By Gary Dickson
Robert Frost, one of the most famous American poets, said, “A bank is a place where they lend you an umbrella in fair weather and ask for it back when it begins to rain.” I wonder what happened to cause the wordsmith to utter such a caustic comment about an institution that has been around since ancient times. Apparently, customer run-ins with their bank are nothing new. Over the past few years many Americans have not only been bad-mouthing their bank, but they have also been joining class action lawsuits to sue their bank.
Historians tell us that banks actually predate money. Before coins were minted from precious metals, bank deposits consisted of grain, livestock and other items of material value. Throughout the course of banking history, we have numerous indications that some banks and bankers were not above gouging the public when they could get away with it.
Even the Bible provides us with a story critical of bankers. We are told that Jesus drove the usurers out of the Temple . It is interesting to note the changes in religious philosophy, over time, regarding the charging of interest for the use of money. Originally, the Christian position was that charging interest was thought to be immoral. In later centuries, ironically, the papal bankers became the most successful bankers in the western world.
A large percentage of the recent banking complaints have originated from the mortgage crisis. When the banking industry was bailed out by the government through the Troubled Asset Relief Program (TARP), banks were obligated to assist homeowners in trouble by providing mortgage modifications. Thousands of former homeowners across the nation have told horror stories of how their bank gave them the run-around and never provided any help that would have allowed them to stay in their home. That made losers out of both the homeowners and the banks. Homeowners lost their homes and banks wound up stuck with properties to care for and try to sell, at distressed prices. It would have made more sense to keep the owners in their homes, making an adjusted payment.
Another area in which banks have been roughed up by their customers is the charging of exorbitant service fees, especially involving overdraft protection. Many banks now charge $35 per item once a customer goes into overdraft status. And, if that isn”t bad enough, lots of banks manipulate the daily order of payment so the customer will receive the largest number of overdraft charges possible. Shouldn”t a bank, which has been trusted to safe-keep their clients” money, do everything possible to help their clients, rather than everything possible to stick it to them?
Instead of paying out account charges in the order in which they arrive, many banks pay largest to smallest. This is so the account will go into overdraft faster. Let”s say you have five debits hit your account in a day, of which four are under $20 and one is more than $100 and you have just $100 in your account because your direct deposit paycheck processing was delayed. The logical action would be for the bank to pay the four under $20 and leave the one over $100 for last. That would result in one $35 overdraft charge. Instead, they pay the large one first so they can hit your account with five $35 charges.
That isn”t my idea of a helpful bank. But, we are dealing mostly with huge corporate banks that are more about profit than service. When one of these corporate banks was recently sued over overdraft charges, internal memos were discovered that lauded the system outlined above because it would add $40 million in additional annual revenue.
Maybe 20th century newspaperman Kin Hubbard had the right idea. Before the Great Depression he wrote, “The safe way to double your money is to fold it over once and put it in your pocket.”
Gary Dickson is the publisher of the Record-Bee. Call him at 263-5636, ext. 24. E-mail him at gdickson@record-bee.com.
