Bankers, Wankers

[altivo]

So how much more garbage are Americans going to put up with before they start burning bankers at the stake or tearing down bank buildings brick by brick?

Beleaguered Bank of America obviously doesn't yet realize that its problems are caused by its own dishonesty and mismanagement, not by its millions of small depositors. How much bonus are they paying those execs who came up with the idea of charging $5 per month for the privilege of using a debit card?

These are, of course, the same people who have been promoting debit cards relentlessly for years. Telling you that checks are passé and that a debit card is more secure and costs them less to process so they can pass the savings on to you. Now that they've finagled changes in banking regulations to take away almost every advantage of the paper check system (no more returned checks, no more security, no more guarantees, no more paper statements...) they want to start charging you for using their preferred alternative.

Note: I am not a B of A customer and never will be. However, I am, through no fault of my own, now a Chase customer. I have no better thoughts about Chase, and have already begun looking for a smaller, more honest, and less costly place to do my banking. I had an account at First National Bank of Chicago, one of so many years' standing that my account number has only seven digits. I have kept it through repeated buy-outs and mergers as the bank changed names and management nearly once a year in the 21st century. But the arrogance of the giant banks and their total lack of interest in the needs of non-millionaire customers has gone much too far and it is time for all of us to scrape the dust of their corrupt establishments from our sandals and go somewhere else.

Such an odd coincidence that Bank of America's website suddenly became unreachable the day after their unilateral announcement, isn't it? They insist that it wasn't hackers, but all descriptions of the problem have DDOS written all over them in my opinion. They deserve worse than that, but the fact is, their customers don't deserve it. Whoever you are out there, interfering with B of A's network connections, you're hurting the innocent far more than you harm the guilty. Choose a different means of attack. An organized bank run would serve them right. Take your money out of the failing and corrupt institution and put it somewhere smaller where you can actually talk to a real person. (And not get charged for the privilege.) Or put it in a sock and bury it in your back yard, where it will earn every bit as much interest as Bank of America is likely to give you. And last time I checked, there are no service charges for using an old sock.

Comments

[baphnedia]

Bravo! If you still want to use a bank, might I suggest USAA (which IS open to non-government, non-military AFAIK). Otherwise, go with a local credit union. I do both - so I have any benefits of having a bank or a credit union at my disposal. Given that many accounts can be linked for easy transfers via online banking - I use both a bank and a credit union these days. :)

[altivo]

I have a long-standing credit union account as well (Michigan State University) and that's where most of my savings are located. Unfortunately, many years ago the "local accounts only" attitude of merchants in Illinois forced me to open one here. I left Amalgamated Bank for Lakeshore Bank when Amalagamated started charging large fees for checking accounts. Lakeshore was free to employees of Time-Life for quite a long time, but eventually they started charging for everything as well, so I switched to First National. The latter eventually upgraded me to "preferred customer" status and treated me very well until they were gobbled up by Bank One. It's been downhill ever since.

The credit union provides me with a VISA card with no annual fee and no service charges as long as the balance is paid in full each month. But in order to have some cash in pocket, which I still regard as essential, I have to keep a local account so I can deposit paychecks. If they went to the credit union, there is no way to get cash out without paying a fee either for using an "alien" debit card at a local ATM or cashing an "alien" check. Illinois banking regulations have improved only marginally in the 35 years I have lived in the state, and still permit barbaric treatment of anyone who is not a "local depositor."

Their much heralded "big step forward" came when they finally allowed branch banks to be opened. Back in the 70s, branch banking was illegal here. In fact, that law was ruled to include ATMs, preventing banks from establishing an ATM anywhere except in their own home building. The furor against that decision ultimately forced the legislature to change the law and allow banks to have branches. At first there was a distance limitation, so branches couldn't be opened two towns away or in the next county, but when the mega-banks started buying everything up they also bought up the legislature and forced another revision to the law.

I know this sounds like the 19th century or maybe even the 18th, but it's Illinois and that's the way stuff works here.

[baphnedia]

Oh, I remember with the history of Wisconsin that banking itself for a long time was outright illegal.

[merik]

Whatever money B of A is bringing in, they're certainly not using it to make loans. My brother-in-law is a mortgage officer for a B of A branch, and he's told some horror stories about B of A doing everything possible to delay or deny home loan approvals. One egregious example was someone who had been a B of A customer for over 20 years and had over $1 million on deposit in various accounts, CDs, etc. being turned down for a $200K loan after B of A foot dragging for over 6 months making the decision.

Truth be told, my brother-in-law may not be employed by B of A anymore. Mom's dropped some hints that he got fired because of making the cardinal sin of actually fighting the B of A loan bureaucracy to try to get his customers' loans approved in a timely fashion and refusing to use the party line explanation that delays and sudden last minute roadblocks (e.g. informing customers the day before their loan was supposed to close that another inspection of the property was going to be necessary before the loan could close) were always "for customer security".

