It is amazing, if you think about it, the types of price hikes
that get the MSM — or “drive-by media” as Rush Limbaugh calls them
— and liberal politicos in a tizzy. They think it’s no big deal,
for instance, that a family staple such as light bulbs will
probably increase by more than 20-fold due to “energy efficiency”
mandates that go into effect starting next year.
The New York Times buried in its “Energy &
Environment” section
an article that noted that replacements for the banned 100-watt
incandescent light bulb “sell for $5 apiece and more, compared with
as little as 25 cents for standard bulbs.” The article added that
replacements that emit the same amount of light can exceed $100 per
bulb. But the only time the light bulb ban gets in the front pages
is for the purpose of an MSM to give preachy
Jon Stewart-like lectures about how conservatives opposed to
the ban shouldn’t distract from the “real issues” like a debt
ceiling breach that might shut down the Department of Education for
a week.
Now now, they reason, it doesn’t matter if the cost of
light bulbs means that Junior can’t have a new sweater for school.
The important thing, the Jon Stewart wannabes rationalize, is that
the Department of Education will still be there to boss the local
school around. And, looking straight at the early Northeast
snowfall last weekend, they proclaim that “after all we need the
light bulb ban to halt the menace of ‘global warming.’”
But let Bank of America, as well as regional banks such as
SunTrust and Regions Financial, put in a $5-a-month debit card fee,
and suddenly it’s a national crisis meriting front-page news! The
media ginned up Bank Transfer Day, an event that was set for
November 5 with the ostensible purpose of punishing BofA and other
fee-imposing banks — which all have now rescinded the debit fee —
by having consumers transfer accounts to community banks and credit
unions.
There is nothing wrong with looking around for the bank or
business that gives you the best deal. As Ross Kaminsky
noted in TAS, that’s called capitalism. But those who
participated in Bank Transfer Day should know it won’t lower fees
for consumers nor shore up smaller institutions. Nor was it
intended to do these things by many of its organizers. The purpose
was to distract the public from regulations like Dodd-Frank that
put a stranglehold on consumers and businesses of all
sizes.
You see, for liberals and the MSM, the important thing
about price hikes is not the impact they have on the average
family. Rather, what matters most is whether new consumer cost is
something that can be blamed on private sector “greed” and thus fan
the flames for another big government takeover.
That’s what they did with the BofA fee, even though as
TAS
readers know, a large chunk of these fees can be blamed on the
price controls of the Durbin Amendment to the Dodd-Frank financial
“reform” rammed through Congress in 2010. The measure inserted into
Dodd-Frank by Senate Majority Whip Dick Durbin (D-Ill.) limits the
amount that banks and credit unions can charge retailers for the
interchange fee — or “swipe fee” — for processing a debit card to
what the government deems “reasonable and proportional to cost.” It
stipulates that only “incremental costs” can be considered in
setting the price controls.
Under the interpretation of the Federal Reserve, this
means that the financial institution can’t profit on the retailer
side and can’t even recover many costs, such as those for computer
equipment and call centers. Perhaps out of concern for bank
solvency, the Fed almost invited banks and credit unions to impose
new fees on consumers, pointing out in its
regulation that “the interchange fee standard would not limit
the ability of an issuer to earn revenue from other sources, such
as by charging fees to its cardholders.”
In the meantime, consumers have not seen any particular
“Durbin discounts” at Wal-Mart, Walgreens, Home Depot, or the many
other profitable retailers who lobbied for and are reaping an
estimated $12 billion windfall from these price controls. “To my
knowledge not one major (or for that fact minor) retailing
establishment is offering consumers rebates for using debit cards,”
financial analyst Richard Bove
told FoxBusiness.com. The news site noted that “a search of
databases covering the retail industry shows little to no rebates
offered to retail customers for the swipe-fee cap.”
So if they were really angry about these new fees’ impact
on families, progressive politicians would simply repeal the Durbin
Amendment. Or they would at the very least they would jawbone
retailers to pass on their savings from the price controls, which
wouldn’t be very effective, but would at least be
sincere.
But the main concern of these politicos and their MSM
defenders was not the toll on the “99 percent,” but the possibility
that their regulations would be blamed for it. In a revealing
answer at a White House press conference, President Obama
said that what he most objected to was BofA and others “using
financial regulation as an excuse to charge consumers more.” Obama
added: “Basically, the argument they’ve made is, well you know
what, this hidden fee was prohibited so we’ll find another fee to
make up for it. Now, they have that right, but it’s not a good
practice.”
So there you have it. Bank Transfer Day should have been
called “Blame Transfer Day,” because for many of its architects, it
was more about making sure progressives and the regulatory state
don’t get blamed, rather than about helping consumers or saving
community banks and credit unions.
For evidence, one need only do some minimal digging for
the political connections of some of the organizers. Take Molly
Katchpole, who has gotten fawning MSM coverage for starting the
petition against Bank of America’s debit fee on Change.org. CBS’s
Early Show described the 22-year-old Washington, D.C.
resident as “working two part-time jobs, and living
paycheck-to-paycheck.”
But CBS, ABC and CNN neglected to specify Katchpole’s
politics or even name one of her “part-time” employers. which could
be relevant to the story. On her LinkedIn profile, Katchpole
lists her job as account manager at the communications firm Winning
Over Washington. According to Roll Call, the
firm was founded by the former communications director of the
Service Employees International Union, and clients “include SEIU
and some Democratic candidates.”
And here are some additional clients listed on the
Winning over
Washington website : AFL-CIO, National Education Association,
Democratic, National Committee, Democratic Governors Association,
and EMILY’s List. As
described by the blog Joust the Facts, which gets a hat tip for
being one of the first to catch Katchpole’s connections, this list
represents “the usual broad spectrum of interests, from far left to
farther left.”
Then, there are Katchpole’s other petitions on Change.org.
These include a letter
calling on GOP presidential candidate Herman Cain to release his
accusers from their non-disclosure agreements, a
pledge to “help to win the election by organizing in my
community” to repay the president for Obamacare’s mandate for
covering birth control in insurance policies, and a
demand to stop a Congressional investigation of Planned
Parenthood. If Katchpole is indeed living “paycheck to paycheck,”
it’s time for her progressive employers to give her a
raise!
While Katchpole’s petition and Bank Transfer Day may help
deflect blame from Durbin, Obama, and Dodd-Frank, they won’t help
consumers and will do little for smaller banks and credit unions.
Even before BofA announced the debit fee in September, a
Bankrate.com survey
found that in the year since passage of Dodd-Frank and Durbin’s
measure, just 45 percent of non-interest bank checking accounts
were free, down 76 percent from two years earlier, and that the
average monthly fee for a non-interest account was $4.37, up 75
percent from a year earlier.
And even though smaller financial institutions are
technically exempt from explicit price controls, they are subject
to other provisions of Durbin’s measure and fear merchants will
discriminate against the debit cards they issue. As the Credit
Union National Association has stated: “[The Durbin Amendment] will
impose a severe hardship on credit unions with debit card programs,
draining the revenue they need to offset the costs of providing
card services. Much as they would prefer not to, credit unions will
have no recourse but to make up these costs by imposing new fees or
service restrictions on their members. How are consumers better off
under this scenario? The plain fact is they are not.”
So if consumers really want to stop higher banking fees,
they should organize a Bad Policy Transfer Day and tell Congress to
get rid of the Durbin Amendment and much of the rest of Dodd-Frank.
They can start by “billing” those responsible with “Durbin
Dollars,”
downloadable on the website of my organization.
Trey Kovacs, a policy analyst at CEI, contributed to
this article.
