Democratic lawmakers are taking a line from Scooby Doo’s “Freddy.” The character known for the idea of splitting up and taking the two women with him and sending “fraidy-cats” Shaggy and Scooby out on their own may say “this all seems a bit fishy to me” regarding big banks’ near simultaneous announcements of fees for debit card users.The five lawmakers, Democratic Representative Peter Welch of Vermont and four others are asking the Justice Department and Attorney General Eric Holder to investigate whether Bank of America and other major banks conspired to charge the new monthly fees for debit card use. Welch admits there is no clear evidence of violation of antitrust laws, but the timing of the fees merits and investigation.
JPMorgan Chase and Wells Fargo’s (both testing $3 charges) announcements of fees came quickly on the heels of Bank of America’s intention of charging its customers a $5 monthly fee to its debit card users. BofA says the charge only applies if customers use debit cards for purchases; ATM usage will not be charged. SunTrust, a regional bank out of Atlanta, also charges a $5 fee for customers with basic checking accounts, which it instated back in June. Regions Financial based in Birmingham, Alabama initiated a $4 fee on October 1 for accounts failing to meet stringent balance requirements.
Many Americans are outraged at the added fees, especially when Bank of America, Chase, Regions, SunTrust and Wells Fargo were among some of the recipients of bank-bailout rescue funds. BofA fired back, saying the new fee was necessary due to Federal Reserve actions that capped the fees banks can charge merchants for debit card swipes. Added to that, Congress directed the Fed cap swipe fees under the financial overhaul law.
In a letter to Attorney General Holder, the five lawmakers cited an e-mail by the Texas Bankers Association to its members, sent after legislation that would have delayed swipe fee caps failed. The e-mail says that “Now the industry must regroup and each and every one of you must decide how you are going to pay for the use of debit cards. It may be through a monthly fee.” The Merchants Payments Coalition – an organization of trade groups for a variety of retailers – supports the lawmakers.
In a letter to Attorney General Holder, the five lawmakers cited an e-mail by the Texas Bankers Association to its members, sent after legislation that would have delayed swipe fee caps failed. The e-mail says that “Now the industry must regroup and each and every one of you must decide how you are going to pay for the use of debit cards. It may be through a monthly fee.” The Merchants Payments Coalition – an organization of trade groups for a variety of retailers – supports the lawmakers.
The BofA fee will not start until 2012. Banks testing the fees have yet to decide if the fees will be permanent and widespread.
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