A Choice In Banks

Floor Speech

Mr. DURBIN. Madam President, yesterday, incidentally, I spoke about Bank of America's decision to impose a $5 fee on their loyal customers who have debit cards. Bank of America announced that this fee had to be collected because they were going to be restrained in the amount of swipe fees they could charge for people who use debit cards.

Those who follow this issue know the Federal Reserve took a look at this. Every time we use a piece of plastic to pay for something--as a debit card--there is a charge imposed on the retailer--the restaurant, the bookstore, the grocery store, you name it. There is a charge imposed. So we asked the Federal Reserve to take a look at that charge that is being imposed by the credit card companies through the banks, and here is what they found. The actual cost of a bank and Visa or MasterCard processing a debit card transaction is anywhere from 4 cents to 12 cents. Remember when they used to process checks for pennies no matter what the face value was? Well, the actual cost of the debit card--the new checking account, the plastic checking account--is 4 cents to 12 cents a transaction.

Then the Federal Reserve Board said: What are they actually charging the retailers? Madam President, 44 cents is the average charge by the banks and credit card companies for the use of the debit card--more than 10 times the 4-cent rate or more than 6 times the 7-cent rate the Federal Reserve said is the reasonable cost of a debit card transaction--a 600-percent profit they are taking right out of every transaction.

Of course, it means the grocery store, the retailer has to charge more. Imagine someone comes in and gets the special--a cup of coffee and a doughnut at the Rock Island Country Market, which I visited during the break, a 99-cent special. They use their debit card to pay for it. The

Country Market is now going to be charged 44 cents for a 99-cent transaction.

So it changed. The world changed last Saturday. The new law went into effect, capping for the largest banks in America the debit card swipe fee at about 24 cents, splitting the difference. Still these banks are doing quite well. The actual cost of the transaction is 4 cents, 7 cents, 12 cents, and they are going to get 24 cents. Well, you would think they could live with a 100-percent profit on what they are doing. No way. Bank of America said to their loyal customers: Sorry, but because we cannot make as much off the retailers, we are going to nail our customers with a $5 monthly fee for the debit cards.

Yesterday, I sent a letter to the CEO of Bank of America, Mr. Moynihan. I said to Mr. Moynihan: I have just done the math here, and if your customers pay $60 a year for their debit cards, you are going to collect more money from your customers than you could possibly have lost because of this change in the law. You are overcharging your customers. It is not fair, and I want you to defend it. Let's see if he does, not just for me but for the people who bank at Bank of America and have debit cards there.

You see, what happened last Saturday is not just a change when it comes to debit card swipe fees. I think what happened last Saturday with this new law is empowering customers and retailers across America.

Now, incidentally, Chase bank, Wells Fargo, and Bank of America have all talked about imposing this debit card fee. If they decide they want to penalize their customers and nail them $5 a month or $3 a month, that is their decision. But I hope what happens next is that bank customers across America realize they have the right to change their banks, to move to banks that are not going to nail them with these fees that are driven by greed.

There is good news. There are thousands of banks across America for people to choose from and thousands of credit unions, and most of them--or many of them, I should say--have already stated publicly they are not going to join in with Bank of America in nailing their loyal customers with a debit card fee.

The Press Democrat newspaper in Santa Rosa, CA, on Friday carried an article saying, ``Local banks say no to debit card fees.'' The article lists a number of local banks and credit unions that said they would not copy Bank of America's strategy. The article quotes Tom Duryea, CEO of Summit State Bank. He said:

It's just not something we want to do to our customers. I am not going to nickel-and-dime people over $5.

Now, that is a man speaking for a bank that I think has a future--a bank that realizes if you treat your loyal customers right, they are going to stay loyal. But if Bank of America has their way and nails their loyal customers with a $5 monthly fee, I hope some of their customers will think twice about doing business there.

Washington Federal is a regional bank in Washington State. Its spokesperson, Cathy Cooper, was quoted in the Oregonian newspaper saying:

We have absolutely no plans to impose a debit card fee.

On Saturday, the Salisbury Post in Salisbury, NC, ran an article titled: ``Bank of America move doesn't prompt local banks to charge debit card users.''

It quotes Bruce Jones, CEO of the Community Bank of Rowan, saying that his bank will start running ads touting its lack of fees: ``We're really going to promote that,'' Jones said, ``That's such a good piece of business.''

The Pennsylvania Credit Union Association put out a statement yesterday and said this on behalf of its 500 credit union members:

Study after study has shown that credit unions overall offer lower fees and better savings rates. The mission of a credit union is to serve its members and not Wall Street.

That is a welcome mentality.

There have even been some large banks that acknowledged the need to treat their customers fairly.

USAA, for example, is a financial institution that serves military personnel and their families. USAA has announced it will not charge consumer debit fees, or checking account fees either.

And the giant Citibank has heavily promoted its position on the issue: Citibank will not charge its customers debit fees.

It is a smart move for these banks and credit unions to treat their customers well when it comes to debit cards. Customers are ready to shop around if they don't.

Across the United States more and more banks and credit unions are making it clear they are not going to nail their customers with a debit card fee.

Now is the time for bank customers across America to say enough is enough. If you do not value me as a customer enough not to charge me a new $5 monthly fee just for trying to access my own checking account, my own bank account at your bank, I am going to do my business elsewhere. I think that is an important thing to do.

Of course, we need to stay vigilant to make sure America's consumers have good, honest information about how banks are treating them. I will be meeting later this week with the Acting Director of the Consumer Financial Protection Bureau, Raj Date. We will be talking about how to ensure customers know what their rights are when it comes to banking services.

Let me tell you, there are Republicans who hate this agency the way the devil hates holy water. The notion that the customers of America would finally have a voice in Washington keeping an eye on the activities of financial institutions scares the living heck out of some Members of Congress. But many of us believe that the scales have been tipped for too long on the other side, that many consumers are, frankly, at the mercy of these financial institutions and could use an advocate who stands up every once in a while and fights for them.

Holly Petraeus is the wife of General Petraeus, who is now heading up our CIA. She and her husband have certainly given great service to this country. I met with her just a few weeks ago, and she talked about the exploitation of men and women in uniform serving our country by many financial institutions--predatory lending and awful practices. Many of these practices, incidentally, lead to these servicemembers having to take an early discharge from service because they are so deeply in debt. I think that is a scandal, and I am glad Mrs. Petraeus has spoken out on it. She is using this agency, the Consumer Financial Protection Bureau, to come to the assistance and protection of our men and women in uniform. That is a legitimate use of their responsibility. And for those who want to do away with the Bureau, let them explain, if they can, why they think our veterans and our servicemembers do not deserve this kind of protection.

I want to see the Consumer Financial Protection Bureau up and running. I think it is about time we had some advocacy group standing up for men and women in uniform and consumers and retailers across America. I hope we can soon confirm the nominee for the head of that Bureau, Richard Cordray. I have met Mr. Cordray, and he is going to be a smart, effective watchdog for America's consumers. As I said, there are some--particularly on the other side of the aisle--who hate the notion that there would be such an advocate and such a counsel available for consumers. But I think American consumers and families at least deserve to have someone speaking out when they are about to be exploited.

The keys to a well-functioning market are competition, transparency, and choice. When these conditions are present, consumers have a fighting chance and they can thrive. So can small banks and credit unions. I am going to keep standing up for these basic principles. I believe competition and transparency are critical for a free market economy to operate in a just and fair way. It is the right thing to do.

Madam President, I yield the floor.

The ACTING PRESIDENT pro tempore. The Senator from Colorado.

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