House Dems call on Holder to investigate bank fee hikes

A group of House Democrats is calling on U.S. Attorney General Eric Holder to investigate whether banks are colluding to raise fees in violation of antitrust laws.

In a letter sent to Holder on Thursday, the lawmakers said recent statements, and Bank of America’s decision to begin charging a monthly fee for debit card users, could indicate banks are working together to raise fees across the board.

“It’s all fair and square for banks to set their price, so long as those prices are subject to the laws of market competition,” said Rep. Peter Welch (D-Vt.), who spearheaded the effort. “We have very serious questions as to whether or not there has been an antitrust violation.”

{mosads}The request marks the latest in a prolonged Capitol Hill battle over new caps on the fees banks charge merchants for swiping their debit cards. The caps were established as part of the Dodd-Frank financial reform law, and took effect Oct. 1, taking a big cut out of a major source of revenue for banks. The industry average per debit card swipe was 44 cents before the caps, and now stands at an average of 24 cents.

Throughout that time and still today, banks and retailers have been engaged in a fierce lobbying battle over those caps, with billions of dollars in revenue at stake.

And now, Democrats want Holder to determine if banks are working together to hike anti-competitive fees.

The primary concern from the lawmakers is that repeated statements from bankers and industry representatives might have served as a signal to the industry that broad-based fee hikes should be in the works.

Welch, who led the House effort to institute the caps, said that “before the ink was dry” on an effort to delay the fee limits, the Texas Bankers Association was telling members they would need to find a way to recoup the revenue lost by those fee caps.

“The industry must regroup, and each and every one of you must decide how you are going to pay for the use of debit cards,” the group said in a June email to members. “It may be through a monthly fee; it may be by using a ‘prepaid’ card as opposed to a debit card.”

Bankers and representatives of the banking industry were loudly critical of the caps as they were enacted, warning repeatedly that the lost revenue would have to be made up in other ways.

But Welch showed no signs of sympathy for the industry.

“[The fees] were a rip-off. Congress finally called them to question,” he said. “The banks reacted with indignation, mainly because they were not going to be able to continue the rip-off … ‘If we can’t pick the front pocket, we’re going to pick the back pocket.'”

Reps. John Conyers Jr. (D-Mich.), Raul Grijalva (D-Ariz.), Keith Ellison (D-Minn.) and Mike Honda (D-Calif.) joined Welch on the letter.