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Best Response to Bank of America's New Debit Card Fee?

POSTED ON BY

Bank of America

Have you noticed all of the publicity Bank of America has received since news came out about their plans to start charging a monthly fee for debit card usage? As I reported on Friday, BofA plans to roll out a $5 monthly fee when customers use their debit cards to make purchases. I've been seeing news on this every night on the national news. They have reported about this online petition which asks BofA to reverse their decision about adding this fee. The petition currently has over 137,000 online signatures. Also, Consumers Union has called for Congress and bank regulators to investigate this new fee. Here's an excerpt of Consumer Union's press release:

Following Bank of America’s announcement of a new $5 monthly fee on debit card transactions, Consumers Union, the public policy and advocacy division of Consumer Reports, called on Congress and federal regulators to investigate the controversial new fee.

In letters to the House and Senate banking committees and financial regulators, the organization urged them to investigate whether the new monthly fee is justified and whether it takes unfair advantage of consumers simply to boost profits. The letter notes that the fee, which could cost Bank of America customers an extra $60 per year, comes at a time when American families are hard pressed to pay additional charges.

Perhaps a better response would be for customers to close their Bank of America accounts and move their money to another bank or a credit union which has more customer-friendly policies. As I discussed last week, you can find many internet banks, community banks and credit unions which provide free checking accounts that won't be charging you for using a debit card. Bank of America's new debit card fee hasn't started yet, so it's not an issue of insufficient communication. Customers have plenty of time to move their money.

I'm more concerned with banks making account changes that violate the spirit of the account disclosures. An example is an institution increasing an early withdrawal penalty on existing CDs based on a generic clause in its account disclosure.

Banks are justifying the new fees based on the debit card interchange fee regulation that took effect October 1st. This caps debit card interchange fees to 21 cents with an extra 0.05% of transaction price to cover fraud prevention costs. Banks and credit unions that are under $10 billion in assets are exempt from this cap.

It's possible that this debit card regulation may help to shrink the too-big-to-fail banks. Bank of America and other large banks are using the new regulation as a reason to introduce new fees which is causing public outrage. Hopefully, small banks and credit unions will be able to pick up new customers who flee from these too-big-to-fail banks. However, it is easier to sign a petition than to move your money.


  Tags: Bank of America, checking account

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Comments
64 Comments.
Comment #1 by Anonymous posted on
Anonymous
I closed my accout at a big bank and opened a checking and savings account at Alliant Credit Union.

They are fantastic!!  Best move I ever made.

Also closed my BofA credit card and opened a State Farm Visa and a Nordstrom Visa.

Both provide excellent service.

10
Comment #2 by Jeffry Pilcher | The Financial Brand (anonymous) posted on
Jeffry Pilcher | The Financial Brand
A petition is ridiculous. If you are naive enough to believe BofA could be influenced by a petition, then why not petition the company to give everyone $1 million?

11
Comment #3 by Anonymous posted on
Anonymous
It is time for Bank of America to close.  The bank is still alive only because of government support.

12
Comment #4 by Wil posted on
Wil
The quote from Consumers Union gives ample evidence of the socialistic tilt of that organization. BOA's controversial new fee is a responsible to the unintended consequences of government intervention (i.e., Dodd-Frank's Durbin Amendment) into the free market. So what does CU propose as a remedy: MORE GOVERNMENT INTERVENTION!!! What unintended consequences will that produce?! Can anyone predict? Ken, I agree with you. The strongest message that BOA customers can send is to close their accounts and do business with more customer friendly banks and credit unions. A mass exodus from BOA would also get the attention of other banks as well, who may be "waiting in the wings" to see how BOA's new fee plays out. Customers who, for whatever reason, have need of a BOA account can simply cease using their debit cards for anything other than ATM usage. Once BOA notices that the new fee isn't generating the kind of revenue that was expected, and that it risks loss of market share, there is a good chance that it will simply give up and drop the fee.

11
Comment #5 by Anonymous posted on
Anonymous
SunTrust was amongst the first to introduce $5 monthly fee for debit card usage, Wells Fargo is considering and running tests in California, New Mexico and Arizona and I don’t see any cry about it.
Why bash B of A about the fee, you should petition Barny, Dodd and Durbin, the democrats in charge of the banking fees, they did impose the fees on us indirectly.
The politicians made a mistake and now they are blaming the banks instead of themselves, hypocrites running wild, to say the least.

25
Comment #6 by Anonymous posted on
Anonymous
Thankfully I have always stayed away from BoA.  None of their products were a good value to begin with, the only thing they had going for them is that they were everywhere but with modern banking being mostly electronic....I don't NEED a bank that is everywhere.

 

7
Comment #7 by Shorebreak posted on
Shorebreak
It's probable that the vast majority of BofA customers that will be affected by the $5 monthly fee will not close their accounts and take their business to another financial institution. They will either be too lazy to do so or will have the usual excuses like convenience of ATM locations, hassles to change direct deposits and automatic drafts or bill paying. I'm sure BofA has already factored in losing a small number of customers into their earnings projections.

13
Comment #8 by Anonymous posted on
Anonymous
Wil - #4, wrote:

“Once BOA notices that the new fee isn't generating the kind of revenue that was expected, and that it risks loss of market share, there is a good chance that it will simply give up and drop the fee.”

