Of all the big US banks that managed to survive the global financial crisis, Bank of America and Citigroup were the two widely recognized to be at risk of failure in late 2008-early 2009. Sheila Bair, then head of the FDIC, really wanted to replace Citi’s CEO, Vikram Pandit, but settled for forcing the bank to do some pretty serious downsizing and streamlining. By contrast, Bank of America has not only been spared this sort of treatment (save being told it can’t pay dividends until its balance sheet is stronger) but it’s also the biggest beneficiary of the most recent “help the banks” full court press, namely, the mortgage settlement.
So how does Bank of America propose to shore up its equity base? Now that bank stocks have traded up smartly, it might be able to unload some more operations (it did a bit of that when it stock was under stress). But bankers prefer to run behemoths because executive pay is highly correlated with total asset size. And that means it’s a given that BofA has ruled out another way to improve its earnings: cutting manager and executive pay, as the Japanese banks did in their bubble aftermath.
Nah, the path of least resistance is to charge customers more. Readers may recall that BofA tried imposing a $5 a month fee on debit card users (there were some customers who generated enough profits for the bank, such as mortgage borrowers, who’d have the fee waived). That led to a big pushback in the media and from consumer groups, and the Charlotte bank had to drop that idea.
The Wall Street Journal reports on latest plan for preserving BoA’s imperial right to profit:
Bank of America Corp. is working on sweeping changes that would require many users of basic checking accounts to pay a monthly fee unless they agree to bank online, buy more products or maintain certain balances…
The search for new sources of income is especially pressing at Bank of America, where 2011 revenue dropped by $26.2 billion, or 22%, from its 2009 level.
Bank of America pilot programs in Arizona, Georgia and Massachusetts now are experimenting with charging $6 to $9 a month for an “Essentials” account. Other account options being tested in those states carry monthly charges of $9, $12, $15 and $25 but give customers opportunities to avoid the payments by maintaining minimum balances, using a credit card or taking a mortgage with Bank of America, according to a memo distributed to employees.
On the one hand, banks aren’t charities. And we have predicted that more costly retail banking was in store as a result of the deleveraging of consumer balance sheets, and some of the worst practices being curtailed, such as cross default and double cycle billing on credit cards.
But on the other hand, it’s disingenuous for banks to pretend that they should have the latitude that true private businesses have. Banks receive subsidies from the state well beyond those enjoyed by any other nominally private business, including defense contractors. Banks have admittedly always had a fair number of unprofitable checking account customers, as the article points out:
Banks often lose money on accounts like basic checking that they use in part to lure younger customers. They offer the accounts in part because they hope to retain customers as they grow more affluent and use services such as mortgage and business loans and credit cards.
Bank of America has presumably woken up to the trend noted in some of Matt Stoller’s and our posts: that young people, burdened by high levels of student debt, aren’t buying real estate at anything remotely resembling historical levels in relationship to household formation. And ex finance, even those young people who are employed are less likely to be upwardly mobile than past generations. It might have helped if the banks had thought that through before they crashed the global economy.
And the current unattractiveness of small customers is in no small measure due to ZIRP. Why do you need free customer balances when market liquidity is high? But one of the important social functions that banks provide is payment services, and those in turn depend on the fact that banks settle their net exposures with each other on Fedwire. Yet this fundamental service is the one that Bank of America is proposing to make more costly.
For many customers, the sort of changes that BofA is implementing would just be a nuisance. Some will close Bank of America accounts and move to another player, perhaps a smaller one or a community bank. Some will change their habits and product use so as to make them more attractive to BoA, relying less in the way of branch services and doing more online, making greater use of BofA credit cards.
The open question is to what degree other banks will replicate Bank of America’s moves. As with the $5 debit card fee, it hoped to be a price leader, but that plan backfired. Other banks are similarly eager to boost flagging margins. The competitors are sending mixed messages:
J.P. Morgan consumer banking chief Todd Maclin told investors Tuesday the bank would like to be able to charge more than its current average of $10 to $12 a month, but “in this environment I am not going to rock that boat.”…
J.P. Morgan Chase and Wells introduced new account structures in 2010 and 2011 that imposed monthly maintenance fees unless customers maintained certain minimum balances or hit preset monthly deposit levels. J.P. Morgan said Tuesday that 70% of customers with less than $100,000 in deposits will become unprofitable for the bank because of new regulations, such as caps on overdraft fees.
