The Real Evil Of Banks Wasn’t The Financial Crash: It Is Everyday Fee Gouging

Personal finance

How much more can one write about the Great Recession? There was enormous stupidity and recklessness among many, most certainly including the banks. Arrogance beyond measure. And enormous disdain as well. When you take part in plans that would make a more sober person’s eyes roll up into their heads and you do so in ways that let you offload the costs onto everyone else, what else do you call it but distain?

Maybe evil.

We recognize the big evils in retrospect. The magnitude of culpability is breathtaking. But what makes them possible is all the small evils that allow people to suppress their consciences, ignore any moral teachings other than “be sure to get yours,” and to hurt, demean, and emotionally torture others for profit.

This came to mind again the other day when political analyst and scientist Benjamin Dixon mentioned on Twitter an experience he had long ago.

“Never will forget confronting a banker over overdraft fees about 15 years ago when I used to LIVE in the overdraft.

I pointed out how they rearranged my purchase to maximize OD fees.

She straight up told me, ‘they have to make money off poor people somehow.'”

He said that was his first day as a socialist.

I don’t know whether he meant as a democratic socialist, a socialist-leading-to-communist, or something else. But I understood the meaning. I once had a banker say something similar to me, that the fees were all to make money and too bad for the customer.

(Do yourself a favor, click on the link above and read the tweet and responses.)

There are horrible practices that banks have put into place to make money. Things like arranging how they process payments to maximize the number of overdrafts and, hence, the total fees they could charge. Like delaying recognition of an incoming payment, looking again for the overcharges that might be there, even if they came in at the same time as the received funds, to pull in as many more dollars as possible.

Bankrate.com has tracked such fees and others over time. The average overdraft has moved from $21.57 in 1998 to $33.36 in 2019. That’s the 19th increase in the last 21 years. If several come in, particularly for amounts that are much smaller, it’s a bonanza.

The average ATM usage charge has been rising for 15 years and is now $3.09, or 2% higher than in 2018. And you pay $1.63 on average to use someone else’s ATM network.

Free checking? Sure, if you don’t have much money and don’t mind the bank lending out what is on deposit so they make a few percentage points in annual interest, even if you don’t.

One excuse for higher fees these days is lower Fed interest rates. They affect how much banks can charge people who have enough wealth to borrow, which lowers the margins they get on lending out money on deposit.

But that’s an excuse. As Bankrate shows, all these fees have been climbing since years before the Great Recession. The banks raise fees because they want more profit and they arrange things so that it’s the poor and lower-income parts of the country that feel the pain most. Those are the people who can’t easily fight back and may not have choices. I’m sure banks would publicly deny it, and maybe they’ve convinced themselves that they don’t, but it doesn’t matter. When the results of actions are pain to a group, it’s immaterial whether there was intent. The damage is still done. And when organizations and executives argue otherwise, they’re trying to spin the situation.

Here’s a response to Dixon’s tweet that I also sympathize with. If such things have ever been the case, you never get over them. You live with the ghost of dread always.

“People that never wrote a check to stop a shutoff notice knowing to takes 2 days to clear and in so doing gives you the 48 hours you need till payday or if they have never swiped a debit card broke out in a cold sweat staring at the “authorizing” screen; they aren’t working class.”

They aren’t working class. True words. Them that’s got shall get; them that’s not shall lose. The Bible, via Billie Holliday, nailed that one.

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