And your point is what?

The banks will not quit running their business, they will impose hundreds of hidden fees and or monthly checking fees and or increase the minimum balance requirements for no fee accounts and or impose online banking fees and or ...... fill it with your imagination fees......

B of A will not be allowed to go out of business since hundreds of small banks are clearing their daily money sweeps through B of A and are using it as notes and bonds clearing house.
Thousands of brokerage accounts are cleared daily at B of A and they are vital to our economy and for day to day activities for millions of people.

Why some of you want a part of our economy to be trashed is beyond belief, if you don’t like the fees, move on with other bank, you have no right to demand accounts with no fees, even the Congress allowed hundreds of bank fees to be imposed on the consumers.

18
Comment #9 by Jack (anonymous) posted on
Jack
I agree with #8,
You call a service to come and fix something in your home, you pay service fee just for the serviceman to come over, if you don’t like that fee, you shop around for someone who does not charge a service fee for the visit.
You go to a grocery or service store, you pay fee for the items and the services received, you can not demand the fees to be waived just because you don’t like to pay the fees and can not demand their business to go out of business just because they have imposed a service fee on you..
If you think you are entitled to a no fee services, well, you may be a communist or with socialistic ideas, without know it.

15
Comment #10 by Bancxman (anonymous) posted on
Bancxman
The reduction in debit card swipe fees imposed by the Durbin Amendment is supposed to be for the benefit of merchants. Since merchants typically pass such costs on to their customers, the latter are  the ultimate beneficiaries of this legislation. BOA isn't going broke because of the lower swipe fees. It simply isn't making enough money to suit it. Hence the $5 monthly fee. If you don't mind enriching BOA's shareholders then, by all means, pay the monthly fee. If not, then switch banks. But don't tell me that this is somehow an unwelcome intrusion by Big Government. It was the lack of government oversight that led to the crisis that Dodd-Frank was ultimately enacted to address. Moreover, without a Treasury Dept. (i.e. taxpayer) bailout under TARP, its questionable if BOA would even have survived in the aftermath of its irresponsible investment decisions. Personally, I would like to see the five largest banks in this country broken up. However, since that's not likely to happen anytime soon, I'll be grateful for all the regulatory controls government can impose on BOA.

8
Comment #11 by Anonymous posted on
Anonymous
Every bank will be doing this. BUT how about the new "min balances"--or you gte charged $12 per fee and min. balance fees! Now this is being done at many banks too! The news has not reported this--Example in CA--Wells Fargo wants you to keep at least $7500.00--yes $7500.00 usd in the bank (it can be in a combination of accounts including CDS) BUT a min bal of $7500 to not be billed $12.00 per month--Chase $1500, and CitiBank is doing the same!! No one is talking about this! So combined one would pay almost $30 per month to maintain a checking account (that pays NO int.--only the bank will be making money ) . All this because the govt wanted to "protect" people who went into their overdrafts! Thanks Dobb FRank! Thanks!

7
Comment #12 by Heidi Donahue (anonymous) posted on
Heidi Donahue
At Mission Federal Credit Union in San Diego, we have already had some Big Bank customers switch over and become our members. We are happy to have them, and happy to say that we will not be charging a monthly debit card usage fee.  We're member-owned and we strive to provide the best service possible. If you live in San Diego, you should come check us out! https://www.missionfed.com

8
Comment #13 by Anonymous posted on
Anonymous
In free market economy an enterprise is "free" to offer their products at whatever price.

In free market economy a potential consumer is equally "free" to accept or reject the product.

.

Utilities are a bit different even in free market economy.

.

Government is vastly different in the free market economy.  The products offered by the government (viz Money/Currency) is hard to reject.  The services offereed by the government (viz Security, Education etc.) are hard to reject.  And of course the fees charged by the government (viz Personal Income Tax, Corporate Income Tax, Sales Tax) is of course very very hard to reject.

.

3
Comment #14 by Fred1 (anonymous) posted on
Fred1
To Jack #9,
You said it right, there are fees on everything we buy, from gas to bread and even Government services. Everything have included some kind of fees, from transportation cost fee to profit fees and store insurance fees.
Just because they are not disclosed, we think there are no fees on that purchase of goods or services. B of A disclosed the $5 service fee and we are steaming at the bank with complains.
I like to know if anyone of you will complain to the gas attendant for making 5c profit for the gallon of gas you just purchased or the 5c fee for the transport from the refinery to the gas station or for the 55c  fee the Government makes for the gallon of gas you just purchased.

14
Comment #15 by Anonymous posted on
Anonymous
Something that has not been addressed that I know of:

Is this fee per card?

For those that say this is Government's doing, the Government didn't give a speech about their "right to make a profit", Moynihan did.  Banks make money, that's a given and it's their right as a business, but to say that this fee is a result of legislation designed to protect the consumer is ludicrous.  Reduce your CEO's salary, stop paying such insane amounts of money to people that make bad decisions.

6
Comment #16 by Anonymous posted on
Anonymous
If regulation is the root cause of BoA charging a fee for debit purchases, then we should consider removing all regulations for the finacial sector.

Then the banks can charge as much as the payday loan places for credit cards, home loans, etc.  They could also not pay any interest what-so-ever.  And charge fees for everything, including speaking to a representative regarding your account.  I could think of a hundred other things banks could impose fees without any regulations.