I’m not terribly sympathetic with this profit analysis. A big cost in retail banking is the branch network. Has anyone missed the astonishing proliferation of bank branches? In my not-cheap neighborhood, they’ve displaced perennial high profit retailers like liquor stores as well as few Gaps and coffee shops. But it’s more convenient to blame Dodd Frank than admit their “trees will grow to the sky” assumptions were a tad rosy.
The bigger lie here is the one sold by the banks, that bigger banks are more efficient. In fact, every study of bank efficiency ever done in the US has found that bigger banks have HIGHER costs per dollar of assets once a certain size threshold is passed (and that is usually pretty low, between $1 and $5 billion in assets). That means there is no economic justification for mega banks, since smaller ones could do the job more cheaply. Oh, and the argument that mergers allow for cost savings? Bollocks. Each bank separately could have achieved any cost savings on their own.
Now banks have sold analysts and regulators on a different efficiency metric, that of an “efficiency ratio” of costs relative to revenues. Josh Rosner points out via e-mail that better looking efficiency ratios that big banks supported were not the result of operational prowess, but from cutting corners in areas like underwriting, servicing, and compliance.
But when the other banks do follow Bank of America’s lead (and I submit it’s when, not if), the implications will be more serious. There will be a tier of customer that won’t be willing or able to find a way to avoid paying monthly fees and will find them a burden. Think, for instance, of computer averse old people.
And in the upside-down world of finance, people who are unbanked face even higher fees. I was told of an open meeting held by Richard Cordray, the new head of the CFPB, in New York. Some of the consumers told of how costly it was if you could not afford to have a bank account (for instance, people who receive benefits on stored value cards). They incurred fees for merely checking balances and the charges for withdrawing cash were shockingly high. Stored value cards (the successor traveller’s checks) are handsomely profitable products even in the absence of these withdrawal/usage fees. You don’t need to price gouge to make good money on them. They’ve been used since the mid 1990s in South Africa to pay laborers who don’t have bank accounts (South Africa has a very high unbanked population). Needless to say, their transaction charges are considerably lower than those in the US (aside: one of the reasons is that the US is still using mag strip technology, which was out of date by world standards when I did an international credit card study in 1997. Chip cards allow merchants to charge transactions to a stored value card without calling for authorization, which reduced both phone charges and infrastructure needs).
Banking became an overly large proportion of the economy and the financiers don’t plan to give up their economic rents without a big fight. The only good news about bank efforts to charge ordinary customers more for basic banks services is it will pave the way for more smaller and more efficient new entrants.
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Another excellent, ingrate-rent-seeker blast. Keep firing, Yves.
(How can you not, in such a target rich environment? Giggle)
Why anyone in their right mind would possibly want to do business with Bank of America is absolutely incomprehensible to me.
“DOWN WITH THE BANKS! Oh noes, they are raising my fees, if only there was something we could DO!”
Unbelievable.
I finally had to bite the bullet and open a bank account after doing without for almost 3 years. It was becoming too difficult.
So I opened a checking account with Charles Schwab, and some of the features of this account are:
No fees… at all.
If I use an ATM machine to get cash, they refund the fee.
Overdraft protection, yada yada yada.
The catch is they also open a trading account for you hoping to get some of your trades. This comes with very handy online services.
I like them so much that toss a trade or two for blue chips their way every month.
Also, Schwab seems to be far less crimogenic than the big banks.
‘Schwab seems to be far less crimogenic than the big banks.’
Not too hard when those banks are the primary culprits responsible for the biggest white-collar crime in history.
But, yeah. Given that Chuck S. played a leading role in the democratization of the stock market for the mass American consumer, Schwab has overall been a fairly wholesome and relatively benign force.
One downside I’m aware of for them is that there is no true US Treasury money market sweep account.
Otherwise, I’ve been with them for 20 years now and have been very happy with both the quality and price of their services.
Schwab is probably many times safer than one of the big brokerage firms with a prop trading desk and all that underwriting and investment banking exposure. I have been doing business with them (when able) for over a decade now.
