Like most, if not all Americans, I was shocked by the news that Bank of America, or BofA, has decided to assess a $5 fee for every time most BofA customers utilize one of its debit cards. Regardless of whether a particular client uses the card once or fifty times in any given month, the monthly charge is still going to be $5. Those who are fortunate enough to be able to consistently carry over a balance of $20,000 or more with BofA and/or have their home mortgage with the bank will be exempt from these fees.
It is safe to say, in my view, that Bank of America's controversial measure is in response to legislation stemming from the the Dodd-Frank Wall Street Reform and Consumer Protection Act. As of Saturday, October 1, that now limits the amount of charges banks with $10 billion or more in assets will be able to collect from businesses.
Bank Of America's "Troubled" Past
Although Bank of America is certainly not the first bank to implement such egregious fees, it is, unfairly or not, receiving sharp and widespread rebuke due to the fact that it was the recipient of $45 billion in bailout money through the federal government's Troubled Asset Relief Program, or TARP. Furthermore, BofA recently announced that it was going to be laying off roughly 30,000 employees in order to significantly cut costs, which are mounting in large part because of a plunging stock price and uncertainty over its mushrooming portfolio of troubled assets.
What is particularly galling to me is that Bank of America continues to be a major sponsor of Major League Baseball, as was evident during television coverage of the National League Division Series game between the St. Louis Cardinals and Philadelphia Phillies on October 2. BofA not only sponsors major MLB events, it also monetarily supports individual clubs, including the New York Yankees, Los Angeles Dodgers, and Boston Red Sox.
TARP Recipients And Corporate Sponsorships
Besides, it has what is dubbed on its corporate website as "exclusive sponsorships" with other professional sports entities, such as the Dallas Cowboys and New England Patriots of the National Football League, as well as being a "proud" sponsor of NASCAR motorsport events. I couldn't help but believe that BofA has been waging a sort of "charm offensive," with an unconditional assist from MLB as an attempt to assuage millions of acutely disgruntled American consumers.
That Bank of America is levying such a fee on its loyal consumers (in light of the fact that it accepted such enormous sums of money from the U.S. Treasury because it apparently approved of and invested in really lousy mortgage and other loan products) is an insult to all hard-working, tax-paying Americans.
Whether other larger banks take a similar path will depend on how much backlash Bank of America incurs and the success of its guaranteed-to-be extensive public relations campaign. Other giant banks like Chase and Wells Fargo are "testing" $3 usage fees in select markets but appear hesitant to fully implement them. If BofA can weather this storm (and it most likely will with help from lax federal regulations and agreeable politicians) these other banks will assuredly follow suit, and in short order.
Sources
- Los Angeles Times. (2011). Bank of Amercia to charge $5 monthly fee for debit card purchases. Retrieved October 2, 2011.
- (2010). Brief Summary of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
- (2011). Bank of America/Sponsorships
- Sorkin, A.R. (2009). Bank of America May Receive More Bailout Money. Retrieved October 2, 2011.
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