Stop blaming regulation that is designed to protect the end consumer from companies from taking advantage of consumers.

7
Comment #17 by Anonymous posted on
Anonymous
.

 

My compliments to Bank of America for being very transparent about the fees, and for communicating this fees well in advance.

 

Bank of America did not hide this fees, they did not bury it is some small print like a few of the credit unions who have buries the fact that they can change the early redemption feed for the CDs after the CDs are opened.

 

.

 

11
Comment #18 by lou posted on
lou
It's very simple: take your money somewhere else. If you don't, then you really can't complain. BTW, I agree these megabanks need to broken up. Right now BoA is a too-big-to-fail bank, exactly what we don't want.

7
Comment #19 by Anonymous posted on
Anonymous
Sheeple won't close accounts.  To much work.  It's easy for most sheeple to complain about all the fees they are being charged.  Some actually enjoy complaining.  They can't do this if they do the smart thing close their account and move on.

4
Comment #20 by Anonymous posted on
Anonymous
.

 

Yes ... I know this forum is for consumers and is infested with consumers who are used to getting services for next to nothing, and I admit to have these leanings myself at times.

 

However, there is an important point about this.  The banks are "for-profit" enterprise, and they will be failing in their corporate duty if they do not generate profit for their owners (sharegolders), which of course is everyone who has even a fraction of any S&P 500 based fund/ETF in their holdings portfolio.

 

.

8
Comment #21 by Anonymous posted on
Anonymous
.

 

I am reminded of the decision by Netflix to hike up their fees a few weeks ago.  There was a big hoopla from the consumers.  What happened as a results?  Nothing!  That's right ... Nothing.

 

The compnay did not reverse the fees, did not offer any discouts, and in fact it went ahead and made operation a little difficult for the subscribers who subscribe to both DVD by mail and watching programs over internet.  ( Oh yes the CEO offered some lip-service but that was it. )

 

What will BAC do?  I guess it stand firm and will not surrender.  It will be happy to retain the customers who stay-put, and will be happier to see the last of those who decide to leave.

 

.

2
Comment #22 by Anonymous posted on
Anonymous
For the people that signed the online petition, I wish they would come to terms with the fact that banks were not created for the common consumer.  They are intended to cater to business and people with large balances who wont even notice that they're getting nickel and dimed left and right. 

I've always done business with credit unions.  They have lower fees, very competitve interest rates, and of course better customer service.  For instance, I do banking at Randolph Brooks Federal CU and they actually pay me 10 cents each time I use my card.  As of now, the assets are under $10 billion so it is exempt from the Durbin Amendment, but once it does finally impact the CU, I really can't imagine a $5 fee being imposed for using the debit card.  I guess my CU has spoiled be, but I think it's truly ridiculous to pay for using your debit card, or pay monthly service fees for not keeping a certain balance in the account.  But like I said, banks were created for business, not the average consumer. 

4
Comment #23 by Anonymous posted on
Anonymous
Bankof America is really not any different than any other large bank.  It's just that they're the most brazen.  I bank with at least a dozen different banks and, like many, I've correlated some customer services with the size of the bank.  Motto:  trust not any bank.  Credit unions are more adaptable, but generally many are incapable of providing the services many of us have longed to expect.

3
Comment #24 by numberten posted on
numberten
Not sure of all the hoopla here. I agree with Ken's suggestion that the best protest is to just close your BofA account and move a different bank whose current fee structure is more to your liking. Of course, if all banks/credit unions decide to impose this fee sooner or later, we will just accept this as a cost of having a debit card :-)

3
Comment #25 by 51hh posted on
51hh
I would switch in a minute if I did not have their 2.24% HELOC:D

2
Comment #26 by Anonymous posted on
Anonymous
To Anonymous - #16,

You my friend are misguided. We don’t like to live in a society full of regulations and rules.
Did you ever heard of supply and  demand , obviously not and you don’t like to live in a capitalistic system. Your utopia reasoning are the cause of such regulations and to the detriment of all us.
There were very few banking rules in the 50s and the interest rates the banks charged was lower then even today’s rates and nobody complained about it. My parents paid 3% interest rate on a first mortgage. Thats right, 3% and there were no Government regulations to protect the people like you (entitled from cradle to grave) of some sorts of handouts and Government protection.
You obviously do not belong among us, the hard working people and the savers. If you wait for the Government to issue rules and regulations to control the businesses of any kind, than there will soon be no business left to supply the money for your entitled mind.
When the Government tries to regulate, those businesses will be ruined and destroyed.

13
Comment #27 by mak1118 posted on
mak1118
 Anonymous#26: I'm not sure what you are saying but if it is that Government regulation is not needed then I will choose to disagree with you totally.

8
Comment #28 by ichaelm (anonymous) posted on
ichaelm
I find this fee to be interesting because I have a business checking acct w/ BOA and in order to avoid a maintenance fee, I'm required to use my debit card at least once a month!

