Four weeks ago, a worldwide phenomenon began—the “Occupy ” movement. What sparked in New York City as “Occupy Wall Street” quickly spread nationwide and overseas. While this movement seems to lack leadership and a definable core purpose, it continues to grow, at times with violent overtones.
The movement appears to have sprung from frustration with economic hardship and a high unemployment rate. One Occupy objective is to make the top 1 percent of wage earners recognize how the other 99 percent feel. Another is to protest against corporate greed, and yet another is to bring renewed attention to unemployment.
Much of the movement’s rhetoric is directed against banks, particularly Bank of America, the first of the banks to announce that it will be assessing fees on customers who use debit cards—the predictable outcome of free-market interference by Congress, President Obama and the Federal Reserve. This interference came in the form of interchange rate price-fixing, which limits what banks may charge to retailers to support the considerable transaction expense, extensive infrastructure and fraud liability needed to conduct debit card transactions.
The fact is that our banking system competes in the same capital markets as all tax-paying, for-profit businesses. Bank investors are driven by the rate of return they can expect on their investments. If banks do not deliver a market rate of return to those investors, capital dries up. Consequently fees must be collected for benefits and services that customers enjoy. In the case of bank fees on debit card transactions, those fees previously were paid by merchants … prior to government price-fixing.
Apparently this elementary principle of economics is lost on Congress, the president and the Occupy crowd. While the outward purposes of the Occupy protests may be worthy, the outrage directed at banks is unfounded. No one can argue against objecting to harms brought about by greed, the widening gap between the haves and the have nots, and the deplorable level of unemployment.
But blaming a $60-per-year fee charged by one bank, as the root of all economic problems, is asinine.