Big Government Battles Big Banks: Obama and Congressional Dems Speak Out

Posted on October 26, 2011


For those of us for whom big government is anathema, there is a sense that only a big government can battle a big bank these days.  Bank of America’s abuses have been well-documented in their mortgage practices among others. Most recently the Bank has overstepped its role in a free enterprise system in their determination to add $5 per month for use of debit cards and eliminate free checking. Other banks began to look favorably on their move in this arena.

Most of us cannot closely follow all of the industries in the US we should that immediately affect our lives.  News of their business practices comes as an unpleasant surprise by the time government catches up with what they are doing to the American consumer.  For example, here is some chilling news about banks and both the Administration and Congressional Democrats’ response:

Rep. Brad Miller (D-N.C.), a member of the Financial Services Committee, introduced a bill Tuesday that would bar banks from imposing fees on people who close accounts, calling the proposal a response to the Charlotte, N.C., company’s plan to charge some debit customers an additional $5 a month for using the cards.

“As megabanks flirt with menus of new fees, an increasing number of Americans will want to switch banks,” Miller said in a statement. “That is the way things work in a competitive, free market as unrepentant banks are still trying to rake in vulgar profits.”

Miller’s criticisms echoed those of U.S. Sen. Richard Durbin, the Illinois Democrat who successfully pushed legislation restricting the amount banks could collect from retailers for debit transactions. The two lawmakers spoke out after President Obama questioned whether Bank of America has an “inherent right” to charge the new fee, which the company said was aimed at making up revenue lost because of the limits on so-called interchange.

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Miller’s bill would ban banks from charging closing fees to customers looking to move their account. The measure also would require the bank to close the account within 48 hours of receiving the customer request and limit a lender’s ability to report negative balances from closed accounts to credit reporting firms.

We all know that banks are quick to add purchases to credit cards but slow to credit returns and payments.  Now there is more evidence of their greedy attempts to have longer “floats” to use our funds.  But fees to close an account and then turning around to report negative balances to credit reporting firms on a closed account?  Outrageous.

Although harboring a deep aversion to government inserting itself into business, in this case the Bank of America has been so egregious in its business practices that this is one instance in which a business has deserved close government observation.

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Major reference:  LA Times

Posted in: BANKING INDUSTRY