An Ol' Broad's Ramblings
Who Is Congress Really Hurting?
Bank of America Corp. and other banks are preparing new fees on basic banking services as they try to replace revenue lost to regulatory rules, in a push that is expected to spell an end to free checking accounts for many Americans.
Free checking accounts, which have been widely available for more than a decade, have been a boon to middle-class consumers and attracted low-income customers to the banking system for the first time.
Customers will likely be required to pay new monthly maintenance fees on the most basic accounts that don’t generate a lot of activity. To avoid a fee, customers will have to maintain certain account balances or frequently use other banking services, such as credit and debit cards, automated teller machines and online accounts.
Well, I guess I’ll have to just close my checking account, since I rarely use it, and see NO point in paying for the fecklessness of others. What about those poor minimum wager earners? You know the ones that the left insist on keeping in poverty. Will there be exemption for those who earn under a certain amount annually?
Bank of America customers who only want a low-volume checking account will likely be asked to pay for it. Fees will likely be waived for customers who keep their balances high, use bank credit cards or tap its investment advisers. Bank executives declined to discuss specifics of the plan saying it is still being formulated.
Where’s the logic in this? Why not just say the folks who spend themselves into debt, are obliged to the bank, who get free checking? Those who only use their checking accounts to pay their bills, don’t have a bunch of bank cards, and who, like me, don’t use ATMs, will be charged for the ‘privilege’ of having a checking account at that particular bank?
Banks say they stand to lose billions of dollars in revenue from separate new restrictions on credit cards and overdraft transactions that were announced earlier this year. They could lose even more from legislation winding its way through Congress. The Senate version of the financial industry overhaul bill, currently being reconciled with the House version, contains an amendment that could limit fees banks charge to merchants for debit-card transactions.
Once again, the entity that can’t balance their own checkbook, is forcing regulations down the throat of financial institutes, doing more damage. Where do they get this authority? Reading through Article I, Section 8, which lays out the powers of Congress, I didn’t see anything relating to them being able to make laws telling anyone how to run their business. Maybe I’m missing something.
Read the whole thing, and help me out here. Obviously, Congress is so smart, the rest of us just don’t get it. /snark
H/T: Paula
No real mystery here. It is the same thing banks have been doing for years. They say “free checking” but then in the fine print it says “with minimum balance of $2500″ or some such thing.
Little accounts cost the bank just as much money in book keeping costs as do megabuck accounts. If you have $100 in the bank and write 50 checks, each for less than $2, that is 50 bookkeeping entries, etc. for the bank to make. If you have $1,000,000 and write 50 checks, that again is 50 bookkeeping entries for the bank to make. All the while, the bank is lending out your money. Lending out your $100 does not earn them very much, but lending out your $1,000,000 earns them quite a bit more. They would much rather have the large account because it covers their costs and leaves them with a lot more left over.
If they can get customers to do something else that they can charge for, such as ATM fees, etc. then they can keep the smaller accounts going. I think there is a problem with the feds and the equal opportunity people if they tell the small accounts to get lost. They are liable to prosecution for “not serving” that segment of the population. For some reason, we seem to think that there is an obligation to do business with all comers, even those that are not profitable, so there is the rub. They have to make them profitable, either by fees on the checking account, fees for some other service, or something.
If you have the cash available, you can always simply put a “cushion” in your account to keep you balance above the minimum level. It just ties up some amount of money, probably a couple of thousand dollars, to do so.
*snicker* I’ll let ya know when I get a couple of grand as a cushion. Couple of hundred is the norm for me, but that’s cuz I always round up.