Debt Card Increases Under Justice Dept Review

http://www.bloomberg.com/news/print/2011-11-22/debit-card-fee-increases-under-u-s-justice-department-review.html



The U.S. Justice Department is conducting an antitrust review of statements and actions by banks and their trade associations about imposing fees on customers who use debit cards. The Federal Reserve, acting on a provision of the 2010 Dodd-Frank Act, imposed rules on Oct. 1 limiting fees card networks charge merchants to 21 cents per transaction, about half what retailers had been paying. In response, lenders including Bank of America and Wells Fargo considered new charges for debit customers to make up some of the $8 billion the largest banks may lose under the rules. House Democrats who last month asked Attorney General Eric Holder to investigate whether U.S. banks and their trade groups colluded on whether to impose fees in response to caps on what they can charge for using debit cards.

House to Wait for Senate to Act on "Swipe" Changes, Bachus Says

House Financial Services Committee Chairman Spencer Bachus (R-Ala.) said that U.S. House lawmakers will wait for the Senate to introduce changes to the Federal Reserve's proposal that would cap debit card "swipe" fees, Bloomberg News reported yesterday. The House panel's decision to wait for action by the Democrat-controlled Senate may delay the legislative attack on a rule that may cost banks including Bank of America Corp. and JPMorgan Chase & Co. as much as $12 billion in annual revenue. Sen. Richard Durbin (D-Ill.), who fought to require fee caps under the Dodd-Frank Act, said that he will block efforts to change that provision of the regulatory law. Fed Chairman Ben S. Bernanke and Federal Deposit Insurance Corp. Chairman Sheila Bair have questioned the measure, saying that an exemption for banks and credit unions with less than $10 billion in assets might have the unintended consequences of making the smaller firms less competitive.
http://www.bloomberg.com/news/print/2011-03-07/house-to-wait-for-senate-to-act-on-swipe-changes-bachus-says.html

Debit Card Predators

The Federal Reserve took a wholly inadequate step last year when it required banks to get people to opt in to the overdraft plan before charging them fees, according to a New York Times editorial today. The banks almost never explain how the system works or what it will cost according to the editorial, and as a result, low-income debit card holders are still being exposed to predations from which credit card holders are protected. New FDIC rules require banks to clearly explain overdraft costs. Most important, if a customer is charged a fee for overdrawing his account more than 6 times in a 12-month period, the bank must offer a less costly alternative. The editorial advocates for the Federal Reserve to adopt the FDIC?s rules, but if it does not, the Bureau of Consumer Protection should make fixing the debit card rules a top priority when it starts work in six months.
http://www.nytimes.com/2011/01/21/opinion/21fri2.html


In related news, Rep. Barney Frank (D-Mass.), one of the authors of the financial regulatory overhaul, said that he is ready to work with the Republican majority to force changes in a Federal Reserve proposal to cap debit-card ?swipe? fees, Bloomberg News reported yesterday. The Fed?s proposed limits on so-called interchange fees may reduce annual revenue for U.S. banks by more than $12 billion. Visa Inc. and MasterCard Inc., which set the fees and pass the money to card-issuing banks, tumbled more than 10 percent after the proposed rules were made public on Dec. 16, based on investor concern that the caps will damage their business model. Read more.


http://www.bloomberg.com/news/print/2011-01-20/debit-card-swipe-fees-changes-supported-by-u-s-house-s-barney-frank.html