Bank of America Botches Debit Card Fee
Like pretty much everything that has happened on Wall Street since the 2008 crisis, Bank of America (BAC) never saw it coming.
The bank never realized that its proposal to charge customers a monthly fee of $5 for debit card purchases would result in a nationwide backlash and spark an anti-big bank movement that put BofA's hapless management at the center of the protest.
All the bank was trying to do, as CEO Brian Moynihan put it, was try to make a profit. "I have an inherent duty as a CEO of a publicly owned company to get a return for my shareholders," he told CNBC's Larry Kudlow. If the Durbin Amendment, which reduced the fees that banks can charge merchants for processing debit card transactions, was going to cost it $2 billion in revenue annually, it had to find a way to recoup some of it.The company probably figured that, at worst, customers would just switch to cash and stop using debit cards. Maybe the move would even push customers toward credit cards, which are more lucrative for banks. But Bank of America clearly underestimated the pent-up frustration that was building in customers who were fed up with the bailouts and wrongful home foreclosures. The fact that big banks were playing hard ball on debit fees after they took a taxpayer handout also didn't help. The $5 fee was the last straw.
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