Two observations: First, given the risks associated with rehypothecation (risks that have been discussed at length at this website), even when using a broker like Schwab, I won’t maintain a margin account. Second, while it may be closed to new customers, Schwab does still maintain a Treasury money market account (see: http://quote.morningstar.com/fund/f.aspx?t=SWUXX). For what it’s worth, I think the FDIC insured sweep is safer and more convenient (given that in my case any invested balance are safely under applicable FDIC deposit limits and, as I recall, the Treasury money market fund is allowed to invest in repos which gives it a certain amount of counterparty risk).
It should be noted that Vanguard also closed their treasury money market fund, because it would have had to pay negative interest if it stayed open to new investors. Even with low fees it would be the case, just like regular money market funds almost pay no interest due to the fees needed. Actually one should look at internet banks for the best yields, which are still not very good.
I had a Schwab account until I found out that Chuck is a member of the Koch brothers “Million+ Club” of big-time donors to their PACs. I found a small local bank instead.
http://www.politico.com/news/stories/0911/62732.html
Thanks Yves. This is a wonderfully woven piece. Payment services are an important social function of banks, and to successfully provide them American banks should get rid of checking.
Checking’s prime raison d’etre is to lure retail customers into debt servitude, as the Journal article documents: “…they hope to retain customers as they grow more affluent and use services such as mortgage and business loans and credit cards.” If you don’t make it to real affluence, then there’s a good chance that your debt service will be pernicious.
Additionally checking generates pathetic fee income that is effectively a poverty penalty. JPMorgan says that 70% of (checking) customers with income less than 100k will be unprofitable because of caps on fees!!! That’s because 70% of them aren’t living off just slightly less than 100k. What % are living month to month? What % of Americans? Since when does anyone provide a service to someone who can’t pay for it? If they do so, it’s not a service, it’s a rip-off.
I have the impression that many American consumers use checking out of habit. It’s the way things have always been, and it feels like a convenient service provided by our good friends down at the bank. Probably a lot of people also had a hard time giving up their bows and arrows.
Instead of getting rid of it BoA now proposes making them more
Checking is fantastic, right there next to cash. Webber says that BOA doesn’t really make no money wif’ da checking… which sounds like a lie, just think of all the fees associated. If Banks can’t profit, great! We’re making progress. Steal more houses BOA then give ’em credit cards, enrich the 1%, re-elect Barack Ofraud.
I found when I used their online bill payment that they take the money out of your account immediately, not when the check clears, and furthermore they never give you any indication online whether the check cleared or not. You have to use your monthly statement to find out.
As an experiment I wrote myself an online check and never cashed or deposited it. They took the money from my account as soon as I entered the transaction, and kept it for six months.
Writing online checks!!! Thanks never heard of that one before. A new artform for kiters.
Having read Jamie Dimon’s remarks about the profitability of customers keeping less than $100K at Chase/JP Morgan, he raised my hackles. I’m a Chase customer NOT BY CHOICE. Hey, they came and got me – buying my accounts up from other banks I had chosen to use. Moreover, I do not care about their profit; I care about my profit and am prepared to walk on them. I could keep more money at Chase except it is not profitable for me. They need to pay attention to customers, because they are alienating the people they should not be alienating.
Dear LAS;
You are the exception that proves the rule. How many people do you know with even a rudimentary knowledge of how a bank operates? The degree of ignorance in the general public about banking is shocking. (Cue the, “I am shocked, shocked!” quote from Casablanca.) I went to a pretty good public high school way back when, and I don’t remember any general education about money being taught. It’s the same old story, they only teach you what they think will be good for them, not you.
There is a definite limit to ‘rugged individualist’ arguments.
It’s amusing to see the outrage of Americans about bank fees, as up here in Canada we’ve had them for decades. I wonder sometimes if this is the reason why Canadian banks didn’t implode during the crisis. There are fees for everything, and everytime you turn around, there are new ones. Canadians don’t put up much of a fuss though, unlike Americans. So our banks rake in a ton of money from fees, so they don’t have to do as much risky business (though some banks lost some money during the crisis, but not a lot)
As to the biggness of banks, we only have 6 big banks in Canada, and it seems to be a good system. I think the complexity in American big banks has more to do with financial engineering than actual banking. You can be big and efficient, as evidenced by our banks, but once you get into complex financial transactions and you’re also big, then it spells trouble.
I lived in Canada (Quebec) for a year and ahalf recently. No doubt, your banking experience dwarfs mine, but what experience I had banking with TD Canada Trust was much more positive than my experiences with Bank of America, Chase, or HSBC, 3 of the mega’s in the US.
