WASHINGTON– U.S. Sen. Dick Durbin, D-Ill., is calling on Wells Fargo & Co. to explain why it needs to impose new debit card fees when it posted a 21% increase in third quarter profits.
The bank has claimed the $3 monthly fee, which it is testing in five states, is a response to the cap on debit interchange fees spearheaded by Durbin as part of the Dodd-Frank Act, which directed the Federal Reserve Board to set a “reasonable and proportional” debit card interchange rate. The interchange cap sets a roughly 24-cent limit on what large banks can charge retailers for a debit transaction.
In a letter to Wells Fargo CEO John Stumpf, Durbin said the bank has no right to blame the new fees on the interchange amendment and said the company will still make an estimated $1.2 billion in annual interchange fees.
"This amount far exceeds any reasonable measure of the cost to Wells Fargo of conducting debit transactions," he said. "Instead of making up costs, your new consumer fee appears to be a plain attempt to increase your profits, even though your bank just reported third quarter profits that hit a record high."
Durbin also said it was surprising that Wells would test t the new fees in light of the consumer backlash against Bank of America Corp., which announced that it would begin charging customers a monthly $5 fee for using their debit cards.
"If you were hoping that your new fee would go unnoticed, it has not," Durbin said.
