For want of a nail the shoe was lost; for want of a shoe the horse was lost; for want of a horse the rider was lost; for want of a rider the battle was lost; for want of a battle the kingdom was lost.
Is it possible after all the trouble Bank of America has found themselves in, the final nail in their coffin will be a $5 per month debit card fee?
When Bank of America acquired Countrywide Financial the pundits said it was a match made in heaven.
Well, I sure hope heaven never looks like this.
From robo-signings to subprime chaos, the acquisition trail has proven much more harmful than good.
Sales of worldwide credit card divisions and prior foreign bank acquisitions gave some relief to the capital pressure, but apparently, not enough help.
As lawsuit upon lawsuit mounted from attorney generals, counterparties, and individuals, the pressure for action continued.
Yet, analysts were unrelenting in pronouncing a buying opportunity as the stock fell lower and lower. It was hinted the “powers that be” would never allow BAC to go below $5.
That price would create all sorts of holding requirements, so it would never happen, so they say.
Sale of assets offered one solution to the problem, and, of course, management changes presented yet another way out.
Still, there was no relief in sight.
Finally, as if everything else was not enough, another predicament arose.
According to the Fed, debit card transactions could no longer be charged $0.44 per transaction; it needed to be reduced to $0.22.
Facing a 50% loss of income, BAC’s solution was to impose a $5 monthly fee for utilizing the card, even if it was only used once per month.
Needless to say, it seems that customers were not annoyed or worried by the subprime mortgage shenanigans, multiple lawsuits, or even the liquidation of prime assets. However, when it came to reaching into their pockets for a monthly fee, customers were totally outraged.
This anger could result in a mass withdrawal of deposits, the last thing Bank of America either expected or desired.
As reflected by the current stock valuation, BAC is skating on very thin ice.
The last thing they need is a bank run created by their own greed and stupidity.
Before they acted they should have read the poem “For Want of a Nail.”
Bank of America would have learned the final result is loss of a kingdom
By: Seung Min Kim October 3, 2011 04:26 PM EDT
Angry about Bank of America’s new $5 monthly fee for using your debit card?
Dick Durbin has some advice for you: Take your money elsewhere.
“Bank of America customers, vote with your feet,” the Senate majority whip said in a floor speech Monday. “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.
“What Bank of America has done is an outrage,” he added.
Bank of America announced last week that it will soon start charging most of its customers $5 per month for using their debit card – a move intended to recoup the revenue that the bank will lose under new federal regulations that went into effect Oct. 1. Those rules, authored by Durbin, capped the amount of swipe fees – what banks can charge retailers for processing debit cards.
Other banks are likely to follow Bank of America’s lead, which means it would be difficult for customers to merely switch banks.
Over the last few days, critics of the Durbin amendment blamed the Illinois Democrat for the debit fee hike. The Chicago Tribune, in an Oct. 1 editorial, dubbed the new charge the “Durbin Fee” and blasted the senator for pushing the swipe fee change.
(Excerpt) Read more at politico.com …
Bank of America, proclaiming that its bottom line is hurt by new legislation that limits how much money banks can charge retailers for the privilege of letting customers pay with debit cards, announced that it will make up for those losses by charging customers a $5 monthly fee. The fee takes effect in 2012 and affects any customer who makes debit purchases. ATM and credit card transactions will remain free. Predictably, the bank’s customers are not happy. Fox Business Network‘s Gerri Willis even cut up her debit card on air. The company’s stock tumbled Friday morning following the news, and customers are threatening to leave the bank.
How much will this backlash hurt BofA?
Customers are going to jump ship: “I’ve been a more-or-less satisfied Bank of America customer for years,” says Jon Gorey at The Street. But if the bank intends to charge a $5 monthly fee for “something I can do elsewhere for free, I’m gone.” There are plenty of other options, including local banks and online-only competitors like ING Direct, which, unlike Bank of America, aren’t charging any fees for debit use. “Thank you, competitive free market.”
This could spell the end of debit: It’s easy for customers to avoid these fees, says Daniel Indiviglio at The Atlantic. “They just have to stop using their debit cards.” And it’s likely that they will. A $5-a-month fee to use debit “would push me not to use it in any case other than emergencies” — especially when that fee doesn’t apply to withdrawing cash from an ATM or using a credit card. Indeed, “debit could fade away altogether.” “Did Congress kill the debit card?”
Hold on. BofA might change its mind: Sadly, Bank of America isn’t the only bank set to start charging debit fees, says Sarah Halzack at The Washington Post. But many see the new fees as “trial balloons” — they’re testing customers to see how many will tolerate the charges. Consumers should continue to be vocal about their displeasure with these banks, “as they might ax the fee if enough customers gripe about it.” “In wake of Bank of America’s new debit charge, tips on how to avoid fees”
Actually, Bank of America may win this fight: For now, angry customers are threatening to abandon the bank, says Jessica Dickler at CNN. But it’s Bank of America “that could have the last laugh.” After all, changing banks isn’t exactly a breeze.
Once consumers realize the hassle of it all — from having checks printed to switching their automatic payments — they’re likely going to suck it up and stay with Bank of America.
The troubled bank, already besieged by multibillion-dollar lawsuits and massive financial losses, saw its stock fall more than 2 percent in late-morning trading. The shares have plunged almost 44 percent for the quarter, the worst-performing in the Dow Jones industrial average by far. For the year, the stock is down 56 percent.
Now the bank faces a public relations backlash.
Fox Business Network’s Gerri Willis went as far as to cut up her debit card on the air Thursday evening. “Right here, right now, I’m going to show Bank of America what I think of their fees,” she said before using a pair of scissors.
(Excerpt) Read more at washingtonpost.com …
RUSH: You remember, ladies and gentlemen, I can’t tell you the number of times it has become a major discussion topic for callers when banks have raised the ATM fee. People go nuts. They e-mailed me and called and talked about what a bunch of rotten creeps the banks were, “Why does there have to be a fee on the ATM anyway? I’m already paying this bank out the wazoo.” Well, sit tight because your bank is going to jack up your debit card fee. “Bank of America customers with basic checking accounts will be hit with a $5 monthly fee in order to use a debit card for purchases, the bank announced Thursday. Banks and card companies have been aggressively establishing and raising fees in recent weeks as banks plan for new rules taking effect Saturday that limit the amount they can charge retailers for each debit card purchase.” And credit card,,,,,,,,,,,,,,,,,,,,,,,,,,