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Op/Ed |
The blizzard of fees that clutter consumers' bank statements every month has turned balancing a checking account into a new-age stress test. Consumers regularly get dinged with fees for everything from visiting tellers to ATM withdrawals. This irritating pattern of proliferating bank fees often leads people to throw up their hands in despair, believing the situation is hopeless. But it is not, in fact. The wide public outcry offers Congress an opportunity to embrace a golden pocketbook issue: basic banking.
Banks appear to have locked half of all American families into a never-ending spiral of bank fees. According to the Federal Reserve, the booty from this bank fee heist is almost a cool $20 billion a year in extra earnings. These billions offer a plush pay-out for the banking industry at a time when it already reaps record profits.
The tragedy is millions of American households are trapped with checking accounts that routinely cost hundreds of dollars each year. Nearly half of all American families regularly keep less than $1,000 in their checking accounts. Free checking is often only available to those who have enough cash to meet often high minimum balances. For many other households, the only way to keep a checking account is to surrender to these fees.
With this issue so ripe and ready for action, Congress could ride to the rescue and help ensure families and individuals who simply want traditional banking services -- like a checking account -- have affordable access to the banking system. As lawmakers race to adjournment, the so-called bank modernization bill offers a rare opening for reform. Tucked inside the version passed by the Republican controlled House of Representatives is a requirement that depository institutions affiliated with financial holding companies offer consumers low cost "basic" accounts.
Americans deserve access to affordable basic banking accounts, with low initial deposit and minimum balance requirements, reasonable service fees, and access to both personal and automated teller services. Not only would basic banking offer some hope to the millions of families who are locked into never-ending bank fees, but such a plan would reach out to bring the 12 million households who have no bank account at all and bring them into our mainstream economy.
But instead of reaching out to protect this modest and important reform, Republican members of the Senate Banking Committee stripped basic banking from the modernization bill. It is apparent some lawmakers and bank regulators are more interested and preoccupied with tinkering with who gets to regulate new financial conglomerates or what form they are allowed to take than protecting millions of American families from this great bank fee heist.
These lawmakers are desperately out of touch with what matters to average working families if they think this is the right thing to do. By deleting this provision, which garnered support from big banking institutions like NationsBank and BankOne, these Senators have left consumers hanging.
Historically, Congress and the bank regulators have not been shy about ponying up to the needs of the banking industry. Taxpayers have paid a steep price to keep banks in business and to bail out those that fail because failing banks can get a taxpayer bailout under a too-big-to-fail policy. For example, it is estimated the 1989 congressionally authorized savings and loan bailout cost American taxpayers billions and billions of dollars. Beyond bailouts, banks also receive the benefit of federal deposit insurance and access to cheaper funds through the Federal Reserve.
If anything, the case for "basic banking" has been strengthened by the rapid pace of bank mergers that have gripped Wall Street this summer. People on Main Street are justly concerned about how customers will fare with bigger banks. In the midst of a season of record profits by these taxpayer-backed depository institutions, consumers are left wondering when Congress is going to start putting the consumer agenda ahead of the powerful banking lobby's agenda.
The Senate has time to make it right for consumers when the bill comes to the floor if they restore "basic banking". The question is -- will they stand with consumers or are they beholden to industry and the campaign dollars that often follow?