As far as fees go, TD Canada gave me very good rates, with no fees, for trading my US and Canadian money back and forth. Try trading the money here in the US – even with a base exchange rate that’s almost dead even, you pay $1.05 for a CAD, but get to sell it back for just $0.95. This is true at all of the big banks. Even at my little local bank, they will give me the fed exchange rate, no surtax, BUT they charge a $50 fee to negotiate the check (cheque, to you Canucks), so it has to be a pretty big check to justify doing it this way.
I paid no fees for my TD Canada accounts, and can’t recall if I earned interest.
Canadian banks are MUCH more tightly regulated than US banks, according to a banker I knew there. Mortgages were never given out willy-nilly there, as they were here, so Canada didn’t have the MBS implosion the US had. That said, I do think Canada’s RE has been inflating like a bubble, and it does not seem to have popped yet, which is contrary to just about everywhere else in the world. Canada’s very-high-end RE market is part of what keeps this going (and very favorable tax treatment of unearned income), but I have to wonder what the future for RE is there.
You’re mostly wrong, they’ve had a lil’housing festival too.
Nobody in fire-nance is “tightly regulated” any where. TD is a leader of corrupt empire, so nice of you to advertise for thieves here. Fuck fees, people need jobs, healthcare, housing, the rich riff-raff are completely clueless degenerates minding their herds.
Yes, there are some things that are cheap to do, such as exchange currency, but the majority of their fees come from regular banking and trading. For example, it costs $29 to make a stock trade at Toronto-Dominion. Most bank accounts have a monthly fee, and then charges on top of that. Canadian banks earn about 25% of their revenue from trading/banking fees.
As for Canadian real estate and banks, don’t get me started on that!!! Canadian banks lend to deadbeats just as much as American banks. Recent legislation did away with 35 year mortgage, and required 5% down payment. I know someone who recently got a 35 year mortgage, and all the banks offer “5%” cash-back mortgages. So legislation that is supposed to prevent the bubble from continuing to inflate is circumvented by all 6 banks. In fact, it’s possible to get a mortgage for more than the house is worth (to pay for renos), so you are in a negative equity position before you even move in.
The banks don’t really care, because most mortgages are insured by CMHC (gov’t agency), so if there is a crash here, it won’t be the banks who are on the hook, but the taxpayer.
Same thing in the USA, banks were allowed to attack marks who needed housing, knowing they were insured/saved/bailed out and encouraged. Deadbeats as you call them, still. Banksters need to find a way to exploit and destroy, say with water or other precious life sustaining commodity. In this day and age of parasites nothing is off limits. Oh Wait! They’ve been there, done that, are doing that – wash rinse repeat.
Yves, I have a “Rescission of Satisfaction of Mortgage” I’d like to send you, how do I do that? Yes, it was notarized and recorded.
“J.P. Morgan said Tuesday that 70% of customers with less than $100,000 in deposits will become unprofitable for the bank because of new regulations, such as caps on overdraft fees.”
Wow. It’s really amazing that more people haven’t dumped the big bailout kingpins in favor of local credit unions. The national average interest rate on a checking account is somewhere in the neighborhood of 0.50 percent.
Really, how many Americans have that kind of money?
Sure, the credit unions don’t pay more; but I don’t need to do a thumb-print for every single transaction and get looked at down the end of some teller’s nose. They actually recognize me and remember my name.
This fiesty freshman senator [R-RI] had this to say about the jerks at Chase…
Senator Moura Steamed Over Chase Foreclosure Flunkies
http://www.foreclosurehamlet.org/profiles/blogs/senator-moura-steamed-over-chase-foreclosure-flunkies?xg_source=activity
“I have personally called and spoken with your staff. They are unprofessional, rude, use their power to frustrate callers, and do what they can to prohibit (instead of facilitate) meaningful resolution(s). If a State Senator is treated that way, I shudder to imagine how your customers and my constituents are treated. It’s atrocious.”
The sheeple are entranced with sporting events, then there’s comedians reminding us to Bank with a criminal enterprise that pays some fairy tale if you partake of their scheme. Retail banking is just that, a scheme, far more sophisticated then some rogue muffler outlet in the 70s who stole from the folk, far more likely to grift and abuse after drawing folks around the bend.
