Durbin keeps up pressure on banks to explain fees

President Obama criticized the nation’s largest bank on Monday during an interview with ABCNews.com, calling it a “not good business practice” and suggesting that the newly created Consumer Financial Protection Bureau (CFPB) get more involved.

“You don’t have some inherent right just to, you know, get a certain amount of profit, if your customers are being mistreated,” Obama said. 

Durbin didn’t go quite as far, recommending that the CFPB and Federal Trade Commission (FTC) and track the effects from the fee hike, and let competition and consumers drive the industry. 

Obama and Durbin are urging lawmakers to confirm Richard Cordray, the nominee to head the CFPB. The Senate Banking Committee is slated to vote Thursday on the nomination. 

“It’s an uphill battle that will run into some resistance,” Durbin said. 

Meanwhile, the Illinois Democrat is at the center of a firestorm over the policy, which banks argue cut into their profits. The new fee limits apply to any bank with more than $10 billion in assets.

The fees were cut to about 24 cents per transaction from an average of 44 cents per transaction, including a one-cent allowance for fraud prevention. 

On Monday, Durbin sent a letter to Brian Moynihan, chief executive of Bank of America, asking the bank to justify the monthly fee on its customers. 

“Your bank has decided to impose a significant new fee on loyal customers who simply want access to their own deposited money,” he wrote. 

“I challenge you to provide specific and credible data that justifies imposing this monthly card fee,” he said. “If you cannot provide such data I challenge you to do the right thing for your customers and reconsider your decision.”

He also sent a letter on Tuesday to small banks throughout Illinois outlining how they will benefit from new swipe fee reforms, urging them to ramp up their efforts for new customers. 

“Now is the moment for smaller banks and credit unions to make crystal clear to these consumers the superior benefits and customer service that your institutions provide compared to the Wall Street giants,” he wrote. 

“I strongly urge your institutions to seize this competitive opportunity, as this will serve both consumers’ best interests and your own.”

Durbin, as well as banking industry analysts, have said that banks are looking for ways to push their customers away from debit cards into more credit card use, which still have unregulated interchange fees that Congress hasn’t tackled. 

“These are hidden fees and retailers have no bargainaing power,” Durbin said about the interchange fees. “It’s unfair in a fair market economy.”

Still, Durbin isn’t planning any additional legislation, just a continued crusade against fees imposed by large banks. 

“Consumers being mistreated by their banks,” he said. “The $5 a month is far in excess than the amount banks reported they would lose.”