I see that President Obama has joined Senator Dick Durbin of Illinois and others in slamming bankers. Some of the outcry is the result of frustration, because banks have reacted to the Dodd-Frank legislation passed recently by imposing fees on people who use their debit cards to make purchases, some is due to the fact that banks were part of the 2008 financial meltdown, and some is caused by the belief that banks are not lending as much as they should.
We should all be on guard, however, when politicians try to blame one industry for our woes. It’s like the sleight of hand used by magicians who want to distract our attention so we don’t see how the trick works. Politicians want us to blame banks so we don’t blame politicians or hold them accountable for the dreadful job they’ve done. And banks are a convenient, time-honored scapegoat. In fact, America has a long history of bank-hating, from the battle between Andrew Jackson and the Bank of the United States to the campaigns against J.P. Morgan and Wall Street “gamblers” during the 20th century.
Should we really castigate banks for charging for their services? Debit cards clearly involve costs for administration, data security, accounting for charges, and sending out bills, and someone has to pay them. When Congress enacted legislation that made it tough for banks to have retailers pay the costs, the banks inevitably turned to another source — the consumer who uses the card to by something in the first place. In a capitalist society, are banks simply supposed to eat the costs and thereby become less solvent? Is it really so unfair to make those who use the debit card service to pay for it?
No one has figured out how to practice capitalism without banks and without allowing businesses to charge what the market will bear for their products and services. Ask President Obama — according to the Amazon website, his two books, Dreams from My Father and The Audacity of Hope, carry retail price tags of $25.95 and $25.00, respectively. The President isn’t giving away his work product for free and banks shouldn’t have to, either.