Last month banking goliath Wells Fargo, the big bank with most branches nationwide, announced another round of fees on basic checking accounts. Customers in six states will have to pay $7 a month if they receive paper statements, $5 if they get them online. The fees can be waived if the customer direct-deposits more than $500 a month, or maintains a balance of $1,500.
Wells Fargo customers in Georgia, Delaware, Connecticut, New Jersey, New York, and Pennsylvania will be hit beginning in May, and the bank expects to expand it across the country in the coming months. While this fee is more narrowly targeted than the across-the-board debit card fees Bank of America attempted to enact last fall (until it backed down in the face of a wrathful public), it is part of a nationwide trend wherein Big Banks relentlessly penalize consumers for basic services. The banking industry, as Lynn Parramore noted on AlterNet, has become an oligopoly, with big players colluding to extract fees from customers, whether or not there is any justification for doing so.
Wells Fargo’s new fee, and others like it, shows that the banks were not put off their course by last year’s protests. Ordinary consumers have a strictly limited ability to hurt the big banks, which mostly depend on much larger clients for their business. Bank of America’s retraction last year was not a game-changing victory, just a temporary setback.
"The biggest banks support an infrastructure that it’s not clear if consumers benefit from, or that they necessarily benefit from consumers,” says Mike Konczal, a fellow with the Roosevelt Institute who blogs at Rortybomb. “Facilitating the means of payment is one of the core things we want from a banking sector. And banks are basically saying we want to make this really difficult for you. This is exactly the kind of stuff we bailed them out to prevent them from failing to do.”
If you were to ask a random passerby what she wants from a bank, a checking account easily accessible by debit card would likely top her list. The big banks do not have the same priorities. The average checking account does not make them much, if any, money, and paying all those cheery bank tellers and mailing statements is awfully expensive.
In the bad old days, the banks made up for this by hitting you with sly undercover fees and charging merchants exorbitant interchange fees, where the financiers take a percentage of any purchase made by a plastic card. (These charges are the reason why many small businesses only take cash.).
New regulations passed by the Democratic 111th Congress and signed by President Obama—largely within the Dodd Frank law—make it much harder to hit customers and merchants with hidden fees. But for the big banks, checking accounts, debit cards, and the everyday consumers that rely on them are only worthwhile if they hemorrhage money. So the big banks, which do most of their business in the capital markets and other high financial venues anyway, are finding new ways to bleed us.
As Felix Salmon shows in this chart, the big banking institutions have uniformly decided that free checking isn’t a service they want to offer anymore. In 2009, 96 percent of banks worth over $50 billion offered free checking. Today only 34.6 percent do. (By contrast the number of credit unions proffering free checking dropped a mere 6.4 percentage points, from 85 to 78.6 percent.)
Couldn’t the banks be backed down from this strategy? After all, Bank of America was dissuaded from its universal $5/per month debit card fees by a passionate public outcry, and the awful publicity that came with it. But it is unlikely similar tactics can reverse the overall trend. BofA relented because its greed was too apparent—and it hurt everybody, no matter their income or banking habits. In future, the banks will just target smaller and more vulnerable populations, as Wells Fargo has.
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