How Banks Scare Us Into Becoming Little Bank LobbyistsS

"Bureaucrats want to take away your debit card!" Seems unlikely. But that's the best slogan the banking industry could come up with to try to enrage consumers about a proposal to cut the fees that banks can charge to retailers when you use your debit card to buy something.

Not a cut to bank fees paid by someone other than me! Anything but that! It's an interesting case study in how banks try to enlist consumers in fights that, by all rights, consumers do not really have a stake in. See, when you buy something with your debit card, the bank charges to store a fee that averages 44 cents. These fees add up to more than $20 billion in profits for the banking industry. As part of the post-meltdown financial reform bill, Congress proposed slashing those fees by more than two-thirds. Now, the time to enact that cut is approaching, and banks are lobbying furiously against the cuts. Says the NYT:

Banks contend the proposed cut in fees - to 12 cents per transaction from an average of 44 cents - will leave many of them unable to afford to issue debit cards to customers or will force them to raise other consumer banking charges to cover the costs. They also claim retailers will reap unfair profits.

A cut in fees charged by banks= Retailers reaping "unfair profits." Welcome to banking industry PR 101! Anything that profits anyone outside a bank is an "unfair profit." Also, anything that threatens to erode or even slow down the current profits of banks must be accompanied by head-shaking insinuations that you, the consumer, will be charged higher fees if this happens. So be sure to send your Congressman this pre-written form email! For your children's sake! It's not that banks want to charge you higher fees, you know; they'll simply have no other choice.

I'm sure Congress will do the right thing.

[NYT. Photo: AP]