Fresh off collecting a federal gov­ernment bailout because they were too big to fail, the nation’s biggest banks now are out to prove they are too big to regulate. Leading the charge is Bank of America, which responded to new limits on debit card swipe fees by an­nouncing it will charge its debit card users $5 a month.

Fresh off collecting a federal gov­ernment bailout because they were too big to fail, the nation’s biggest banks now are out to prove they are too big to regulate. Leading the charge is Bank of America, which responded to new limits on debit card swipe fees by an­nouncing it will charge its debit card users $5 a month.


Let’s put this in perspective. Before Oct. 1, when the reforms in the Dodd- Frank Act went into effect, the average fee charged to a retailer on each debit card transaction was 44 cents. Under the new rules, the maxi­mum is 24 cents — which is far more than the 12 cents the Federal Reserve originally had advocated.


According to the Federal Reserve, it costs banks 4 cents to process each card transaction. So before Oct. 1, they made a 1,000 percent profit per transaction. Now they will make about 500 percent. But that is not enough for Bank of America (and other big banks that are testing similar fees), thus the $5 monthly fee for granting its customers the privilege of access­ing their own money.


Response to BOA’s move is divided into two camps. One says it illustrates the futility of the Dodd-Frank Act; that government can’t regulate these kinds of fees because banks simply will impose other fees on their customers. The other says it’s about time the biggest banks — those whose investment banking as­pirations have eclipsed any sense of obligation to account holders — are called out on their ever-growing menus of largely hidden service fees.


Put us in the latter camp.


“This fee is an outrageous burden on consumers,” Sen. Dick Durbin, who sponsored the Dodd-Frank bill, told The State Journal-Register. “This makes a hidden fee very visible to con­sumers, and it also says to the banks that the overcharging of retailers across the United States has to end.”


It also gives consumers the chance to, as Durbin and many consumer advocates have urged, “vote with their feet” by taking their business elsewhere.


As State Journal- Register business editor Tim Landis reported last week, many community banks see opportu­nity in the big banks’ adding of new fees in the post Dodd- Frank era.


There was a time in America when banks made their money by making loans. To do this, they needed to cul­tivate bases of loyal customers who put their money in the bank. They did that by being customer- friendly — offering free services like checking or even giving away premiums for opening new accounts.


That changed for the biggest banks in 1999, when the Depression-era Glass-Stegall Act was repealed and allowed traditional banks to become investment banks as well. Compared to the sums that could be made rolling the dice on Wall Street, sav­ings accounts were a nuisance.


That attitude worked for the big banks, which grew bigger and bigger until about 2007. By then, they had become too big to fail, thanks in large part to innovations like credit default swaps that their own financial ge­niuses had invented.


Sorry, BOA and others. We saw the result of too little regulation. We’ll take our chances on this new ap­proach. At least this lets ordinary de­positors see the ways that the biggest banks treat them as liabilities to their bottom lines.


The State Journal-Register