James Lambert
Dem leader makes outlandish, irresponsible statements invoking 'run on bank'
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By James Lambert
October 11, 2011

Assistant Majority Leader, Sen. Dick Durbin (Illinois), is the second leading Democrat in the United States Senate. In a Senate Floor speech on Monday (October 3), Durbin urged Americans to break all ties with Bank of America. He told the bank's customers to "get the heck out of that bank. Find yourself a bank or credit union that won't gouge you for $5 a month. "

Encouraging Illinois state constituents and Bank of America clients to "vote with your feet" the Senate Majority whip was, in my opinion, eluding to a time during the 1930s when their were actually 'runs on banks.' This precedence could prove to be dangerous considering the fragile condition of the banking system these days and Bank of America in particular.

Durbin is annoyed by the bank's new $5 monthly ATM fee it will be assessing customers. According to Politico, the company is attempting "to recoup the revenue that the bank will loose under new federal regulations that went into effect October 1."

The Chicago Tribune reports that Durbin authored an amendment to the newly enacted federal regulations that went into effect last week. The legislation, according to the Tribune, was responsible for the debit fee hike. In a statement issued on Tuesday, Bank of America said the "new regulations on debit card interchange fee — which provide no apparent benefit to customers — will further reduce revenue by additional billions of dollars." The bank spokesman concluded by saying that their "new fee structure will restore a portion of that lost revenue through clear and transparent pricing."

In a free enterprise system if a company wants to charge a $5 monthly ATM fee charge — so be it. For 22 years I served in various capacities with three good sized banks. I know that today, most banks run on fairly thin margins. Bank executives are under continued pressure, by shareholders, to show a profit. However, B of A found itself in difficult straits after it acquired Countrywide Financial several years ago. Prior to that acquisition Bank of America's mortgage delinquencies hovered around 6%. After the country's recent real estate downturn, Countrywide's delinquencies increased to 15%. Such dramatic increases, with the bank's newly acquired loan portfolio, has had a huge impact on the bank's financial condition.

Back in 2006 the bank's common stock traded for $50 a share. Today, the value of their stock is less than $6 a share. For Sen. Durbin to blatantly trash and encourage the demise of this Fortune 500 Company is, in my opinion, irresponsible.

While I am not a defender of Bank of America, I am against unwarranted government interference in free enterprise. Durbin's amendment and subsequent public appeal for people to "get the heck out of the bank" is uncalled for and offensive for such a high ranking public official to make.

Presently, Bank of America operates over 195 branch and ATM locations in the state of Illinois.

© James Lambert

 

The views expressed by RenewAmerica columnists are their own and do not necessarily reflect the position of RenewAmerica or its affiliates.
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James Lambert

James Lambert has a broad business background. After receiving his undergraduate degree from Linfield College (McMinnville, Oregon), Lambert pursued a career in banking by working in various management capacities for Crocker Bank, San Diego Trust & Savings Bank and First Interstate Bank (between 1973 and 1995). By 1990 Lambert received his Master in Business Administration from National University (San Diego). For 3 years, Lambert also taught Finance at Mira Costa Community College... (more)

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