Have you gotten those credit card announcements--we're changing the terms of your credit card, increasing our fees for this and that, increasing the rate we charge, permitting ourselves to charge you more if you do this, etc.? This from banks that pay .015% interest on deposits these days and charge 6.5% interest on any loans they make. I have a fairly decent credit score, pay all of my credit cards off in full when I receive the bill, and reconcile my checkbook to the penny each month. Yet I've gotten smacked with huge late fees by my credit card company --because it dates the bill one date and then apparently waits about a week to mail the bill, and has the due date for the payment about two weeks from the date on the bill. You have to put the check in the turnaround mail to get it to the bank on time. Then I called the bank and complained--and sure enough, they took the fee off. Another card sent me out a notice that they were increasing the interest charge on their accounts across the board--mine would go up from the old rate to a much higher new rate. I called and told them I would discontinue my use of their credit card if they did that. Without a hint of delay, the person on the phone said--We'll reduce your new rate. But what about all those people who don't take the time (and it does take time) to call? And what about the ridiculous rate, even with the "reduction"? Of course, credit card issuers are raising their rates now because the relatively puny law enacted by Congress will soon make it harder to do so. See Trejos, Credit Card Issuers Raising Rates Ahead of New Law, Washington Post, July 2, 2009. As Mahoney (D-NY) notes, it's these "capricious actions" that required congressional action in the first place. Banks are raising their rates just to get even, I suspect, and because, quite simply, they can get away with it.
Credit cards, of course, are just one of the areas where banks are displaying a lack of corporate citizenship. The NY Times had an article on the banks' fee increases--even in a recession, which is a new low for the banks. And even when they are being bailed out in mega form by the taxpayers, also a new low for the banks. Dash, Bank Fees Rise as Lenders Try to Offset Losses, NY Times, July 1, 2009. There's a great graphic, at this link, showing the increases in bank revenues from overdraft fees (from about 15B in '97 to about 37B in '09). In other words, the banks that engaged in foolish, speculative, risky lending and betting on the markets out of, mainly, plain old-fashioned greed are now raping their customers to recoup the money they lost in their greediness.
Banks hardly lend to little guys--and some of them discriminate when they do, as the Spitzer-Cuomo case on racially discriminatory lending practices, now allowed to go forward by the Supreme Court, demonstrates. Banks lobby against bills that would permit mortgage loans to be modified in bankruptcy, the most obvious good solution to the housing crisis that exists. They lobby against bills that would place strict limits on the kinds of obscene manuverings that banks do with credit cards. In fact, they tend to lobby against any legislation that protects the consumers that are supposed to be the lifeblood of the bank, their customers.
The problem is that the banks have come to view themselves--the brokers, bankers, managers and CEOS as the most important people in their universes. They'll apparently do anything to make money. Including in deciding to whom they should lend: big bucks count, social responsibility is something to brag about but not bother to do. See, for example, BankSecrets' tally of Citibank's socially irresponsible loans to polluters, arms manufacturers and other bad guys, at this link.
Banks are so busy making money for themselves (owners and managers) that they've forgotten that they exist by the grace of the state. The state needs to remind them. Definitely by creating a consumer protection agency. But also byy cutting them down to size. By breaking up the "too big to fail" banks by whatever means it takes to do so. By pursuing anti-trust. Reinstating Glass-Steagall boundaries. Regulating them under a single, powerful banking agency--including hedge funds and the rest of the shadow banking system. Controlling leverage. Limiting fees (come on--$25 for a copy of your record, that costs them 10 cents to print out? $39 for a payment that arrived a day late because they mailed the statement a week before the payment was due?). Placing stringent restrictions on banks' ability to gamble with exotic derivatives for their own benefit. In fact, by placing stringent restrictions on exotic derivatives period--like banning the exotics, allowing only the most plain vanilla derivatives (interest rate swaps, etc.), and requiring those to be traded over an exchange. Requiring full, public reporting of bank positions in stocks, debt, and derivatives.
Now, that would be bank reform.
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