There are at least two ways to look at Bank of America's (
that it will now charge $5 per month to any customers who use debit
cards for their intended purpose - making purchases. The bank is
either desperate...or supremely confident.
of offering a debit card have changed," a Bank of America
spokeswoman said on Thursday, according to
These changing economics presumably involve the new regulatory
environment that banks are dealing with in the wake of the
Dodd-Frank financial reform act. In particular, they'll struggle
with the Durbin amendment, which caps some - but not all - of the
fees banks can levy.
In a move that should surprise no one, the banks have decided that
if they can't soak the consumer directly (by levying fees on
merchants which are then passed on in the price of goods and
services) they'll just go straight for their customers' wallets.
Bank of America is not a particularly happy
institution - its
value is down nearly 55 percent since the start of the year, and it
faces signfiicant legal and financial challenges, from the
robo-signing scandal to potentially devastating lawsuits from major
investors who claim they were sold a bill of goods when it came to
However, it's still the largest bank in the U.S. by assets. A
pointed out that smaller
are taking this opportunity to highlight their own, lower-fee
offerings - but still mentioned that JPMorgan Chase (
) and Wells Fargo (
) are piloting similar programs.
The bank clearly has to do something to stem falling profits and
reassure investors, and it may be betting that its massive customer
base will not get around to moving their assets into smaller, more
consumer-friendly local banks and
Bank of America's increasingly toxic public image will present
further challenges. While Goldman Sachs and JPMorgan exemplify the
investment banking side of the financial crisis, Bank of America -
which owns Merrill Lynch - is the personal face of the banking
industry for millions of students, homeowners and workers, charging
ATM fees, collecting mortgages and foreclosing on millions of
homes. That's part of the reason why hundreds of protesters
gathered on the company's downtown Boston,
doorstep in a protest led by
Right to the City
, chanting "Bank of America - Bad for America" and "You got bailed
out - we got sold out!"
Seven demonstrators were arrested for trespassing at the apparently
orderly demonstration, a Boston Police officer stated. However,
editor Adam Gaffin
that 20 participants were arrested, all of whom were designated for
Bank of America
fell over 3.5 percent in trading today.