Happy Bank Transfer Day!

[southsider2k5]

So Dick Durbin is the only one who understands basic economics and competition between businesses? Or dick Durbin is the only one who doesn't realize that the entire country has become a bunch of corrupt monopolies where competition no longer has any impact on prices?

 

I would say he is the only one who doesn't considering he is the one who sold this as saving consumers money.

[southsider2k5]

What matters is that it's Dick Durbin's fault that these fees are now nominally transparent and that this is a bad thing (even though the "$5 a month Durbin tax!" idea has already crumbled).

 

The obvious one has gone away, but a lot of other fees have increased to make up for it.

[Y2HH]

What matters is that it's Dick Durbin's fault that these fees are now nominally transparent and that this is a bad thing (even though the "$5 a month Durbin tax!" idea has already crumbled).

 

The idea didn't crumble, I hope you aren't duped THAT easily.

 

The idea was merely put on hold and/or moved elsewhere, to something more easily hidden from the public eye.

 

People have a short memory span, so let me remind you of something. This SAME EXACT thing happened with ATM fees when they originally came around...at first they were free because they were called a convenience to the bank (after all, now they don't have to hire a teller). Shortly after, it was 25 cents, then 50 cents, then 2$/3$/5$, or free depending on which ATM's you happen to use, or "possibly refunded" up to a certain dollar value, etc. There was temporary outrage when these fees first started hitting 1$+, but this public rage quickly waned when peoples attention was diverted elsewhere and suddenly the fees were *quietly* upwards of 3$.

 

This is far far far from over. In the end, they will find a way to make you pay. Either that, or someone in Springfield will say, "Hey, we just saved people 5$ and various other transaction fees from banks, so they obviously have more money...let's create a new tax since they can afford it now!" After all, someone in Springfield (or elsewhere in the government) *WILL* take credit for forcing the banks to back down!

[Balta1701]

But again Y2HH...ATM fees are competitive. If I want to avoid ATM fees, I keep myself at a bank with broad access where I can avoid that fee (I actually do this). I can choose whether or not to pay that fee. If a bank charges me a fee that I judge to be too high for the service, I can use a different method of payment or move to a different bank.

 

A fee that is hidden and mandated by the government is not competitive.

[southsider2k5]

But again Y2HH...ATM fees are competitive. If I want to avoid ATM fees, I keep myself at a bank with broad access where I can avoid that fee (I actually do this). I can choose whether or not to pay that fee. If a bank charges me a fee that I judge to be too high for the service, I can use a different method of payment or move to a different bank.

 

A fee that is hidden and mandated by the government is not competitive.

 

Cash has no hidden fees.

[Balta1701]

Cash has no hidden fees.

If a retailer is being charged $.40 every time a debit card has to be used, and the retailer is legally forbidden from passing that fee along to the debit card user, and I use this retailer and pay with cash, I am paying a higher price for goods because of the swipe fee. I'm actually subsidizing usage of debit cards by paying with cash.

[StrangeSox]

The obvious one has gone away, but a lot of other fees have increased to make up for it.

 

So essentially bank profitability is a one-way ratchet and it is impossible to ever push back against it.

[Y2HH]

But again Y2HH...ATM fees are competitive. If I want to avoid ATM fees, I keep myself at a bank with broad access where I can avoid that fee (I actually do this). I can choose whether or not to pay that fee. If a bank charges me a fee that I judge to be too high for the service, I can use a different method of payment or move to a different bank.

 

A fee that is hidden and mandated by the government is not competitive.

 

You completely missed my point, as it had *nothing* to do with what you just explained.

 

My point was that these new fees they're backing down on will work out the SAME WAY that ATM fees worked out. Yes, you can avoid them -- just like you could have avoided these newly proposed fees. Point is/was, ATM's went from being free to being a way to make money, and despite the public outrage of the fees increasing despite the technology bringing costs DOWN, they raised them anyway and got away with it.

