The New York Times today published a letter from Roger Campos, president and CEO of the Minority Business Roundtable, that’s right on the money about the Federal Reserve’s recent misguided proposal on debit card fees. As I said last week and Roger says in his letter, we need to be getting more cash into the hands of consumers and small-business owners rather than imposing policies that will take money away from them.
What Roger doesn’t address is the negative effect this proposal will have on the cost of checking accounts for consumers. The debit cards the Fed’s proposal will affect typically are linked to checking accounts and other banking services that up to now have been provided at no cost to customers. If banks cannot recover the total costs of debit card transactions financial institutions will have little choice but to impose other fees to make up the difference.
As Roger says, it was a huge mistake for Congress to order the Fed to impose these price controls without a single hearing to examine the potential unintended consequences and it’s definitely not too late for Congress to reconsider.