How government pulls the contract out from under you

I’m not referring to the social contract, although that ground is fertile enough. I mean private contracts that businesses and their customers enter willingly.

I got to thinking about this topic when I read this Associated Press story, posted on AJC.com today, about the demise of free checking accounts. Here’s the first key passage:

Almost all of the largest U.S. banks are either already making free checking much more difficult to get or expected to do so soon, with fees on even basic banking services.

It’s happening because a raft of new laws enacted in the past year, including the financial overhaul package, have led to an acute shrinking of revenue for the banks. So they are scraping together money however they can.

(snip)

In the last year, lawmakers in Washington have passed a range of new laws aimed at protecting bank customers from harsh fees, like the $35 charged to some Bank of America customers who overdrafted their account by buying something small like a Starbucks latte.

These and other fees were extremely lucrative. According to financial services firm Sandler O’Neill, they made up 12 percent of Bank of America’s revenue. On Tuesday, the bank took a $10.4 billion charge to its third-quarter earnings because the new regulations limit fees the bank can collect when retailers accept debit cards.

It’s debatable whether $35 is indeed a “harsh fee” for spending money you don’t have in your account, and less debatable whether it provides sufficient grounds for the federal government to intervene in the market.

But here’s the money quote (pun intended):

“Customers never had free checking accounts,” Bank of America spokeswoman Anne Pace said. “They always paid for it in other ways, sometimes with penalty fees.” (emphasis added)

This goes beyond the truism that there’s no such thing as a free lunch — although that certainly applies in a case where Congress took away a revenue from banks and ignorantly believed that the industry wouldn’t try to make it up elsewhere. (Either that, or members of Congress cynically believed that, with all the popular outrage against bankers, the public wouldn’t connect the dots when they started paying other account fees.)

It was no accident that the typical checking account came to be one in which customers weren’t charged monthly fees to keep the account open but instead paid penalties if they took certain actions, such as overdrawing on their accounts. It happened because banks and their customers settled on that arrangement over a number of years in which millions and millions of separate but similar transactions took place.

We call this process “the market,” even if anti-capitalist propagandists would have you believe that “the market” is some sort of dark art practiced by greedy businessmen.

In any case, the market decided that overdraft fees and other penalties were preferable to monthly charges. We can see that this was the overwhelming sentiment from the statistic, reported in the AP story, that last year “81.5 percent of U.S. banking customers had free checking.”

We can also see that other arrangements were available — again, the market at work — since 18.5 percent of customers did not have free checking.

And we can furthermore see that customers were not at the mercy of the big, bad bankers:

Bank of America CEO Brian Moynihan acknowledged in a conference call that overdraft fees were generating a lot of income. But the bank was also losing customers who were often taken aback by the high hidden fees.

Checking accounts were being closed at an annual rate of 18 percent, he said, and complaints were at an all-time high.

So Moynihan ended overdraft charges on small debit card transactions. He says the rate of account closings have since dropped 27 percent.

Some customers were reacting negatively to the arrangement, and at least one big bank was responding to them. (I’d also take exception to the idea that these fees were always “hidden”; plenty of people like me who read the terms and conditions of their accounts were well aware that such fees existed.)

The case for federal intervention here, then, seems pretty weak. But intervene Washington did — no doubt under much pressure from “consumer watchdog groups,” which in many cases could be renamed Have Your Cake and Eat It Too Societies.

And now guess what: That “free” (i.e., no-monthly-fee) checking account you previously enjoyed is becoming a thing of the past, whether or not that’s what you wanted.

Too bad this was another bill they had to pass so that you could know what was in it.

60 comments Add your comment

CJ

October 20th, 2010
3:49 pm

It happened because banks and their customers settled on that arrangement over a number of years in which millions and millions of separate but similar transactions took place.

