Posted on 08/11/2009 4:57:41 AM PDT by TigerLikesRooster
Banks make $38bn from overdraft fees
By Saskia Scholtes and Francesco Guerrera in New York
Published: August 9 2009 22:52 | Last updated: August 9 2009 22:52
US banks stand to collect a record $38.5bn in fees for customer overdrafts this year, with the bulk of the revenue coming from the most financially stretched consumers amid the deepest recession since the 1930s, according to research. The fees are nearly double those reported in 2000.
The finding is likely to increase public hostility towards the financial sector, which has been under political pressure to ease the burden on consumers by increasing credit availability and lending more fairly after being bailed out by taxpayers.
The Federal Reserve is working on rules on overdraft fees, and rules on customer charges could be a priority of the Obama administration’s proposed Consumer Protection Agency if approved by Congress.
Data from Moebs Services, a research company, show that the crisis has prompted many banks to lift charges on overdrafts and credit cards in order to boost profits.
(Excerpt) Read more at ft.com ...
Ping!
Oh, the inhumanity of it all! Don't banks know that people are naturally inclined to spend more than they make??
All this manufacturing outrage is just so dishonest. It's really sickening.
It is interesting too how they use software to stack the timing of the pending bills so that it will guarantee the largest number of bounced checks.
bookmarked
You obviously don’t understand how the banks would sometimes hold deposits and then present drafts in an order garanteed to maximize overdraft billings.
Bank of America was notorious for that.
Back in the days before all the electronic transactions we knew we could cash a check on Friday afternoon and it wouldn’t get to our bank and posted until Wednesday so you had 5 days to get money deposited.
Some years ago an elderly acquaintance of mine had an overdraft of about $2. He was on SSI and receiving around $400 a month to live on. No pension, no inheritance, no property, just $400/mo. He put it in direct deposit, so the bank knew they’d get the funds ONE DAY after the overdraft. They charged him $30 for it. That’s a very substantial percentage of a poor man’s income, for a $2 loan with a term of 24 hrs.
They’ve a right, of course, to their pound of flesh.
While they have the right to do this, isn’t it fishy that they can basically create money out of thin air through fractional reserve lending? It’s all a house of cards.
Denninger’s post on that was enlightening and, if true, explosive.
For anyone that didn’t read his piece, what he’s saying is that the majority of overdraft fees are incurred *electronically* through ATMs. Used to be that such transactions would just be denied for insufficient funds. But now some banks are approving transactions *they know from the get-go will result in an overdraft* specifically so they can collect the fees.
He also said that some banks are reshuffling the order in which they process checks/deposits, specifically to maximize any overdraft fees that occur and even regardless of the order they come in.
I’m as pro-business as the next guy, but this is pure and outright theft if true. I’d like to see some other confirmation.
Read the piece linked to in post #4....see if it changes your mind any.
I agree that if you write a bad check the bank has every right to collect a fee. But what if the bank knows you are overdrafting and lets you do it anyway? And what if the bank is rearranging the order things come in to maximize the fees it’s charging you?
1) Do not overdraft your account!
2) Get an overdraft line of credit incase it happens.
Done.
Meaning, if I deposit $10,000 they would have to hold all $10,000 in reserve. Thus nothing to lend.
Exactly right, and one more thing. All the people on unemployment now are mostly running on debit cards. If those people want to draw $20 from their unemployment debit card, the banks will not process that for them at the counter, they require the person to go to the ATM machine which charges them $3 for that transaction. Add that to the overdraft manipulations, and see what it adds up to. People cannot even find out how much they have on their cards unless they go to an ATM and make a withdrawal to get the receipt, and for that, they are charged $3 each and every time.
This is more predatory charging on those who can afford it the least.
http://www.csmonitor.com/2008/0506/p09s01-coop.html
Ban payday loans? Big mistake.
A high-interest loan is better than a bounced check.
By Tim Miller
from the May 6, 2008 edition
Washington - Fed up with politicians incapable of balancing budgets? Well, now state legislatures across the country want to take a crack at balancing your checkbook – whether you like it or not.
Paternalism – the idea that government must take care of adults because they aren’t able to do so themselves – is the ideology behind the wave of politicians determined to limit how much and how often Americans can borrow money. By putting stringent restrictions on borrowing, these politicians would effectively ban the practice of short-term “payday” lending, no matter how many people use it responsibly in times of crisis.
Yes, a few years ago I finally got them to reverse about 400$ in overdraft fees. They paid the checks, but held the deposit, without telling me.
I hate BoA. I noticed them heavily advertising to illegal immigrants starting in the mid-90’s.
There’s further discussion of this on the “Ticker Forum”:
http://www.tickerforum.org/cgi-ticker/akcs-www?subindex=Bribed%20Regulators:%20Another%20Example
The simplest way is to not use the bank. Do your transactions in cash and barter. The underground economy is alive and well. The bank here now will not cash a check unless you run it in and out of your account....hmmm,,,isnt that fishy?
I know people who have small accounts at several different banks under different names. They rotate their business so that no consistent large occurrences happen at any one account. Banks are now arms of the IRS. The less business you do with them, the better off you will be. Why do you think that all this direct deposit BS is going on? It is so the IRS can track you. No longer can you get your paycheck and then cash it wherever you wish, it now all has to go to one account so they have a trail on you.
Federal revenues are down almost 30% they say, it seems like a good start.
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