San Francisco The news that I could put in file folder entitled “banking as a criminal enterprise,” just keeps getting bigger. The Justice Department made headlines zinging two big banks, Zions and First Delaware on a settlement for billings for their profit making in facilitating fraud by telemarketers and others. I noticed that part of the two banks’ haul was $20 million in overdraft fees that they had ripped off from their customers in the process of aiding and abetting criminals to clean out their bank accounts.
Moebs Service, a Chicago-based economic research firm estimates from just the first quarter of 2013 alone, banks will clear $31.1 billion in overdraft revenue nationally, which is about the same as 2012 produced, but down from $37.1 billion in 2009.
Rules promulgated by the new Consumer Financial Protection Bureau (CFPB) were supposed to be addressing this, but unfortunately as I have argued before, so-called “disclosures” are never enough to halt the slippery language, confusing communications, and desperation that under-gird all predatory practices. Susan Weinstock, director the Pew Charitable Trust’s Safe Checking Project told Kathleen Pender of the San Francisco Chronicle that the sample disclosure form from the Federal Reserve for “voluntary” bank use “only adds to the confusion. “Voluntary” is a key word there. I think I can see from here the number of hands raised by people who think that banks are going to voluntarily walk away for 30 billion worth of cheese in the interest of what? More transparency and integrity? That is so last century!
The CFPB’s own report on overdraft opt-in’s by consumers, which are choices to continue to have overdraft protection at a price, indicates opt-ins were running at 16.1% and 22% for newly opened accounts. Overdraft charges can run between $25 and $40 a pop, depending on the bank, and the average fees in 2011 at those rates was $225 per customer, when they used overdraft protection. Sadly, as Pew’s Weinstock pointed out, one member of a Los Angeles focus group thought she was opting in to NOT have overdraft protection.
Calls for a warning before you use your debit card and pay $35 bucks for a cup of coffee are dissed by the industry. As one said, “The checking account superhighway needs to have information signs,” but “if we start putting stoplights and stop signs on our superhighway, it’s going to look like Rome in rush hour traffic.” You know, that’s simply not true. Anyone who has ever used a credit card on the internet knows personally the number of stops and starts companies put up before the transaction goes through and sometimes even afterwards in the name of “security” checks for credit cards or use of cards in other countries or even other communities, so this is totally bogus. When it’s in their interest, anything goes. When it’s in ours, forget about it!
How about less bull corn and some real consumer protection and, even better, regulation of banking, as the criminal enterprise it seems determined to operate in too many areas?