Banks to Mimic Bank of America With New Fees
By Charles Mead – Oct 17, 2011 11:09 PM GMT+0100
U.S. banks likely will charge customers more fees as the lenders seek to recoup revenue sapped by new U.S. rules, said Paul Miller of FBR Capital Markets Corp.
Banks may levy added fees and cut expenses as regulations erode former sources of “really strong fee revenues,” such as overdraft charges, Miller said today in an interview with Pimm Fox and Courtney Donohoe on Bloomberg Radio’s “Taking Stock.”
Bank of America Corp. (BAC) and Wells Fargo & Co. (WFC) are among lenders that have announced plans to charge customers for using debit cards after the Federal Reserve, acting on a mandate of the Dodd-Frank Act, capped the so-called swipe fees charged to merchants. The caps may trim annual revenue at the biggest U.S. banks by $8 billion, data compiled by Bloomberg Government show.
“Banks will try to do something to recuperate some of those fees,” said Miller, a former examiner with the Federal Reserve Bank of Philadelphia. “They won’t recuperate all of them, but they’ll try to get some of them back.”
Bank of America’s plan to charge customers $5 a month sparked objections from critics including President Barack Obama, and five U.S. House Democrats asked Attorney General Eric Holder on Oct. 13 to investigate whether banks and their trade groups colluded on decisions to impose new fees. San Francisco- based Wells Fargo ended all debit-reward programs and is testing a $3 monthly fee in some markets.
“Those debit cards now are not that profitable unless they’re able to collect some of those fees back from consumers,” Miller said.