[altivo]

I really believe the problem is simply that they wrecked their cash flow writing bad loans and buying up questionable paper, and then since the bailout period have been spending all their liquidity on huge bonuses for their fat cat execs. This is the same as nearly every other large bank in the country, and the reason that Wells Fargo, BofA, Citibank, and others have been in continuing difficulties.

Because they are afraid to punish their own high-rolling execs (or can't, since the decisons are made by those same execs and the shareholders are shut out of the equation) and don't dare pass the expenses on to their large depositors and business accounts, they are trying to fix their disaster by stealing from the small customers. The same old tired tricks that the GOP tries again and again in politics. Tax the poor, feed the rich.

Things are going very, very bad in this country and it's happening much faster than even I expected. Something has to give, and it seems quite possible that heads will roll somewhere in the true French Revolution fashion if they keep it up.

[baphnedia]

In response to heads rolling, given that sustained demonstrations have started cropping up around the country... yeah. That, and even the political structure is rather cracked in it's foundation. The same Gov Perry who tried to get Texas to secede from the Union after Obama was elected... is running for President. I don't know where his loyalty changed all of a sudden in the past 3-4 years. Oh wait... I think I'm assuming that he's at all loyal to the people of the United States... (sorry, I'll get off my soapbox now)

[altivo]

Perry is loyal only to his wealthy overlords. I think he has exposed himself for an ignoramus now, though, and will soon be eliminated from the race.

[avon_deer]

Revolution has lots of shiny consumer gadgets and "The X Factor" to compete against. Great for keeping people distracted.

Bread and circuses..

[altivo]

Those only distract the people who can afford to buy the shiny gadgets. As more and more find they are having trouble just acquiring the basic needs of life, as in food and shelter, things will proceed. This is a concept that seems to have escaped the wealthy manipulators. Since they no longer study history, they believe that the sheep will not turn against them and they are wrong about that.

[(Anonymous)]

I think you already know that I hate BofA with the fury of 1,000 fiery Death Stars. I'm pretty sure it's in my LJ somewhere. If you want the details again, just ask.

I'm not surprised at all at their latest antics. They're either going to run themselves out of business as customers flee or fuel the revolution, either is fine by me.

[(Anonymous)]

Oh, it's me, Keegan for the above post. Sometimes it shows who I am, and sometimes not...

[altivo]

Yeah, I had it narrowed down to two or three and you were a candidate. DW will recognize you if: 1) you are currently logged into LJ; and 2) you specify to use OpenID when commenting and give the URL of your LJ page. If you login at www.dreamwidth.org using OpenID you can tell it to remember you. That works until one of the cookies expires or is erased.

[dakhun.livejournal.com]

I don't know how American banks can make money at all - interest rates have been stuck too low too long, and every few months the government tries to effectively make the rates even lower.

If there's a way they can make money by accepting a deposit from someone, only to have them withdraw more or less exactly the same amount of cash within two weeks or less, without charging fees, then I certainly don't know what that is.

[altivo]

Oh, they can still make money. For one thing, they all issue credit cards and credit card interest rates remain sky high no matter what the Fed does. Even mortgage rates are still around 5% which is enough for them to make some profit on mortgage and construction lending.

Since they are paying almost zero on savings and even on CDs, there is really no loss to them in those departments. 0.29% on savings is nothing. They should be earning far better than that by investing the money even in this marketplace.

They have the option, if they really insist, of eliminating consumer banking. Several have tried that in the past, most notably to me the Continental Bank here in Chicago. (It didn't help them, they collapsed anyway.) But if their intention is just to eliminate consumer bank accounts, they should be honest about it instead of expecting customers to put up with a service charge for everything. That doesn't work and the evidence is well established against it.

A bank the size of BofA should have a substantial cushion of liquid funds that allows them to invest where necessary in order to earn better than what they pay out. They are being allowed to charge a per transaction charge on debit cards already, and one that is actually higher than what they used to get for paper checks. What it comes down to is massive inefficiencies in processing and management, combined with incredibly top-heavy salaries and bonuses. Before demanding more from their customers, they need to cut a lot of fat out of their compensation packages.

They probably make more just on "float" (the time between when a deposit is received and when they make it available for withdrawal) than the cost of maintaining the account these days.

[dakhun.livejournal.com]

People who preferentially use debit cards probably use them because either A) they don't qualify for credit cards, or B) they don't have the money management skills to use a credit card to their benefit. Either of those cases are likely people who live paycheque to paycheque, who withdraw all of their money deposited from their last paycheque by the time they get their next one. They are going to have very small balances on average, and thus are not going to provide the bank with very much capital to be leant out.

