Rakim Brooks

Consumers expressed outrage when Bank of America announced that it would begin charging $5 per month for debit card use. Good for them. Working families are strapped. Median incomes are declining, food prices are rising, and the labor market is stagnant. Five dollars per month means a lot to Americans these days, especially the 45 million Americans who now rely on food stamps to make ends meet. But I hope the outcry is even greater when the word spreads that the Consumer Financial Protection Bureau knew about BoA’s plans and did nothing to stop it.

According to recent reports, the BoA officials who met with the CFPB to discuss the plan brazenly admitted that this is the financial industry’s response to the Dodd Frank Act. BoA, which is the largest US financial institution, has publicly claimed to be under siege. Its credit rating has been cut, stock prices have suffered, and lawsuits are being filed against them at a dizzying pace. Add to that the Durbin Amendment of the Dodd Frank Act, which limited the amount banks could charge merchants, and BoA spokespersons claim they are like a turtle on its back: just looking for a hand up.

No wonder BoA has an image problem. This “embattled institution” participated directly in the mortgage crisis but still received $45 billion through TARP and, as of August 2011, has received another $500 million from Fannie Mae to offset the losses associated with their toxic mortgage portfolio. All the same, the fees keep coming. That is unless you have at least $20,000 banked, a small business, a BoA mortgage, or accounts linked to the Merrill Lynch brokerage. After all that America has done for this bank, BoA still doesn’t treat ordinary citizens as valued customers.

This is what class warfare really looks like, betrayals of public trust, accompanied by maddening distortions. This transaction fee is neither Senator Durbin’s fault, nor is it a legitimate response from the financial sector. The Durbin Amendment, contrary to industry and GOP commentary, was a wise piece of legislation. Prior to its enactment, merchants were charged roughly 400 percent the cost of processing a debit card transaction. That equaled, on average, 44 cents per transaction. Senator Durbin’s amendment capped those fees at 24 cents, a figure that was determined by the Federal Reserve. This move is expected to reduce bank profits by $6-10 billion, with BoA absorbing $2 billion of those losses. But note that banks are still able to charge merchants more than 215 percent of the transaction cost. While that rate is still exorbitant – more than most loan sharks charge – it’s at least fairer than it was previously.

There is also a good economic rationale for the Durbin Amendment. Cutting transaction fees, just like the payroll tax cuts favored by the GOP before Obama proposed them, will save businesses money and give them more capital to invest in hiring and growing. Additionally, lowering the average cost of transactions makes processing debit cards more attractive to other businesses that have not yet made the transition from cash only to plastic. Debit cards, like ATM machines, make transactions more efficient and thus improve the quality of businesses. All in all, the Durbin Amendment is not only a smart financial regulation but it actually should have promoted economic growth, even if it does hurt BoA’s profits.

Yet, BoA, and the other major banks – JP Morgan, Citibank, Wells Fargo & Co – that have or intend to experiment with debit card fees are too self-centered to recognize levelheaded reform. Prior to the recession, BoA boasted $21 billion in profits. Today, the financial giant is in a panic, having reported a $2 billion annual loss in 2010. Looking for some way to steady themselves quickly, BoA intends to fire 30,000 workers and raise more fees on consumers.

The message to America’s working families: We are going to gouge the little guy because Dodd Frank won’t let us gouge merchants anymore. That’s the way things work around here. You put even an inch between us and our profit and we’ll tighten the vice on working Americans.

Sadly, strategies like these work. Hours after announcing the debit card fee, BoA stock price rose 3 percent and somewhere the millionaires were heard saying “Amen.” This is exactly the kind of corporate greed that Occupy Wall Street has been trying to confront every day in Zuccotti Park. “Banks got bailed out, we got sold out.”

Many of us had hoped that the CFPB would be an ally in this fight and maybe they still can be. But their first shot went center right. They affirmed the bank’s entitlement to do anything that is not explicitly against the law rather than upholding standards that protect average Americans. Seven House Democrats are now demanding that the Justice Department investigate whether the big banks are effectively organizing to raise consumer fees in violation of anti-trust laws. Whatever comes of this demand, hopefully the CFPB will stand firm with the lawmakers in defense of the working class, many of whom are marching as we speak.