1
Comment #29 by Wil posted on
Wil
Anonymous #8 asked what was the point of my last sentence (in comment #4). Perhaps I can be clearer. In free markets, businesses react to market forces, and in competitive markets, they usually seek to gain and/or protect market share. Should there actually be a mass exodus from BOA because of its debit card fee, BOA would do what is necessary to protect its market share. Anonymous #5 mentioned other banks "running tests" in certain markets. Why do you think they are "running tests"? To find out how the market will react! Now, if TARP, and Dodd-Frank, and the Durbin Amendment, etc. means that financial markets are no longer free, then perhaps my point might be proven wrong. But if that is the case, is the remedy more government intervention, as Consumers Union proposes, or less regulation. I humbly suggest that the way to remedy the unintended consequences of government regulation is to rescind or repeal the government regulation that created them in the first place. In any case, even if BOA doesn't relent and drop the fee, those who left for more customer friendly banks and credit unions will be better off anyway.

4
Comment #30 by Anonymous posted on
Anonymous
How is this article related to Savings rates. There are many articles which are related to what bank Of America is doing. I dont care about them here. What a waste of time 

1
Comment #31 by Anonymous posted on
Anonymous
Here's the issue with all this...I called BofA about this to see what options I have....result-keep $20k with them, which would be fine if their interest rates were competitive (which they're NOT), dont use their debit card and keep cash (do people actually do that still?!?!?!) or write checks (seriously??)

IF and BIG IF they decided to charge fees because of the government's imposition/regulation to limit the banks "profits" off card swipes, its rediculous! Banks usually make approximately 8c per swipe, so when it was previously at 44c, the banks were BANKING IT!  Even with their profit reduction, they are still making money and a lot of it!  Not to mention, BofA closed a few branches and let go a few thousand employees, got the government bailout and STILL need to increase profits? If thats the case, someone isn't balancing their books!

Finally, those saying that everyone charges fees and companies have cost associated with services...I AGREE, however banks are already making money off the simple fact that we bank with them---we keep money in their bank which they, in turn, THEY use to make money and earn interest off....we keep our money with them so what we can spend at merchants, who turn around and pay the banks; and the most obvious, they earn an insane amount on their fees, for overdrawing funds, wire transfers, interest on credit card etc etc.

Changing their fee structure 4 years ago probably wouldnt have been as big of an issue when the economy was stable, however in these times, its simply wrong!

3
Comment #32 by lou posted on
lou
#31 what is right or wrong is a value judgement which i rather not have the govt making. Again, it is very simple, take your money to another bank or credit union. Let the marketplace discipline them. BTW, this is the same govt that allowed them to acquire numerous banks, potentially giving them monopoly status as well as making them too big to fail.

3
Comment #33 by pathofpain (anonymous) posted on
pathofpain
jeff petitions work what else would work is collectivly customers demanded more of an return banks take no risk the investments they make are not with their money but ours and ours is backed by the fdic-wil they are always part of the banks i.e fdic-how did gov impose this fee?by protecting us.-i like the fill it with your head imagination fee-jack when in home service providers charge a fee to come over they take it off the price of repair,if not then negotiate the fee theyll waive it.-bancxman i agree you nail itoverdrafts should have a 30 day grace period and then a $35 dollar fee-fred a gallon of gas work for your money the bank dont they use you money for their profit sowhy charge a fee anyways.-

1
Comment #34 by Anonymous posted on
Anonymous
Yeah, I'm a little P.O.d that Bank of America has announced right up front

how they're going to start this stupid $5.00 charge. I've had an account with them for many years,

but as soon as I can, I'm going to close my account with them, and move it elsewhere. I know

some of  the other banks will do that too, but maybe if enough of us close our accounts with them,

as quickly as possible, maybe the other banks will see the impact on B of A, and give second thought about

following suit.This whole thing is rediculous. First we give them billions to get them back on their feet

and they show their appreciation by hitting their customers in the stomach with more new fees. Do you realize

that if they have 1,000,000 customers that use a debit card they will earn $5,000,000.00 every month and

we all know where that will go,(to the CEO's, etc.) They should be giving us money instead of taking it away.

Please pass this on to all your friends, (lets hit them where it hurts), less money in their bank. Maybe it'll get

them scratching their heads saying, "Oh ****, maybe we went too far this time" And I swear,friggin' Wall Street

and Obama and Capital Hill better not give them more money to waste.I'm sick of it and I say we should

rally together and let them know by moving our accounts, and when they come crying, tell them they may

have ****ed us once BUT WE ARE NOT GOING TO KEEP GIVING THEM MONEY TO WASTE.Let the government

buy out their bank and see (I'm quite leery),if they can run it better, as Obama says, (RESPONSIBLY) with

an open window policy, so we can see where our money is going.Or would they **** it up too??

2
Comment #35 by Awesome (anonymous) posted on
Awesome
lol @ all the poors complaining about a $5 fee.  Also, lol @ morons using debit cards.  I get 2-6% cash back using credit cards.  Finally, lol @ idiots who talk about BofA vast network of ATMs.  Is it 1985?

