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JOAN VENNOCHI

A cheap swipe

Bank of America’s debit card fees are another slap to the public

By Globe Columnist 

As of 2012, if you are mugged while using a debit card, you can easily identify the culprit – Bank of America.

The bank just announced a new $5 monthly fee for customers who use their debit card to make just one purchase a month. That’s potentially $60 a year, from any customer who swipes a debit card to buy a latte. With 38 million debit card customers, including two million in Massachusetts, that could add up to as much as $2.3 billion annually. Put another way, the first 16 million or so monthly fees will just about cover the $83 million exit package for ex-Bank of America CEO Kenneth Lewis.

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Of course, it will take many more swipes to erase the giant mess Lewis left behind, especially via the acquisition of Countrywide Financial. That purchase made Bank of America the nation’s leading mortgage lender. When those mortgages turned out to be bad, Bank of America was left with billions in losses that it is now trying to make up. Congress also cut into its coffers when it reduced the amount of money banks can get when customers use their debit cards in stores.

It took banks a New York minute to figure a way around those restrictions. Of course, Bank of America is not alone in trying to squeeze more money out of consumers. A few days after the Bank of America announcement, Citibank announced it was increasing its fees on checking accounts. But much of the public anger is directed at Bank of America. When you have Senator Dick Durbin of Illinois urging the bank’s customers to take their business elsewhere, you know you have a public relations disaster on your hands.

The public anger toward Bank of America is connected to the nationwide saga of mortgages gone sour and what that means to people who were living in those homes. The bank is trying to get out the message, via full-page newspaper ads, that it is reaching out to “distressed homeowners.’’

It will take more than an advertising campaign. In its quest to get too big to fail, Bank of America forgot the key to the banking business: trust. Today, too many consumers see it as a greedy, incompetent entity out to nickel and dime them out of their own money, instead of a top-flight financial institution filled with friendly bankers who can help them realize their well-grounded dreams.

It feels like we are paying for the bank’s mistakes, and that’s not a good feeling. There’s also a sense of betrayal. Getting bigger was supposed to be good for consumers. It was supposed to drive costs down. Instead, the opposite has come to pass.

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Bank of America, along with the rest of the too-big-to-fail crowd, will have to work hard to regain consumer trust. In the short term, it will have to figure out how to restructure those bad loans and keep as many people as possible in their homes.

In the long run, it has to figure out how to get back to basics. As hard as it is on the high-flying banker ego, that means getting smaller. The question is, how does the bank do it? The financial press has been speculating that Bank of America is considering the option of putting its Countrywide Financial unit into bankruptcy. According to a recent report in The Economic Times, this option is possible because the Charlotte-based bank maintained a separate legal identify for the Countrywide unit after the 2008 acquisition.

While unloading Countrywide is tempting, it’s a risky way to win back consumer trust. If homeowners are in tough financial straits, they can’t just ditch their bad credit. First, they sell the family heirlooms to try to build up cash reserves. If they don’t have heirlooms, they cut back on extras. When they’ve cut out the extras, they turn off the cable.

Bank of America has to find a way to look morally responsible as it reshapes itself for the future.

Joan Vennochi can be reached at vennochi@globe.com. Follow her on Twitter @Joan_Vennochi.