Obama: BofA Debit Fee Shows Need For Strong Consumer Watchdog
First Published Tuesday, 4th October 2011 04:47 am - © 2011 Dow Jones
By Jared A. Favole
of Dow Jones NEWSWIRES
WASHINGTON -(Dow Jones)- President Barack Obama on Monday pointed to Bank of America Corp.'s (BAC) decision to charge some of its customers a $5 monthly fee for debit-card purchases as an example of why the U.S. needs a strong consumer watchdog.
Obama, in an interview with ABC's George Stephanopoulos, also suggested that there are ways the federal government could crack down on fees in cases in which banks are treating consumers unfairly. "You can stop it," he said, adding that the government can tell 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."
Still, he said his hope is that banks discover on their own that raising fees is not a good business practice.
While Obama likely wouldn't be personally affected by Bank of America's debit-purchase fee, such fees from other banks could reach him. According to his financial disclosure forms, President Obama has checking accounts with Chicago-based Northern Trust Corp. (NTRS) and J.P. Morgan Chase & Co. (JPM). J.P. Morgan has begun testing a $3 fees on debit cards in some regions.
Obama's comments come as activists in New York and other U.S. cities hold anti-Wall Street protests and voice outrage at banks for increasing fees on various services. The president has had a rocky relationship with the business world, particularly the financial industry and Wall Street.
Obama said the debit-purchase fees are "exactly why we need somebody whose sole job it is to prevent this kind of stuff from happening." Bank of America's decision to charge the fees sparked outrage last week, although other banks have also begun charging debit-purchase fees.
Obama's nominee to head the Consumer Financial Protection Bureau, Richard Cordray, is expected to face a confirmation vote this week. If confirmed, he'll be heading an agency that has come under fierce criticism from Republicans and other groups that argue the bureau will have too much power and will limit credit availability.
Obama said banks need to treat their customers fairly and transparently. He also had some advice for banks: "Banks can make money, they can succeed, the old-fashioned way--by earning it," Obama said, "By lending to small businesses, by lending to consumers, by making sure that, you know, we are building the economy together."
Obama wasn't alone in criticizing Bank of America's decision. Sen. Dick Durbin (D., Ill.) on Monday blasted the company's decision. "What Bank of America has done is an outrage," he said on the Senate floor. "They went overboard."
-By Jared A. Favole, Dow Jones Newswires; 202-862-9256; email@example.com
--Maya Jackson Randall contributed to this article.