Wednesday, August 26, 2009

Local Banks Prey On The Poor & Financially Strapped

The financial world today has changed greatly over the years, with seven day banking and faster than ever clearing times of transactions our finances have moved into the realm of light speed.

Big banks and their banking policies have also changed greatly with the changing times. After the Real Estate bubble popped, big banks became victims of their own greed. Staggering foreclosures and evaporating collateral in real estate forced hundreds of small and large banks to go out of business.

However, some select banks were deemed “too big to fail” and reckless and greedy banking institutions like AIG, Citibank, Fannie Mae, Freddy Mac, Bank of America, etc.. etc.. were given Trillions of dollars in taxpayer bailout money.

This money was created by the Federal Reserve System, a corrupt institution run by the banking elite themselves and led by Ben Bernake. While many have recently congratulated Ben Bernake for fending off a Depression globally, Americans have seen no relief, no growth, and ever increasing unemployment.

The Trillions in fake money that has been given to so many un-named institutions are still a mystery to the average American but fortunately our leaders have taken notice and two bills H.R 1207 and SB 604 are demanding an audit of the Federal Reserve. The Federal Reserve has fought back by hiring a high priced PR firm to lobby Congress and make sure the recipients of the Trillions in tax dollars are kept secret.

According to Peter Schiff of Euro Pacific Capital, every one of us will be paying the price even harder in the coming years. “When the fake money hits the streets Congress will be confronted with two horrible choices. Raise interest rates to stop runaway inflation and further collapse the real estate market and stock market or leave interest rates low and force the Dollar down against other currencies. This second choice also brings the risk of forcing our debtors to cut their losses, to induce the sale of U.S. treasuries and debt and spawn hyper inflation, or worse hyper stagflation.”

“The stage we are at now with banks is one where banks are trying to make it through the challenging environment in the next two years, and they are doing a great job of making huge profits off all the economically challenged people who live on minimal fixed incomes. This practice is one the banking industry refers to as their “Fee Income” and their “Fee Income” is expected to produce a whopping 38.5 Billion in revenue for the big banks. This figure is so large that it will now be the single largest revenue source for all banks.”

One bank in particular has a $39.00 fee; legally they can charge their customers a maximum of ten such fees in a day for a total of $390.00 to a single consumer. Other banks have fees for deposited but uncleared checks (UAF) or their credit cards have Over Limit Fees and Late Fees. There is also the ATM fee game where it is now possible to pay multiple fees on a single cash withdrawal. Adding insult to injury banks are charging up to 39% interest on these late fees. Mortgage companies have also got into the fee churning game. Many mortgage companies using (ACH) or the electronic payment system are running multiple transactions through to the banks that draw on payment accounts.

Anyone who has had experience with this will see that there are two separate transactions posted to their checking account. One transaction is for a $5-$10 “A Convenience Fee” and the other the larger mortgage payment. While banks could easily combine both these transactions into one payment they refuse. Instead they learned that this practice will generate twice the $39.00 fees for their banking partners who will overdraw the account by clearing the larger check first and the smaller check next.

At Peoples bank here in Milford, CT bank managers are under duress by their higher bosses not to refund any overdraft fees. They are training their employees to engage an angry public and give answers and solutions that guarantee they keep these very profitable fees. The manager also said that managers will deduct the refunds from their bottom line and punish employees who engage in Overdraft refunds.

The bank manager I spoke with wishes to remain anonymous, but has personally told me that these fees are being paid by the towns financially strapped, the poor who live paycheck to paycheck. Sadly their cowardly bosses who never see a bank customer are instructed to tell fee victims to fill out an overdraft protection loan form. However, she said this is a waste of time because management has made it nearly impossible to qualify for this type of loan. It is not in the banks financial interest to be giving away their fee income to people who wish to opt out.

Congress and the CT Banking Commissioner have heard so many complaints about this fee issue, that there has been talk of reforming the practice under an ethics rule. Some suggestions have been made to limit banks to charging one fee per day, other suggestions have been to force banks to lend the overdrawn money or not issue the fee, and other proposals have been to limit fees to reasonable amounts.

For obvious reasons the banking industry is fighting this at the highest levels and lobbying hard to keep “extorting the poor.” Banks argue that in these troubled times they “need the money” more than the people they take it from. They argue that banks can’t fail but individuals who can’t manage their finances can and should.

While banks know that there is little money to be made in this era of low interest rates their core business have been criminally “retooled” to strip the general public “one fee at a time.” This money comes from people “young and old” living on the “edge.”

The best way to fight these fees for now is to use low fee Credit Unions like McKesson and get rid of your high interest credit cards, or just pay them off altogether.

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