Screw mortgages, here’s the real banking crisis
Title sarcastic, in case that wasn’t obvious. The banking industry’s blatant refusal to work with the federal government on this mortgage relief program is as blatant as class warfare gets. On paper, working with the government to create a situation where people get to keep their homes and banks get to recoup more money than they would by foreclosing on those homes would seem like a win-win situation. Instead, you’re seeing this sort of moralistic attitude from bank officials towards working people trying to stay afloat that they’d never take towards their own. This has all put me in a fuck you state of mind towards banks.
Which is the perfect frame of mind to be in when you get a phone call from you bank about the upcoming federal regulations regarding overdrafts on your debit card. Let me be clear that it was obvious to me that the guy calling me had been given a script to read. He sound pitiful only because he was personally having to call up little old ladies and ask them to come in to discuss shit that bank deliberately makes obtuse to fool those little old ladies. His problems were completely separate and understandable.
But the script he had to read from the bank? Best fucking self-pitying from rich people I’d heard since, oh, yesterday or so. This is from memory, and probably isn’t exact, but here’s how it went down:
Bank employee: Ms. Amanda Marcotte? I’m calling from ______ Bank to see if we can set an appointment to discuss federal regulation changes to your debit card.
Me: No, I’m not coming in so you can try to sell me on stuff I’m going to say no to.
Very patient bank employee: Do you know about these new federal regulations limiting the use of your debit card?
Me, mildly concerned: No, what’s going on?
Bank employee, still obviously reading a script: We at ________ Bank extend as a courtesy to our customers the ability to overdraft your account with a debit card, and you can avoid a fee by making a timely deposit—-
Me, interrupting: Oh yeah, the federal regulations making it illegal to overdraft people’s accounts with their debit cards. I heard about that.
Bank employee: Would you like to come in for an appointment to discuss your options?
Me: Absolutely not. Can I get off the phone now?
I’ve heard the self-pitying rationalizations from banks before about overdrafts, that they are willing to rack up sometimes dozens of overdrafts and therefore overdraft fees to a person’s account in a day to spare them the embarrassment of having a card turned down at the store. Of course, the embarrassment of not being able to pay your bills next month because the bank ate half your paycheck in overdraft fees is more severe, I’d say, but this is how they justify what is basically a straightforward attempt to bleed you dry.
But I was mildly alarmed to hear the injection of the suggestion you avoid the fee by making a “timely” deposit, which means before the cut-off hour of the same day, usually 3 or 4 PM at most banks. I’m surprised their legal department didn’t pause before allowing them to write a script that tacitly endorses check floating, which can be, under certain circumstances, prosecuted as fraud. I mean, someone who suddenly realizes at 2PM that they have charges that will overdraft their account and rushes to deposit a check isn’t going to be prosecuted as a fraud (unless they wrote that check off another bank account of theirs with iffy funds as well, which is called check kiting), but on the whole, banks tend to officially look down on check floating and warn that it’s potentially illegal. But here this guy was recommending it! They must be desperate, I thought.
I couldn’t for the life of me figure out what he needed to get me in person for, so I went home and looked up the regulation, which kicks in on July 1st. And sure enough, there’s an opt-in clause. So that’s what they were trying to get me in to do. You get in to a seat and the salesperson pressures you into signing a form that will let them overdraft your account.
Here’s what I guess is happening: They’re handing their salespeople lists of checking account holders who have average monthly balances below a certain amount. (Or that’s what I’d do, if I were them, because over a certain amount, they simply don’t overdraw their account.) Then they have to call and set appointments. I’m sure they’re getting bonuses based on how many people they get to sign the opt-in clause. It’s the only way to keep salespeople from guiltily dissuading people from signing them.
Overdraft fees are a huge source of income for the banks, and unless they can figure out how to game their customers, this will be a big loss to them. However, it’s going to be a huge boon to the working class and especially working poor of this country. Granted, I worked in banking, so it’s a if-you’re-hammer situation, but I’ve long thought that one of the major things that holds poorer people back in this country is overdraft fees. Overdraft fees are just built in to the lives of many Americans, and it ends up meaning that they can’t even get the foot in the door for starting basic savings accounts. Having the bank wipe you out of hundreds of dollars, sometimes thousands, a year can ruin some people who live paycheck to paycheck. Just the income from overdraft fees every month in a single branch looked to me like it was more than enough to pay all the employment costs at that branch—salaries, benefits, everything. Banks are going to be choked of a serious amount of money because of this.
The responsible thing to do, faced with loss of income from this and other sources, is to stop belligerently refusing to let the federal government to help you get mortgage loans down to reasonable levels so that you don’t take an even bigger bath on the mortgage crisis. But I suppose if they prefer to punish home owners who’ve fallen behind and instead try to shake down confused old ladies for overdraft fee opt-ins, then that’s the way they’d prefer to do this.