Also, interest rates in the United States are historically low. They've never been this low before, and the amount that banks can make by loaning money out has correspondingly never been this low before either. If you remember a couple of months ago there was a news story that Bank of NY Melon was charging HIGH balance accounts a fee that was equivalent to having a negative interest rate.
http://online.wsj.com/article/SB10001424053111903366504576488123965468018.html

So, it is not just the low balance accounts that are being dinged by new fees, it is the richy-riches too. (at those two banks for now, but probably at other ones later if it catches on) What you are saying about banks making money on the float, by loaning the money out, and so on was perfectly true. It WAS... But these days, it looks like it isn't so easy anymore.

You could do some back of the envelope calculations and find that the new fees exceed their costs, yes. That shouldn't be a surprise because they are a business and aim to have their profits exceed their costs, and the fact that they NEED to charge new fees, well that was expected and inevitable. So maybe you could complain about the size of the fees, but not the existence of the fees.

[altivo]

Well to put it another way, this type of monthly fee is still normally associated with a checking account that is below some minimum balance, not something that is applied across the board to everyone. But even though they have been claiming for years now that it costs more to process a check than it does to process a debit card transaction, they are imposing an across the board fee for use of a debit card, regardless of minimum balance. To my mind, they have played the game the tobacco companies play: get the suckers hooked on something, then raise the price. I find this despicable, profit margin or no.

To put it yet another way, these giant banks get absolutely no sympathy from me. They were major players in the current economic disaster, and I assign them major guilt for it. They have gone on to fiddle while Rome burns, continuing to give huge bonuses to their fat cat execs while squeezing the small depositors who no longer have any choice other than to depend on one of them. Finding a trustworthy bank, with FDIC insurance, that isn't owned by one of the huge five or six monster banks or about to be acquired by one of them has become very difficult indeed.

To put it yet another way, if they can afford those monster bonuses, they can afford to take some losses elsewhere. And if they have assets in the order of magnitude they claim, they can still get good yields from the bond market and the stock markets even without taking high risks. For instance, I can't buy T-bills, but they can. The reason is simple: I don't have large enough amounts to invest at once, but they do.

[(Anonymous)]

Yes, debit cards are the evolution of cheques... and that evolution will continue.
And I understand how you don't like bank execs. Who does? :-P

Banking is essentially an industry based on service, so employee salaries are and always will be their largest expense.
But BofA's CEO's salary (including bonus) is only about 0.1% of the total amount they pay out for all their employee's salaries... sure he could take a pay cut, but it wouldn't affect the sign of their bottom line even if he took a pay cut to zero.

And how does any of this negate the fact that loans are and always will be their largest source of revenue, and that their ability to make a profit on this by loaning out deposits is at an all time low? If you realise this, then you shouldn't find nasty new fees as particularly surprising. I could understand being lynchmob-angry if this came out of the blue during a period of economic calm, but it did anything but.

Canadian banks generally have higher service fees than American banks. I note that especially around the late 90's early 00's service charges jumped upwards. And this is one thing among many that contributed to Canadian banks' greater stability (the reason that nobody likes to talk about). We don't have $5/mo debit card fees, but we have other fees. For example, we pay several times what you pay to order a book of new cheques. Any maybe this is the way it should be? So maybe American banks just charge too little, and you should embrace joining the rest of the world in seeing your fees go up.

[altivo]

Bank regulations in the US were originally designed to prevent excess of all sorts by restricting interest rates and requiring proper loan guarantees and insurance. They were also supposed to insure that low income persons had reasonable access to essential services.

All this appears to have been destroyed, first by administrations that repealed regulations or failed to enforce them, and then by the crisis that resulted.

Many people use debit cards in the US because they are forced to do so. Not because they can't get or manage a credit card, but because many merchants will accept only the debit card. Some will accept neither checks nor credit cards. The banks have also been doing everything they can to discourage the use of paper checks and shift all that activity to the debit card as well.

No matter what kind of distress the banks have put themselves in, I find it unacceptable that they punish their customers before they cut their own staff and salary perks. They are responsible for their own predicament, and in most cases have already received millions of dollars in aid from the government, money that was taken from the pockets of their customers ultimately.

[dakhun.livejournal.com]

Yes, debit cards are the evolution of cheques... and that evolution will continue.
And I understand how you don't like bank execs. Who does? :-P

Banking is essentially an industry based on service, so employee salaries are and always will be their largest expense.
But BofA's CEO's salary (including bonus) is only about 0.1% of the total amount they pay out for all their employee's salaries... sure he could take a pay cut, but it wouldn't affect the sign of their bottom line even if he took a pay cut to zero.

