I last posted about Bank Simple given the hardship that banks are causing Third Wave attorneys, solos and lawyers in general. The point was that banks have actually sought a bailout from us, while continuing to deny us cheap tech to get around the problem. We paid first for the banks' graft and malfeasance, and how we are forced to paid for their recovery. For all of the hoopla over government spending, this should be the rage of the American people. The hope was that upcoming Internet banks like Banksimple.net would afford us attorneys some relief the bank. This is so because Banksimple appears to agree to live primarily off of the net interest margin, allow its customers to bank primarily off of smartphones, provide a giant free ATM network, forego overdraft fees, and allow remote deposit via your smartphone's camera with no other equipment or fees required. This bank is not operational yet. It is coming soon via the web, and I hope it lives up to the hype. You can let Banksimple know you are interested by requesting an invitation.
Now, as reported by AP, by Huffpo and other news sources, Big Banks are after us again. They plan to look to Main Street to make up for their losses. Not in the form of lending and interest spread, but in terms of, you guest it, fees.
Fees are about to increase on checking accounts, bank statements, and even fees for visiting your local branch.
The reason is certainly the recently past financial reforms. Bank of America says, for example, it will lose $2.3 billion annually along from the new restrictions on card "swipe fees, or the charge that banks charge merchants who accept debit cards.
Bank of America says this will cause a significant reduction in revenue, which is undoubtedly true. But, Bank of America and the other banks miss the point. QUIT RIPPING THE PROSUMER OFF WITH FEES! Either fees stolen from accounts directly or through charges to merchants that are passed on.
As for the charges to visit a branch. We do not want to pay for your branch. We visit it only because of your restrictions on cheap tech. The point is that the cost of operating a branch is for the benefit of the banks and not for our benefit. The problem is that the banks want to treat their antiquated property as a profit center. We, and it seems many in the government, want then to slash overhead, obscene compensation, make cheap tech available, and start living off of the process of making loans.
It is typically argued that banks made money off making loans and it caused the real estate crises. But, that is not really the truth. This is because banks, directly and indirectly, only packaged the loans and sold, and then serviced, the loans for fees. Any loan the banks might have made were very short term. Banks helped cause the crises by not doing what they are chartered to do.
Small business, and lawyers, are suffering from this practice in two ways. Money is not available on reasonable terms, and exorbitant fees are being charged for required services.
For example, Bank of America has a started a pilot program in Georgia which charges customers $8.95 a month to get paper statements or to use a bank teller. It plans to roll the program out next month nationally. Now, maybe that would be reasonable if Bank of America allowed its customers the banking alternative of operating virtually in a way that did not require a trip to the bank. But, when the Bank does not allow banking without effectively needing to visit a teller, and then charges a fee, that is a tax.
The Bank also plans to raise minimum balances. When I started banking there the minimum balance was $1,250.00 or something like that. Now it is $7,500.00. The point is that they make it impossible for most of us to avoid fees.
The point is not that banks need not recoup their costs of doing business. Like all of us they need to control those costs and it does not take a genius to figure out that is not happening in reality. Then the question is how should banks recoup their costs?
The point is that banks have sought to lock us in, and then they have involuntarily extracted fees from us in a way that is just punitive.
Not everything meaningless task in life needs to be monetized.
Sometime there are arrivals of companies that revolutionize the system. Google is a great example of this. There is Amazon. Apple for its iTunes and iPod. The government can only do so much. Besides, especially in the GOP the Big Banks have powerful allies.
We need an Internet bank that can start the revolution in this regard.
Chuck, Skank of America will lose customers. Most importantly they posted a loss against what? They got caught with their pants down 'rolling losses' to play with their accounting eventually admitting it was a 'mistake. 'All banks play games with the consumer. I hope banksimple takes off and gives these thieves a run for their money.
Posted by: Susan Cartier Liebel | July 17, 2010 at 01:35 PM
Chuck, what are your thoughts on banking locally as suggested by Consumer Reports and AARP? Are credit unions and local banks TWF (Third Wave Friendly)?
http://www.consumerreports.org/cro/magazine-archive/2010/july/money/banking-services/overview/index.htm
http://www.aarp.org/money/credit-loans-debt/info-06-2010/credit-unions-versus-banks.html
Posted by: Paul Perez | July 17, 2010 at 07:05 PM