A statement made by President Obama in an interview on ABC News has led to a public exchange between the President and the American Bankers Association, highlighting the growing distance between the White House and Wall Street.
On Monday night, ABC’s George Stephanopolous interviewed the President in the Blue Room of the White House, and discussed topics ranging from Obama’s reelection prospects, to counterterrorism, to his 19th anniversary with First Lady Michelle. What caught people’s eye, though, were Obama’s comments on Bank of America®’s (NYSE:BAC) $5 monthly debit card fees.
From ABC’s transcript:
GEORGE STEPHANOPOULOS: Can you stop this service charge?
PRESIDENT OBAMA: Well, you can stop it because…if you say to the banks, “You don’t have some inherent right just to– you know, get a certain amount of profit. If your customers– are being mistreated. That you have to treat them fairly and transparently.” And– and my hope is is that you’re going to see a bunch of– the banks, who say to themselves, “You know what? This is actually not good business practice.” Banks can make money. They can succeed, the old-fashioned way, by earning it. By lending to small businesses. By lending to consumers. By making sure that– you know, we are building the economy together.
President of the American Bankers Association, Frank Keating, fired back today writing, “It’s disappointing and puzzling that the President would attack a private corporation for responding to government price fixing that has fundamentally altered the economics of offering a debit card.” Keating is of course referring the the Durbin Amendment to the Dodd-Frank financial reform bill. The amendment was introduced by Senator Dick Durbin (D-IL).
The President’s comments upset some observers — specifically Wall Street Journal commenters — who think that Obama is suggesting that the Consumer Financial Protection Bureau might step in an stop Bank of America® from charging a monthly fee for using their debit cards instead of letting consumers decide for themselves whether $60 a year is worth the convenience of a debit card service that is free at other banks that might offer better rates on deposits.
But that’s not what the President said. Reading his comments carefully, he’s making the case the regulation like the Dodd-Frank bill forces banks into being more forthcoming about their fees, and that banks can find out for themselves what the true costs of charging fees for typically free services like debit cards actually is. Obama is making the case that regulation preventing banks from making their profits off of proprietary trading and charging overdraft fees will make banks work better for the economy because they will have to focus on doing actual banking.
As for Keating’s remarks, it also seems that Obama was not attacking the bank, but suggesting that, now that they have been forced to make their fee structure more transparent, they will have to deal with the repercussions. If Bank of America® needs to levy fees on checking customers to stay afloat — bad news for them.