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BofA Looks To Pull Back On $5 Debit Card Fee

Bank of America Corp., under continued pressure from consumers, shareholders and politicians, will likely make it easier for more customers to avoid a $5 monthly debit-card fee, a source familiar with the plans said Friday. The Charlotte lender, the nation's second-largest bank by deposits, is likely to allow many customers to avoid the charges by maintaining minimum balances, having paychecks direct-deposited or using Bank of America credit cards, the person said. The bank's original plans imposed much stricter requirements for avoiding the fee, such as having a mortgage with the bank or keeping as much as $20,000 between deposits and investment accounts. Two of Bank of America's major competitors also stepped back from debit-card fees Friday. Wells Fargo & Co., citing "customer feedback," said it would cancel its planned five-state test of a monthly $3 fee for debit-card users. And New York-based J.P. Morgan Chase & Co., which has been testing a $3 charge in some markets since February, said Friday it will end the test and won't implement the fee. Other big banks' reluctance to follow Bank of America's lead "is kind of indicative of how the industry is going to play it," said Nancy Bush, a contributing editor with SNL Financial. Bank of America first announced the debit-card fees Sept. 29 in response to a new law capping the "swipe fees" banks can charge merchants whose customers pay with their debit cards. It plans to roll out the charges beginning next year. BofA's image problems The scaled-back plan would be the latest in a series of moves by Bank of America to rebuild its battered brand. The bank has been running print and television ads in a dozen major markets, including Charlotte, plus some smaller communities, bank officials said. And executives have made 1,500 phone calls and visits to community leaders across the country, reminding them of the bank's business lending, local employment and other contributions, according to a Bloomberg News report. Even as the bank posted a nearly $6 billion profit applicable to common shareholders in the third quarter, customers and lawmakers have hounded it over everything from foreclosures to website outages to fees. President Barack Obama was among the politicians to enter the fray over the debit-card charges, and this week, a group of senators and congressmen told federal regulators they feared Bank of America's recent transfer of financial instruments into its retail bank could put taxpayers on the hook for any losses. Against that backdrop, shareholders and public relations experts say the marketing campaigns might not be enough to boost the bank's image - or that of its chief executive, Brian Moynihan. "I don't think they're doing much PR work, period," said Steve McLendon of Matthews, a longtime shareholder frustrated by what he sees as a lack of honesty among the bank's top executives. "Moynihan needs to step up to the podium and say, 'Listen, I'm not blaming who I took over for, but I took over a pure mess.' And be honest about it." Bank officials this week declined to provide details about which community leaders the bank is contacting and details of its message. But ads running since late September have targeted the broader public. One full-page ad in the Observer reminded readers of the bank's sponsorship of the Bank of America 500 NASCAR race and related charitable efforts with the tagline, "We're working to help drive Charlotte's future." Another a few days later detailed the bank's efforts to help distressed homeowners. "The ads, which highlight our community impact, from small business lending to charitable giving, speak for themselves," spokesman T.J. Crawford said. An 'incensed' CEO The push occurs in Charlotte as rival Wells Fargo, which bought Wachovia in 2008, marks the end of that merger with fanfare. The San Francisco-based bank has taken out prominent ads in newspapers and on light-rail trains, and has organized a community celebration today, with free admission to arts and culture museums and the grand opening of Wells' history museum uptown. Bank of America has so far said little publicly in response to critics. Moynihan has avoided directly addressing lawmakers' complaints in media appearances, though in a conference call with analysts last week, he said the monthly debit-card fees were a way to encourage people to bring more business to the bank. The CEO was more blunt during a meeting with employees last week, when he said he was "incensed" by recent attacks, given employees' volunteer service, charitable giving and dedication to customers, Bloomberg reported. "You ought to think a little about that before you start yelling at us," he said to the bank's critics. Experts say the remarks - and the bank's public advertising - seem ill-advised. "There is a tone-deafness in the current campaign as to what's really going on in the U.S. customer base," said one source close to Bank of America, who asked to remain anonymous because of ties to the company. "Tell me you're sorry, show me humility - don't be 'incensed.' " Customers and shareholders Heidi Hennink-Kaminski, a marketing professor in UNC Chapel Hill's journalism school, said companies such as Bank of America face a difficult balance between keeping customers happy and delivering a return to shareholders, often adopting policies that might be unpopular with some stakeholder groups. But she said in the face of public criticism, it's generally best for companies to address a problem head-on. "People need to hear that the company knows there is a problem, how it is actively solving the problem, and that it will continue to serve customers as best it can," she said. "... If you start with high trust, and you are transparent about how you're addressing the issue or remind people of the other contributions you make to customers and the community, you can bounce back. But there has to be enough positive history to withstand extensive criticism." Bush, the bank analyst, said Bank of America needs to be careful not to be too aggressive with its PR campaign, but she said she's glad the bank is reminding people how many workers it employs and all the good it does in communities. "They have been a pin cushion," she said. "I think they have done many dumb things, but on the other hand, they are trying to make loans. They do a lot of volunteer work. ... They have been this year's big dumb bank. But it's got to stop somewhere." In the meantime, Bank of America's efforts at establishing local goodwill continue. In remarks this month at the Atlanta Rotary Club's annual prayer breakfast, Moynihan stressed his company's involvement in the community and said the bank is attempting to reshape itself in the wake of the worst economic crisis in decades. It's up to everyone in financial services to help restore the public's confidence, to show that company leaders believe in what they do for the right reasons, and to return to the profession a culture of moderation and humility, he told the group. "The most simple and clarifying question we can ask of ourselves," Moynihan said, "may be the most important and the hardest to answer: What is the right thing to do?"