News Wrap: Bank of America Scraps Planned Debit Card Fees
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HARI SREENIVASAN: Thousands of protesters demonstrated in Nice, France, today, two days before European leaders convene there. They called for shifting the focus from bolstering banks and markets to helping ordinary people.
We have a report from James Mates of Independent Television News in Nice.
JAMES MATES: The crisis of capitalism these demonstrators have long predicted may, they believe, now be upon us. As they march through the streets of Nice ahead of the G20 summit, due to start in nearby Cannes on Thursday, there came news of meltdown on the markets and the greatest political crisis since the creation of the euro.
This sort of demonstration is pretty common now whenever there’s a major international summit. But the continuing chaos in the markets and in the chanceries of Europe is only convincing these people that they’re right that something is fundamentally wrong with the system.
Hard financial facts are meeting growing popular resistance to austerity. And right across Europe, not just in Greece, the result is not pretty.
HARI SREENIVASAN: Authorities in France have deployed more than 12,000 police and other security officers for the summit.
Bank of America dropped plans today to charge a $5 monthly fee for debit card use. A Bank statement acknowledged the decision was at least partly a response to a customer backlash. Several other major banks had already canceled tests of comparable debit fees.
For more, we’re joined by Dominic Chu, correspondent for Bloomberg television.
Thanks for being with us.
DOMINIC CHU, Bloomberg Television: Thanks, Hari.
HARI SREENIVASAN: So, Dominic, tell me, how bad was this backlash? Put it in perspective for us.
DOMINIC CHU: Well, it was a big backlash.
You’re also talking about this whole Occupy Wall Street protest that’s been spreading all over the globe. Consumers were getting a little bit fed up with what was happening with the banks and the profits they were making. And what you saw in terms of this cancellation of the debit card fees was kind of a response to what was happening with them, but also to competitive pressures as well.
Like you said all the other major banks in the U.S., the J.P. Morgans, the Wells Fargos, Citis, U.S. banks, had all scrapped their plans prior to this. That would have left Bank of America as the only major U.S. lender to keep this debit card fee in place. So think of it like when an airline tries to raise fares and nobody else matches them. They tend to go back to the old fares themselves. And that’s kind of, Hari, what you saw today.
HARI SREENIVASAN: All right, so remind us why they would have put this fee on the in first place. Is it because their competitors did or were they in a bad financial situation?
DOMINIC CHU: Well, what these banks are trying to do right now is cope with a new changing landscape for regulation, things like the Dodd-Frank act, things like regulation who have taken away other sales or revenue sources for the banks.
In terms of this, there used to be a transaction fee applied to debit card purchases. If you were a shopper, every time you used your debit card, there was a fee that was transacted. Well, that fee was then slashed in half. And our analysts over at Bloomberg Government actually calculated it and it would cost somewhere between around $8 billion annually in lost revenues for the biggest banks in America.
So what they’re trying to do is make up for some of that lost revenue by charging fees elsewhere. And that was kind of what this $5 debit fee was meant to do, meant to make up for some of that lost revenue.
HARI SREENIVASAN: All right, Dominic Chu from Bloomberg Television, thanks so much for your time.
DOMINIC CHU: Sure. Thank you.
HARI SREENIVASAN: Automakers had a good month in October. Volkswagen led the way in U.S. sales with a 40 percent jump for last month. Among the Detroit three, Chrysler reported a 27 percent gain, for its best result in four years. The gains were more modest at Ford, up 6 percent, and General Motors with an increase of 2 percent.
October also marked the first month that Toyota and Honda dealers had inventories near normal levels. The earthquake and tsunami in Japan last March had disrupted supplies.
Across the Northeast today, there was no letup in the long slog to restore power after the weekend’s rare October snowstorm. Power companies had to pull crews from 15 different states to work on downed power lines — 1.7 million homes and businesses were still in the dark today. Hundreds of schools remained shuttered, and supplies were running out at grocery stores.
But Connecticut Gov.Dan Malloy appealed to the public not to panic.
GOV. DAN MALLOY, D-Conn.: If you have a half a tank of gas or three-quarters of a tank of gas, you know, wait. This is not 1973. There is a flow of gasoline. There’s no embargo under way. And I think there’s a fair amount of worry or panic involved and people are sitting in long lines.
HARI SREENIVASAN: Authorities have blamed the storm for at least 23 deaths, including one in Canada.
Dorothy Rodham, the mother of Secretary of State Hillary Clinton, has died at a Washington hospital. She passed away early today, after an undisclosed illness. Rodham mostly stayed out of the spotlight over the years, but she did campaign by her daughter’s side during Clinton’s unsuccessful bid for the 2008 Democratic nomination for president. Dorothy Rodham was 92 years old.
In Syria, the government of President Bashar al-Assad announced an agreement today on starting a dialogue with the opposition. State media reported a deal with an Arab League committee, but the Arab League said it’s still waiting for Damascus to respond to a package of proposals. They include releasing prisoners detained since the uprising began in February and pulling security forces off the streets.
Those are some of the day’s major stories.