And how does any of this negate the fact that loans are and always will be their largest source of revenue, and that their ability to make a profit on this by loaning out deposits is at an all time low? If you realise this, then you shouldn't find nasty new fees as particularly surprising. I could understand being lynchmob-angry if this came out of the blue during a period of economic calm, but it did anything but.

Canadian banks generally have higher service fees than American banks. I note that especially around the late 90's early 00's service charges jumped upwards. And this is one thing among many that contributed to Canadian banks' greater stability (the reason that nobody likes to talk about). We don't have $5/mo debit card fees, but we have other fees. For example, we pay several times what you pay to order a book of new cheques. Any maybe this is the way it should be? So maybe American banks just charge too little, and you should embrace joining the rest of the world in seeing your fees go up.

[altivo]

I'll embrace not dealing with banks first. It's still possible, though difficult.

I don't agree with the idea that because a thing has arrived in a bad state, it is necessary to let it remain that way. Especially if the bad state exists largely due to the practices of the banks themselves. They made this bed, let them lie in it. I've already been forced to give them too much quarter in the form of government bailouts.

Shakespeare made a mistake when he went for the lawyers first. I say kill the bankers, and then go for the lawyers. Politicians are mostly lawyers, so we'll be getting rid of them too. These people are parasites who produce nothing and suck the life out of the economy for their own benefit.

[dakhun.livejournal.com]

I think you're still living in the subprime crisis. The current situation is mainly because of Greece, but also the Tea Party, and a series of economic shocks that began with the Japanese tsunami. Just earlier this year, mortgage rates and government bond yields were on the rise... and then Greece came back, the Tea Party went into moronic overdrive, Japan got hit by earthquake-tsunami-fallout, and those are the reasons why interest rates are at all time lows right now. At the beginning of the year, there was a brief moment when US banks were looking pretty good, believe it or not... but it didn't last very long.

[altivo]

Here in the US we *ARE* still living in the subprime crisis, or at least the aftermath. The claims that a 'recovery' has taken place were simply lies intended to fool people into business as usual and they failed. The ill health of the banks never went away. It was disguised by merging the sickest ones into healthier ones that thus became less healthy. Meanwhile the house of cards that is an economic system continued to collapse. Because the homebuilding industry ground to a halt, demand for equipment and materials, real estate, nursery plants, etc. also dried up. Jobs in construction deconstructed. The resulting economic contraction caused collapses in retail, food services, and the already cancerous auto industry. None of that has gone away. The only 'recovery' has been in stock market indexes and the demand for luxury goods to sate the endless appetites of the richest 5% of the population, who continue on as if nothing at all has happened.

The Greece panic has affected the stock markets, sure. But that only bothers the few people left with lots of money invested there. The pain being felt by the rest of us comes from the subprime fiasco, and still lies on the shoulders of bankers and [de]regulators. While the DOW rose back to the pre-recession level, the rest of us got nothing out of it. Pay levels are frozen, job markets anemic, and the cost of essentials like food, energy, and health care have risen to levels well above what they were in 2008. The value of our homes (those of us who still actually own them) has dropped by as much as 30 or 40%, while our taxes have increased anyway to pay for gigantic bailouts that seem to have been used to give handouts to corporate execs rather than to save the livelihoods of ordinary people.

I'm fed up with the lies and deception. Anyone with eyes should be able to see that we are well into a real depression here and there has been no real improvement since fall of 2008. The 'definitions' used by the Federal Reserve's flunkies just have nothing to do with reality.

[dakhun.livejournal.com]

Well, first of all, I was talking about the bond market, not the stock market. These are debt crises, remember? Not that you can ignore stock market volatility even if you don't own stocks, or that you can ignore commodity market volatility even if you don't invest in futures - you can't. People lose their jobs during extreme volatility because businesses and employers of all types lose confidence because they think that the economy is about to fall off another cliff, the products and/or raw materials they they produce lose a large part of their value without warning, and businesses find it near impossible to get loans or investment capital. Again, PEOPLE LOSE THEIR JOBS just because of stock market volatility by itself, so don't think for a minute that it is not your problem.

And second of all, I have no trouble telling the difference between the subprime and Greek debt crises, and I don't think too many other people are unable to tell the difference. I think you're being a little silly in that regard.

If you want to put the last recession which ended mid-2009, and the current economic slowdown, as well as the period of anemic growth in between all under the same umbrella and define that as a depression, I have no trouble with that. But it does not change the fact that the sub-prime crisis and the sovereign debt crisis are two different crises. Though if you DO want to define this period in history as a depression, then you need to make a list of all the separate economic shocks that contributed to it, because these types of severe economic events always have a multiple number of contributory factors. If there was only one factor, that would only cause a mild recession - you learn that by studying history. So by ignoring the very apparent differences between the different economic stresses that are going on, you are only weakening your own argument that this is a depression.