Bank of America in Trouble – Excuse Me While I Dance and Sing

Posted on September 30, 2011

This morning the following arrived from Huff Post Hill:

BANK OF AMERICA JUST BEGGING TO GO DOWN – Bank of America today announced that it would begin charging $5 per month for debit card usage, because defrauding homeowners and cashing taxpayer checks was no longer a winning business model. Well, they announced that first part, but they actually blamed Wall Street reform and a cap the Fed will put Saturday on the swipe fees they can charge merchants. Don’t believe it: BofA is getting crushed in the market and simply wants your money. HuffPost Hill will eat its overdraft notices if these fees are still around a year from now. In January 2010, TCF Bank, which pioneered free checking in the 1980s, announced it would begin charging a monthly fee in response to Fed rules restricting overdraft charges. The move was regularly cited during the 2010 swipe fee fracas as evidence of the harm that would befall consumers if Dick Durbin didn’t back off. This January, TCF brought back free checking after losing customers. But this isn’t the worst crisis consumers have faced! One day before the Senate was expected to vote on delaying swipe fee reform, Chase went nuclear: Thanks to the Durbin amendment, thousands of Chase customers were warned, your kid can forget about that trip to Disney World. “Congress recently enacted a new law known as the Durbin Amendment that significantly impacts debit cards,” reads the letter. “As a result of this law, we will be changing our debit rewards program. After July 21, 2011 you will no longer earn Disney Dream Reward Dollars when you use your Disney Rewards Debit Card.” Which reminds us: Did we ever tell you about the great swipe fee fight?

Minutes ago CNN interviewed Warren Buffett and he was asked about the new fees since he is now a major stock holder.  His response:  “There are 7,000 banks in the US. If people don’t like the rates, they can go another bank.” Asked about the bailout of this bank and whether it should have got some $40 billion:  “They paid it back in full at some benefit to the US [i.e. interest].

Buffett was also asked about the tax the rich issue and he is for it.  He does not feel that poor and middle class America should give up medical care and other necessities to pay down the deficit.  In short, Mr. Buffet is selectively concerned about the poor and middle classes.  Guess what group will no doubt pay the lion’s share of the new debit card fee?

BOA itself is not even sensitive to its wealthiest customers.  My late aunt had a trust account there with which I helped her in her old age.  I saw first hand the loss of more personalized service and care when BOA took over her bank.  A trust officer known to SamHenry left the Bank due to this change in emphasis.  Speaking of personal care, the Bank sold perfectly good stocks to purchase mutual funds – easier to manage in a small account.  Yes small anything gets short shrift at BAC.

SamHenry has been following the exploits of this Bank for the past year.  Search under BOA or Bank of America to retrieve the articles.  They should have their brokerage house and mortgage divisions taken away and the same should hold true for the other big banks that have been ripping of the American public undeterred for decades.

With BAC still in trouble, thousands have been laid off or will be.  There has recently been extensive restructuring.  Are these fees paying for that?  The government should have thoroughly investigated what happened at BAC to put it in distress before the bailout.

Congress had better wake from its gridlock and begin legislating bank reform without loopholes.