Seems like kind of a silly assertion. I, for one, never “settled” on overdraft fees. These are back door fees in which people are gouged when they least expect it after making a mistake (few bounce checks or withdraw too much on purpose) that probably, on average, doesn’t cost the bank more than a few cents.

As far as there being no such thing as a free lunch, banks even pay interest on our deposits because they want have more money to be able to lend for larger amounts of interest than they pay out. Seems to me that they’re the ones looking for a free lunch when threatening to reinstate monthly fees.

So let them try. If it happens to me, then I, for one, will move my account to another bank. We call this process “the market.”

Kyle Wingfield

October 20th, 2010
3:58 pm

“If it happens to me, then I, for one, will move my account to another bank. We call this process ‘the market.’ ”

Very good, CJ. And, per the BoA CEO, plenty of people were doing just that. It seems the market was working…so why should the feds have intervened?

Kyle Wingfield

October 20th, 2010
4:04 pm

Btw, do you think overdrafts would be a bigger problem for banks if their customers had no incentive to avoid them? Do you think maybe that, and not a desire to “gouge” people, is another of the reasons those fees made sense?

Allen

October 20th, 2010
4:07 pm

Banks employed a variety of sketchy methods to arrive on this overdraft fee account structure.

One method is changing the order in which transactions are processed. Banks do not necessarily process checking and debit card purchases in chronological order. Instead, they wait for customers to make several purchases and process the most expensive purchases first. This practice pushes balances to zero faster, allowing banks to charge more overdraft fees — in some cases, many, many more.

There are dozens of similar small deceptive practices, which, in other industries, might rightly be called fraud.

A tenet of economics is that markets function optimally when all parties involved in a transaction have perfect information and act rationally. In these instances, banks had an information advantage and ruthlessly exploited it. So, this notion of the government disrupting an efficient market solution is debatable.

retiredds

October 20th, 2010
4:14 pm

there is one surefire way to avoid overdraft charges: make sure you have enough money in the checking account to cover all withdrawals. If one has difficulty balancing the check book there is overdraft protection. If one does not know what that is, well, can’t help you.

Hillbilly Deluxe

October 20th, 2010
4:14 pm

I’ve always wondered why banks don’t give you your cancelled checks, anymore. They charged me for the checks, so they’re my damn checks, not theirs. The smart thing is to bank with a small, local bank. To hell with the national banks.

Kyle Wingfield

October 20th, 2010
4:14 pm

Allen: Unless the banks are processing deposits out of chronological order — e.g., two days late — so that they appear artificially later than purchases, I don’t see why it should matter that the bank posts a $100 purchase ahead of a $10 purchase when the customer has only $105 in the account.

And I can only speak for my bank, Wachovia, but in more than a decade of watching my account ledger online almost fanatically closely, I have never once seen such a thing happen.

Kyle Wingfield

October 20th, 2010
4:19 pm

Make that “…almost a decade of watching…”

Jefferson

October 20th, 2010
4:21 pm

Kyle, add one more $10 check in and guess what, you bounced 2 instead of one based on the sequence. (Bottom line you should not write more than you have but humans make mistakes)

Banks are no different than Walmart, they have a moral obligation to relieve a sucker from their money.

Jefferson

October 20th, 2010
4:22 pm

They process debits largest to smallest.

Allen

October 20th, 2010
4:33 pm

Kyle, my roommate once allowed a large automatic debit from his checking account to push his balance below zero. Citizen’s Bank then charged $35 dollar overdraft fees on several smaller transactions that had occurred prior to the “large” debit, but were posted after. They had actually “cleared” the transactions in order from high to low.

In a minute on Google, I found instances of the same at SunTrust, Wells Fargo, and others. And this is only one example of overdraft fraud.

Kyle Wingfield

October 20th, 2010
4:36 pm

Allen: Maybe I’m missing something, but I still haven’t read anything from you about people who had sufficient funds in their account to cover their purchases somehow getting hit with overdraft fees.

