I'm really not the kind of person to write this article, and I certainly don't do it lightly. But there's a lot at stake here and it's time that people pull their heads out of the sand and recognize our collective situation and embrace the power that we have.
This blog post is specifically about Bank Of America, but I'm sure they're not the only offenders. Hopefully those that read this will recognize a broad problem that exists and or be motivated to adjust their behavior to have a positive impact on this problem.
I've been a faithful client of Bank of America (and it's predecessors) for nearly 10 years. I have a checking account, two savings accounts and a substantial Home Equity Line of Credit ( HELOC ) with Bank of America. In this period my wife and I have also had credit cards through Bank of America. We have never paid a monthly service charge and have always enjoyed free checking with a good level of customer service. That all changed this week.
Upon reviewing our monthly bank statement, my wife noticed that there was an unusual maintenance fee listed to our checking account in the amount of $16.00. "Since when do we have a maintenance fee?" my wife asked. "Since never." I replied. In fact, as we examined previous months statements, it was apparent that this was the first month we had been charged. Also in examining any and all correspondence from the bank, it became clear that the bank had neglected to inform us of any change to their banking protocol. I guess they thought it would be cool if they just stole some money out of our account.
The first thing I did was to call Bank of America's 800 number to inquire about the fee. The nice young lady who picked up was all to happy to wave this fee as a "One Time Convenience". A "One Time Convenience"?! When I asked her if I could expect these charges to continue on a monthly basis, her reply was, "I don't know."
I then demanded to speak to a supervisor. The supervisor kindly let me know that I had a Basic Checking Account and that Bank of America requires depositors with a Basic Checking Account to maintain a minimum balance of $750.00! It gets better. Apparently that is the starting point (I.E. the account requiring the lowest maintained balance). The next level of checking accounts require a minimum balance of $1,500.00.
Apparently the only way around this balance requirement and maintenance fee is having your paycheck automatically deposited into your account (Giving Bank of America extra money to work with on a monthly basis), or open a credit card with Bank of America (so they can raise your interest rate to 30%).
When I explained that we had never paid a monthly maintenance fee and that Bank of America was always willing to waive that fee because of the substantial HELOC that we have through them, his reply was "We can't count your Home Equity Line of Credit towards your minimum balance requirements." To which I retorted, "You always have up until now." The supervisor sheepishly confirmed "We can no longer do that." in a voice that sounded weary from explaining his employers predatory nonsensical policy for the umpteenth time.
Sensing weakness, I pounced: "You mean to tell me the hundred's of dollars I pay in interest every month for my HELOC and the 0% yields you pay on checking and savings accounts aren't enough for you guys? Now you're going to blindside me with an outrageous and undisclosed 'Maintenance Fee' to boost corporate earnings? Do you even realize who's money this bank survives on? Here's a clue....It's not Bank of America's money! It's OUR MONEY! Every day Americans that Bank of America is willing to screw to boost their (apparently desperately sagging) balance sheet." I went on and on, but it finally dawned on me that the poor guy that was on the business end of my justified anger was just the mouthpiece of a large conglomerate bank that had made a policy that he unfortunately had to relay to me. In the end he was able to offer a 3 month reprieve in "Maintenance Fees" which will allow me to locate an honest bank to deal with and transfer all my accounts over.
The Underlying Problem:
Big Banks made a calculated risk with Mortgage Backed Securities, Derivatives, and Sickly Mergers...you know, all those things that lead us to the brink of Financial Armageddon. When the taxpayers of this country bailed these banks out, our Government didn't put into place any firm rules about how the money was to be used or how the rules had to change to avert repeating these deadly decisions. The result was that banks didn't change. The situation only got worse. Guess what? The big banks are still leveraged upwards of 40 to 1. The extra bad part is that if they blow up now, all of the taxpayer money that got injected into them goes up in smoke.
Perhaps that's why the Government has been instrumental in facilitating these schenanegans...even changing accounting rules to keep regulators, Wall Street, and ordinary tax paying Americans in the dark about how much risk these banks have and their current financial health. It's now actually legal for these institutions that you trust with your money to hide their losses off balance sheet and claim values for assets that would never ever be supported by the market.