JPM is the biggest boy on the block. Look at their role in the MF collapse, no one in the MSM will even say their names.
Another point, which the MF collapse points out- You don’t want money on deposit at the BIGGEST bank, you have no recourse if it is stolen by them. At a smaller bank, you may be able to find a bigger one, or an attorney willing to take on a case. Running a case against JPM is career suicide.
I have very little sympathy for anyone who keeps an account at JPM, especially given it’s CEO’s perfect asshole act.
I am very interested in the passing reference to the U.S. banks’ reliance on magstripe technology for credit/debit cards, compared to the predominance of chip cards in the rest of the world.
I would very much like to understand why the transition to chip cards hasn’t occurred here in the U.S., given the cards’ greater fraud resistance. Is it because there are fewer merchant processors in the rest of the world who had to get onboard? I have a sneaking suspicion that the impetus abroad may have been a result of regulatory pressure that overcame the inherent difficulty of collective action to change standards, whereas in the U.S., our unbridled faith that the free market will produce the best of all possible worlds leaves us with a system that is worse for both card issuers and consumers.
Yves explained this:
The mag strips give rentiers higher rents. The rentiers have a monopoly, so of course they won’t change. Why would they?
Thanks to the heroic sacrifice of financial industry talent, American retail banking and its payment transfer preferences are firmly dug in at the top of BoA tower in Charlotte and calling in airstrikes on any and all approaching innovation. These income streams must be defended to the last bankster!!
Occupy needs to pay a visit to Lord Moynihan, throw funiture on his front lawn, then onto Dimon’s lair.
Toilets, like in “The Help”.
Dimon can send his kids, his relatives to engage in resource- grab new millenium colonial wars in the middle east. There’s body bags, torture and hegemony this side of the Gubbmint.
Pay yo’ bills, cattle!
Regarding the underbanked South Africa:
As a South African who is an outsider to the banks, it is interesting to see the rise of a new way to tackle this ‘untapped market’.
Capitec Bank is a new kid on the block but has gained fantastic market share here in the time it has existed. It boasts lower fees than any other bank and high rates on saving accounts with small amounts of money in it, as well as focusing greatly on cellphone banking rather than branches. It specifically targets masses of people with only a small amount each.
The cynic in me thinks their business model is based on gaining a captive market, then raising fees.
The optimist in me however thinks that there could be something to a lean new operation with well developed systems and focus on automation that can easily compete with existing behemoths that are saddled with aging legacy systems and redundant and auto-matable departments.
Big banks have the advantage to streamline by eliminating redundant efforts, which I cannot believe is a useless effort. On the other hand, small banks offer flexibility and agility, which considering the relatively recent computing revolution is a pretty significant advantage.
The greater ‘efficiency’ reported by small banks could be an indicator that the value of innovation, good solid systems and ability to remain flexible is a far greater advantage than any streamlining that larger banks can manage.
Ahem! Not just “computer averse old people,” but old people who are highly computer literate, poor as a result of being DISemployed, and as a result partly involved in barter and System D.
In any case, why would any sane person give the banksters any more data than necessary?
Re: “A big cost in retail banking is the branch network. Has anyone missed the astonishing proliferation of bank branches?”
As a contractor with more than one TBTF customer, yes, the banks (several of them) have been spending money on branches, branch upgrades, and stand-alone branches (which are hideously expensive compared to in-store branches, what with RE costs, development, etc.) However, do not think that they allow “trickle down” to infect their purchasing power – they are viciously tight with a dollar, and expect contractors to overperform for free. They are far, far worse than retail customers I’ve had over the years, who are also notoriously tight and absurd on schedule.
However, recently we were told by one TBTF customer that the stand alone branches were costing them too much money to build and maintain. They are now moving to upgrade the interiors of their branches to be able to service higher-end customers…
I’ve been wondering how they do the accounting for those branches. Do they “buy” the CRE from a deafulted loan, at par, and then get to depreciate it, based on their own mark?
I think this is another part of extend and pretend, institutalilized.
On the one hand they are doing everything they can to drive people out of branches, on they other they are building them all over the place.
My credit union requires me to have a savings account to have a checking account.
Minimum to open a savings account? FIVE DOLLARS.
Minimum average daily balance to get free checking?
SEVENTY FIVE dollars.
