[Congressional Record Volume 157, Number 147 (Tuesday, October 4, 2011)]
[Senate]
[Pages S6061-S6062]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                           A CHOICE IN BANKS

  Mr. DURBIN. Madam President, yesterday, incidentally, I spoke about 
Bank of America's decision to impose a $5 fee on their loyal customers 
who have debit cards. Bank of America announced that this fee had to be 
collected because they were going to be restrained in the amount of 
swipe fees they could charge for people who use debit cards.
  Those who follow this issue know the Federal Reserve took a look at 
this. Every time we use a piece of plastic to pay for something--as a 
debit card--there is a charge imposed on the retailer--the restaurant, 
the bookstore, the grocery store, you name it. There is a charge 
imposed. So we asked the Federal Reserve to take a look at that charge 
that is being imposed by the credit card companies through the banks, 
and here is what they found. The actual cost of a bank and Visa or 
MasterCard processing a debit card transaction is anywhere from 4 cents 
to 12 cents. Remember when they used to process checks for pennies no 
matter what the face value was? Well, the actual cost of the debit 
card--the new checking account, the plastic checking account--is 4 
cents to 12 cents a transaction.
  Then the Federal Reserve Board said: What are they actually charging 
the retailers? Madam President, 44 cents is the average charge by the 
banks and credit card companies for the use of the debit card--more 
than 10 times the 4-cent rate or more than 6 times the 7-cent rate the 
Federal Reserve said is the reasonable cost of a debit card 
transaction--a 600-percent profit they are taking right out of every 
transaction.
  Of course, it means the grocery store, the retailer has to charge 
more. Imagine someone comes in and gets the special--a cup of coffee 
and a doughnut at the Rock Island Country Market, which I visited 
during the break, a 99-cent special. They use their debit card to pay 
for it. The Country Market is now going to be charged 44 cents for a 
99-cent transaction.

  So it changed. The world changed last Saturday. The new law went into 
effect, capping for the largest banks in America the debit card swipe 
fee at

[[Page S6062]]

about 24 cents, splitting the difference. Still these banks are doing 
quite well. The actual cost of the transaction is 4 cents, 7 cents, 12 
cents, and they are going to get 24 cents. Well, you would think they 
could live with a 100-percent profit on what they are doing. No way. 
Bank of America said to their loyal customers: Sorry, but because we 
cannot make as much off the retailers, we are going to nail our 
customers with a $5 monthly fee for the debit cards.
  Yesterday, I sent a letter to the CEO of Bank of America, Mr. 
Moynihan. I said to Mr. Moynihan: I have just done the math here, and 
if your customers pay $60 a year for their debit cards, you are going 
to collect more money from your customers than you could possibly have 
lost because of this change in the law. You are overcharging your 
customers. It is not fair, and I want you to defend it. Let's see if he 
does, not just for me but for the people who bank at Bank of America 
and have debit cards there.
  You see, what happened last Saturday is not just a change when it 
comes to debit card swipe fees. I think what happened last Saturday 
with this new law is empowering customers and retailers across America.
  Now, incidentally, Chase bank, Wells Fargo, and Bank of America have 
all talked about imposing this debit card fee. If they decide they want 
to penalize their customers and nail them $5 a month or $3 a month, 
that is their decision. But I hope what happens next is that bank 
customers across America realize they have the right to change their 
banks, to move to banks that are not going to nail them with these fees 
that are driven by greed.
  There is good news. There are thousands of banks across America for 
people to choose from and thousands of credit unions, and most of 
them--or many of them, I should say--have already stated publicly they 
are not going to join in with Bank of America in nailing their loyal 
customers with a debit card fee.
  The Press Democrat newspaper in Santa Rosa, CA, on Friday carried an 
article saying, ``Local banks say no to debit card fees.'' The article 
lists a number of local banks and credit unions that said they would 
not copy Bank of America's strategy. The article quotes Tom Duryea, CEO 
of Summit State Bank. He said:

       It's just not something we want to do to our customers. I 
     am not going to nickel-and-dime people over $5.

