F.

    • Anonymous

      Peter X,

      I get it.  To the point brevity is the soul of wit.  +1

      Semper Fidelis-

  • http://otisthehand.blogspot.com/ OTIS the hand

    Another lesson. Businesses which have government protection can charge whatever they want because they do not need to worry about pesky free-market reprisals. They know that their real bread and butter is the money which is taken by force and handed to them.

  • Anonymous

    #OccupyWallStreet

    • http://www.rustedsky.net Anonymous

      Careful what you wish for – the ‘cure’ might be a lot worse than the disease.

    • http://otisthehand.blogspot.com/ OTIS the hand

      #We’reACommunistMob

  • http://twitter.com/erraticabee Jonatha Bates

    I don’t know if you actually address the whole story here it’s much more complex that “those Dems made regulations that screwed the little guy”… unless you don’t think of small business owners as “the little guy”. By capping the fees on bank card transactions the bank regulations do a lot by allowing small businesses to actually keep more of their money- which in theory should stimulate job growth. Regardless of your feelings about political parties, this is precisely what conservatives have always been FOR not against: businesses (or anyone for that matter) keeping more of their own money. I know it’s a fee in exchange for a service- but so are taxes, unless you don’t drive on roads, or walk on sidewalks… which are just a few of the things our government imposed fees pay for. Banks may have a legal obligation to make as much money for their shareholders as possible, but losing customers due to those very same greed-based policies is hardly the way to go. Besides, as many have pointed out above, this means very little, as anyone with a brain will be able to avoid these fees entirely. Get one of the no-fee Bank Of America credit cards they aggressively try to foist on every customer, use that instead of your debit card, and twice a month pay it all off with your handy free online bill pay…or join a credit union.

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  • Anonymous

    I used to work for a bank as a programmer. We used to provide-at the ATMs- a quick 3 month history of your bank account, which could be used to help get loans and such. Some moron decided that we should start charging everyone a dollar for this ATM mini-statement. The month it was implemented, over 95% of the customers who were billed called the bank to get their dollar refunded. Afterward, the usage of the service decreased to zero. Extra income to the bank? Dick. Number of disgruntled and/or former customers? Hard to say, but greater than zero. In any event, BoA is about to find out that this “fee the customer to death” mentality is going to cost them customers. I don’t have an account with BoA, but if I did I would go cash only.

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