Free Checking’s Demise: Blame Big Retailers and Big Government
Washington, D.C., September 28, 2011—“Free checking is going the way of the free checked bag,” declared USA Today this week. And for more than a year, John Berlau, director of CEI’s Center for Investors and Entrepreneurs, has zeroed in on the financial regulations that have sent free checking packing.
This Saturday, Oct. 1, the Durbin Amendment from the Dodd-Frank financial law of 2010 officially goes into effect. The amendment places price controls on interchange fees, the so-called “swipe fees” that retailers pay to banks and credit unions that process debit card transactions.
Berlau, who has written on the price controls for publications such as the The Wall Street Journal, The Daily Caller and The American Spectator, explains in a brand new post on OpenMarket.org the effects of this cost-shifting for debit card processing from some of the nation’s wealthiest retailers to ordinary consumers. He details new evidence that this rule might not just be costing ordinary Americans their free checking, but also their jobs. He attributes part of the 40,000 job losses at Bank of America to these price controls, as well as layoffs at a Texas community bank.
Berlau notes ironically that though “big business” is in fact to blame for these losses to workers and consumers, the business at fault is not the banking industry. Rather, he points the finger at big-box retailers such as Wal-Mart and Home Depot who lobbied “the government to line their pockets by putting a regulatory albatross on their financial suppliers and actually bar banks from making a profit on debit cards on the retail side.”
Berlau is available for interviews, including on Saturday, when the rule officially goes into effect.
>> Read John Berlau’s OpenMarket post on free checking’s demise here.