1
Comment #36 by 51hh posted on
51hh
Do you always laugh at the poor and call people morons and idiots?  Sigh.

Have a nice day:-)

10
Comment #38 by Anonymous posted on
Anonymous
To Anonymous - #31, Anonymous - #34

You just commented without going deep into your logical thinking.
The bank issue is much different than you suggested.
When you deposit money in a bank you create liability for that bank and you trigger all kinds of other fees to incur, like FDIC and the bank needs to balance your deposit with assets or income in the general ledger.
If no income is coming out of your deposited money, the bank needs actually  to either borrow assets or issue loans against your deposit. All those procedures require manpower and costs to be associated with your deposit.
If there are no fees to compensate for that, you actually cost the bank money to keep your account open and be serviced online or at the branch or at an ATM, which all of them cost additional money to the bank.
The Congress, being narrow minded, tried to run banking business without knowing anything about it how it works and there we are, stuck with regulations and limits that hinders the banks performance. Since the smaller banks are exempted from those congressional rules, it created unfair competition.
Mucking the big banks is not fair position to take, since the playing field is biased against the big banks.  

10
Comment #41 by Anonymous posted on
Anonymous
**** Durbin’s personal financial disclosure shows he holds investments in Warren Buffett’s Berkshire Hathaway and the Fairholme mutual fund. Both are investors in Bank of America.
Why Durbin trashes B of A, he holds short positions and any move of B of A stock lower, creates tremendous profit for him.
Now you know how our corrupt Government operates.

9
Comment #42 by Wil posted on
Wil
Anyone notice that PNC Bank is already putting up ads (seen on Verizon Online) touting "no debit card or PNC ATM fees." While some banks may be testing the "waters" as to whether customers will sheepishly accept new debit card fees, other banks seem to believe that announcing "no debit card/ATM fees" is a viable strategy for gaining market share.

2
Comment #43 by Wil posted on
Wil
New "Bank" (actually, CU) Deal: Just heard about this on the Willis Report (FOX Business News, 5 PM Eastern). Co-op Services Credit Union of Livonia, Michigan is offering $105 to new members who "shred their debit card and open a new account." One assumes the debit card(s) in question would be from an "other financial institution."

1
Comment #44 by Anonymous posted on
Anonymous
Let us look at the real problem.  When government steps in and  controls industry prices, bad things happen.  In this case. BOA is trying to maintain a profitable company for their investors while Sen. Durban is demanding they reduce their fees.  How can Durban tell any company what to charge?  Will he tell Wendy's that they can only charge $1 for their hamburgers next?  Let the free market work.  If customers don't like BOA fees, they will change banks.  We don't need the government to tell us what bank to use. But when the govenrment intervenes, all banks must do something to remain profitable.  By the way, BOA is not the only bank making these changes.  The news outlets are pretty silent on that fact.  So stop the BOA rant -- it is really government go wild that is causing all this.

WM   Houston Tx

5
Comment #45 by msf (anonymous) posted on
msf
With everyone saying people should to banks where they're cheaper (read: free), I challenge the underlying assumption, viz. that people should use debit cards.  It is very hard to find advantages to using debit cards - they don't provide the same protection that a credit card does for problems with a merchant, they don't provide the same loss protection (and since the debit card instantly reaches into your account, the money is gone like that ), they don't provide a float on your money.

For some comparisons, see NYTimes (2009) or this oldie but goodie (2004) from Military Money.

Sure, they do make it easier to see your balance sinking to zero, but if most people were using it that way, then why did Congress see the utility of requiring overdraft protection to be an opt-in, instead of an opt-out?  And why would the banks care about this, if they weren't making money hand-over-fist from people overdrawing on their debit cards?  So much for the bookkeeping benefit of debit cards. 

Banks spent piles of money promoting debit cards, which originally got a lukewarm reception.   They suckered people into switching from credit cards.  Try getting an ATM card that is not a debit card.  Interestingly, it is the large banks that have accomodated me on this request.  Can't get a pure ATM card from an internet bank, or from a credit union, at least in my experience.

Regarding banks being less regulated in the past (e.g. the 50s).  In the 50s and 60s, commercial banks/savings banks were prohibited from offering more than 4.75%/5.0%, then later 5.0%/5.25% and finally 5.25%/5.5% on savings accounts.  They could not offer any interest on demand deposit (checking) accounts.  NOW accounts did not exist - they were prohibited.  And you couldn't have banks crossing state lines.  (For all of this, see Time Magazine 1981.)  It was with the start of deregulation, where banks could do all sorts of risky things (but still get government insurance) that you had the S&L crisis, only recently surpassed by the 2008 fiasco.  Of course there was Glass Stegall, until Sandy Weill decided he didn't need to follow the rules.

Regarding banks being big business - take a closer look at what AP Giannini built - the former Bank of Italy started as a bank for the "little fellows", as any San Franciscan who knows his history will tell you.

2
Comment #46 by RJM posted on
RJM
"at the end of day most people won't switch unless they get totally ticked off & they'll only go to convenience"

1
Comment #47 by Anonymous posted on
Anonymous
To msf, #45, Friday, October 7, 2011 - 6:32 PM

You wrote: “It was with the start of deregulation, where banks could do all sorts of risky things (but still get government insurance) that you had the S&L crisis, only recently surpassed by the 2008 fiasco.”

You are misleading in that statement, without looking at all of the facts.

For starters, the interest rate in the late 70s and early 80s were over 20% on some bank loans given to the consumers. My second mortgage was 21.5%, I still have the note from the bank and I still have the papers for a CD were the interest rate was 16%.

De-regulation mentioned in your posting is for new products to be introduced by the banks, like credit cards and personal line of credits. It has nothing to do with interest rates.