A good one is the ING checking. ING and Sharebuilder recently bought by capital one. CO is a bastard on the credit cards but interestingly, pretty good on banking (I do business banking with them) for business and consumers. Can’t beat the free banking with ING and free ATM usage. Course they are online only and an issue for some folks, works fine with me. Not a shill for these guys but there are alternatives. I bet some economist estimated that the demand for checking at B of A is fairly inelastic and the majority of people happy to pay for the priveldge and or too lazy or tied in to move elsewhere. Hope folks get smart. Americans as a whole are bad that way–they don’t mind getting mulced for 5 and 10 dollars here and there….A shame really.
“Nickle and dimed to death” has now been replaced with
“Fin’d and Sawbucked to death…”
“Fin” slang for a five. Sawbuck, slang for a ten.
A sawbuck is an X shaped construction of wood used to hold a log in the air for sawing. If you don’t know what the X represents you don’t belong here.
B of A is working really hard to encourage people to stop banking with them. Great PR.
I opened a bank account with and for my 11-year old son 3 months ago at the local Bank of America branch to educate him about personal finance and banking. He was told he had to maintain a $100 balance to wave monthly fees. I put that layer in for him to support his personal saving decisions on a $4 weekly allowance. I looked at his balance today and BofA charged him $5 a month while his balance remained > $100 all that time ($118.56). Inquiring today on chat and on the phone with BofA today, they are telling me that the balance is actually $300 to wave the fees. Not sure whether my son was and I were lied to or whether the fees were raised from $100 to $300. My son is going to hate that when I tell him after I pick him up from school at 4:00pm today. He is probably going to cry at first. This is 4 week worth of allowance. Then he is going to be mad, and angry … Tomorrow, he is going to tell all the kids in his class. The kids will tell their … 50 parents around the diner table tomorrow night. The 50 parents will tell their siblings, parents, kids, nieces, uncles and aunts, warning friends … gone viral.
This is sad but this is personal banking education for my son. I wanted him to face financial realities and this is what he is getting, the financial reality check. He is 11 and he can take it. Bank of America lied to Him. Bank of America stole his money … 1-month worth of allowance. that’s a video game. That’s a movies. Basically, Bank of America grounded my son for a week-end and this is really not fair. Nobody ever said that banks were fair :-) My son is getting the education he needs to get to better manage his personal finance.
Tomorrow night or Saturday, I will take my son back to the local Bank of America branch. He went there once to open an account. He was so proud. He was making great decisions, opening a saving account to save and plan better, bigger decisions later. I thought I was making a great decision to. Arming him with some education. I did. And when we go back, he will go back into the cubicle of that Personal Banking Advisor. And he will close his account. And he will most probably hate Bank of America for the remaining of his life expectancy ~ 100 years.
I feel bad for my son. He is going to be sad. But I feel good about my attempt at educating him. For sure, he is getting the lessons he’s gonna need to deal with his personal finances and the banking system. That’s his reality and I am glad I am arming him. And I really don’t feel bad about Bank of America. They probably have no clue, but that’s really very expensive education for them. That’s going to cost them a whole lot, probably a lot more than an Harvard education when you think about it.
Keep the kids away from Bank of ‘Murica. That’s very close to child abuse my friend. As for “learning up your kids” get real, we have 24/7 assaults on perception, underwritten by the predator class. The major criminal enterprises need to be crushed, obliviated. Speaking of that, teach yer’ youngin’s about anthropology, not the specious mechanisms of tyranny. Cloying reminders from Big Brother. Imagine a bunch of crooks lecturing about responsible conduct after they’ve burned down villages and killed the civilians.
Take you boy to a local credit union and have him start an account there. Explain to him that it’s a cooperative bank and that whatever profits there are get returned to him and all the other members. His money should help the community he lives in, not enrich some stockholders somewhere overseas or in NYC.
This statement: (aside: one of the reasons is that the US is still using mag strip technology, which was out of date by world standards when I did an international credit card study in 1997. Chip cards allow merchants to charge transactions to a stored value card without calling for authorization, which reduced both phone charges and infrastructure needs)
is false.
Chip & Pin based still requires contacting for authorization, and doesn’t represent ANY cost savings except in terms of reducing fraud. And the fraud reduction savings are as much by shifting the cost of fraud to the cardholder rather than the bank & merchant because Chip & Pin is ‘secure’, so any fraud must be the cardholder’s fault.
