In a report filed at the Los Angeles Times's Politics Now blog earlier today, Washington Bureau reporter James Oliphant relayed a number of whoppers delivered by Vice President Joe Biden without anything resembling a challenge. In Part 1, I noted how Biden, who in August described Tea Party sympathizers as "terrorists" and in September as "barbarians," today spoke in complimentary terms of how much the Occupy Wall Street crowd has in common with them.
This part will deal with Biden's hit at Bank of America and its $5 monthly fee for debit-card use. The relevant excerpt from Oliphant's writeup follows the jump (bolds are mine throughout):
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... (Biden) cited Bank of American’s new monthly $5 debit card fee as a symbol of public unease.
“Banks are part of the problem in the economy,” he said. “The American people know -- they don’t guess, they know -- the reason the CEO of the Bank of America, or anybody in that business, is in the business is because they, that guy making 50,000 bucks bailed him out, bailed him out. Put his financial security on the line when his government said we’re gonna come up with a trillion-plus dollars to bail him out.”
Of Bank of America, Biden said, “At a minimum, they are incredibly tone deaf. At a minimum. At a maximum, they are not paying their fair share of the bargain here. And middle-class people are getting killed.”
Well Joe -- and James Oliphant -- if losing money in your enterprise counts towards paying your "fair share," B of A should be getting tons of praise, as it has been mostly losing money for years (click to enlarge and open in a new window or tab):
The left graphic shows that Bank of America lost a combined $5.8 billion in calendar 2009 and 2010. The right graphic, containing the results of the past four quarters through June 30 of this year, shows that the bank has lost over $16 billion during that time.
In a truly free-market situation, the proper response would be that this is the bank's and its depositors' problem. But of course it's not that way in what is probably the most heavily regulated sector of the economy. "Financial reform," also known as "Dodd-Frank," and a myriad of congressional and Federal Reserve regulations which preceded it, have greatly constrained banks' ability to conduct business as they see fit.
Dodd-Frank included an amendment championed by Illinois Senator Dick Durbin which ordered the Fed to dictate maximum merchant fees for debit-card transactions. As shown in a Monday post about the Associated Press's poor coverage of this matter (at NewsBusters; at BizzyBlog), the Fed's new limit will cut banks' debit-card profitability by about half, amounting to an estimated $9.4 billion. B of A's share of that is likely at least $1 billion. To partially make up for that loss, B of A is instituting a $5 per month debit-card usage fee in any month during which a merchant purchase is made (ATM usage fees, if any, are apparently unaffected). Even if it gets back its regulation-driven losses, which seems doubtful, the bank still hasn't solved its profitability problem. B of A's shaky situation makes Durbin's suggestion that customers should "Get the heck out of that bank" -- which is even harsher than Chuck Schumer's similar statement a few years ago which led to a run on and the closure of IndyMac Bank -- incredibly irresponsible.
James Oliphant and most other reporters are pervasively failing to report Bank of America's fundamental lack of profitability. In the process, they are causing much of the public to believe that the bank's attempt to recover some revenue in its debit-card business is some kind of exercise in unadulterated greed, when in fact it's a difficult move by an entity fighting for its survival to stop at least some of the bleeding.
Joe Biden is feeding into this unjustified negative sentiment. James Oliphant and others are letting him. How negligent -- and how typical.
If a regulation costing over $9 billion to the auto industry had been proposed in 2008, it's virtually impossible to believe that the press wouldn't have pointed out how the Big 3 automakers were already losing money. So why is almost no one reporting that Bank of America has been unprofitable?
Part 3 will deal with Joe Biden's mischaracterization of the the nature of the “bailouts” which followed the passage of the Troubled Asset Relief Program (TARP) in the fall of 2008, and set some history straight for readers who are unaware of what really happened.
Cross-posted at BizzyBlog.com.