(Updates with Obama comments on banks, Wall Street protests beginning in third paragraph.)
Oct. 6 (Bloomberg) -- President Barack Obama said banks are using new financial regulations as an “excuse” to impose fees on consumers, while saying there isn’t anything the government can do to stop them.
“People have been using financial regulation as an excuse to charge consumers more,” Obama said at a White House news conference. He used the issue to urge the Senate to confirm his nominee to lead the Consumer Financial Protection Bureau, saying that providing the public with more transparency on prices and practices will put competitive pressure on financial institutions.
The anti-Wall Street protests that have spread from New York City to San Francisco are evidence of public frustration with the financial system.
Bank of America Corp., the biggest U.S. lender, and rivals including JPMorgan Chase & Co., Wells Fargo & Co. and SunTrust Banks Inc., are rolling out new charges for debit-card users as Dodd-Frank Act rules imposed by the Federal Reserve take effect this month.
The limits may reduce annual revenue at the biggest U.S. banks by $8 billion, data compiled by Bloomberg Government show. The fees have drawn criticism from Obama and some Democratic lawmakers, who are fighting Republican attempts to scale back Dodd-Frank.
“Basically, the argument they’ve made is, well you know what, this hidden fee was prohibited so we’ll find another fee to make up for it,” Obama said. “Now, they have that right, but it’s not a good practice. It’s not necessarily fair to consumers.”
Obama stepped back from an answer he gave Oct. 3 in an interview with ABC News and Yahoo. When asked then whether he could stop Charlotte, North Carolina-based Bank of America’s $5 debit- card service charge, he said, “You can stop it because it -- if you -- if you say to the banks, ‘You don’t have some inherent right just to -- you know, get a certain amount of profit.’”
Obama said today the government doesn’t have a right to dictate how much profit a bank makes. Still, he said, the bank charges demonstrate the need to install his nominee to lead the financial watchdog agency.
“What the Consumer Finance Protection Bureau could do is to make sure that consumers understood exactly what they were getting, exactly what was happening,” the president said.
The nomination of Richard Cordray to oversee the bureau was approved by the Senate Banking Committee today. The action sets up a showdown with Republicans vowing to block any nominee for the post until changes are made in the structure and funding of the new agency, created by the Dodd-Frank Act.
Vice President Joe Biden said earlier today that financial institutions are “tone-deaf” in adopting new fees.
“The American people know -- they don’t guess, they know - - the reason the CEO of Bank of America” and leaders of other financial institutions remain in business “is because they, that guy making 50,000 bucks bailed him out,” Biden said, referring to the government rescue of financial institutions in the aftermath of the collapse of Lehman Brothers Holdings Inc. in 2008.
“At a minimum, they are incredibly tone deaf,” Biden said. “And at a maximum they are not, they are not, paying their fair share of the bargain here. And middle-class people are getting killed.”
The president said he has followed reports of the anti-Wall Street demonstrations. The protests “are giving voice to a more broad-based frustration about how our financial system works.”
He said the public is dissatisfied that “you’re still seeing some of the same folks who acted irresponsibly trying to fight efforts to crack down on abusive practices that got us into this problem in the first place.”
Still, Obama defended the government rescue of U.S. banks, saying that “had we seen a financial collapse then, the damage to the American economy would have been even worse.” He said he has used “a lot of political capital” to keep banks afloat.
--With assistance from Roger Runningen and Kate Andersen Brower in Washington. Editors: Joe Sobczyk, Jim Rubin.
To contact the reporters on this story: Hans Nichols in Washington at firstname.lastname@example.org; Margaret Talev in Washington at email@example.com
To contact the editor responsible for this story: Mark Silva at firstname.lastname@example.org