Like many of you, I was appalled when I first read the recent announcement that several of the big banks are going to start charging fees, as much as $5 a month, for customers to use their debit cards. Since consumers regularly use their debit cards for everyday expenses like buying groceries and filling the gas tank, this is just one more opportunity for the big banks to dig into the pockets of the middle class at a time when most people can least afford it.
As big banks fail to lend adequate capital to small businesses, it's particularly infuriating that they are taking one more opportunity to gouge working families to enrich shareholders. So it's time to draw a line in the sand. Recently, I introduced H.R. 3190, legislation to stop this outrageous practice, by simply making it illegal for banks to charge customers a fee for using their debit card.
Some background here. Big banks claim that these new debit card fees are being implemented as a result of Dodd-Frank, the critical reform legislation passed in response to the financial meltdown on Wall Street. Under an amendment added to the Dodd-Frank legislation by Senator Durbin, the transaction cost or "swipe fee" that banks charge businesses to cover the cost of processing a debit card transaction would be limited to an amount that is reasonable and proportional to the costs.
While some analysts estimate the actual cost of processing a debit card transaction at only a few pennies, the Federal Reserve recently implemented the new rule, which restricts this fee to roughly 21 cents per transaction, down from an average fee of 44 cents. The Durbin amendment was designed to help businesses by lessening the burden of these excessive transaction fees, which would provide an opportunity for them to invest more in their businesses, hire new workers, and pass on savings to consumers by lowering prices of goods and services.
So now that banks can no longer reap huge profits by taking advantage of small businesses, they are trying to take money from average folks who can least afford it.
Let's not forget that Dodd-Frank was enacted in response to the reckless behavior on Wall Street that brought our financial system to the brink of total collapse, and that many of these same banks received a bailout through the Troubled Asset Relief Program (TARP) established through the Emergency Economic Stabilization Act of 2008, which appropriated $700 billion in taxpayer funds to "restore liquidity and stability" to our financial system.
Not only are these new fees unfair, they are also applied in a grossly unfair manner. At some institutions, premium account holders, who maintain large balances in their checking and savings accounts, will escape being charged the new debit card fee altogether.
You read that correctly. So while working families living paycheck to paycheck will be forced to spend extra money every month to use their debit card, affluent customers who would be least affected by the fee are given special treatment. Is it any wonder that people are protesting in the streets right now?
Every day, I hear from families across my district who feel like Washington has totally lost sight of what is happening in their lives. They believe, with justification, that the rules of the game are increasingly rigged so that only the powerful and well-connected have any voice and any real opportunities to get ahead.
For too long the big banks have run roughshod over middle class families in America; these latest fees are just one more example and it's time to fight back. The big banks were reckless with the customer money entrusted to their institutions and brought the global financial system to the brink of collapse. Billions of taxpayer dollars went to bailing them out. Charging hardworking families a monthly fee for them to use their own money to purchase ordinary necessities is outrageous and it needs to stop.