Five House Democrats today asked Attorney General Eric Holder to investigate whether banks and their trade associations are violating anti-trust laws with their new, unpopular debit card fees.
Bank of America announced last month it will begin charging customers a $5 monthly fee to use its debit cards, and other banks are following suit.
The Democrats, led by Rep. Peter Welch of Vermont, said in a letter to Holder today that there's evidence to suggest big banks are coordinating their fee strategies. Bank of America's debit card fee announcement adds to the urgency of their question, they wrote.
"We are concerned that BOA's announcement may be a reaction to, and participation in, price signaling or collusion that has occurred among and between banks and bank associations," the letter said.
The letter points to possible evidence of collusion, such as an email from the Texas Bankers Association to its members regarding swipe fee reforms in Congress. The email read in part, "Now, the industry must regroup and each and every one of you must decide how you are going to pay for the use of debit cards."
In addition to Welch, the letter was signed by Reps. John Conyers, D-Mich., Raul Grijalva, D-Ariz., Keith Ellison, D-Minn., and Mike Honda, D-Calif.
Paying to use a debit card was unheard of before this year. Banks say they're trying to recoup the losses they'll suffer from a new rule enacted as part of Mr. Obama's Wall Street regulatory overhaul. An amendment in the Wall Street bill (known as the Dodd Frank Act) capped the amount banks can charge merchants for debit card swipes at an average of 24 cents per transaction. The cap, determined by the Federal Reserve went into effect on October 1.
The previous industry average for transactions fee was 44 cents. Initially, the Fed considered a 12-cent cap.
Sen. Dick Durbin, D-Ill., the author of the Dodd Frank amendment, pointed out in a statement last month that "earlier this year the Federal Reserve determined that the interchange fees Visa and MasterCard fix for big banks grossly exceed the cost of processing a debit card transaction by some 400 percent."
In addition to recouping lost revenue from the swipe fee cap, as CBS News' Anthony Mason reported, Bank of America also has to offset the cost of billions in dollars in bad mortgage loans.
As the new debit fees brings new scrutiny on the Dodd Frank Act, Republicans are attempting to roll back the new fee cap, along with the rest of the Wall Street overhaul. Yesterday, Republican Reps. Jason Chaffetz of Utah and Bill Owens of New York introduced a bill to eliminate the amendment.
Chaffetz called the measure an "egregious provision that increases the cost of doing business on everyone."