Read This:
Did Congress Kill the Debit Card?
By
Some Americans are outraged that Bank of America intends to charge its customers a $5 fee for using their debit card. And simply switching banks might not help: others are expected to follow. While frustration over yet another bank fee is understandable, this one should surprise no one. Congress acted to cap the debit fees that banks could charge retailers last year, and banks are reacting by directly charging their customers a portion of these lost fees to make up the difference. The move could mean the end of the debit card.The Logic Is Simple
Bank of America is actually being quite straightforward about its rationale for instituting this new fee: it blames the government. A provision from last summer's financial regulation bill promoted by Sen. Dick Durbin (D-IL) capped the fees that banks can charge retailers when customers pay with debit cards. The new rule goes into effect on Saturday. Andrew R. Johnson at the Wall Street Journal reports:
Bank of America has said it expects the caps, which the industry lobbied against for months, to erase $2 billion in revenue annually.The only thing surprising about this news is that anyone Congress was so blind to reality that they expected anything different. Did they really believe that banks would just shrug when their revenues declined by billions of dollars? Since they can't get as much money from customers indirectly through debit interchange fees paid by retailers any longer, they're going the direct route and charging customers for using debit.
"The economics of offering a debit card have changed with recent regulations," a spokeswoman for Bank of America said Thursday.
Congress, Not Banks, Are Gouging American Consumers
That WSJ article quotes one angry Bank of America customer, saying that she feels the bank is "gouging" her. That's not quite right: she paid this fee before -- she just didn't know it. It was incorporated into the prices of the goods and services that she purchased with her debit card. The fee was then paid to banks by the retailer where she shopped. Now Bank of America is just cutting out the middle man to collect a portion of the fees. This move isn't meant to create new revenue for the bank, but to replace the revenue that Congress forbid them to collect through their old fee policies.
In a perfect world, customers would end up paying the same amount in fees as they did before through this new approach. The only difference should be that they're paying more money directly and less indirectly. That means that the prices of the goods and services they purchase ought to decline accordingly.
Unfortunately, we don't live in a perfect world. As I pointed out on Wednesday, retailers aren't cutting prices. Instead, they're pocketing the $7 billion or so they'll save in fees. While this could theoretically change in the future, they have indicated that they aren't cutting prices at this time.
So customers will end up paying more than they did before once this new law goes into effect, but not because the banks are creating a "new" fee, but because the government forbid them to make full use of their old one. This financial regulation effort will amount to a gift to retailers, courtesy of Congress.
As I also pointed out, in particular, this action by Congress will hurt low- to middle-income Americans more than wealthier Americans. Banks find it very important to cultivate relationships with their wealthier customers, because they want their high deposits and to sell them other financial services. So banks' wealthiest customers will likely escape fees like this. Instead, less affluent Americans will end up paying more than their fair share.
The End of Debit?
But luckily, customers can avoid these fees -- they just have to stop using their debit cards. They will only be charged this fee if they use their debit card during the month, according to the WSJ story. I don't know about you, but this would push me not to use my debit card in any case other than emergencies. After all, I don't face a similar fee when I use my credit card. The bank also says that ATM use won't incur the fee -- so you could just use cash.
As a result of the new regulation, debit could fade away altogether. In fact, that's sort of the best-case scenario. If people continue to rely on debit as a means for payment, then they'll ultimately be paying more unless retailers respond by cutting prices accordingly. Rather than save Americans money, Congress' effort will have cost Americans instead.
And Read This:
U.S. mulls Canadian border fence
The Canadian Press
Posted: Sep 29, 2011 9:38 AM ET
Unmanned U.S. aircraft patrol about 1,500 kilometres along the northern border from Washington to Minnesota as well as more than 300 kilometres of the Canadian border around New York state and Lake Ontario.
The Canadian Press
Posted: Sep 29, 2011 9:38 AM ET
The United States is looking at building fences along the border with Canada to help keep out terrorists and other criminals, according to a draft report by the U.S. Customs and Border Protection agency
The report proposes the use of "fencing and other barriers" on the 49th parallel to manage "trouble spots where passage of cross-border violators is difficult to control."
But a spokesperson for U.S Customs and Border Protection said the government is not considering the fence option "at this time" and instead is looking at the environmental effects of putting more manpower, technology and infrastructure along the border.
9/11 SECURITY New border measures affect Canadians' lives Many unsure if lineups, searches, lists have helped
The border service is also pondering options including a beefed-up technological presence through increased use of radar, sensors, cameras, drones and vehicle scanners. In addition, it might continue to improve or expand customs facilities at ports of entry.
The agency considered but ruled out the possibility of hiring "significantly more" U.S. Border Patrol agents to increase the rate of inspections, noting staffing has already risen in recent years.
Customs and Border Protection is inviting comment on the options and plans a series of public meetings in Washington and several U.S. border communities next month. It will then decide which ideas to pursue.
U.S. Homeland Security Secretary Janet Napolitano noted last month the challenges of monitoring the vast, sparsely populated northern border region. She stressed manpower, but also a greater reliance on technology.
P.O.V.
Ironically, the moves come as Canada and the U.S. try to finalize a perimeter security arrangement that would focus on continental defences while easing border congestion. It would be aimed at speeding passage of goods and people across the Canada-U.S. border, which has become something of a bottleneck since the 911 attacks.
Relatively speaking, Washington has focused more energy and resources on tightening security along the border with Mexico than at the sprawling one with Canada.
But that may be changing.
Only small portion secured
A U.S. Government Accountability Office report recently warned that only a small portion of the border with Canada is properly secure. It said U.S. border officers control just 50 kilometres of the 6,400-kilometre boundary.
The Customs and Border Protection report says while fences have been a big element in deterring unauthorized crossings of the U.S.-Mexican border, "it is unlikely that fencing will play as prominent a role" on the northern border, given its length and terrain that varies from prairie to forest.
However, the agency would use fencing and other barriers such as trenches to control movement and sometimes delay people trying to sneak across the border, increasing the likelihood they could be caught, says the report.
It doesn't provide details about what the fences might look like, but suggests they would be designed to blend into the environment and "complement the natural landscape."
The approach would also involve upgrading roadways and trails near the border.
"The lack of roads or presence of unmaintained roads impedes efficient surveillance operations," says the report. "Improving or expanding the roadway and trail networks could improve mobility, allowing agents to patrol more miles each day and shortening response times."
Over the last two years, the U.S. Department of Homeland Security has already made what it calls "critical security improvements along the northern border," adding inspectors at the ports of entry and Border Patrol agents between ports, as well as modernizing land crossings.
Nearly 3,800 Customs and Border Protection officers scrutinize people and goods at crossings. The number of Border Patrol agents working between crossings along the northern parallel has increased 700 per cent since Sept. 11, 2001. And some three dozen land ports of entry are being modernized.
My 2¢ by Tim
Does the American public realize that their government and King Obama may not want anybody to escape? Just a thought.
"None are more hopelessly enslaved than those who falsely believe they are free"
Johann Wolfgang von Goethe
Does the American public realize that their government and King Obama may not want anybody to escape? Just a thought.
"None are more hopelessly enslaved than those who falsely believe they are free"
Johann Wolfgang von Goethe
.
I just hope they don't build their stupid fence right along the property line and expect Canada to pay half.
I just hope they don't build their stupid fence right along the property line and expect Canada to pay half.
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