Kicking Ass & Taking Names

Good for Barney Frank! It’s simply amazing what American banks have gotten away with for years at the expense of consumers.

For example, check out this video report from the NYT/Frontline about the “card game” played by many banks (and credit unions) to profit handsomely from debit purchases that inadvertently go into overdraft.

I don’t believe that Canadian banks engage in this practice, but here’s a neat little trick they pull… waiting until you’re maxed out on your overdraft and then socking you with their monthly fee — which of course sends you past the bounds of your limit and then charging you a hefty penalty the “privilege” of paying their fee. That one always makes me laugh… albeit, mordantly.

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16 Comments

Filed under U.S. Economy, US Politics

16 responses to “Kicking Ass & Taking Names

  1. Yup. Wachovia nailed me in the arse for $350 a few months ago. It was on an account I use for my annual overseas vacation. I am still trying to get that money bank because I was never notified of the change. My purchases should have been declined.

  2. hemmingforddogblog

    I read over at MSNBC this morning that Citibank is increasing their interest rate to 30 f*cking percent!!!! I guess it’s tough to make at profit on the spread between 19% and 2% (the bank rate) when you have all those bonuses to pay.

  3. The interest rates on short-term loans can be pretty astronomical. In olden times it was called usury, then more colorfully as loan-sharking… now it’s become institutionalized as a perfectly respectable form of legalized theft. The problem of course is that the extortion of funds in this manner comes mainly from the working poor… It’s kind of perverse that people with the least amount of money frequently get shaken down and exploited in the worst possible way precisely because they’re so helpless and desperate. But hey… that’s the free market for you!

  4. austin

    “… that’s the free market for you!”

    Normally the free market would solve this heinious form of usury, you would figure at least one bank would want to stand up and offer a much more honest service and get that many more customers. It makes me think that either consumers have become that much dumber or more likely the banks are in an act of collusion. Either way a few regulations will fix this right quick.

  5. Well, there’s ING, which apparently now has a retail branch out here and a new one called Ally (or something like that) offering a no-frills kind of service package. And there’s the sub-banks like PC (which is actually a division of CIBC — drawback there is that they hold funds for 7 business days, even if you deposit cash). So there are a few alternatives in the market.

  6. Michael

    I don’t have any extensive knowledge on the subject other than what I watched in the linked video, but it seems that being charged overdraft fees is an avoidable situation if the consumer is conscious of their account balance and chooses not to spend beyond their means. The problem extends beyond the banks to the ethic of consumerism. Government can regulate the banks, but that only addresses part of the problem.

    That being said, if there isn’t any money in the chequing account then the transaction should be declined.

  7. Ti-Guy

    Normally the free market would solve this heinious form of usury…

    And yet, it’s occurring in the US, where banks have always operated in a relatively free market.

    This is precisely what the free market does. You snooze you, lose. You have to pay to play. If you can’t stand the heat, get out the kitchen. Caveat emptor.

  8. austin

    “This is precisely what the free market does. You snooze you, lose. You have to pay to play. If you can’t stand the heat, get out the kitchen. Caveat emptor.”

    Exactly. The free market is a lot like evolution or Darwinism it will weed out the dumbest and laziest first. Survival of the fittest.

  9. Austin — I’m endlessly amused by laissez-faire, dog-eat-dog social Darwinists and neo-liberals who are so confidently smug and supremely arrogant about their presumptions (quite often based on having numerous horseshoes shoved up their backside) until they suddenly find themselves holding the shitty end of the stick for one reason or another.

  10. Ti-Guy

    The free market is a lot like evolution or Darwinism it will weed out the dumbest and laziest first.

    And yet, here you are.

    That not how evolution works. The traits that are selected are those that are successful within a particular ecology and are not always based on competition but on other relationships, such as symbiosis. In fact, what results from one species becoming over-dominant is extinction.

    RT: Fixed. 😉

  11. austin

    Yeah Ti thats why I put “or Darwinism” after. Don’t get me wrong here I am not a free market at all costs kind of person, I understand that we need regulations for many reasons.

  12. My belief is that free markets always lead to oligopolies and that’s what happened with the banking sector in the states.

    It really started with the first pangs of “deregulation” in the U.S. in the late 80s when the federal government allowed banks to service customers across state lines. Then the big banks bought or used their economies of scale to drive most of the smaller city/regional/state banks into extinction.

    Then they went after the credit unions which were their biggest competitors, filed suit and the US Supreme Court ruled for the banks in http://en.wikipedia.org/wiki/NCUA_v._First_National_Bank_&_Trust and limited credit union membership to a “common bond” of customers (the bond based on employer or union or profession). So their wings were clipped.

    Then the consolidation kept going until we’ve reached a point where in most cities you have a local cartel of 3 to 8 banks, all with essentially the same policies.

    The population also become more mobile and ATM fees for out-of-bank transactions made big banks with many branches much more attractive than small banks with only a few. Those ATM charges can really add up!

    The big banks don’t need to be terribly customer friendly because most people find the alternative even worse.

  13. To be honest, I actually quite like my bank and they’ve been fairly good to me over the years. I laugh at their overcharging but balance that off against their genial customer service.

  14. Ti-Guy

    I just want the words “free market” to be banished for a few years. Markets are fine for tangible goods and services. But they’re completely inappropriate for symbolic things, like money and ideas, the prices of which can vary for no rational reason at all.

  15. counter-coulter

    Part of Frank’s “kicking ass” that he mentioned was trying to get the enactment date on the credit card reform bill moved up. That’s because the credit card companies have taken it upon themselves to gouge all their customers as “punishment” to congress.

    Case in point, I have a Capital One card. I’ve had it for an emtremely long time and always in good standing. It had been a fixed 8.9% (cash or cedit). I was notified along with every Capital One cardholder that they were modifying their rates and switching everyone over to their variable rate of %17.9 for credit and 24.9% for cash advance.

    My mother told me that her cards, including American express, had modified their rates upwards of 26%.

    Luckily I was in a position that I could pay off the card, but there are those that cannot. It becomes very easy to imagine people needing to file for bankruptcy protection from this.

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