Put another way: Why do you care if it’s the $100 charge or the $10 charge that puts you over? If you’re over, you’re over — right?

CJ

October 20th, 2010
4:45 pm

Kyle,

Your scenario at 4:14 indicates your misunderstanding of the scam that Wells Fargo, for example, was running. In you’re scenario, change the $100 purchase to $110 purchase. Now, if the $10 check is processed first, then there’s only one overdraft charge when the $110 check is processed. However, if the $110 check is processed before the $10 check, then the bank collects two overdraft charges. In this scenario, WF would process the $110 check first, even if the $10 check was an earlier transaction specifically to increase their revenue from overdraft fees.

Responding to your earlier comments, per Clark Howard, BoA is known for it’s notoriously awful customer service. I know that it’s now in their CEO’s interest to say that anybody who closed their BoA account did so because of overdraft fees, showing that the market was working, but it doesn’t make sense to change banks for this reason since nearly every bank has the similar policies and fees (some free market). I suspect they were leaving for a variety of reasons.

However, giving the BoA explanation the benefit of the doubt, customers only moved their accounts after they were gouged. That is…customers moved their accounts, primarily out of spite, after BoA “stole” $35, $70 or more from them (I use “stole” in the ethical sense, not the legal).

On the issue of incentives to avoid overdrafts, banks can electronically prevent customers from withdrawing too much from their ATMs or overdrafts while using their debit cards—no punitive incentive required. Other than that, such incentives should be between merchant and their customers. For example, if I accidentally bounce a check at Kroger, that’s none of the bank’s business (except for the few cents is costs the bank to bounce the check). If Kroger wants to charge me a fee, then they’d be justified in doing so.

Hillbilly Deluxe

October 20th, 2010
4:45 pm

Kyle

I think the point that people are trying to make is that the order of posting can have an effect on how many overdraft fees you get hit with. Where as you might have been hit with 1, you get hit with 4 or 5. That’s why they care.

Allen

October 20th, 2010
4:54 pm

Apologies, Kyle. I may be misunderstanding you also, but let me try again.

Let’s say it’s Monday morning, and my checking account has a $150 balance. Over the course of Monday, I use my debit card to purchase items for $5, $10, $15, and $20. Then, on Tuesday, my car insurance is automatically debited from my account for $200, overdrafting my account.

My contention is that many banks will charge overdraft fees on each of Monday’s transactions (even though the account had sufficient funds for small purchases on Monday) because banks artificially clear charges highest to lowest.

Hopefully that helps.

CJ

October 20th, 2010
4:59 pm

Here’s info about the Well’s Fargo case: “Wells Fargo Must Pay Consumers $203 Million in Overdraft Case”

http://www.bloomberg.com/news/2010-08-11/wells-fargo-should-pay-203-million-in-overdraft-fees-lawsuit-judge-rules.html

Kyle Wingfield

October 20th, 2010
5:00 pm

CJ @ 4:45 and Hillbilly @ 4:45: I see what you’re saying. But I guess I don’t have a ton of sympathy for someone who, as in this scenario, would write $120 worth of checks on an account with $105.

Now, I realize the next thing that someone will say is that I’m being insensitive to people who live paycheck to paycheck. So I’ll pre-empt that by saying that example after example of “unfair” charges involves what I’d consider unnecessary purchases.

The $35 pretzel: http://bit.ly/918oEr

The $35 cup of coffee: http://huff.to/cakr58

And so on. I realize I’m straying from my original point here, but sooner or later personal responsibility — to ask questions of the companies you do business with, to know how much money you actually have in your account, to spend no more than the money you do have — also comes into play.

Jefferson

October 20th, 2010
5:04 pm

Hope your wife never makes a simple math error in the checkbook and there is not plenty of money in it.

Hillbilly Deluxe

October 20th, 2010
5:15 pm

But I guess I don’t have a ton of sympathy for someone who, as in this scenario, would write $120 worth of checks on an account with $105.

