After the recent backtrack on several big banks’ decision to impose fees on debit cards, the financial sector will likely look to recoup losses through other means, according to MarketWatch
Consumer advocates have cast the reversal, capped by the announcement on Tuesday by Bank of America, as a victory over corporate greed. While that conception might be overly dramatic and confrontational, it does accurately represent the fact that banks were responding solely to pressure from consumers.
However, MarketWatch notes that a report from Javelin Strategy and Research estimates the banking sector’s losses from the recent Dodd-Frank reforms at $6.6 billion from reduced debit card transaction fees and $5.6 billion from other regulatory compliance costs. That amounts to $12.2 billion that banks expect they must raise somewhere in order to meet their expected costs.
“When banks have their revenue streams cut in one area, they will find a way to make up for that in another area, and it is always the consumer who pays for it,” Bill Hardekopf, chief executive of LowCards.com, told the news source.
CNN suggests other routes that banks might attempt include anything from raising existing fees and interest rates to reducing the returns on deposits, all of which would be less likely for consumers to protest.