Is it Ignorance or Arrogance?

The President had a very revealing comment in his interview with George Stephanopoulos the other day. They were discussing the recent trend to banks charging customers directly for debit card usage.

PRESIDENT OBAMA: Well, you can stop it because it-- if you-- if you say to the banks, "You don't have some inherent right just to-- you know, get a certain amount of profit.

What to say about this incredible lack of understanding of economics and appreciation for American liberty?

First of all, Mr. President, at the risk of using concepts too simple for you: There is no Free Lunch. Those charges are appearing because YOU (actually Senator Durbin with your endorsement) stuck your monkey-wrench into the machinery of the market,  limiting banks' historical practice of charging customers indirectly via merchant swipe charges (if you think retailers don't pass on their costs to customers via higher prices, you are even more ignorant than I thought).

But your point that banks don't have a right to earn a profit in excess of whatever you deem worthy is simply stunning. Since when? 2008? Banks, like every other enterprise are in business to maximize the profits for their owners. There is no other purpose. They do so by structuring products that customers want to buy. If they err in those assessments, customers will exercise their right to take their business elsewhere. You might recall how this plays out in other industries. Much of the airline industry has decided to break out baggage charges from ticket costs. Some of the industry -- most prominently Southwest Airlines -- have chosen not to. Flyers decide which method they prefer. 

Customers and banks will decide which method of paying for the cost of operating accounts they prefer. I don't know what they'll decide and neither do you --except that you don't want them to decide. You want to decide for them. And apparently you want to decide what level of profit a bank has a "right" to earn, too.

Voters in 2008 voted for a change in Washington, They did not vote for a change in America. It's time to remind the White House about that again next year.