Durbin's (over)reaction to the Bank of America Debit Card fee

So Sen. Dick Durbin, D-Ill., is back at it again. As if he hasn't wreaked enough havoc on the banking industry, he's now telling customers to "vote with your feet. Get yourself out of that bank". He is, of course, talking about Bank of America (BOA) and their recent decision to begin charging $5 per month when a customer uses their debit card. The fee goes into effect in 2012.

It was his legislation (the Durbin Amendment) capping the interchange fees on these transactions that started this whole mess in the first place. The legislation was, ostensibly, aimed at helping the consumer. Not quite. What it has done is lowerer what the retailers are paying and reduced the interchange income to the banks. I think it is safe to say that retailers are not going to pass on these savings to consumers. So, do you see any benefit to the consumer? I don't.

Now, according to Durbin, Bank of America is going to "push people away from debit cards into credit cards, which are not regulated..." to increase their interchange rate. What Durbin seems to dismiss is an alternative: using cash for their retail purchases. You see, if you are a BOA debit card holder, there is no monthly charge for using a BOA ATM machine. But that doesn't get mentioned in his grandstanding on the Senate floor.

So here's my personal message to Sen. Durbin. Consumers will make their own decisions about how to deal with this. Believe me, BOA is taking plenty of heat for this from their customers. Maybe, instead of the government getting more involved in everyday banking, they should focus on governing. Seems to be a pretty strong need for that these days.