If they did it on purpose and knew what they were doing, neither would I, but people do make mistakes. And in your scenario, you’re talking $15. They could easily get hit with over $100 in charges for a $15 mistake. Loan sharks don’t get that good of a return.

Kyle Wingfield

October 20th, 2010
5:19 pm

Jefferson: If we were ever close enough to zero that a cup of coffee might put us over, we wouldn’t be going to Starbucks.

We talk a lot on here about politicians’ fiscal discipline, but this country is also in a whole heap of trouble because too many of us won’t deny ourselves the latte — or pair of jeans, or fancy car — we can’t afford. There’s probably a doctoral dissertation or 10 to be written about how we’ve reached that point, but things aren’t going to improve until we figure out how to move away from it.

Jefferson

October 20th, 2010
5:24 pm

Agreed, but you watch your cork, many folks have their bait stolen and never knew they had a bite.

Allen

October 20th, 2010
5:37 pm

If overdraft fees go down, then the cost of other services goes up. OK, fine. Kyle has not persuaded me that this is an economically undesirable outcome (or that Congress “ignorantly” believes in free lunches).

The overdraft fee structure is a product of an information asymmetry that makes it easy for banks to exploit consumers. It’s becoming harder to rely on “personal responsibility” when banks create lengthy contracts full of deliberate obfuscation.

Kyle is an informed commentator on the subject, and it took him a moment to understand a relatively scheme that banks use to exploit customers. We can hardly expect better from the rest of society.

What I’d like to hear is a compelling reason that overdraft fees should remain in place as a subsidy for other failing business lines (ie, checking accounts). It seems to me that the alternative is not only more comprehensible and fair, but also sends clearer market signals so that the market forces Kyle venerates can operate unimpeded.

left wing

October 20th, 2010
5:39 pm

Kyle I’m surprised at you. I would have expected that you would have loved to see these ‘use fees’.

I was thinking about this topic this morning when I saw it also. The premise of the article was regarding the . . range of new laws aimed at protecting bank customers from harsh fees . . .. It seems to me (and I’m strictly going on memory) that, back in the ’60s, the ’70s and ’80s (maybe I’m older than you) that banks did not in fact charge the ‘harsh fees’ they charge in the ’00s.

Do you know if this is true? If so, why do you think that is? Could the banking deregulation have anything to do with it? Do you think that banks, which really are solely concerned with maximizing their profits, tried to charge for whatever the market would bear?

Or, are you going to defend the banks against those ‘evil’ consumers?

Allen

October 20th, 2010
5:43 pm

Kyle, since you continue to bring it up, my experience suggests that it’s often large, automatic debits that initiate overdraft fees. My roommate was charged well over $700 on a dozen smaller transactions because he forgot about his semi-annual car insurance payment, which he immediately remedied. That’s 10000%+ interest for a brief lapse in personal responsibility.

People need to have personal responsibility, but that’s not really an adequate response to such an indefensible banking practice.

Hillbilly Deluxe

October 20th, 2010
5:57 pm

left wing

I’m going from memory as well, but it seems to me, in the days before bank de-regulation, things were a lot better for the consumer. I think savings accounts were limited to like 5.25% interest, or something like that and they had regulations on loan rates they could charge you but you didn’t have all these fees and charges that are written in terms that only a Philadelphia lawyer could understand.

left wing

October 20th, 2010
6:10 pm

Hillbilly Deluxe Yes. I remember having a passbook savings account, where you actually had a book (about the size of a passport). When you made a deposit or withdrawl, the teller would take your book and put it in the machine to update your balances.

What I want Kyle to respond to is, did banking regulation back then protect us from the usery fees that we were subjected to post deregulation.

Because as I said above, corporations don’t care about protecting consumers. All corporations care about is maximizing profits. Any way they can. Bigger profits mean bigger bonuses for the executive staff. If they get creative and figure out new fees to charge, hey, they guy that thought of it gets the biggest bonus. Screw the consumer.

