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Banks mixing bailout with high fees
A Wells Fargo bank branch in San Francisco
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Steve Chiotakis: Wall Street will be looking closely at financial institutions this week. Earnings reports are expected from JP Morgan Chase, Citigroup and Goldman Sachs in the coming days. Wells Fargo last week said it expects record profits for the first quarter and the market surged with that news.
You know who else is watching the banks? A government oversight committee -- one that's been keeping an eye on bank bailout money. The Wall Street Journal reports this morning it's launched an investigation into the hiking of interest rates and fees at banks that took bailout cash. Here's Marketplace's Dan Grech.
Dan Grech: Elizabeth Warren, head of the Congressional Oversight Panel, told the Wall Street Journal it's like "asking taxpayers to pay twice" -- once through billions in bailout money, and again through exorbitant new charges.
Warren says the panel is working on a report on potentially inappropriate lending practices. Like Bank of America slapping up to $10 in new fees on a wide range of credit card transactions. Or Citigroup advertising $5,000 loans without mentioning in the flier they carry an annual interest rate of 30 percent. Other banks, like Pacific Capital Bancorp, Wells Fargo and U.S. Bancorp, offer short-term emergency loans with interest rates topping 100 percent a year.
The banks are unapologetic about their higher charges. The banking industry says it relies on these fees for a quarter of its revenue. And it needs to recoup its mortgage losses somewhere.
I'm Dan Grech for Marketplace.
This is a crime, but even thought the government doesn't do anything. Besides government could give the opportunity to increase a little bit those jumbo loans from 417,000 to $550 or $600,000 and help those homeowners who strangle to pay on time. Probably you will see a better respond.
So now they are picking our pockets with BOTH hands. And our compliant congress, who get campaign contributions from the financial industry, rolls over and plays dead.
When I get my credit card paid off, it will be a cold day in hell before they get a cryin' dime out of me again. If enough of us go on credit card strike, maybe they will wake up, but I am not holding my breath.
