WASHINGTON, October 4, 2011—Taking political demagoguery and stupidity to dizzying new heights this morning, Illinois Senator Dick Durbin, a Democrat, effectively encouraged a customer run on beleaguered Bank of America, starting now. AP reports: “Holding up a plastic debit card on the Senate floor this afternoon, Sen. Dick Durbin, D-Ill., had some advice for Bank of America customers angry about the new $5 monthly fee: leave.”
Here’s part of Durbin’s latest rant: “Bank of America customers, vote with your feet, get the heck out of that bank,” Durbin said on the Senate floor. “Find yourself a bank or credit union that won’t gouge you for $5 a month and still will give you a debit card that you can use every single day. What Bank of America has done is an outrage.”
Senator Dick Durbin (D-IL).
Sounds a little bit like “Workers of the world, unite! You have nothing to lose but your chains!” Doesn’t it?
As we reported here yesterday, either because of or in spite of BoA’s announced $5 fee for debit card users commencing in January 2012, BoA’s website went down last Friday. It popped up over the weekend only to go down again on Monday. Since I’m an inadvertent customer of BoA (via a third-hand Countrywide mortgage loan) I attempted to log on to the site this morning around 9 a.m. and found everything working fine.
I tried to log on again just now (circa 12:30 p.m.) and got the following screen:
Oops, we're down again. Tough to do business when you can't do business. Have a nice day.
Nice work, Dick. Now I can’t access my account again. According to the AP report, BoA attributes these continuing outages “to traffic and not hackers or malware.” I’m not so sure. The persistence of the outages has all the trappings of a good old-fashioned denial-of-service attack. I’m not surprised that that BoA’s CIO types aren’t exactly forthcoming with what’s going on.
It is difficult to fathom what Dick Durbin is trying to accomplish with his latest anti-bank rant. Dodd-Frank, which Durbin fully supported, has hamstrung the major banks’ ability to generate profits from a number of avenues. Further, Dodd-Frank’s reserve requirements, along with the apparently upcoming and more stringent requirements of the evolving Basel pact, are a major reason why banks are sitting on massive reserves rather than loaning them out.
The banks, no doubt, figured they could recapture some of this lost income by charging fees for this and that. But Durbin blocked them there as well by tacking a controversial amendment onto Dodd-Frank as it passed, capping the banks’ per transaction fees for credit and debit card purchases.
BoA’s announced $5 fee was transparently an end run around the per-transaction requirements, but what are these guys supposed to do to generate some black ink? Having been essentially coerced by the previous Administration to swallow the fiscal black hole known as Countrywide, BoA has been paying a steep price ever since for effectively preventing that out-of-control lender’s massive and catastrophic bankruptcy.
The government hasn’t helped, either, happily imposing huge penalties and fees on BoA and other large financial institutions while continually urging them to forgive loans and make more of them. It’s a small wonder that loan activity continues to be virtually non-existent for small and mom-and-pop businesses as well as countless individual customers who—contrary to popular opinion—simply can’t refinance loans and deleverage because the banks don’t know what the Feds will do to them next.
So now Dick Durbin—architect of at least part of this mess—makes matters worse by effectively encouraging a run on BoA by its depositors. What does this guy have for breakfast? Is he trying to score points with Illinois’ strangely complacent electorate? What is the point of this irresponsible vindictiveness when the entire financial system, hamstrung now by the European debacle, is hanging by a slender thread?
Don’t imagine that this columnist is in love with the big banks, either. Big bank executives continue to pay themselves entirely too much for not standing up to the government and for not loaning money to the moms-and-pops who could get our economy humming again if only they could get hold of a little fresh capital.
I shuddered in 1999 when Bill Clinton and the Congressional Republicans joined together to eviscerate the Glass-Steagall Act—an incredibly useful piece of legislation passed early in the Roosevelt Administration to limit all banks to specific areas of business, excluding things like brokerages and insurance. Look how much we’ve benefited ever since.
Prior to Glass-Steagall, large banks were involved in all these businesses and more. Their collective malfeasance and incompetence was a major ingredient in the Crash of 1929. Getting them out of their side-businesses, which they operated with their customary ignorance and abandon, resulted in stabilizing the banking system for decades. What’s happening today is that Yogi Berra favorite, déjà vu all over again.
Everyone knows the old adage, “If it ain’t broke, don’t fix it.” Both parties “fixed” Glass-Steagall in 1999, when Congress passed and Clinton signed the Gramm-Leach-Bliley Act, which effectively repealed the ban on bank holding companies’ ability to own other financial companies. We’re certainly paying a heavy price for that now.
A better idea than the vindictive Dodd-Frank remedy for that problem would have been to simply re-impose certain provisions of Glass-Steagall. But it’s probably too late, now.
Meanwhile, bank in your nation’s capital, having helped remedy previous damage to the financial system by imposing even greater legislative damage, Dick Durbin is now encouraging a good old-fashioned run on Bank of America. Disgruntled debit card customers didn’t need a push from Durbin to find the exit doors. But now, with this choice bit of “progressive” demagoguery, Durbin risks putting BoA back under effective government control.
And who gets to pay for this? Suckers like you and me, of course. Taxpayers continue to send money to Washington to fund unproductive and damaging nonsense like this. But they still can’t get a loan. And I still can’t log on to BoA.
PS: If you’d like to give Dick Durbin a piece of your mind, link to his senate contact site here. Visiting trolls: if you actually enjoyed the senator’s rant, I’m sure he’d like hearing from you even more so feel free rather than wasting our editors’ time here.
Read more of Terry's news and reviews at Curtain Up! in the Entertain Us neighborhood of the Washington Times Communities. For Terry's investing insights, visit his WT Communities column, The Prudent Man in Politics.
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