Congressional Democrats Call for Investigation into Bank Fee Practices

Strategic Insights -

Congressional Democrats are urging the US Attorney General to investigate whether banks have engaged in anti-competitive practices, including "price signaling," a tacit agreement not to compete on fees charged to consumers. The move comes after Bank of America announced it would raise its monthly debit card fee to $5, prompting concerns that other banks may follow suit. The investigation is aimed at determining whether the banks' actions constitute a violation of federal antitrust laws.

Key Takeaways:

  • Rep. Peter Welch of Vermont has sent a letter to Attorney General Eric Holder urging an investigation into whether banks have engaged in price signaling, a tacit agreement not to compete on fees.
  • The investigation centers on the swipe-fee practices of Bank of America, JPMorgan Chase, Citigroup, and Wells Fargo, which control a substantial share of the consumer banking market.
  • Welch claims Americans pay the highest swipe fees in the world and that these fees represent "the big bank model that is all too much now a fee-driven shakedown of consumers."
  • Rep. Keith Ellison notes that an investigation, regardless of its outcome, could discourage banks from taking advantage of customers and encourage better behavior.
  • The petition drive against Bank of America, led by Molly Katchpole, has gathered over 200,000 signatures and prompted Bank of America to claim it is responsive to customer feedback.
  • Rep. Brad Miller is considering legislation to make it easier for people to switch banks by addressing issues with direct-deposit paychecks and automated bill paying.

Statistics:

  • The four banks under investigation (Bank of America, JPMorgan Chase, Citigroup, and Wells Fargo) control over 50% of the consumer banking market (Welch's estimate).
  • Americans pay the highest swipe fees in the world, potentially representing a "fee-driven shakedown of consumers" (Welch).
  • The petition drive against Bank of America has gathered over 200,000 signatures (CNN).
  • Over 20 years, the number of banks in the US has dwindled due to mergers and consolidations, leaving a smaller number of large institutions (Welch's chart).

Sources:

  • Welch, P. (Interview with CNN). (Unspecified date).
  • CNN. (Interview with Ellison, K.). (Unspecified date).
  • CNN. (Interview with Miller, B.). (Unspecified date).
  • CNN. (Article regarding Molly Katchpole's petition drive against Bank of America). (Unspecified date).
  • Welch, P. (Letter to Attorney General Eric Holder). (Unspecified date).