Willing To Bet The House:
The shenanigans that these banks and our government is playing on us taxpayers isn't news to me, and it may not be news to you either. In fact, with the current state of banking and the FDIC being in the red, I wouldn't consider keeping any amount of money in the bank that I'm not comfortable losing. So the chance of me keeping $750.00 in my checking account are exactly 0% (ironically the same as the yield). Even if I had that much money sitting around with nothing to do, which I (and most other Americans) don't, it wouldn't be in Bank of America. So what is Bank Of America thinking?
The banking industry is a lot of ugly things, but stupid isn't one of them. There is no way that the executives behind this call don't understand the risk and possible outcomes of their decision. When Americans see these fees, one of three things is going to happen:
1. They're going to be too lazy to do anything about it and end up absorbing the cost without considering the implications. (What Bank of America hopes)
2. They'll try to keep $750.00 in their account to meet the requirement. But more than likely they'll dip below several times throughout the year thus incurring that stinging penalty. (Millions of accounts X $750.00)+(lots of penalties)=Lots of money to gamble with and hopefully juicy profits. (Perhaps even better for Bank of America)
3. People will tell Bank of America to go pound sand and will withdraw all their money and move it to a banking institution that treats the consumer fairly. (What I hope happens).
The willingness of Bank of America to risk their primary business (Banking) in order to cash in on some short term profits is an indicator that they are in deep financial trouble. They are literally betting the farm on their ability to steal from the American Taxpayer (I guess billions in bailout money wasn't enough.)
Imagine going to a Casino in Atlantic City or Las Vegas with a $20.00 bill. You sit down at a table and 5 minutes later you've lost all your money. Can you imagine a pit boss coming up to you and offering to extend you credit through the Casino? Maybe you can if you're a famous athlete or entertainer. But even then the Casino would never lend 40 times the net worth of the player. After all, they want to get their money back. Bank of America and other large conglomerate banks are gambling with up to 40 times their net worth. They've just had a terrible losing streak. In fact, if they were forced to complete a full and transparent audit, they might be revealed to be insolvent. So they are now desperately trying to catch up by gambling more. Sounds like a winning strategy huh?. They foolishly think they can make up ground on the backs of The American Taxpayer by gambling with our money. The only thing is, I think they've forgotten who's money it is.
What We Can Do:
Watching all this stuff play out on the news is nerve racking and can leave us feeling powerless and paralyzed. One thing that this recession is teaching us though, is that we are the engine of this economy. Each one of us, individually drive this nations wealth. Although it might appear that large corporations and even banks are in control with their massive advertising budgets, and lobbying budgets in the hundreds of millions of dollars, they are in fact powerless, because we as individuals earn and spend the money in this country.
Because our spending is the lynchpin of this economy, the money that we earn and how we choose to spend it gives us more power than we will ever have with a traditional ballot. In fact, thinking about capitalism in this way can actually empower us with a type of "Direct Democracy" where we vote with our dollars.
Corporations, especially banks, have forgotten these facts. They count on us to be mindless followers, easily manipulated by their advertising, public relations, and propaganda. They count on us to take it on the chin like we've been doing for the past couple of decades.
They think they have us figured out. They take us for weak. But now is the time to break the backs of these greedy institutions that have recklessly endangered our economy and our futures with their gambling.
I believe in forgiving. I believe in second chances. But these banks are showing us that they haven't learned a single lesson. They're plowing forward recklessly as if they already forgot the last disaster. They are doomed to repeat their mistakes. And worst of all, they're counting on us to bankroll their shenanigans.
So I'm taking my money out of Bank of America and moving it to a bank that will treat me fairly. If enough people have the same idea I have, Bank of America will have a hard time perpetrating their predatory practices any more. I'm determined to analyze my spending and who's getting my money to make sure that I'm not supporting corruption, deception, or fraud perpetrated on the American Consumer. In short I'm going to be voting with my dollars for businesses that I feel are doing right by people. Where there's a need that lacks an honest company's solution, I'm going to dig deeper till I find the a company I really WANT to support.
I'm spending less these days, so I'll probably have more time for this type of activity, and I might even discover another business opportunity in an unanswered, or improperly answered need. I feel like that's the least I can do. What about you? How do you feel about these predatory companies? What counter measures are you taking?