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Obama backs off debit card fee complaint

It’ll be left to Bank of America customers to fight $5-per-month cost, says White House spokesman

- The Washington Times - Wednesday, October 5, 2011

Only two days after President Obama suggested the government could stop Bank of America from charging customers a $5 debit card fee, his spokesman said Wednesday the administration has no such plans to fight the fee.

"It's up to the companies to decide what approach they want to take," said White House press secretary Jay Carney. "And customers — the markets — react accordingly."

In an online interview Monday, Mr. Obama reacted angrily to Bank of America's plan to charge customers a $5-per-month service fee for debit cards.

"This is exactly why we need this Consumer [Financial] Protection Bureau that we set up that is ready to go," Mr. Obama said. "This is exactly why we need somebody whose sole job is to prevent this kind of stuff from happening ... You can stop it because if you say to 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. That you have to treat them fairly and transparently.' "

But Mr. Carney said the president has no intention of fighting the bank fee.

"I'm not sure he said that," the press secretary said. "He can, or anybody can, express an opinion that they think it's excessive or unfair."

The president has something of a love-hate relationship with big banks. He pushed for greater regulation of the industry after the Wall Street collapse, resulting in the Dodd-Frank law that imposed new rules on everything from investment transparency to swipe-card fees.

But Mr. Obama also is relying heavily on campaign donations from the industry for his re-election. Almost half of the cash raised by his big-money bundlers, $11.8 million, has come from banking and securities interests, according to the nonpartisan Center for Responsive Politics.

And the 2012 Democratic National Convention will be held in Charlotte, N.C., a major center of banking.

In an interview with The Washington Times this week, American Bankers Association President and CEO Frank Keating said the new rule limiting swipe-card fees is part of a pattern of regulatory overreach since the passage of Mr. Obama's far-reaching financial reform law that threatens the health of the banking industry and limits options for consumers.

"What the Congress did by price-fixing was make a decision that was not theirs to make," Mr. Keating said.

The president's spokesman said Mr. Obama's central point in the interview with ABC was that nothing in the new law compels banks to charge higher fees.

"How banks decide to deal with the overall legislation is up to them," Mr. Carney said.

But Mr. Keating and others in the industry say the new regulations have cost banks $7 billion in lost revenue.

Regulations will take effect Saturday to cap the fees that banks can charge stores for debit-card purchases. The Senate is expected to vote on Mr. Obama's nominee to lead the Consumer Financial Protection Bureau, Richard Cordray, this week; many Republican lawmakers fought the creation of the agency, arguing it will have too much unchecked power.

The president's comments about the bank fees came as activists in New York and other cities are protesting against Wall Street and banks.

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