Banks should accept a lower profit so their customers won’t have to pay for debit cards, President Barack Obama told an ABC reporter today, when asked about Bank of America’s decision to charge its customers $5 per month for use of its debit cards.
Before Obama’s interview, the bank was already facing financial difficulties. Bank of America’s stock was trading at $10 per share in mid-July. Today, as the president joined Democratic politicians in complaining about the bank’s decision, its stock fell from $6.10 per share this morning to $5.60 by the end of the interview.
That’s a drop of 50 cents per share, or roughly 8 percent.
If the bank recovers only half of that drop, today’s political push-back could be blamed for wiping out more than $2 billion in shareholder value. It will also have sliced roughly $250 million from a $5 billion investment made in late August by Obama’s political ally, Warren Buffett.
The bank’s decision to charge customers for its services “is exactly why we need somebody whose sole job it is to prevent this kind of stuff from happening,” he told ABC’s George Stephanopoulos. “If you say to banks, ‘You don’t have some inherent right to get a certain amount of profit if your customers are being mistreated, that you have you have to treat them fairly and transparently,” then some will hopefully get the message, he said.
Obama used the question about the Bank of America’s decision to charge $5 for the use of its debit cards to champion extended government oversight of the banking industry, adding, “Without those kinds of protections, we’re going to continue to see these kinds of problems.” He also called for the Senate to confirm Richard Cordray, a former Ohio attorney general, to head the Consumer Financial Protection Bureau.
“Banks can make money — they can succeed the old-fashioned way — by earning it by lending to small business and by lending to consumers, by making sure we are building the economy together,” said Obama, who worked for non-profit groups in Chicago before being elected to the U.S. Senate.
Leading Democrat Sen. Dick Durbin of Illinois said Monday the Bank of America’s action is an “outrage.”
“Bank of America customers, vote with your feet. Get the heck out of that bank. Find yourself a bank or credit union that won’t gouge you for $5 a month and still will give you a debit card that you can use every single day,” he declared in a floor speech.
The bank levied the monthly $5 charge after Durbin led a successful effort to enact legislation that curbed banks’ ability to levy debit-card charges on retailers. Once those curbs came into force, the financially strapped bank shifted the levy from retailers’ prices over to customers’ monthly accounts, prompting the political complaints.
Obama also used the ABC interview to boost his $447 billion one-year spending bill to boost employment. “Unemployment is still way too high,” he said, adding, “That’s why it is so important for us to take every action we can take to put people back to work.”