Kyle, prove me wrong.

catlady

October 20th, 2010
6:44 pm

Well, Kyle, I have had my account debited for the same transaction more than once and thus been unable to use the card for a couple of days because it had shown that I had no money. Happened more than once. I am sick and tired of the bank making errors and I pay for it (through not being able to use my funds) Oh, yeah,they eventually “catch” their errors, but not until I have been inconvenienced and made to look foolish.) There should be a FINANCIAL PENALITY for the bank that will “discourage” this kind of error in turn!

The banks are crooks. Pure and simple. Look at how they reward their boards of directors with gracious loans and push the banks into failure, then we the people pick up not only the cost of the FDIC takeover. A win-win for them. We have lost 2 of the 4 banks in our county due to this insider-favoring, and the taxpayers pay not only for our mistakes but for theirs.

While we are talking about failure to follow contract, let’s talk about how the state of Georgia, through its legally-constituted school boards, has teachers sign a contract (in our area for years has required us to sign a BLANK contract) that, even when filled out, can be summarily ignored by the local board if they don’t have the money because the state, which agreed to give them the money, has reneged. YET the teacher will lose their license if they fail to perform their contracted days of service! In April, 2009 I signed a contract for 190 days at X amount of money. Come late fall, 2009, the contract was changed, without my agreement, to 186 days at x-y amount of money. Yet, the state tells me I have no recourse! How is that for the old switcheroo? It’s not a contract if it isn’t binding on both parties!

saywhat?

October 20th, 2010
6:45 pm

Left out of the descriptions of fraudulent banking practices is the delay in crediting deposits to customer accounts, thus creating more “overdrafts” and resultant fees. The best thing to do is join a credit union. Screw the banks.

Hillbilly Deluxe

October 20th, 2010
6:54 pm

saywhat?

Yes and there is no delay when they deduct something from your account. Deposit today, it may not get credited until tomorrow. But if somebody cashes a check today, that you wrote 2 days ago, the transaction is dated 2 days ago. It should either be one way or the other.

13 Days To V-Day

October 20th, 2010
6:59 pm

That blithering idiot Harry Reid is stating that the separation of church and state is in the First Amendment in response to Christine O’Donnell’s comment that there are no specific words stating “a separation of church and state.” But you have to remember that the same blithering idiot liberals like Reid are trying to establish a clause that tax-exempt churches should not be tax-exempt – because it violates the so-called separation of church and state mentioned in the First Amendment. Show us those *specific* words, bed wetters.

Well that’s interesting. George Soros, the billionaire liberal American immigrant (capitalist hater), who made his money in hedge funds, has pledged $1 million to great unwashed liberal special interest group called Media Matters. Can’t overseas hedge funds be tax free in America in certain situations? Why yes, they can be. And while we’re on the subject of donations, liberals have been upset that some anonymous donors to the Chamber Of Commerce aren’t being exposed for Conservative/Republican campaigns. Ain’t that a damn shame.

Pure unadulterated Democrat rule is HISTORY in less than two weeks. And all these mindless drones can do is trot out the old “Republicans are going to take your Social(ist) Security” cart. But there’s a modification to this cart. It’s now got a dangling carrot on the front in the name of a $250 check if you essentially vote for them. Those beans are to allegedly make up for two years of ZERO inflation adjustment in payments. Idiocrats and their policies have failed America. The people will rebel when not represented. And they will in 13 days.

buck@gon

October 20th, 2010
8:54 pm

Contracts? Fees? Business arrangements?

This is history given the great Obasm. “You’ve got me now, he said to leaders of Congress,” and no doubt that’s what he means for nearly everything.

Secured debt holders from Chrysler and GM? Bully them into accepting 10 cents on the dollar; give the unions unsecured bond 50. Big insurance? Stick your boot on their neck!

