Durbin calls on banks to release earnings from fees

by Vicki Needham - 10/31/11 9:17 PM ET

Still, he expressed skepticism about how banks will raise funds in the future.

“It’s not over by a long shot,” he said. “The big banks still have enormous power and resources and they’re going to continue to find ways to make money at the expense of their customers.”

Atlanta-based SunTrust Bank announced on Monday it would forego the fees, following Chase and Wells Fargo last week.

SunTrust said it “listened to our clients’ feedback” in making the decision.

Durbin went on the attack as banks began announcing they were testing $3 to $5 monthly fees on debit cards following the start of a new federal regulation on Oct. 1 that cut in half the fees banks could charge to retailers for processing those purchases.

Banks said they were instituting the debit card fees as a way to make up revenue lost to these new rules with opponents referring to it as the “Durbin fee.”

Now Durbin wants banks, which he says are now pushing customers toward credit card use where merchant fees remain unregulated, to release in monthly statements how much they make in interchange fees.

Durbin led the charge to include the reduction of swipe fees as part of the Dodd-Frank law. He has called the fees unnecessarily high and a burden on consumers and merchants — they have dropped from an average of 44 cents to 24 cents per transaction on Oct. 1.

This month, the Illinois senator sent a letter to Wells Fargo, asking for an explanation as to why it is considering the fees following the announcement of the bank’s 21 percent increase in third quarter profits.

Durbin also sent a similar letter to Bank of America, chastising the bank for the fees.

“It is disingenuous for banks to claim they are somehow entitled to make up reductions to a revenue stream that they never would have received in the first place in a transparent and competitive market,” he wrote.

He also called for the Senate to lift a hold on Richard Cordray, the nominee to head the Consumer Financial Protection Bureau.

Bank of America hasn’t announced that it is ending the fees but has said it will provide its customers with ways to avoid the fees by using services like direct deposit or maintaining a minimum balance.

The fees sent a wave of outrage across many banking customers, many of whom have opted to close their accounts at the offending banks.

“Word is spreading across America and people are transferring their monty to community banks and credit unions,” Durbin said.

“That should strengthen small banks and help small businesses.”