Fox News' Bulls & Bears makes dubious claim that plan to tax banks will cause ATM fees to rise
On Fox News' Bull & Bears, while discussing President Obama's plan to tax the nation's largest banks, host Brenda Buttner claimed that it's "going to be the consumers who get hit, ultimately"; Fox Business Network host Eric Bolling agreed, responding that the tax would be passed "right down to the depositors, through ATM fees, through check fees, through lower rates." However, according to economist Dean Baker, since the tax "only applies to the largest banks, it would not be possible for the banks to pass it along to consumers, since they would lose market share to smaller banks who don't pay the tax."
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Fox News' Bolling and Buttner: "Consumers" will get hit by Obama's bank tax
From the January 16 edition of Fox News' Bull & Bears:
BUTTNER: It's going to be the consumers who get hit, ultimately, isn't it?
BOLLING: Unfortunately, that's what's going to end up happening. The fifty banks or so that are going to get slapped with this tax, they're going to get fees, and they're going to drop it right down to the depositors, through ATM fees, through check fees, through lower rates, the bottom line is -
TOBIN B. SMITH (Fox Business contributor): Less lending -
BOLLING: Less lending.
Baker: Not possible for banks to pass tax along to consumers
Baker: "it would not be possible for the banks to pass [tax] along to consumers." In a January 15 post on his American Prospect blog Beat the Press, Baker noted that since the tax applies only to the largest banks, if they passed along fees to consumers, they "would lose market share to smaller banks who don't pay the tax. (If they could charge their customers more, why aren't they doing it already?)" From Baker's post:
It would also be helpful if reporters tried to evaluate the assertion of the industry lobbyists that this (or other) taxes will simply be passed on to customers. Reporters should have the time and ability to do make such an evaluation, rather than just pass along a he said/she said to readers, almost none of whom will have the time or expertise to make this assessment.
In the case of this tax, since it only applies to the largest banks, it would not be possible for the banks to pass it along to consumers, since they would lose market share to smaller banks who don't pay the tax. (If they could charge their customers more, why aren't they doing it already?) The alternative scenario, in which the large banks are able to pass on the tax, would suggest a degree of concentration in the industry which should require anti-trust action.
Bulls & Bears claim echoed Limbaugh's dubious assertion
Limbaugh: "Your ATM fee's gonna go up" because of bank tax. On the January 14 edition of his radio program, Rush Limbaugh told listeners that their lives "might get worse because your ATM fee's gonna go up. As these banks are taxed, they're gonna pass as much of it along to you and all of us as possible. That's just how it works, which Obama also knows."
They Fax the Truth & Report the Fax.
Mr. News
Baker's claim doesn't have to be true, he's making some assumptions.
This is not a good idea and it will not be implemented.
I don't believe the current proposal will be implemented, if it is it will be seen as a mistake.
The grand total of ALL bank fees paid by ALL Americans in 2009 was about $36 billion. Compare that to the BONUSES paid to only Chase employees in 2009, which total $9 billion. Or compare to the total salaries, benefits and bonuses for all 200,000 Chase employees worldwide projected to be $27 billion. 225 million Americans = 200,000 Chase employees, or 1 Chase employee = 1,125 American citizens' bank fees.
Chase relies upon treasury & securities, asset management, and corporate banking for about 80% of their profits, not upon ATM fees, consumer real estate and credit card to make their profits.
Here's an example of treasury: The US capital markets are currently shoveling derivatives valued at as much as 35 TIMES the total US Gross Domestic Product, about $500 TRILLION. They're earning income - and generating nice banker bonuses - by trading those sometimes worthless pieces of paper with US taxpayer guarantees backed by AIG insurance.
* If you need some idea of the level of absurdity, and why you should learn to laugh visualize a 2 year old with a plastic squirt gun protecting a division of fully armed Marines.