Furthermore, FDIC and FTC, still hold the banks responsible for banking rules and regulations even deeper than in 50s and 60s.
FDIC hold full power over the interest rates the banks can charge their customers and now FDIC can even order the interest rates to be implemented or risk being fined and or closed.
There was no such regulation before.

The FEDs can now order the banks to merge and or assimilate other banks with detrimental consequences. FDIC can close banks with just few months notice if any of the present banking rules are not followed.

The banks were ordered by the Government to lend to anyone who buys a property and they can sell those loans back to Freddie Mac and Fannie Mae (housing afford-ability act).

The Congress ordered banks how much to charge and how to run their business, there was no such regulation few months ago.

Are you still claiming that the problem is de-regulation or the problem is the Government.

De-regulation did not cause the banking problem, the new rules and regulations that followed and the Government intervention caused the problems and those are the facts.

What You call de-regulation, actually meant that the banks will not only comply to the old banking rules, but also to the FDIC, FEDs , FTC and  the Congress and can accept to be ordered the new rules and regulation at a whim of a second, in exchange for introducing their new products.

7
Comment #48 by Anonymous posted on
Anonymous
Seems to me that it is a reasonable response to legislations that removed $ from all banks....if you're mad at someone ...be mad at your democratic congressman and president who beleive that after they interfere in the free market that nobody will REACT to the legislation.

just wait until Obama care forces me to buy health insurance.,.....I will pay the 2000 fine.,....and when I get cancer I will sign up for the plan and because there is no pre existing condition exclusion.....they wil have to take me and YOU will have to pay for it.   you cannot legislate anything without consequenses and people acting rationaly to the new legislative reality.,

back the bank fee........before when you used the ATM before YOU paid for it with fraction of a cent increases in prices at the retailer.....now you will pay for it at the bank.......YOU are always going to pay.....there is no free lunch

6
Comment #49 by Anonymous posted on
Anonymous
Banks should lower the debit card transaction limit to $10, $15, or $20 maximum!!! This way they can maximize the debit card interchange fees to 21 cents, and not worry too much on fraud. Banks should continue to push and advertise customers to apply or use their credit cards. Credit cards have better consumer protection, and you have a float.  Of course, if you're already maxed out on credit cards and do not qualify for a new credit card, then either pay the debit card monthly use fee, or pay the fee to get prepaid cards (and beware of additional fees with them, especially GreenDot, accountnow cards).

3
Comment #50 by Anonymous posted on
Anonymous
Commercial banks charge fees because they are businesses responsible to their shareholders.  They are not non-profits, or public utilities.  Even public utilities must occasionally increase their rates in order to ensure a fair return for their shareholders.  In the case of debit cards, payment systems require massive ongoing investments in capital equipment, technology, and management oversight in order to ensure safe and efficient processing, as well as absorb fraud costs.  Debit cards had nothing to do with the financial crisis of 2008, yet the Durbin amendment of the Dodd Frank legislation imposed a cap on the so-called "interchange fees" that large banks assess to retailers on debit card transactions they process for them.  The cap imposed, effective October 1, is at a level below their costs.  No business should be forced to provide any product or service at a level below their cost. Therefore, the Durbin amendment was nothing more than a transfer of revenue from banks to retailers. It is highly unlikely that the ultimate customers of retailers will ever see this savings passed down to them.  At its' heart, this is why the Durbin amendment was bad public policy and unnecessary government intervention.  The fees you see being assessed now by most of the larger banks, and it is safe to assume by all banks in time, are a direct result of Senator Durbin's amendment.  Finally, all banks have repaid TARP (which they were forced to accept) with interest (ie. profit) to the US Treasury (ie.taxpayer).

4
Comment #52 by lou posted on
lou
#50 I couldn't agree with you more, but there is one very important area where this industry is not working as it should. Unfortunately, 4 banks control almost half the deposits in the US (with strong encouragement by govt) and, as a consequence, the free market is not functioning as it was intended. I would like to see these banks broken up, eliminate the nonsensical regulations and allow the marketplace to work. We should not have any banks who are to big too fail.

4
Comment #51 by CB (anonymous) posted on
CB
Banks issued debit cards to get customers to stop using checks, which are much more costly to process. Just go back to writing checks and taking cash out of the ATM when you need it.

 

1
Comment #54 by msf (anonymous) posted on
msf
Anonymous #47 - Interesting assertions from personal experience.  I'll address the points less anecdotally.

"For starters, the interest rate in the late 70s and early 80s were over 20% on some bank loans given to the consumers. My second mortgage was 21.5%, I still have the note from the bank and I still have the papers for a CD were the interest rate was 16%."

You have provided no connection between this and regulation or deregulation, so it is difficult to ascertain what point you're trying to make.  Nevertheless, you are correct that banks were (and are) freely able to set mortgage rates according to market demand.  No change in regulation there.  The change was in the sunsetting of Regulation Q, that restricted the rates that the banks had to pay for the money they lent out.  So instead of being able to borrow at 5.5% (what they paid on savings accounts) and lend at 17% (the all time high in 1981), they had to pay much more for the money they had lent out (i.e. compete on the free market for depositors), and the S&Ls collapsed.  (The all time high, by month was 18.45% in Sept. 1981). 