 

Not to mention the newly proposed fee is also "competitive" in that if their competition is not charging it, you have an added incentive to go to them. The market is the competition in this case. If the bank wants to charge 5$ to use a convenience card, and others do not...well...that's called competition. The reason BOA backed down isn't because of the public outrage -- it's because their competition came forward after said outrage and said, "yea, we won't be doing that".

 

Also note, as reported on the news and finance shows today, people removing their money from these banks yesterday actually saved the banks money since on average, it costs a bank about 400$ a year to administer/maintain an account...and if the account is of low value, they don't end up losing just because they lost a low value customer. I don't know for sure, but I'm betting MOST people that left these banks for credit unions are exactly that.

Edited November 7, 2011 by Y2HH

[Balta1701]

You completely missed my point, as it had *nothing* to do with what you just explained.

 

My point was that these new fees they're backing down on will work out the SAME WAY that ATM fees worked out. Yes, you can avoid them -- just like you could have avoided these newly proposed fees. Point is/was, ATM's went from being free to being a way to make money, and despite the public outrage of the fees increasing despite the technology bringing costs DOWN, they raised them anyway and got away with it.

Why shouldn't services provided by a financial institution be a way for the financial institution to make money? I have zero problem with the concept. We don't have a nationalized, not-for-profit banking system in this country and I'm pretty sure I don't want one.

 

If a bank is going to offer products and services that allow them to make money...fine. If they introduce a new or better service and expect that they should make more money because of offering a better service, fine. There is nothing unreasonable about being able to do so.

 

What is unreasonable is to have a government mandated fee amount that is not transparent and is not competitive.

[southsider2k5]

If a retailer is being charged $.40 every time a debit card has to be used, and the retailer is legally forbidden from passing that fee along to the debit card user, and I use this retailer and pay with cash, I am paying a higher price for goods because of the swipe fee. I'm actually subsidizing usage of debit cards by paying with cash.

 

Do you really believe that doesn't happen?

[southsider2k5]

Why shouldn't services provided by a financial institution be a way for the financial institution to make money? I have zero problem with the concept. We don't have a nationalized, not-for-profit banking system in this country and I'm pretty sure I don't want one.

 

If a bank is going to offer products and services that allow them to make money...fine. If they introduce a new or better service and expect that they should make more money because of offering a better service, fine. There is nothing unreasonable about being able to do so.

 

What is unreasonable is to have a government mandated fee amount that is not transparent and is not competitive.

 

Except when the government does it apparently.

[Balta1701]

Do you really believe that doesn't happen?

It happens through higher prices on goods overall.

 

If I walked into the grocery store in late August, before the rule changed, and swiped a debit card versus paying cash, I'd be charged the exact same amount. That means the $.40 per transaction is being absorbed into the cost of doing business, and is thus being spread around to every customer, regardless of payment method.

[Balta1701]

Except when the government does it apparently.

And you'd be outraged if the government had a $.40/swipe tax on these type of transactions. But if the money goes to the financial industry, it's ok.

[southsider2k5]

And you'd be outraged if the government had a $.40/swipe tax on these type of transactions. But if the money goes to the financial industry, it's ok.

 

They have this exact tax on every single trade done in the US, with the exact same rules that apply to the old way of doing business, all of the way down to it being illegal to bill clients for it being an SEC fee.

[Y2HH]

Why shouldn't services provided by a financial institution be a way for the financial institution to make money? I have zero problem with the concept. We don't have a nationalized, not-for-profit banking system in this country and I'm pretty sure I don't want one.

 

If a bank is going to offer products and services that allow them to make money...fine. If they introduce a new or better service and expect that they should make more money because of offering a better service, fine. There is nothing unreasonable about being able to do so.

 

What is unreasonable is to have a government mandated fee amount that is not transparent and is not competitive.

 

It's unreasonable, yes, but not illegal. Thankfully we have a free market where competition can choose to do the exact opposite and become a more attractive offer for our/your business.

