Wells Fargo's (WFC) Stumpf Lashes Out at Debit Card Fees Limit

Saying the proposed limits on debit card fees "make no sense," and distort free-market economics, Wells Fargo (NYSE:WFC) CEO John Stumpf blasted the idea in an annual letter to shareholders.

He rightly says, “What’s next? Will the government require car dealers to sell a new vehicle for $5,000 or grocers a gallon of milk for 50 cents?”

“Banks should be fairly compensated for the value that debit cards create for merchants and their customers by reducing fraud risk and the cost of carrying cash or handling checks,” Stumpf wrote. “An 80 percent cut in this fee wouldn’t even enable us to cover the cost of providing the service.”

Issuers including Bank of America Corp. (NYSE:BAC) and JPMorgan (NYSE:JPM) could lose as much as $12 billion in annual revenue under the change, scheduled to be implemented July 21.

The Federal Reserve rule, required as part of the Dodd-Frank Act approved in 2010 by a Democrat Congress and signed by President Barack Obama, would cap the fee card networks can charge merchants at 12 cents for each transaction, replacing a formula that had averaged 1.14 percent of the purchase price.

Some lawmakers have introduced bills to hold off on the change for a couple of years until it can be examined more closely. There's really nothing to examine, it needs to be excised from the bill altogether.