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发帖数: 29846 | 1 by John
Post image for How Has Dodd-Frank Impacted Your Checking Account?
In late 2008, the U.S. economy experienced a sharp decline. Much of the
American public placed the blame for this “Great Recession” on large
financial conglomerates, as the collapse of Bear Stearns, Lehman Brothers,
and others triggered a bailout of “too big to fail” institutions.
In response to the events, the U.S. government passed the Dodd-Frank Wall
Street Reform & Consumer Protection Act to better regulate the financial
industry and protect American taxpayers from harmful banking practices. The
bill was signed into law on July 21, 2010.
Dodd-Frank in a nutshell
Dodd-Frank signaled to U.S. banks that they would face increased regulations
and restrictions on certain fees, among other things. The Durbin Amendment,
for example, limited the fees banks can collect from merchants for debit
card swipes.
In addition to Dodd-Frank reforms, the Federal Reserve initiated a rule on
July 1, 2010 which removed bank’s ability to automatically enroll customers
in costly and deceiving overdraft coverage programs.
Banks, seeking new ways to make up for these increased costs and lost
revenues, began taking actions to extract additional fees from their
customers. In particular, they seemed to be targeting those customers with
lower deposits and investments. Such customers with balances under $100,000
are, in the words of JP Morgan Chase CEO Jamie Dimon, “no longer profitable
,” in most cases.
How Dodd-Frank impacted checking accounts – step by step
In 2010-2011, big banks began by ending traditional free checking
accounts. Customers who previously didn’t pay monthly service fees now had
to meet minimum balance or usage requirements to avoid regular charges. Over
the 4 largest U.S. commercial banks, this new fee averaged about $7.25 per
month, or $87 per year.
In 2011 and 2012, banks raised monthly fees. The average yearly cost to
big bank checking customers increases to over $100.
Now in 2012, with even the most basic checking accounts exhausted by
monthly fees, many banks are attempting to scrape revenue from other sources.
The most notorious of these may have been Bank of America’s announcement
circa September 2011 of a proposed $5 monthly fee for debit card usage. CEO
Brian Moynihan responded to the public outcries against this new fee by
emphasizing that his company “has a right to make a profit.” Other banks,
like Wells Fargo and Suntrust began testing this same fee.
Bank of America decided to drop their planned fee not two months later,
after many of their competitors, including those who had been testing the
fee themselves, decided against it.
Other changes directly affecting bank customers include raising fees for
things like overdrafts and out-of-network ATM withdrawals. In some cases,
banks are also cutting costs by closing branches and reducing available ATMs.
Bank of America is again leading the charge in this area. The bank reduced
their number of ATMs in service by almost 9% over the past year, among other
branch closings and job reductions. Moynihan’s comment: “It’s going to
be a smaller platform…We have 42 million retail customers; many of those
don’t contribute or overcome their cost-to-serve.” |
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