Unfortunately, Obama doesn’t have an american form of government in mind; he seems to be thinking a “managed democracy,” because, as he said this week, we are all just too stupid, scared and nervous to embrace change.

Screw you, Mr. Adolesident!

Tea Party Revolutionist

October 20th, 2010
8:56 pm

Fees and more fees.

Yeah… The banker at **************** is doing me a favor…….

AUDIT THE FEDERAL RESERVE SYSTEM — It’s our money. Where does it come from and where does it go?

James Dunn

October 20th, 2010
8:58 pm

Kyle, I’ve read your commentary many time but never commented. This time you’re so off base that I have to chime in. Your ignorance is appalling. I’ll be short. Bottom line, the govt HAS to regulate banks until they decriminalize the other option. That option is holding cash! Did you realize I am forced to paricipate in the banking system! Are you that naive you dont realize the govt can seize your cash when you are holding over 10k and you have to appear in court and show cause to get it back…You never fully analyze issues. Please get it together.

AMH

October 20th, 2010
10:02 pm

Bank at a credit union and you’ll have NONE of these issues! I recently went from Wachovia Bank to Delta Community Credit Union (with no affiliation other than living in a metro Atlanta county). AND I LOVE IT! No BS charges for something that a COMPUTER does, no minimum balances, interest bearing checking accounts, great rates on loans, I could go on and on.

Even Overdraft Protection was going to cost me – and cost me just as much as overdrawing my account at Wachovia.

SAY NO TO BIG BANKS. BANK LOCAL! That is what the market trend is for a reasons and I, for one, followed it right to DCCU.

I hope the Big Banks pay for screwing their customer base. When I called Wachovia to try to address all of my concerns, the customer service person didn’t care one bit if I left the bank. The attitude did not adjust when I closed all of my savings accounts, and STILL didn’t change when I shutdown my checking account for good. These are the same banks that took the big risks which brought the country to its knees. They continue to want the public to pay for it.

JM

October 20th, 2010
10:38 pm

Two words, Kyle: credit union. Big banks will soon find out that, unlike Georgia Power, they’re in no position to demand a pre-determined profit.

Left wing management

October 20th, 2010
11:05 pm

“We call this process “the market,” even if anti-capitalist propagandists would have you believe that “the market” is some sort of dark art practiced by greedy businessmen.”

It’s not propaganda to point out the truth that an unconstrained market under conditions of capitalism is run in ways that redound to the benefit of the capital-owner at the expense of the worker. The psychological/moral category of ‘greed’ doesn’t really enter into it.

captguitarman

October 20th, 2010
11:17 pm

Very interesting posts re: Kyle’s article. First, to get it out of the way, in Madison vs. Marbury, during the tenure of Chief Justice John Marshall many moons ago, the Supreme Court ruled, in a case in which a local jurisdiction attempted (and ultimately failed) to tax the federal government, that “the power to tax is the power to destroy.” If it ever becomes legally and culturally acceptable in America for the government to tax churches, that will be the beginning of the end for free, organizded religion, one of the basic building blocks that helped to create and sustain this nation in the beginning, and which made it different (free) from all other nations in the world at the time of its creation, and still does for two centuries, plus, since its creation. Many may not agree or like to hear it, but the destruction of free and organized religion will be the beginning of the demise of the American civilization.

As to the banks. In view of the last three years and the Great Recession in which the reckless, risky, and careless activties of banks (knowing they would be bailed out if they failed) , and in view of the constant nickel and diming that has gone on for many years prior to that in which fees, on top of fees, on top of fees have been artificially created — how could anyone have one iota of sympathy for them in any way, shape or form. Record bonuses are coming this Christmas on Wall Street, folks. What does your bonus look like — assuming you even have a job?

