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Banking industry

Congress Calls for Investigation into Bank Fee Coordination

Strategic Insights

— 1 min read

As American consumers and businesses face increasing debit card fees, Vermont Representative Peter Welch and House colleagues have called on Attorney General Eric Holder to investigate whether big banks are coordinating their fee strategies in violation of federal anti-trust laws. The lawmakers pointed out public statements by banks and banking associations that suggest possible efforts to coordinate fee increases. The issue has sparked widespread outrage, particularly in light of new debit card fees announced by Bank of America and other big banks.

Key Takeaways:

  • A total of four major banks (Bank of America, J.P. Morgan Chase, Wells Fargo, and three other banks) have recently announced plans to charge new debit card fees, with some banks proposing monthly fees of up to $5.00.
  • Bank officials and associations have made statements suggesting possible coordination on fee increases, including a Texas Bankers Association email urging members to regroup and consider new ways to charge customers, such as monthly fees or prepaid cards.
  • The lawmakers are concerned that these statements may indicate a level of coordination among banks and associations, which could raise antitrust issues.
  • American consumers and businesses pay the highest swipe fees in the world, with Visa and Master Card charging an estimated $50 billion each year in swipe fees.
  • Newly released figures show that American businesses have seen swipe fees rise faster than any other expense in the last decade, growing even faster than health care costs.

Statistics:

  • Estimated annual swipe fees in the US: $50 billion
  • Number of major banks announcing new debit card fees: 4
  • Proposed monthly fees: up to $5.00
  • Percentage increase in swipe fees for American businesses over the past decade: significantly higher than any other expense

Sources:

  • "Letter to Attorney General Eric Holder" by Peter Welch et al. (Exact quote and reference: May 26, 2011 http://www.washingtontimes.com/news/2011/may/26/washington-declares-war-on-your-debit-card/)
  • "Texas Bankers Association Email to Members" (Attached to letter to Attorney General Eric Holder) (Exact quote and reference: June 8, 2011, Texas Bankers Association)
  • "TMCNet, May 8, 2011 (available at http://business-video.tmcnet.com/news/2011/05/08/5494967.htm)"
  • "Center for Public Integrity, May 4, 2011 (available at http://www.minyanville.com/businessmarkets/articles/credit-card-companies-debit-cards-interchange/5/4/2011/id/34339)"

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