Obama blasts Bank of America's new debit card fee

President Obama joined fellow Democrats in blasting a new fee on debit card users announced by Bank of America, arguing that banks do not have an "inherent right" to a certain amount of profits.

The bank has come under a hail of criticism after it announced Friday it would begin charging debit card users $5 a month, with one Democrat even calling for customers to abandon the bank.

But Bank of America has pushed back, saying the economics of its debit cards had changed ever since the so-called "Durbin amendment" took effect at the beginning of the month, requiring the bank to impose new fees. That amendment — a provision of the Dodd-Frank financial reform law — roughly halved the amount banks could charge retailers for swiping their debit cards, and was the subject of a fierce lobbying battle on Capitol Hill.

Democrats who backed the provision say banks simply want to protect robust profits, and the president seems to agree.

"You don’t have some inherent right just to get a certain amount of profit if your customers are being mistreated," he said in an interview with ABC News. "My hope is that you’re going to see a bunch of the banks saying to themselves, 'You know what, this is not good business practices.' "

Sen. Dick Durbin (D-Ill.), the primary backer of the measure, on Monday urged Bank of America customers to find a new place for their money.

“Bank of America customers, vote with your feet,” said Durbin. “Get the heck out of that bank. Find yourself a bank or a credit union that won’t gouge you with $5 a month and will still give you a debit card you can use every single day.”

Asked about the fee, Obama used the opportunity to tout the new Consumer Financial Protection Bureau (CFPB). Also established by the Dodd-Frank law, the bureau opened its doors in July but is still without a full-time director. The president nominated former Ohio Attorney General Richard Cordray for the position, but GOP senators are blocking any selection until the bureau is overhauled.

"This is exactly why we need this [CFPB]," the president said. "We need somebody whose sole job it is to prevent stuff like this."

The bureau was handed a broad mandate by the financial reform law, and has the ability to crack down on any "unfair, deceptive or abusive acts or practices." But so far, no officials from the relatively new bureau have indicated the agency would be acting on the fee.

The bureau has primarily focused on making the costs of certain financial products transparent and easily understood, so consumers could better choose the right product for them.

For example, a major initiative under way at the bureau is reworking mortgage paperwork.

—This post updated at 4:09 pm.

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