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Banks roll back some fees

A cyclist rides past a Bank of America branch on September 12, 2011 in Chicago, Ill.

Kai Ryssdal: One hesitates to make too much of any given news item on any given day, but I draw this to your attention today.

Bank of America has backed off those plans it announced a week or two ago to charge fees for debit cards. Chase and Wells Fargo 86'd their fees while they were still in the testing stage.

But Marketplace's Adriene Hill reports banks are eventually gonna getchya.


Adriene Hill: Fighting bank fees seem a little like playing whac-a-mole. You know, the game were a mole pops up, you smash it down and another mole pops up somewhere else.

Sure, customers got a win today when they thumped down big banks' plans to charge for debit cards. But:

Jim Sinegal: I don't think the banks are just going to take this lying down.

Jim Sinegal is an analyst at Morningstar.

Sinegal: I think they are going to try to implement other fees in other areas, new ways of charging customers in order to maintain the same level of profitability they had previously.

He says fees will keep popping up -- like those moles -- as banks try to make up the billions in revenue they're expected to lose from laws that limit fees for debit card purchases and account overdrafts.

Mitchell Petersen is the chair of the finance department at the Kellogg School of Management at Northwestern University.

Mitchell Petersen: In some sense, the checking accounts we have always perceived to be free in the last decade because we haven't formally paid fees for them, they're never free.

The service costs banks -- they've got to pay for it somehow -- and the big banks have to answer to a group of people other than account holders.

Petersen: All these fee changes are, on one side I have customers and on the other side I have shareholders.

Petersen expects the next set of fees could pop up in the form of new costs for checks or maybe raising minimum deposit amounts. So you're going to want to keep your eyes trained on those bank statements.

I'm Adriene Hill for Marketplace.

About the author

Adriene Hill is a senior multimedia reporter for the Marketplace sustainability desk, with a focus on consumer issues and the individual relationship to sustainability and the environment.
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In the story on bank fees, it was implied that banking executives only work to make shareholders happy. Accordingly, executives will need to find new fees to replace the $5 monthly debit card so that corporate earnings can be maintained. However, if executives really were concerned about maintaining earnings they could also take a harder look at compensation levels for senior bankers and managers in the organization. Bankers need to realize that the environment that sustained/tolerated compensation levels of the last 10 years no longer exist and that the compensation model needs to be revisited. Senior bankers will no doubt scream that the firm and shareholders will be disadvantaged if the company can no longer pay the outsized packages to retain the best and the brightest. However, a shareholder should ask “didn’t the best and the brightest do enough damage in the Naughts, or, with lay-offs in banking recommencing, shouldn’t bankers just be happy just to have a job?”

D

Back in the early '80's I graduated college, got a job, and took advantage of a new investment vehicle called an IRA CD. I chose Talman Savings & Loan and encouraged my husband to use the same because Talman supported classical music radio. With time Talman was bought by LaSalle Bank and LaSalle was bought by BofA. When I went to consolidate and move my IRAs to another institution BofA charged me $100 just to get my own money out!!! I'll never put a cent into BofA. I think that fee, especially when interest rates are so low, was outrageous.

"Maintain the same level of profitability"? I think not. BofA and their TBTF (Too Big To Fail) brethren reconsidered because many many customers voted with their feet and MOVED THEIR MONEY to community- and customer-friendly local banks and credit unions. TINA (There Is No Alternative) you say? OWS and the 99% say "TA-TA" (Think Again!!)...

Despite the cynicism about "they will get you one way or another" I found myself wondering how profits in the banking sector (and executive pay) compares both in terms of time and other industries (non-financial, that is).
Would you consider running some numbers (I think we can remeber 3 even on radio) and give us, as example, for 20 years ago, 10 years ago, and this last year, the percentage increase (decrease, yeah, right!) in Revenues and Profits as well as the percentage of profit on those revenues. I think that would be very enlightening (and I'm too lazy to run the numbers for myself). Then if we could take the same 3 moments in time and examine the percentage of exec pay related to the revenue and to the profit as well as the increase or decrease they get. I'm biased. I think they are making out like bandits. but that is perceptual, and not fact based.

Maybe entitle it Occupy Facts 101?

(all of this spurred by the comment that Bank of A was seeking alternatives for all the money they would lose from the "lost" %5/month debit card fee. Lost? How the heck much are they current making? and how much do they think they have to make? Is there no limit?

I love you guys... along with the Daily Show you are my key news source... help me out with this one, will ya?

Cheers,

C

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