"De-regulation mentioned in your posting is for new products to be introduced by the banks, like credit cards and personal line of credits. It has nothing to do with interest rates."

A curious comment, since there was one remnant of Regulation Q (a 1933 regulation) that survived until this year.  That was the rule against paying interest on checking (demand deposit) accounts.   This regulation was eliminated as part of Title VI of the Dodd-Frank Act.  Perhaps you've heard of it?

Credit cards date back many decades - the first general credit card, BankAmericard, was created in 1958 - hardly a new product.  Until 1978, state governments generally restricted the amount of interest on this 50s-60s era product via usury laws.  But Marquette Nat. Bank v. First of Omaha Corp, 439 US 299 (1978) let banks pick the state with the highest rates allowed, and charge that nationwide (i.e. banks were now less regulated).  Citibank immediately jumped to South Dakota, and the gold rush, rasing interest rates on this old product, was on. 

"The FEDs can now order the banks to merge and or assimilate other banks with detrimental consequences. FDIC can close banks with just few months notice if any of the present banking rules are not followed."

In the 1980s the FDIC (don't know what "FEDs" means, unless you're talking about the Federal Reserve, which is an association of private banks) ordered banks to merge or assimilate other banks.  Was this a new power, or one that it had had for decades (including the 1950s and 1960s)?  Here's what the FDIC says: (see pp. 13-14 of the linked pdf file): "Section 13(e) of the Federal Deposit Insurance Act ... authorizes the agency to reduce or avert a threatened loss to the insurance fund by providing assistance to facilitate a merger between a failing bank and another insured bank.  .. [T]he FDIC had always had this authority and had used it frequently in the early years."

Pehaps if you'd provide a cite to the law you're referring to, we could compare and contrast.

"The banks were ordered by the Government to lend to anyone who buys a property and they can sell those loans back to Freddie Mac and Fannie Mae (housing afford-ability act)."

I'm going to take a wild guess that you're talking about the Community Reinvestment Act of 1979, passed under a Democratic president, and defended by a Republican FDIC Chair.  I think she put the question to you quite well: "Where in the CRA does it say: make loans to people who can't afford to repay?"

If you mean the 2009 Homeowner Affordability and Stability Act, that addresses restructuring exisiting mortagesIt also improves Fannie's and Freddie's finances, but that's not telling the banks to originate mortgages either.

If you mean the 2002 Housing Affordability for America Act, that primarily provides for expansion of so-called affordable housing for lower income people.  That means Section 8 housing, other public housing, etc.

Hard to address such fuzzy comments; I've done what I could without more info above.  While I could go on, you get the point.  Banks were heavily regulated through the 70s; that regulation went so far as to impede them from introducing new products (consider that CDs at the retail level really arise until the late 70s/early 80s).  So it was the existing products that were regulated (usury laws and Reg Q affecting interest permitted, for example). 


A nice summary of the public policy (largely but not exclusively regulations) that precipitated the S&L crisis can be found here.  It talks about all the old (30s-70s) rules that were phased out in the 80s.  All I have done is point out that pre-1980s (someone had mentioned 50s and 60s), banks were much more heavily regulated.  The fact that you can find a few new regulations does not refute the broad trend toward deregulation, though which we had the S&L bailout of the 80s and the TBTF bailout of 2008.

 

5
Comment #56 by Anonymous posted on
Anonymous
I feel the outrage isn't so much about the banks making a profit, rather it's the bank charging you to use your own money.  Maintaining a minimum balance of $1500-7500.00 to avoid paying a "maintenance" fee is absurd.  You may as well just hand them your $1500-7500.00 because it's of no use to you if it slips below those amounts since it would incur those fees.  To now charge you $5.00 a month to use your debit card - essentially use your own money, when CEO's are still posting billion dollar profits and rewarding themselves with bonuses bigger than most make in 5 years was the turning point for me.  I hadn't walked into a BofA brick and mortar in the last eight years, doing bill pay and all my banking needs online.  I kicked my own butt for keeping the accounts so long and this new fee was the catalyst I needed to get off that same butt, close out the 3 accounts, and plop the money in the credit union.  No more frustrations; I'm done and pleased with the results!  Should have done it 8 years ago.

4
Comment #57 by Anonymous posted on
Anonymous
I understand the frustrations about banks, but everyone should realize that credit unions pay absolutely NO taxes to any federal, state, or local authorities (they are not-for-profits), and have no shareholders.  Banks pay taxes and like all corporations therefore help support essential public services.  That is the main reason why credit unions can afford to charge lower fees.  The flip side is credit unions typically do not have as many products or services, and their networks are not as large or as convenient.

1
Comment #58 by Anonymous posted on
Anonymous
To msf - #54, Monday, October 10, 2011 - 6:09 PM,

Thanks for your point of view about the banking system and regulations, however,
some rules are still open for interpretations by the courts.

Another thing you failed to mention is the political pressure inserted on the banks to act on unwritten laws, like B of A was forced to take over Countrywide (with all those failed loans and recent settlement pressure form the Government and private funds to pay compensations for allegedly fraudulent and overstated income on allegedly made loans to individuals which were sold to the investors) and now the B of A is guilty by association.