Jeb

October 21st, 2010
12:09 am

Kyle,
I agree with the premise by and large that the market should be allowed to regulate itself. And I have no beef with your argument that you should have enough money in your account to cover your obligations or you shouldn’t make the charge. However, the issue was exacerbated by BOA and other bank’s similar practices of intentionally debiting charges out of order to create the highest number of fees. This is well-documented and I believe it provided sufficient political ammo for this change to be enacted. I’m not crazy about this new law and am sure there will be unintended consequences from it, but there has to be a middle ground somewhere.
I have not bounced a check in over 15 years, but I got dinged this way last year by Regions Bank when our daughter was born. Blue Cross automatically added my daughter to my wife’s policy without our instruction (we had added her to mine already) and debited an additional $260 from our checking account that I was not expecting a couple days before I was paid. It resulted in 8 overdraft charges on our account to the tune of an additional $280. It took 6 weeks, dozens of phone calls, and all of my patience to get resolution on the matter from the bank and Blue Cross before we were finally made whole.
The irony of this is that most of the big banks that took and benefited from TARP money (BOA chief among them) because they were fiscally irresponsible are now turning around and nailing their customers (taxpayers) who are less fiscally irresponsible than the banks were.

Streetracer

October 21st, 2010
4:55 am

Jeb @ 12:09:

Seems to me that the insurance company did something wrong, not the bank. Why do you blame the bank? Are they supposed to be omniscient and know your intentions?

As far as a $35 dollar overdraft fee is concerned, it doesn’t seem all that excessive to me. My first checking account, the overdraft fee was $5.00, but a whole lot of things have gone up more than 7 times in the intervening years, like cars, jeans hamburger. It’s called inflation.

Bottom line is know how much money you have, and don’t spend more than that.

itpdude

October 21st, 2010
5:42 am

This is where the Obama administration is lacking in experience and knowledge or real-world arrangements. They thought they could simply pass a law with only positive impact.

And yes, not having fees attach to overdrafts is a positive for many people. However, the spillover now is the costs that used to be assessed to those who overdrafted their accounts for a Starbucks coffee are now being assessed to everyone, including people who don’t overdraft their accounts because they take adequate measures to no overdraft their account. Measures such as not frequenting an over-priced coffee joint (I write this as I sip at my homebrewed coffee, which is a helluva lot cheaper and better than Starbucks).

The free checking accounts often were attached to “good” behavior like having an adequate cushion in your checking account. A personal story of mine was when I was 18, I opened a checking account and found that free checking was available if I kept a $1,000 balance. I saved my money by not going out to eat (and by out to eat, I mean “splurging” on Taco Bell) or going to a show, or smoking weed (just being honest) so I could get that $1,000 minimum so I could have free checking. That was “good” economic behavior on my part. The quid pro quo was a mutually beneficial arrangement. The bank had more liquidity, I got a free checking account.

That enticement is now gone due to this clumsy piece of legislation.

No More Progressives!

October 21st, 2010
5:48 am

Seems like kind of a silly assertion. I, for one, never “settled” on overdraft fees. These are back door fees in which people are gouged when they least expect it………….

The solution is simple: learn to manage your money. Don’t bouce checks. And yes you did settle on overdraft fees, when you signed up for the account and agreed to the banks terms & conditions.

No More Progressives!

October 21st, 2010
5:54 am

Left wing management

October 20th, 2010
11:05 pm

It’s not propaganda to point out the truth that an unconstrained market under conditions of capitalism is run in ways that redound to the benefit of the capital-owner at the expense of the worker. The psychological/moral category of ‘greed’ doesn’t really enter into it.

Simple. Open your own bank and, and forego the fees that you deem greedy.

