(Updates with Durbin letter to Moynihan in last paragraph.)
Oct. 19 (Bloomberg) -- U.S. Senator Richard Durbin challenged Wells Fargo & Co.’s decision to charge new fees to debit-card customers, citing the record quarterly profit reported by the bank this week.
In a letter to John G. Stumpf, Wells Fargo’s chairman and chief executive officer, Durbin faulted the San Francisco-based bank for imposing a $3 monthly fee for debit-card users in five states in response to Federal Reserve rules capping the amount lenders can charge retailers for processing transactions.
“It is disingenuous for banks to claim they are somehow entitled to make up reductions to a revenue stream that they never would have received in the first place in a transparent and competitive market,” Durbin, an Illinois Democrat, wrote in the letter dated today.
Lisa Westermann, a Wells Fargo spokeswoman, didn’t have an immediate comment on Durbin’s letter.
Wells Fargo joined rivals including Bank of America Corp. and Atlanta-based SunTrust Banks Inc. in increasing customer fees to make up some of the revenue big banks may lose under the caps, a loss that could total more than $8 billion, according to Bloomberg Government data. Durbin, who pushed to require the caps as part of the Dodd-Frank Act, said in his letter that Wells Fargo’s decision was surprising in light of negative response to a similar move by Charlotte, North Carolina-based Bank of America.
The Fed rule implemented on Oct. 1 limits fees that card networks charge merchants to 21 cents per transaction -- about half the average retailers have paid in the past.
Wells Fargo shares fell 8.4 percent on Oct. 17 after the company reported record profit of $4.06 billion for the third quarter as investors focused on a 6 percent decline in revenue from the year-earlier quarter. The third quarter ended Sept. 30, the day before the Fed caps took effect.
Shares fell 51 cents, or 2 percent, to $25.35 at 3:34 p.m. in New York trading today.
The letter to Stumpf was Durbin’s second to a bank CEO this month. The Senate’s No. 2 Democrat challenged Bank of America CEO Brian Moynihan in an Oct. 3 letter over a decision to charge some debit-card customers a $5 monthly fee.
--With assistance from Dakin Campbell in New York. Editors: Gregory Mott, Lawrence Roberts
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