PNC Chairman of CEO of PNC Financial said this of the Durbin Amendment and indicated that PNC along with all banks will be raising debit card fees thanks to the Obama Government.
Rohr said the following:
Well lets be honest about the Durbin Rule: the banking industry built the debit card business... and the merchants were tremendously advantaged. They dramatically reduced the amount of cash they had to do business with, they dramatically reduced the number of checks they had to process, it dramatically or virtually eliminated all the fraud that was involved with check writing and so they tremendously benefited by the development of the debit card business. The consumer was benefited as well but the merchant got immediate cash with the elimination of all the operating expense and the fraud expense and a result they were paying 44 cents an item for the service for a long period of time and the high volume people where paying less as they always do.
Well the Durbin Amendment comes along and says the government is going to get involved in price fixing and as you know there was a great deal of lobbying on behalf of the merchants into that bill and of course then the Fed was given the responsibility of only allowing us (the banks) to recover marginal cost. Well we build an entire system, the debit card is now an integral part of the checking account, the checking account we have to keep information for seven years, we incur fraud all the rest. We have to provide fraud protection and prevent against hacking and the retailers have eliminated all that expense. The Fed comes out and says 24 or 26 cents depending on if you include the fraud protection or not.
The banking industry lost $6 billion of pre-tax income. So you take the $6 billion worth of pre-tax income that we lost on that product and you combine with almost 0 interest rates. So whats happened is we're not really making money on the deposit business anymore the way we used to and so the industry is now re-pricing the retail relationship with their customer and the debit card fee is part of it.
Does whomever posted this hogswallop actually expect most people to believe that banks -- after making billions (yeah, billions) of dollars off of debit card fees, etc. -- will now be FORCED to charge even more because the government finally requires them to be honest about their shenanigans?
ReplyDeleteThen use your cash and checks at walmart. You pay for convenience and security. Banks have profits and shareholders that are interested in making a living of their hard work. If you don't want capitalism move back to Cuba.
ReplyDeleteThe debit card was a tremendous convenience brought to you now that you rely on it. Suddenly the banks don't deserve to make money on their creation?
ReplyDeleteI don't get the argument against profits. Apple made $7 billion last quarter maybe they should be forced to take a cut.
Why can everyone profit but banks. Just because its essential all that does is make it a better business. Its not unethical like charging for hospitals. I don't believe in that or I wouldn't invest in it. but people deserve to pay something to keep their money safe.