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| Economy |
| Checking Chumps |
| 2010-06-19 |
| Hollering about "fairness," Democrats vowed to punish U.S. banks by passing new laws to micromanage their businesses. As a result, free checking may soon be dead. So who's really paying for all that "fairness"? Bank of America and other big banks plan to charge monthly "maintenance fees" on checking accounts, according to the Wall Street Journal, due to a spate of recent new congressional regulations on banks. It's not surprising, given the extent of do-gooderism in Congress, which has insisted it knows better than banks themselves how to run their businesses and treat their customers. Acting from what they imagine are the interests of the little guy, their recent legislative moves -- as well as others on the way -- have effectively halted how banks charge overdraft fees on consumers who bounce checks and how interest rates are calculated on high-risk credit cards. What they didn't pay any attention to was the fact that those fees enabled banks to offset the $300 or so it costs to maintain each checking account at a bank. So now everyone pays to replace what had otherwise been penalty-based income on the individual acts of an irresponsible few. Previously, consumers could control their fees based on how well they managed their checkbooks. The better they managed, the less they paid. Now, they'll just pay, whether they're responsible or not. Call it the socialization of fees. The infuriating thing is that in recent years, Democrats really thought they could just wave a legislative wand to end all fees from banks and create a Better World. They assumed bank fees are purely a function of banker malice and greed, and that only their legislative heroism could stop it. In reality, banks are businesses and like other businesses, must balance their books and make a profit. The one instrument they control is the price of the service they provide. As prices go up to cover Congress' newly imposed regulatory costs, expect the poorest people to drop out of the banking system. They'll be driven from banks back to inner-city check cashing outfits and hide their cash under their mattresses -- and attract crime. It's exactly the fact that poor people were underbanked and dependent on a cash economy that prompted other irresponsible legislative measures, like the Community Reinvestment Act of the 1990s. The CRA forced banks to make home loans to poor people who might have been better served by access to free checking. In the end, we'll all pay for Congress' foolish desire to micromanage our banking system. Maybe voters in November will pick a Congress that can undo this mess. We certainly hope so. |
| Posted by:Fred |
| #9 Yeah, my Credit Union charges no fees as long as I have about 300 dollars in either checking or savings. The fact that they don't advertise on the Super Bowl or sponsor prestigious athletic events or make crappy ass loans to welfare recipients may have something to with not only their business practices but their solvency, as well. |
| Posted by: Dash Riprock 2010-06-19 16:17 |
| #8 agreed KBK |
| Posted by: Frank G 2010-06-19 16:04 |
| #7 Opinion from WaPo financial columnist Steven Pearlstein: If bankers want to lead the exciting hedge-fund life, earning hedge-fund-like profits and bonuses, let them go work for a hedge fund. |
| Posted by: Anguper Hupomosing9418 2010-06-19 13:50 |
| #6 $300 to maintain a checking account? Yeah, right. |
| Posted by: KBK 2010-06-19 12:34 |
| #5 The Feds should re-instate the old US Postal Savings System, which ended in 1967. It used to pay 2% on deposits. They would certainly get my business. The big banks would really squeal like the pigs they are if that happened. |
| Posted by: Anguper Hupomosing9418 2010-06-19 12:04 |
| #4 It's a sign that over-regulation is preventing bank competition and new entrants. |
| Posted by: Bright Pebbles 2010-06-19 11:58 |
| #3 No problem. Credit unions are happy to take your deposits and not charge a service fee. |
| Posted by: ed 2010-06-19 08:49 |
| #2 Back before ATMs, banks had human tellers who did the transactions for about 6 hours a day, four days a week, and then a split, 3 early + 3 late, on Friday. Then this ATM thingy showed up and the banks started to install them as a "cost savings" measure that off set the expense of paying a human a salary and overhead (health, unemployment, social security, etc). Some how a couple years later that "cost savings" got padded with use charges. Now that the competition has been cut down and the behemoths that have been granted the graces of their rotating employees in the Fed/Tres, they now feel confident enough to float their profits on more 'charges'. Meanwhile the Fed is loaning the biggies at around zero interest while they buy Treasury bonds at a couple percentages above that. |
| Posted by: Procopius2k 2010-06-19 08:41 |
| #1 Last time i looked banks were PROFITING Billions from these "Fees" that makes the article a damn lie the banks wil NOT need other "Fees" to break even, but they will to continue to pay their executives Multi Million dollar salaries. That can stop easily, the Banks are feeding Greed, NOT Need. |
| Posted by: Redneck Jim 2010-06-19 00:24 |