Brian J. O’Connor
Banks are hogging capital, lenders are squealing about being forced to play fair, mortgage firms are wallowing in fraud and credit card companies are STILL inventing new ways to steal your bacon.
Yup, sounds like it’s time for the annual Piggy Bank Awards—or “Piggies” — the honors I annually hand out for dishonorable behavior by banksters and other scum. It’s been a year of financial “services” firms going hog-wild with excuses and rip-offs, so let’s pig out on this year’s winners.
When pigs fly … : Bank fees took an extra hit of helium in 2010, soaring to new heights in several categories. According to the Bankrate 2010 Checking Study, ATM fees leapt 5percent from 2009 to a new high of $2.33. And the charge from your bank for using another institution’s teller machine increased nearly 7 percent to an average of $1.41. Overdraft fees likewise hit a new record of $30.47, and the charge for not maintaining a minimum balance on an interest checking account increased almost 4 percent to an average of $13.04 a month.
The good news is that, by year’s end, new banking rules limiting some fees had already gone into effect, the Federal Reserve was limiting some (but not all) other bank and credit-card fees and the nascent Bureau of Consumer Financial Protection should be able to protect us from others. The bad news is that banks will continue to invent and increase fees to make up the millions they used to rake in from ripping us off.
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Example: New rules limit late fees on credit cards to $25 or the minimum payment, whichever is lower. To eliminate the option of “lower,” some card issuers are raising their minimum payment amounts. This means low-balance customers who are late will pay more, boosting fee income. The higher payment also could prompt customers who are short of cash to pay late, generating more late fees. Oink!… and boars soar: Speaking of the Bureau of Consumer Financial Protection, the bought-and-paid-for mostly Republican lawmakers who stuff their campaign coffers with “donations” from banks and other financial services squealed their heads off about who should run the agency. Anyone with consumers’ best interest in mind knew it should be Harvard bankruptcy professor Elizabeth Warren, who suggested the idea for the bureau in the first place. (Hint: If the lobbyists don’t like you, you’re probably on the right track.) Facing an uphill fight in the Senate, President Obama ran past these swine like a greased pig and installed Warren as a “special adviser” who needed no confirmation. By this time next year, she’ll have the banksters squealing.
Quote: “I believe in personal responsibility, but it only works when prices and risks are clear up front and not buried in pages and pages of incomprehensible fine print. But, I also believe in American families. When they have better information they will make good decisions and those good decisions will … ultimately will make the entire economy stronger.”
When can I buy pig protection? The newest credit-card racket being foisted on the American consumer? Payment-protection-insurance programs. These policies, added to your monthly credit card bill, promise to suspend interest and minimum payment requirements if you get sick or lose a job. According to The Wall Street Journal, policies cost 80cents to 90 cents per every $100 of debt, so a $5,000 balance means a protection premium of up to $45 per month. It’s a bad deal and the money is better spent paying down your balance, or paying for a balance transfer to a card with a lower interest rate. But just because you don’t sign up for it doesn’t mean you aren’t getting charged. Media reports find that just as in the past, the new fee is sneaking onto bills without consumers even requesting them. David Paris, an attorney based in New York, sued Discover Card in federal court, saying thousands of people had been pushed into the program without their knowledge. A class action suit over similar problems has been filed against HSBC in Illinois.
Discover also got hit with a lawsuit in Minnesota over similar problems with a $15 monthly theft- and fraud-prevention service, which Minnesota Attorney General Lori Swanson claims were foisted on consumers using questionable practices. Not to mention the products themselves are nearly worthless. Except Ed Mierzwinski, consumer program director for U.S. PIRG, did mention it: “They’re all absolute junk, and if you tried to sell them at a store … nobody would buy them.”
Chase-d out by the pigs : Let’s review: Banks take your deposits, pay you next to nothing in interest, then turn around and lend that money (when they actually get around to making loans) out to other folks at a higher rate of interest. They’re supposed to make their profit on the spread between the two rates. Yeah, and pigs fly. Instead, they make more and more of their profits from the sky-high fees they can gin up and stick to their customers. The newest case of this swine-fee flu has been incubated at Chase.
It used to be that a direct deposit of cash to a bank got you free checking, and it’s a very cheap way for the bank to get capital electronically beamed right into their vaults. No deposit slips, no visits to the teller, no telephone transfers, nothing. You work, you get paid, and the money magically appears in your bank account for the bank to lend. Or your Social Security check does the same thing while you’re playing shuffleboard.
Not anymore. In February, Chase wants a $6 monthly service charge if your direct deposit isn’t at least $500. And that’s EACH deposit. If your total deposits in a month come to $500, you still get slapped. As the Associated Press notes: “According to the Social Security Administration, about 7 percent of beneficiaries receive a monthly check of less than $500. Unemployment checks are often less than $500 as well.”
The problem is, now that federal rules mean banks can’t steal (as much) from you (as often) as they used to, they are looking to make up the income lost from not being able to lie to you and then instantly suck money out of your account.
And Chase isn’t the only one. Customers at Bank of America without direct deposit and those who fail to keep a minimum balance are restricted to only electronic statements and online banking to avoid a $9 monthly fee. What’s next? A cover charge and two-drink minimum?
Porcine pronouncements: Every once in a while, a big porker squeals out the truth. It’s a novel event in politics, but that doesn’t make it any less scary. One such accident dropped like a chewed corn cob from the mouth of Alabama Republican Spencer Bachus, who is set to take over as chairman of the House Financial Committee — the committee that just helped pass some of the few new consumer finance protections we are getting. I quote:”In Washington, the view is that the banks are to be regulated, andmy view is that Washington and the regulators are there to serve the banks.”
And if you’re wondering just what gets served — it’s us.
Not being a pig perks up sales: Hey, banksters! Need proof that doing the right thing (or at least being forced to stop doing many, many, many wrong and unfair things) is good for your business? Root your big ol’ piggy noses in a recent report from the Tower Group. The study found earlier this year that gift cards were bouncing back in sales, “thanks to new laws that cut down on the fees, restrictions and money lost when the cards are unused for long periods.”
Gift-card spending dropped from $97 billion in 2008 to $88billion in 2009, partly because of growing awareness about gift-card fees and traps.
One analyst predicts that spending will rise back to $92billion for this year and $96billion next year. So it turns out that building trust with your customers is good for business, but when people figure out that you’re a money-stealing swine, they stop spending with you.
Let’s hope that lesson is one all the financial “servicers” will learn in 2011: Act like a pig, and eventually you get slaughtered.
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Article source: http://detnews.com/article/20101227/OPINION03/12270315/1005/rss32
Category: Identity Theft Watch