Storing the value on the card itself is a guaranteed failure, as attackers can and do modify the stored value, clone cards, and perform other such mischief. NO system with stored value on the cards themselves have survived hacking.
I had a checking account with Washington Mutual Bank in Los Angeles. The basic account was free but I opted for $5 monthly fee because it provided other services like free cashier cheque or money orders, otherwise, which itself would cost $5 each. After the crash of 2008, Washington Mutual was basically stolen by JP Morgan Chase for free (I think that was like insider stealing because Jamie Dimon was in the board of some Federal Reserve). Anyway, when my account got converted to Chase, I was told I don’t need to pay $5 monthly fee (which was agreed by Washington Mutual) and Chase will make my checking account fee free. That all sounded good, so I agreed. About six to eight months later, Chaserrevised its policy and starting charging me $10 per month for checking account and also raised service charge for cashier’s check from $5 to $8, This is one of the ways they ripped Washington Mutual customers.
It was not long ago banks used to be a happy place to visit. I remember when I went to banks in Los Angeles, they used to have free coffee and loads of cookies right inside the entrance. Nowadays, when you go to the bank more than certain number of times they want to punish you by charging fee for each visit. Needless to say, I never touched those cookies and stayed lean and trimmed. However, now, I hate banksters so much that if I ever see cookies being offered at the banks, I might run away with the whole box, just to get even.
JPM had the FDIC grab Wamu for them. All of the deposit base was disappering, going to Wells, most likely.
There were some news stories out of seatle about the bank runs at Wamu(after the fact), and how they were surviving them.
Nothing scares the FDIC like a bank run.
I was one of those bank runners. Closed it out the moment I heard I now banked at JPMorganChaseCitiBearStearnsWaMu in 2008. The guy closing my account said that there had been a lot of that happening.
Well, I am old enough to remember when banks gave gifts for opening checking accounts. And now we hear that checking accounts are too costly for banks?! Verrrry interesting! ;)
Who needs our deposits when they have the Fed?
If it were up to me, the banks would have neither the Fed NOR insured deposits nor ANY OTHER government privileges.
I cannot understand why banks aren’t making money. First, there’s the fractional reserve thingy in which they basically create money out of thin air – which they then lend out at interest. Then there’s the spread between the 0.25% they pay the Fed to borrow money and the usual mortgage rate of around 4% – a 3.75% gain on money they invent. Or how about the joke of the UST market, where they buy from Treasury and sell to the Fed a few days/weeks later – at a healthy profit. And then there’s those deposits we all have, paying what, half a percent? So, now they wish to charge me for holding my deposits (which, by the way, benefits them by increasing their reserves, allowing them to create more money from thin air).
If you haven’t done so already – move your money. More states need to follow N. Dakota’s example.
I’m very pleased with my USAA checking account. Their physical network is very limited, but they refund fees on ATM usage (up to a max), and have full online banking, including smartphone check deposit.
But the best part is that you don’t have to worry so much
about how they’re trying to rip you off this month, like with the TBTFs. I’ve been with them for years and there have been no unpleasant surprise fees in their statements.
I also use a CU for my local banking needs. I’ve been out of the TBTF banks for years and do not miss them at all.
You don’t need to be military to get USAA banking.
You have got to be joking. USAA is another bilker that serves no purpose other then formulaic extraction, flag waving and all. F@#k ’em for their Vietnam fieldtrip advertisements, just disgusting. Also, be sure to check out Google/NSA’s new privacy policy. ta ta!
It looks like BofA needs another slapback. I’m so glad I moved my money last year. Although I did get my licks in.
You might like this direct action protest I took on my own against Bank of America. I called the credit card customer service line to do some “negotiating.” Having a bit of leverage, I thought it presented a great opportunity to mess with them a little without fear of retribution. I made a video of the call and posted it on my blog along with my comments about what happened and a fuller “director’s cut” transcript. Pay attention to his response to the classic line “Why does Bank of America hate Christmas?” Enjoy. http://www.ragingwisdom.com/?p=508
If the bank does not want a person as a customer, the credit unions do. Just move your account, and both sides will be happier. Interestingly the credit unions are able to do something that banks can not, combine branches, putting service centers in that serve a number of credit unions instead of distinct branches.
Basically if they say they do not want your business, then leave.
