Gouged by the Banks? Nope, the government again

Have you been whacked by brand new fees on your checking account or debit card yet? B of A, among many others, have done so. Those evil, greedy banks: charging us to use our own money; how terribly mean and unfair of them.

Nope: think again.

A brand new federal government law is causing these charges. See, the Dodd-Frank bill reformed the banking industry supposedly to improve it; however, there was the Durbin Amendment attached to it. It limited the swipe fees (the amount a bank charges the store each time you swipe your debit card) to a hard and fast 21¢ per swipe. See, it used to be a flat charge of a few cents plus a % of the total bill, and a surcharge for smaller amounts; on average, the fee was 44¢, and earned the banks in the neighborhood of $35 billion per year. The politicians thought: aha, let us limited the swipe fee, stop the banks from gouging the retailer, who in turn passes it on to the customer. So, reducing the swipe fee will reduce costs to the consumer.

Not: the retailers, for the most part, ate the fees as part of doing business. They now have reduced costs, and will not pass it on the customer. Worse, the banks have now increased fees on our checking and debit accounts to make up for the lost profit.

This is a classic case of unintended consequences: a law to help consumers have hurt them instead. Maybe it is time for the government to give it a rest already.