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Press Release October 1, 1998 |
Contact: 202/462-6262 |
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WASHINGTON - The enormous Long-Term Capital Management hedge fund bailout should strengthen the hand of public interest groups lobbying Congress to restore reforms in a bank bill to help consumers gain access to low cost bank accounts, according to Consumers Union, publisher of Consumer Reports.
"The Fed is quick to step in to help out big investors, but misses the mark when it comes to the little guy," said Mary Griffin, insurance counsel at Consumers Union. The fact that banks are relying on the federal government to oversee highly leveraged bailouts, certainly raises issues about why banks are not required to meet some fair obligation of reasonably priced services for consumers. We submit that an industry that is supported by the American taxpayer should meet the banking needs of all Americans, not just the wealthiest.
"As bank powers are expanded and taxpayers exposed to more risk in this banking bill, Congress cannot forget about consumers who just want basic, traditional bank accounts," added Frank Torres III, legislative counsel at CU. "Consumers are not asking for special treatment, just an alternative to stuffing cash under the mattress."
Low cost basic banking accounts have low initial deposit and minimum balance requirements and reasonable service fees in exchange for limits on consumer transactions. This provision passed the Republican controlled House earlier this summer as part of the financial services modernization bill. It also has support from big banks like NationsBank. However, Wall Street special interests succeeded in stripping it from the bill before it left the Senate Banking Committee.
"Consumers Union appeals to the Senate not to approve the bank bill without restoring basic banking," said Griffin. Consumers Union supports an amendment that Sen. Paul Wellstone, D-Minn., Sen. Jeff Bingaman, D-N.M., Sen. Tom Harkin, D-Iowa and others will introduce to restore the basic banking provision. "It would be nice if people on Main Street for once had the same clout with Congress as the people on Wall Street."
Beneficiaries of basic banking would include many of the 48 million American households that keep $1000 or less in their checking accounts who cannot avoid being zapped with extra bank fees as well as the 12 million families who have no account at all, according to Consumers Union.
