What Hath Dodd-Frank Wrought

Eli,

One deleterious impact of Dodd-Frank is higher bank fees, and a reduction in free checking. How's that? The Durbin Amendment, which put a price cap on debit card and credit card swipe fees, the fee a retailer pays to the card issuers for using the card. Ah, the marvels of price controls. 

At the time banks warned it would result in higher checking fees since swipe fees are substantial and swipe fees were used to subsidize free checking, particularly for account with low deposit amounts And, as you can see below, it did.

This is a poster child of the legislation of the 111th Congress. Have prices declined at the stores? I haven't seen any indications that is the case, and that was certainly the argument made for the Durbin amendment. But checking fees have gone up. Who get's hurt most? The poor and those on the margin. Congratulations Senator Durbin! Congratulations Dodd-Frank! Congratulations President Obama and the 111th Congress! You must be proud.

Bill

http://www.bankrate.com/finance/checking/checking-fees-record-highs-in-2012.aspx?ic_id=Top_Financial%20News%20Center_link_1

Banks are in a fee-ing frenzy

The banking industry finds itself in the middle of a fee-for-all. In Bankrate's 2012 Checking Survey, almost every checking fee we follow went up, with some bank fees rising 25 percent or more.

What's behind the jump in all these fees? In part, it's the banking industry's response to recent regulations limiting consumer overdraft fees and to new rules capping the cost of debit card swipe fees for U.S. retailers, says Eben Jose, an industry research analyst with IBISWorld.

"That had a drastic kind of an effect on their revenue for retail banking," Jose says. "They need to find a way to make up for these fees in other ways."

Those fee hikes have sometimes gotten pushback from customers, says Greg McBride, CFA, senior financial analyst for Bankrate.com.

In a recent Bankrate poll, 72 percent of Americans said they would consider switching banks if their financial institution raised its fees on checking accounts, up from 64 percent in March 2011.

Banks have noticed customers' sensitivity to fees. Last year, Bank of America announced it would begin charging customers a fee for carrying a debit card, but the bank quickly backed down in the face of withering public criticism. Other banks followed suit; in our checking survey, less than 1 percent of banks charged a fee for carrying a debit card.

"The consumer backlash was such that the banking community as a whole just decided to look to other avenues to recoup revenue," McBride says.  "Banks have a lot of different levers they can pull to recoup revenue."

Here are some of the other fee levers banks have been pulling lately.