As a long-time observer of the financial services industry, I was wondering how long Bank of America could hold onto plans for a new $5 monthly fee on debit accounts, starting in 2012.  The answer: About a month.  Earlier today, B of A announced that they are ending plans for the new fee roughly 32 days after it was announced, according to the Huffington Post. (Some wise senior manager at the bank probably had a monthly report dropped on their desk today showing high customer abandonment rates, shot through the roof, and called off the fee.)

In the past, banks have had the wiggle room to both add and increase fees, nudging them up to increase profits or stave off losses.  That, of course, was in the era before the Tea Party, Occupy Wall Street and a myriad of other similar populist uprisings.

Last quarter, NetFlix CEO Reed Hastings learned what it means to draw the ire of the American consumer during tough economic times, when Hastings was forced to apologize for a planned product spin-off that amounted to a 60% price increase by the company.  Nearly 600,000 Netflix customers dropped the service after the price increase was initially announced and before his apology.

Compared to Netflix rate increase of 60%, Bank of America’s $5 monthly fee looks relatively small and would probably have been absorbed by its customers as late as 2007.  In B of A’s defense, they were hoping to plug a revenue hole opened by Dodd-Frank, which cut the fees banks can charge to process debit card transactions, known as interchange fees, roughly in half.  However, B of A failed to weigh the anger felt by many that the TARP financial bailout helped banks and not consumers.  Had B of A not rescinded the planned fee, it was sure to see a max exodus of customers on Bank Transfer Day, scheduled for November 5th.

Evidently, it’s going to be quite a while before any financial institution – retail bank or credit union – can raise fees to plug a funding hole.  For at least the first half of this decade, they’ll have to put their effort into cutting costs, either by increasing productivity or reducing head-count.  If the don’t, the war on banks will not only continue, the customer will surely strike back.

Donald Patti is a Principal Consultant with Cedar Point Consulting, a management consulting practice based in the Washington, DC area, where he advises businesses in project management, process improvement, and small business strategy. Cedar Point Consulting can be found at