By the way, is it OK for Apple to charge 5 times the price of a Dell? Or should you precious omnipotent Gub’mint intervene here as well?

southsidetoby

October 21st, 2010
6:22 am

Kyle, somehow you and several others here have decided that the story here is that banks are victims inappropriate government regulation and the poor personal financial management. You might want to step back from the brink and take a few moments to read the new rules. Despite what you say, the new rules DO NOT prohibit banks from charging overdraft fees, provided they have obtained authorization from the customer before enrolling them in the bank’s overdraft protection program. Customers who opt in to overdraft protection may be charged overdraft fees. Those customers who decline overdraft protection will simply have attempted overdrafts declined. This approach seems entirely consistent with maintaining a fair and open market place where the terms and conditions of financial products are fully disclosed.

Gordon

October 21st, 2010
7:01 am

Kyle is right. There was nothing wrong with the way it was. Now I and other people who don’t write bad checks have to pay for those who do. If you can’t do the time (paying high fees), don’t do the crime (writing checks without the money in the account).

Jason T

October 21st, 2010
7:38 am

Thank you Imperial Federal Government for your “Financial Reform”. I can see that through your great wisdom, the consumer will be paying more for banking. Nice job.
Idiots.

southsidetoby

October 21st, 2010
7:45 am

Kyle is not right, Gordon. Show me the provision in the new rules that now authorizes anyone to commit the crime of writing bad checks? In fact, if you take the time to look, you will find that banks can still enroll you in their overdraft protection for checks and automatic bill pay without telling you about it. You are not being required to pay “high fees” for anyone. What is happening is that banks are being required to disclose their fees and practices up front and to obtain permission for enrolling customers in their overdraft protection programs. Again, what is wrong with this for those who truly believe in the efficiency of the free market? If the overdraft protection plans are so wonderful — and worth $20 or $30 per overdraft — then we should find consumers lining up to sign up for the plans with full disclosure. If not, I’m certain we will see competitors enter the marketplace to offer better products for less money. The same goes for checking accounts — BofA may start charging $100 for basic checking accounts, but I’m certain there are competitors out there who can do much better for less money and still make a tidy profit.

Beavis

October 21st, 2010
7:47 am

You have a choice don’t use Bank of America; I fired them about 1 year ago. There are credit unions that anybody can join, for some reason a credit union seems to care about their business, and has better rates at everything.

Blah

October 21st, 2010
7:47 am

I read a lot of comments about scams and fraudulent overdraft fees. Seems to me that if you are not smart enough to not write checks for money you do not have then maybe you need to only use cash.
Or, if you think you are entitled to spend the banks money to cover your shortcomings and do not want large fees for the luxury of doing so, fire your bank and find one more to your liking. Or, and here is the big one, don’t spend money you don’t have. Seems silly to have to tell adults this…

Left wing management

October 21st, 2010
8:17 am

No more progs: “Simple. Open your own bank and, and forego the fees that you deem greedy”

But, as I said, I don’t think ‘greed’ is the important thing here. ( I really could care less if capitalists / financiers are ‘greedy’ or not. ) Frankly, I’m not particularly interested in the consumer banking side of things at this particular point. There’s bigger fish to fry, like the wild proliferation of speculative practices by financial institutions of various kinds, not just commercial banks.

“By the way, is it OK for Apple to charge 5 times the price of a Dell? Or should you precious omnipotent Gub’mint intervene here as well?”

Not sure what your point is here. Obviously a Mac is a rather different product than a PC, and I have no problem with that. By the way, Gub’mint is no more omnipotent than the ‘market’, nor should it be. But generally I think you may be overestimating the mutual independence of these entities.

Left wing management

October 21st, 2010
8:23 am

Jason T: “I can see that through your great wisdom, the consumer will be paying more for banking. Nice job.
Idiots.”

Where do you get the idea that consumers will only be “paying more” as a result of governmental regulation of banks?

That attitude seems to me to be based on a rather stupid assumption. The real costs that are coming all of our way is those incurred when the banks have to be bailed out by said government authority because their practises are fundamentally unsound due to lack of regulation and oversight. Just consider for one moment the events of the last 2 years and tell me with a straight face that banks are capable of operating without regulation.

So, who are really the idiots here?