  Now, that is a man speaking for a bank that I think has a future--a 
bank that realizes if you treat your loyal customers right, they are 
going to stay loyal. But if Bank of America has their way and nails 
their loyal customers with a $5 monthly fee, I hope some of their 
customers will think twice about doing business there.
  Washington Federal is a regional bank in Washington State. Its 
spokesperson, Cathy Cooper, was quoted in the Oregonian newspaper 
saying:

       We have absolutely no plans to impose a debit card fee.

  On Saturday, the Salisbury Post in Salisbury, NC, ran an article 
titled: ``Bank of America move doesn't prompt local banks to charge 
debit card users.''
  It quotes Bruce Jones, CEO of the Community Bank of Rowan, saying 
that his bank will start running ads touting its lack of fees: ``We're 
really going to promote that,'' Jones said, ``That's such a good piece 
of business.''
  The Pennsylvania Credit Union Association put out a statement 
yesterday and said this on behalf of its 500 credit union members:

       Study after study has shown that credit unions overall 
     offer lower fees and better savings rates. The mission of a 
     credit union is to serve its members and not Wall Street.

  That is a welcome mentality.
  There have even been some large banks that acknowledged the need to 
treat their customers fairly.
  USAA, for example, is a financial institution that serves military 
personnel and their families. USAA has announced it will not charge 
consumer debit fees, or checking account fees either.
  And the giant Citibank has heavily promoted its position on the 
issue: Citibank will not charge its customers debit fees.
  It is a smart move for these banks and credit unions to treat their 
customers well when it comes to debit cards. Customers are ready to 
shop around if they don't.
  Across the United States more and more banks and credit unions are 
making it clear they are not going to nail their customers with a debit 
card fee.
  Now is the time for bank customers across America to say enough is 
enough. If you do not value me as a customer enough not to charge me a 
new $5 monthly fee just for trying to access my own checking account, 
my own bank account at your bank, I am going to do my business 
elsewhere. I think that is an important thing to do.
  Of course, we need to stay vigilant to make sure America's consumers 
have good, honest information about how banks are treating them. I will 
be meeting later this week with the Acting Director of the Consumer 
Financial Protection Bureau, Raj Date. We will be talking about how to 
ensure customers know what their rights are when it comes to banking 
services.
  Let me tell you, there are Republicans who hate this agency the way 
the devil hates holy water. The notion that the customers of America 
would finally have a voice in Washington keeping an eye on the 
activities of financial institutions scares the living heck out of some 
Members of Congress. But many of us believe that the scales have been 
tipped for too long on the other side, that many consumers are, 
frankly, at the mercy of these financial institutions and could use an 
advocate who stands up every once in a while and fights for them.
  Holly Petraeus is the wife of General Petraeus, who is now heading up 
our CIA. She and her husband have certainly given great service to this 
country. I met with her just a few weeks ago, and she talked about the 
exploitation of men and women in uniform serving our country by many 
financial institutions--predatory lending and awful practices. Many of 
these practices, incidentally, lead to these servicemembers having to 
take an early discharge from service because they are so deeply in 
debt. I think that is a scandal, and I am glad Mrs. Petraeus has spoken 
out on it. She is using this agency, the Consumer Financial Protection 
Bureau, to come to the assistance and protection of our men and women 
in uniform. That is a legitimate use of their responsibility. And for 
those who want to do away with the Bureau, let them explain, if they 
can, why they think our veterans and our servicemembers do not deserve 
this kind of protection.
  I want to see the Consumer Financial Protection Bureau up and 
running. I think it is about time we had some advocacy group standing 
up for men and women in uniform and consumers and retailers across 
America. I hope we can soon confirm the nominee for the head of that 
Bureau, Richard Cordray. I have met Mr. Cordray, and he is going to be 
a smart, effective watchdog for America's consumers. As I said, there 
are some--particularly on the other side of the aisle--who hate the 
notion that there would be such an advocate and such a counsel 
available for consumers. But I think American consumers and families at 
least deserve to have someone speaking out when they are about to be 
exploited.
  The keys to a well-functioning market are competition, transparency, 
and choice. When these conditions are present, consumers have a 
fighting chance and they can thrive. So can small banks and credit 
unions. I am going to keep standing up for these basic principles. I 
believe competition and transparency are critical for a free market 
economy to operate in a just and fair way. It is the right thing to do.
  Madam President, I yield the floor.
  The ACTING PRESIDENT pro tempore. The Senator from Colorado.

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