WASHINGTON – In the volatile political air ignited by the nation’s economic struggles, $5 buys a lot more controversy than it used to.
The recent announcement by Bank of America Corp. that it would charge customers $5 a month to use their debit cards has rung up animosity from coast to coast.
Coming amid growing anti-Wall Street protests, Bank of America’s new fee has become a focal point for anger and frustration about the flailing economy and Washington’s attempts to help the nation recover from the financial crisis.
Some banks are testing similar, though lower, debit card fees. But Bank of America was the first major player to take the plunge. And since it is the nation’s largest bank – as well as the beneficiary of one of the biggest taxpayer bailouts – the move has put a target on its red-white-and-blue logo.
“It’s one example of why I’m here and outraged,” said Julia Lum, 25, of Oakland, Calif., a law student and intern at a Washington firm who joined protests this week against large banks.
A Bank of America customer herself, Lum said she was ditching the bank because of the fee.
“This frankly is just an incredible marketing and PR debacle,” said Bert Ely, an independent banking analyst. “They roll this thing out with no testing, make it nationwide, it’s higher than anybody else – what kind of reaction do they expect?”
Probably not what they’ve seen over the last week.
President Barack Obama and Vice President Joe Biden both publicly criticized the fee, which Bank of America said was triggered by revenue losses from a new federal limit on what banks can charge retailers to process debit card transactions, known as swipe fees.
Sen. Dick Durbin, D-Ill., who championed the limits on swipe fees, urged Bank of America customers to “get the heck out of that bank.” And Rep. Brad Miller, a Democrat from the bank’s home state of North Carolina, introduced legislation to make it easier for customers to close an account.
When Bank of America Chief Executive Officer Brian Moynihan appeared on stage Wednesday at the Washington Ideas Forum, the first question from interviewer Larry Kudlow of CNBC was about the fee.
“It’s the most famous five bucks in the history of this country,” Kudlow said.
Moynihan defended the fee, which he said was an attempt by Bank of America to be transparent about what it charges its customers for services. He said many customers won’t pay the fee, which takes effect next year, because it will be waived for those with a Bank of America mortgage or at least $20,000 in their combined accounts.
Despite the administration’s response, politicians in Washington had mixed reactions as well.
Many Democrats said the debit card fee showed the need for more rules to keep banks from taking advantage of their customers. But some Republicans said it showed the negative ramifications that can be caused by regulations.
Miller had been working on his Freedom and Mobility in Banking Act for months. But when Bank of America’s new fee landed, he decided the time was right to introduce the bill.