You forgot to mention the Congressional bills and semi-regulated acts imposed on the banks and their impact on the banks (like when Dudd-Frank law was extended to apply to conventional loans the banks initiated to private persons with only stated income.)
President Bush complained to Congress and showed concerns that the laws will be abused by the irresponsible persons, hence the housing bubble happen.

The Congressional acts did more damage to our banking system, than any banking laws in effect today. If Congress is not supporting the free market economy, it will end our banking system as we know it, whether we like it or not, to the detriment of all of us.

I believe you knowledge on the banking system is sufficient to write a book about it, however, my reasoning is on the practical side and the implementations of the laws, instead of lets see what is written about a particular situation.

The banking system can not functions profitably when the (goal post) is moved by the Congress twice a year and or when their bills trump any previous rules and or regulations.
As I see it, Congress acts as the banking system is already nationalized and the banks have no longer say about their day to day business activity.

What you call the de-regulations did bad things, I say Congress did the bad things and the whole banking system is controlled or can be controlled by the Federal Government with executive orders and laws that can be implemented or imposed overnight on any bank.

4
Comment #60 by Anonymous posted on
Anonymous
Plain outright greed at a time when peole are hurting!  And they were bailed out by the government to boot with our money! What a mixed up mess of Corporate and Government fleecing!   It's wrong no matter how you look at it! Plain and simple!

1
Comment #62 by Taxpayer (anonymous) posted on
Taxpayer
I strongly support a free market.

 

Only the end user accounts were insured, not the management lifestyle. 

 

No bailouts.  These banks should have been siezed and the parts auctioned off to the highest bidders.  Management should lose their jobs and be procecuted for breech of fiduciary responsibility.  When the company you run is going under it is theft to pay yourself a bonus.  The bank boards are just like the kids stealing out of the till at 7-11 except the numbers are much bigger.  They should be barred from positions of trust and thrown into a forced labor camp.

 

Anyone who does business with them is both a fool and giving aid and comfort to the enemy.

 

1
Comment #63 by lou posted on
lou
^^^^ forced labor camps?    The rhetoric is getting pretty scary!

2
Comment #65 by Anonymous posted on
Anonymous
This rhetoric is scary alright, which unfortunately, is endemic of our entire political process right now. No one wants to be conused by the facts quoted by many above including those in #50 and #58.  Sad that people are unwilling to use their noggins...

2
Comment #66 by gulag (anonymous) posted on
gulag
can any one sayi agree w  louie

1
Comment #67 by Kayte (anonymous) posted on
Kayte
Normal 0 false false false EN-US X-NONE X-NONE MicrosoftInternetExplorer4 /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-qformat:yes; mso-style-parent:""; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin-top:0in; mso-para-margin-right:0in; mso-para-margin-bottom:10.0pt; mso-para-margin-left:0in; line-height:115%; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri","sans-serif"; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin; mso-bidi-font-family:"Times New Roman"; mso-bidi-theme-font:minor-bidi;} All of this has finally given me the impetus to leave my BoA and open up an account at my local credit union.  I researched local savings and checking account rates and fee structures as well as overall products and services and found a new banking institution.  I live in Lacey Wa and I finally decided on O Bee Credit Union - www.Obee.com - a locally based credit union.  They offer no fee debit cards along with a host of other products and services that have very competitive rates and they don't bombard you with fees like these bigger banking institutions are becoming so well known for.

 

I'm happy with their service, both in branch and online & mobile banking.  In this age of digital banking, I have no reserves about belonging to a localized banking institution.  There is shared banking for when I am on the road and out of the vicinity, but I don't anticipate needing to use physical branches very often because there is direct deposit for my paychecks and online bill pay - which handles the bulk of my everyday needs.

 

So BoA can keep their $5 debit card fees and whatever other fees they can dream up.  I'm much happier at my new, local credit union and I anticipate that you can easily do the same if you are fed up too!

1
Comment #69 by to awesum (anonymous) posted on
to awesum
u r the idiot and moron

1
Comment #70 by make it 2 mill (anonymous) posted on
make it 2 mill
in small non sequential bills watch out for the spam bots

1
Comment #71 by Anonymous posted on
Anonymous
I think that man of you forget how the banks make their money! Off your DEPOSITS which they take a make interest bearing loans to other customers. How would you like it if you come to me to "hold" your money and then I make money off of it? That is the reason why they shouldn't charge fee's for a bank account. They are already making money of the loans they make off their customers money and pay minimal interest back. Most banks charge anywhere from 7 - 30% but the interest bearing checking or savings account bearly get to 1% pay back. Where is all the other money going?

1
Comment #72 by Anonymous posted on
Anonymous
The best response: as of today, Wells Fargo and Chase decided to eliminate the debit card fee per month, and plan to stop their pilot programs.

1
Comment #73 by Anonymous posted on
Anonymous
Bank of America and other Banks have all become too greedy.  Let them stop paying themselves Hugh bonuses and salary like the rest of Americans.   We all need to move our banking accounts to local credit unions and community banks to send a clear message.  There is no value to having these large banks that only take advantage of the common people.  Just look at who owns them and their agenda that is self-serving.

 

Bottom line:  Bank of America is out to serve their own self-interest and not the interest of the average citizen.  We all need to stop falling for their phony tricks and traps that place our vary way of life in jeopardy.  What redeeming moral value does BoA provide except to serve themselves and their owners? Do you know who owns these large Banks?

1