Bank of America has canceled its proposed $5 a month debit card fee, amid pressure from bank accountability groups and the Occupy Wall Street protests, as well as rage from its own customers. BofA was the final holdout among major banks on the debit card fee. JPMorgan Chase and Wells Fargo announced that they would abandon test plans for a fee last week, and Regions Bank and SunTrust gave up on their fees yesterday, and will reimburse customers for fees incurred.
Think about what a turnaround this is. Under Dodd-Frank, banks lost the ability to extract billions of dollars in inflated swipe fees, and the Federal Reserve set the maximum fee per transaction lower. All the savvy, jaded folks out there said that the banks would merely pass the fees on to their customers and gain the same amount of revenue. And indeed, that’s what they tried to do. The only problem is that they announced it in the middle of a massive anti-Wall Street uprising, which made Bank of America’s initial action a symbol of financial industry greed. So the people – not politicians per se, but ordinary people – rose up, agitated, protested, started taking their money out of big banks. And the banks relented. And by the way, this won’t stop the backlash, either. Groups are piling on the Move Your Money movement and national Bank Transfer Day, set for November 5, as well as the larger national divestment campaign put on by the New Bottom Line.
This action, however, prevents a transfer of billions of dollars from ordinary depositors into the pockets of Wall Street executives. It’s one of the most progressive actions we’ve seen in this country in some time, and it had nothing to do with Congress or the President. It consisted of people being angered by having to pay for the privilege of using their own money. And they spoke up, and stopped it. What was it that Margaret Mead said? “Never underestimate the power of a small group of committed people to change the world. In fact, it is the only thing that ever has.”
And let’s have a brief for Occupy Wall Street. While the media obsessed over whether the protest movement had a coherent enough agenda, the energy created by OWS just stopped debit card fees in their tracks, saving depositors billions of dollars. Greg Sargent gets confirmation of OWS’ centrality to this whole thing:
I just got off the phone with a senior banking official familiar with the discussions about Bank of America’s decision. This official said there was no direct corelation between the protests and the decision, and argued that the move by other banks to back off the fees left BoA no choice. But the official acknowledged that the atmosphere has been changed in a palpable way by the protests and by media coverage of them. Obama and leading Dems have aligned themselves with the shift in public mood by also hammering BoA.
“It’s all connected,” the official said. “There are a lot of issues out there that have added to the conversation. If you take a lot of customer complaints, and you add on to it something along the lines of the protest, it’s amplified the concerns. From our perspective it has clearly amplified things. It has amplified the concerns our customers have. It’s heightened the conversation. It has impacted all the banks.”
Just think what Occupy Wall Street could accomplish with a 10-point position paper!
…BAC is down 6% today, by the way.
UPDATE: One more thing here, pointed out by Kevin Drum. The system worked. Before this point banks were extracting fees from customers through a hidden process of taking billions extra through debit card transactions. When that avenue was closed off to them, they had to transparently seek that money from the customers themselves. And the customers rebelled. The market fixed this problem, in other words.