[southsider2k5]

It happens through higher prices on goods overall.

 

If I walked into the grocery store in late August, before the rule changed, and swiped a debit card versus paying cash, I'd be charged the exact same amount. That means the $.40 per transaction is being absorbed into the cost of doing business, and is thus being spread around to every customer, regardless of payment method.

 

By that logic, the prices should have dropped to reflect that change. They didn't.

[Y2HH]

By that logic, the prices should have dropped to reflect that change. They didn't.

 

In utopia they did.

 

Just not in reality.

[Balta1701]

They have this exact tax on every single trade done in the US, with the exact same rules that apply to the old way of doing business, all of the way down to it being illegal to bill clients for it being an SEC fee.

Note the difference here.

 

What you've described is much more akin to a sales tax. It is a tax charged, as you describe...on "Every transaction". It is not a subsidy to one type of payment over another. I can't avoid SEC fees by using cash, which you've repeated as a way out of debit card fees repeatedly here.

[Y2HH]

Note the difference here.

 

What you've described is much more akin to a sales tax. It is a tax charged, as you describe...on "Every transaction". It is not a subsidy to one type of payment over another. I can't avoid SEC fees by using cash, which you've repeated as a way out of debit card fees repeatedly here.

 

You can avoid them by not trading.

[Balta1701]

By that logic, the prices should have dropped to reflect that change. They didn't.

Seriously, didn't you teach basic high school economics?

 

The interplay between the cost of doing business, competition, and prices is pretty much the most fundamental part of why a "Market economy" works.

 

Prices are, of course, slightly sticky on the way down, so it takes some time for a price decrease to wind its way through the system, but this is as basic as it gets...cost of doing business, narrow profit margin, profit margin prevented from increasing due to competition.

[southsider2k5]

Seriously, didn't you teach basic high school economics?

 

The interplay between the cost of doing business, competition, and prices is pretty much the most fundamental part of why a "Market economy" works.

 

Prices are, of course, slightly sticky on the way down, so it takes some time for a price decrease to wind its way through the system, but this is as basic as it gets...cost of doing business, narrow profit margin, profit margin prevented from increasing due to competition.

 

It was the opposite actually. The merchants are just pocketing the extra profits. Consumers are paying more in the end.

[southsider2k5]

Note the difference here.

 

What you've described is much more akin to a sales tax. It is a tax charged, as you describe...on "Every transaction". It is not a subsidy to one type of payment over another. I can't avoid SEC fees by using cash, which you've repeated as a way out of debit card fees repeatedly here.

 

Not really no. Everyone is touched by the SEC in one form or another by your logic.

[Balta1701]

It was the opposite actually. The merchants are just pocketing the extra profits. Consumers are paying more in the end.

And of course, unless we're in a full and organized monopoly in every industry, a competitor will realize there is market share to be gained with a slight reduction in prices, which will undercut another competitor and cause them to lower their prices slightly, until a new price-equilibrium is established reflecting the new, slightly decreased cost of doing business.

 

 

[Y2HH]

And of course, unless we're in a full and organized monopoly in every industry, a competitor will realize there is market share to be gained with a slight reduction in prices, which will undercut another competitor and cause them to lower their prices slightly, until a new price-equilibrium is established reflecting the new, slightly decreased cost of doing business.

 

While that works in a perfect world, Jewel, Dominick's and Whole Foods say hi. They do the exact opposite, and drive prices up...somehow.

[southsider2k5]

And of course, unless we're in a full and organized monopoly in every industry, a competitor will realize there is market share to be gained with a slight reduction in prices, which will undercut another competitor and cause them to lower their prices slightly, until a new price-equilibrium is established reflecting the new, slightly decreased cost of doing business.

 

Price changes should have happened. They didn't, just like was said. The economic conditions didn't change during this process. Durbin just lied to everyone so he could pass profits to one group over another, and in the end, he is costing consumers more money in the middle of a recession. Which is exactly what he was told would happen.