Banks should disclose more about fees, consumer agency head says
As the backlash continues over Bank of America's new debit-card fee, the acting head of the Consumer Financial Protection Bureau called for more disclosure about what customers pay for checking accounts.
Raj Date, the Obama administration advisor leading the agency until it gets a Senate-confirmed director, weighed in on the controversy for the first time Wednesday. But he did not directly address Bank of America's new $5 monthly debit-card fee.
Instead, Date said that banks often are murky about how much they charge customers and suggested the agency might move to simplify checking account disclosures.
"This isn't about any one fee from any one bank," he said. "The problem is that checking accounts often come with a wide variety of unexpected costs that can quickly add up for consumers."
Date cited a poll in July commissioned by the Pew Charitable Trusts that found nearly three out of four Americans with checking accounts supported regulations requiring banks to provide better disclosure of the fees, terms and conditions.
"Different banks charge different fees. Different fees are applied under different terms and conditions. Different banks give different names to the very same fee," Date said. "Ideally, consumers would have a simple way to evaluate checking account costs."
The agency was created by last year's financial reform law to protect consumers from being gouged by banks and other financial institutions, although it generally cannot set rates or fees unless they are deemed unfair, deceptive or abusive. The agency has focused on disclosure to avoid hidden fees, and Bank of America has been public about its new policy.
Bank of America has argued it needed to impose the fee because of new limits on what banks can charge retailers to process debit-card transactions. Those limits, championed by U.S. Sen. Dick Durbin (D-Ill.), also were part of the financial reform law, and he has called for upset Bank of America customers to switch banks.
Wells Fargo & Co. and JPMorgan Chase & Co. also are testing new debit-card fees in some states.
The consumer agency has not said if it would review the Bank of America fee. It also could force banks to standardize the checking account fee schedules they provide to customers, as they must with credit card and mortgage terms.
"A lot of changes are being made to the cost structure of bank accounts," said Jean Ann Fox, director of financial services for the Consumer Federation of America. "If we’re going to count on a competitive market to keep fees down, consumers need a lot more information and leverage."
Date noted that the consumer agency has the power to simplify checking account disclosures, and he said more information about fees would be "good for consumers and good for competition." But Date did not commit to such an initiative, possibly because he's only the agency's temporary head.
President Obama nominated former Ohio Attorney General Richard Cordray to be the first director of the agency, which officially launched in July. He is expected to be approved on a party line vote by the Senate Banking Committee on Thursday.
But nearly all Senate Republicans have vowed to block any nominee for the job from getting a final confirmation vote unless the White House agrees to reduce the power of the agency. The Obama administration opposes the changes, as do consumer groups.
-- Jim Puzzanghera
Photo: Raj Date, acting head of the Consumer Financial Protection Bureau. Credit: Reuters.