Senate Banking Committee Chairman Chris Dodd, D-Conn., said if the Fed doesn’t curb overdraft abuses, he’ll “pursue legislative action.” Rep. Carolyn Maloney, D-N.Y., has sponsored legislation requiring banks to get consumers’ permission to cover overdrafts, disclose APRs and pay transactions in a way that doesn’t increase fees.
Banks are lobbying heavily against restrictions. Why? “Overdraft fees are the mother lode of (deposit) fees,” says Michael Moebs of Moebs Services, an economic research firm. “If it weren’t for overdraft fees, 45% of banks and credit unions wouldn’t have made money in 2008.”
So 45% of banks are now on the public library model where you only make money from late fees. Are you kidding me?
We’re talking about the banking industry, where all you have to do to make money is to follow the 3-6-3 rule: borrow at 3% interest, lend at 6% interest, and be on the golf course by 3 PM. If you can’t make money in fractional reserve banking maybe you need to pursue your lifelong dream of sleeping every day until noon, popping a brewski, and yelling at the TV. At least you’d be less of a burden on society.
Some consultants offered banks ways to boost overdraft and credit card revenue. A 2001 “checklist” from Profit Technologies — a firm that has worked with 19 of the USA’s 20 largest banks — has more than 600 strategies. Some are cost-cutting ideas such as printing a dispute form on the back of credit card bills to curb phone calls.
But most relate to income from fees. One strategy listed to boost overdrafts: “Allow consumers to overdraw their … accounts at the ATM up to the bank’s internally set limit.” To increase credit card fees, banks can “delay crediting of payments not received in bank provided envelop (sic) or for which payment coupon is not received for up to 5 days,” and “remove bar coding from remittance envelopes,” slowing the payment.
Patrick Fox, president of Profit Technologies, says the document USA TODAY obtained “look(s) like our work.” The list, he adds, is a “collection of (bank) practices,” but the firm doesn’t necessarily recommend each one. Still, the practices confirm consumer groups’ greatest fear. “We always thought what (the industry) was doing was deliberate. Now we know it is,” Wu says.
Bastards. “God it’s good to be a banksta.”