The Capital For 3/10/10: Do My Eyes Deceive Me, Bank Of America Doing Something Good?

Photo from AP's Chuck Burton

It's spring like weather here in New York today, but this following piece of news reads like a "Cold day in Hell."

"Bank of America" did something really good for the consumer in America. Yup, hard to believe, but they actually did so.

In fact, it is a little impertinent of me to just label it as "good". Because it is nothing short of "great."

In a move that could bring an end to the $40 cup of coffee, Bank of America said on Tuesday that it was doing away with overdraft fees on purchases made with debit cards, a decision that could cost the bank tens of millions a year in revenue and put pressure on other banks to do the same.

The outrageous nature of overdrafting has plagued the people of this nation far too long. This has always been a pretty facile and clever way of banks adding to their profits at the expense of Main Street.

You surly wouldn't have seen this from Bank of America under the tutelage of Ken "Money Robbing" Lewis , and credit has to be given here to Bryan Moynihan for a move he didn't have to make.

As evidence by this:

Martin Eakes, chief executive for the Center for Responsible Lending, called Bank of America’s decision “a very big deal.”

“If Bank of America can forgo the fee income and do the right thing by their customers, this should be seen as a direct challenge to the other big banks to match and do the same,” said Mr. Eakes, who serves on a Bank of America advisory council, an unpaid position.

Of course, because of the new federal rule that requires customers to opt in to overdraft protection, all the big banks are anticipating a sharp drop in revenue once it goes into effect this summer.

But Mr. Eakes said that because of Bank of America’s size, it might have still charged hundreds of millions of dollars in overdraft fees even if most of its 37 million debit customers in the United States dropped out of overdraft protection.

And with this move putting pressure on the other banks (funny enough, Citibank does not allow for overdrafting on debt cards), their reactions to this news are expectedly timid:

Told of the change late Tuesday, a spokesman for JPMorgan Chase declined to comment. A spokeswoman for Wells Fargo said the bank was still working on its overdraft plan as it relates to the new federal rules and was not yet prepared to release the details.

Bank of America probably would not have done this if it weren't for the new credit card rules implemented (though the outstanding Liz Warren warns us that already 8 out of 10 rules have already been loopholed by the banks) instead of the growing pressure of charging 40 dollars onto a - $1 account.

And they could use this as leverage to combat Consumer Financial Reform, giving their corporate puppets the Republicans (and some Democrats) another excuse to protector their banking masters.

Nevertheless, it is one moment where one can say that someone on Wall Street actually did something for Main Street.