No One is Stopping Banks from Ripping off Soldiers at US Bases

Fort_Hood_Natl_Bank-e1389936052936New Orleans    You find some dangerous things going along the side road on the way by Susie’s house, but I’m going to take you there with me to see some scary rip-offs of everyone, but especially soldiers and other members of the armed forces.

There was a report on the top ten financial institutions that make their money as a percentage of deposits from various banking fees like converting overdrafts to short term loans and the like.  Keep in mind that overdrafts are always big business for banks who scooped in $32 billion in 2013 along on fees for bouncing checks.  The drift of the storyline of the Wall Street Journal’s review of federal filings of banks was that five of the top ten banks reporting the highest level of bank fees as a percentage of deposits from 2010 were housed in Walmart stores, led by Woodforest Bank.  And, they were right, since obviously Walmart is aiding and abetting a ripoff of its largely low-and-moderate income customers, which I have to heartily condemn.

But, they were silent on another part of the story, which was equally predatory, and directed at vulnerable soldiers, which is likely the real story here:  the top ten banks making most of their money on these up to 300% interest rates on fees were almost always cheek to jowl with military installations and directly, if not solely, catered to the military.

Of the top ten, likely nine of the banks were designed to cash in on their proximity to military bases and the soldier’s syndrome of long months and short money.  So, yes, Fort Sill National bank, has a lot of stores in Walmarts and so does City National Bank and Trust Company, but both are headquartered in Lawton, Oklahoma, the home of Fort Sill.  First Convenience Bank is also one of the top ten on fee income and is number two in Walmart locations, but it joins Fort Hood National Bank in the number nine position on the list as both being headquartered in Killeen, Texas, which of course is the home base of Fort Hood.  Number seven and number ten on the list are lighter on doing business at Walmarts, but calling themselves the Armed Forces Bank of California located near all of the naval bases in San Diego and the Armed Forces Bank headquartered in Fort Leavenworth, Kansas, says it all doesn’t it?   Nor do I have much doubt about the militarily oriented predatory business model of Academy Bank headquartered in Colorado Springs, undoubtedly named in honor of the nearby Air Force Academy.   So, yes, perhaps Sunbank in Phoenix is just a small outfit with a huge amount of its money coming from fees, but I would bet money a map search puts them near the gates of Luke Air Force base.  Just as I would not be surprised at this point if Southern Commerce Bank in Tampa isn’t right up against MacDill Air Force base or the other military outfits from naval to boots on the ground in Tampa.  So, yes, Woodforest National Bank, based in the upscale Woodlands suburb of Houston is a bloodsucker for the Walmart crowd with branches in over 700 Walmarts, but the rest are putting dollar sign targets on the backs of uniformed military around the country and ripping them off right and left.

We have a Military Lending Act passed several years ago which was supposed to protect military from predatory loans, but both the top brass and Defense Department, Walmart, and Congress is allowing predatory financial institutions like these banks and others to deliberately, and almost exclusively, target military and military institutions to reap their ill-gotten gains.  How can Congress or the Consumer Financial Protection Bureau allow this?  This is when we have to wish Elizabeth Warren was a Senator in her birth state of Oklahoma or in Texas where she lived and taught so long, and not Massachusetts, but surely there are plenty of elected officials willing to stand up for the rank and file military against the banks?  Or, am I kidding myself again?

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A Corrupt Credit Business Model Travels to Chile and Brazil

New Orleans Cred

ODECU of Chile
ODECU of Chile

it card scams are the bad penny perfected in the United States that is turning up now elsewhere in the world.   These practices are not the foul play of bad actors as predatory lenders always claim, but intrinsic elements of corrupt, exploitive business models.  The economic success stories in Brazil and Chile now seem threatened by the avarice of casual corporate corruption matched as usual with light to non-existent regulation and consumer protection regimes.

In Brazil the debt to income ratio has risen from 22% to 40% in only five years from 2006 to 2011 according to a study quoted by Alexei Barrionuevo in The New York Times. In Chile in 7 years the ratio has goen to 70% according to the Central Bank.   There’s no question the model is predatory with interest annual interest rates reaching 220% in Brazil and no limits anywhere it seems.   The situation is especially intense at retail chain, freely issuing cards to working and moderate income customers to access basic consumer goods, and then routinely adjusting the terms and levels of the interest rates on the debt without any notice to the customer.

These cards were supported by transnational banking big boys like UK’s HSBC and Spain’s Santander and Itau-Unibanco, all of which, especially HSBC, absolutely knew better, but couldn’t resist the rip-off, knowing that they could get away with it.  When confronted by the prosecutor’s office in Brazil, the banks ignored appeals to fully compensate customers.

It was shocking to read that there are no only no limits to the level of interest rates in Chile, but also no way for an individual to be able to file for personal bankruptcy and get their act together.  Unfortunately, when ripped, there’s no way for them to run – or reorganize.  Stefan Larenas of the Organization of Consumers and Users of Chile, speaking about the Equifax-owned, unregulated Dicom credit score outfit in that country, was quoted ominously that, “If you are in Dicom, if you are not in hell, you are on the way there.  It is a true social stigma here.”  Seems a bad score not only bars you from any future loans, but is also seen as a legitimate reason to block you from future employment, creating a debtor’s prison without walls.

Predatory financial injustice is a global issue with most central banks simply burying their heads in the sand, just as our Remittance Justice Campaign has uncovered everywhere, and leaving workers and families nothing but fresh meet for corporate crime.

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