Government regulations bolster smaller banks
The anger over debit card fees plays into an ongoing interplay between large banks and small community banks.
“There has been this movement toward little banks, which are usually credit unions,” said Karen Spohn, Rivier College associate professor of economics.
Through regulations, the government is trying to make community banks larger so that giant banks are no longer too big to fail, Spohn said.
Credit unions are less likely to institute fees for the simple reason that they aren’t built to make money the way banks are.
Bill Johnson, an associate professor of finance at the University of New Hampshire Whittemore School of Business and Economics, described credit unions as a sort of customer-owned nonprofit bank. They generate revenue, but it’s rolled back into the credit union to keep down costs for its owners.
Banks, on the other hand, are owned by investors who expect their stocks to increase in value.
“They really do look the same from the outside. They provide the same services,” Johnson said. “From a consumer standpoint … it looks the same. It’s just the federal government who cares about the difference.”