In Defense of Bank of America -- Sort Of
It’s hard to feel sorry for Bank of America.
Like most big banks, they have become dependent on the federal government and the Federal Reserve for their survival. BOF was the recipient of $20 billion in bailout money and $118 billion in government loan guarantees after they agreed to purchase Merrill Lynch, perhaps as part of a deal with the Treasury Department. The sins of the banking industry are well known and their poor reputation well deserved. Only Sen. Dick Durbin (D-IL) and the Obama Administration would actually make you defend banks.
At the the behest of retailers like Walgreens and Wal-Mart, Durbin offered an amendment to the Dodd-Franks Financial Reform legislation passed last year that
Durbin’s amendment passed the Senate and was signed into law. Then the law of economics took over. Where retailers profited millions on the new law, banks were now losing millions. So, in an attempt to stem these loses, Bank of America announced a $5 a month fee on debit cards and Chase imposed a higher fee. That set Durbin off.
Durbin called for a bank run by depositors as a means of punishing BOA. The president demanded the fee be eliminated. Treasury Secretary Tim Geithner took an even more threatening tone saying that the White House was prepared to be “even more aggressive” and that the White House “will prevail.” In other words, Durbin and company drove up the cost for banks and now are outraged that they are trying to cover the costs.
Bank of America is being attacked by the arrogance of people who believe the laws of economics don’t apply to them but the laws of economics apply across the board. There are no exceptions for Dick Durbin and Barack Obama. To be bashed repeatedly by those who don’t understand basic economics or believe the rules don’t apply to them is enough to make you feel sorry for Bank of America.
But the facts are irrefutable: when you raise taxes, businesses will create less jobs; when you raise fees on corporations, consumers will bear the ultimate cost; when you regulate something, you will have less of it.
And whether or not Obama will ever understand it, every banking customer in America will soon feel the effects. Bank of America and Chase are not anomalous. There were just first.