When I moved to Massachusetts from the Midwest several years ago, I looked around for a local checking account. B of A was offering $50 to open a free checking account, plus they are the largest bank around here so I would have good access to ATMs.
Once they handed me the $50, I was told they didn’t offer free starter checks. I’ve never heard of a bank not offering free starter checks. After becoming aware of their many other fees (wiring money in & out of the account) I ordered new checks from my Midwest bank with my Massachusetts address on them. I’ve never had a problem using the checks in Massachusetts. I don’t know why I thought I had to have a “local” checking account.
My average balance in my free B of A account has been about $15 over the years. They mail me a printed statement every month (helps out the Postal Service). When I need access to cash, I visit B of A and cash a check from my real bank to avoid foreign ATM fees. B of A also offers free notary service, which I’ve used a couple times.
Why on earth would I leave B of A? I’m just waiting for the gravy train to end though which explains why I keep a balance of only $15 so they’ll never get any more than that from me with a “surprise” fee.
I moved a while ago and left behind a bank account with a few hundred dollars in it. I did this deliberatly, I didn’t want to cut things too close. I gave them the new address, and had my mail forwarded. I never once got a statement.
After two or three months I called and asked what was going on, hoping to close the account out. The person I spoke with was asking very probing questions, which I was relucant to answer, I just wanted a check for the remainder of the account sent, and the account closed.
Well, it turns out that a bunch of fees had been lumped on and compounded, and I ended up owing them money, due to account changes, which I was NEVER notified of. Not to waste any time, they had already sold the “claim” to a collection agency.
I had all my documentation, and stood by it. The collection agency was another story, I had to call the FTC to get them to stop calling me over a (false) $250 claim (bank fees, then collection fees, compounded 3 times daily). The collection agents went as far as to recite my social security number, to a voicemail account they hadn’t even verifed beloged to me.
Capital One strikes!
They are going after business checking accounts as well – in a big way in my case. I am controller of a decent-sized local manufacturing/distributing firm and we met with our banking representative (it’s not B of A but it is in the top five) in late 2011 and found ways to lower our checking account costs by about 20% overall, or so we thought. In January, we received our first account cost statement and instead of decreasing, the costs had increased roughly 25% over the previous month. I went down the statement line by line (about forty line items overall) and noted that the bank had added about ten new line items and increased the unit price in roughly three-fourths of the rest. I plugged in the previous month’s pricing scheme line-by-line to the January volume and found a whopping 44% (!) increase.
The chutzpah of these banks is simply breathtaking. I’ve come across various thieves, crooks and ne’er-do-wells in my life (in and out of business), but I’m having trouble remembering any of them trying to stack the price anywhere near 44% in one fell swoop.
As you might imagine, I made a little noise about this. The first response from the bank was that they had announced the increase a couple of months prior (as if that makes it all AOK, not to mention that this price increase was never came up once in our meeting on that very subject) and that the bank had not had an increase in two years. I told them that when I inform our management that the bank had increased our banking costs 44% in one month, I am pretty sure what their response will be. This has to be called out – forcefully, or the banks will eventually steal everything.
“In my not-cheap neighborhood, they’ve displaced perennial high profit retailers like liquor stores”
Only Yves would rather see liquor stores in her neighborhood than banks.
It used to be that banks in neighborhoods implied that people in the neighborhoods were forward-thinkers, savers, etc. Now we’d rather see liquor stores :)
Who goes to the branch office anymore, anyways? I am probably one of the only 30-something year olds who still goes regularly, given that I need to withdraw cash sums for poker tournaments or other activities that are still cash-only. I do all my account-checking through mint.com, which plugs into my regional bank via the internet. If someone writes me a check I end up having to go, but I am hoping in the future my bank comes up with an iPhone app that lets me snap pictures of my checks to deposit them.
“On the one hand, banks aren’t charities.”
Neither are depositors.
For all of you complainers out here, can you please name me one other company whom provides you all of their products or services absolutely free??!! That’s what I thought, you’ll spend over a hundred and fifty dollars a month to watch tv and another 100 a month to yap away on your cell phone though? That’s roughly 8 dollars a day combined. Banks want around 10 dollars a month to provide you with almost any product and service they offer.. I think you would be better served re-evaluating the ‘necessities’ in your budget, as opposed to whining. Additionally, you think they’ll really care if you close your average balanced account of a few hundred bucks?