Taking its cue from the right-wing Heritage Foundation, the Romeo Area Tea Party has labeled Bank of America’s new $5 monthly fee on debit cards a federal “tax” created by Congress.
Seriously, the RATP and many other tea party groups across the nation have actually bought into the idea that Bank of America, perhaps one of the nation’s least admirable corporations, has been forced by federal regulations to create a new fee that will help keep them in business. And that fee, therefore, is a tax born in Washington.
At issue is the legislative congressional solution to the 2008 bank meltdown that nearly destroyed the U.S. economy. Within that Dodd-Frank bill – named after its key sponsors – is a provision that says the sky-high fees charged by some banks for debit card use must be reined in. The limit was set at 24 cents per transaction.
Federal investigators have found that a bank’s cost for processing a customer’s debit card transaction averages about seven to 10 cents. But retailers and merchants were being charged about 44 cents for each card swipe that’s profit ranging from 340 percent to 530 percent.
If you read the fine print, that gluttonous profit by a “too big to fail” bank is what conservatives are defending.
Bank of America last week responded to the swipe fee limit by breaking new ground, creating a $5 monthly fee on debit cards, whether a customer uses the card within a given month or not. Other big banks hailed the BofA move and suggested they will follow suit.
Across America – the real America – the reaction was quite a different. The move was considered a major blunder. Consumers took to the blogosphere in droves to vent their displeasure, and the bank’s already-battered stock dropped by more than 3.5 percent one day later.
According to some estimates, BofA generated $2 billion a year in profits under the old debit card system. With the $5 fee, those profits may grow to $3 billion.
All of this from a bank that took nearly $100 billion in federal bailout money, paid no corporate taxes in 2010, and then used all that political strength to post record quarterly profits.
Yet, one of the most organized and effective tea party organizations in Michigan has bought into the idea that Bank of America’s fee was forced upon the company by Congress and should be labeled a new federal tax on debit cards.
