By Sudo, Philip T.
American Banker , Vol. 149
NEW YORK -- A study on bank service charges, released by a New York State senator, has refueled the drive by consumer advocates for "lifeline" banking services.
The study, conducted by Sen. Franz S. Leichter, D-L-Manhattan, rated 24 New York banks on fees for checking, NOW, and savings accounts, money orders, certified checks, and stop-payment orders. It also included a survey of 1,500 customers on the average waiting time for teller services.
Mr. Leichter, a member of the state Senate banking committee, said he found Manufacturers Hanover Trust Co. to be the most expensive retail bank for consumers in New York City. The Amalgamated Bank, followed by Dollar Dry Dock Savings Bank and Anchor Savings Bank, were cited as having the lowest service charges.
The senator said his survey "shows that the trend of making the customer of more modest means pay for foreign loan losses and higher interest paid on the accounts of the affluent is continuing."
Glenn von Nostitz, an aide to Sen. Leichter who prepared the study, said the results may help hasten the drive by consumer groups, legislators, and the state superintendent of banks for lifeline banking services such as deposit accounts and the cashing of welfare checks for low-income consumers at no cost.
"There's a need to put controls on these fees," he said. "I'm not saying [banks] can't make a profit, but the consumer has to be protected first. A lot of the fee-raising is gratuitous."
Superintendent of Banks Vincent Tese and a committee of bankers and consumer representatives have been studying ways to implement lifeline banking for several months. Richard M. Kessel, director of the state Consumer Protection Board, said Sen. Leichter's study "will add to the cause of people like myself who think lifeline banking is essential for consumers of this state."
The superintendent's lifeline committee, which had hoped to complete work on a proposal in April, is now preparing a tentative report that "should be released in the fairly near future," according to Richard Riley, a spokesman for the banking department.
Mr. Kessel said the committee is considering a lifeline savings account of $200 to $250 that charges no fees and perhaps pays no interest.
In prepared remarks, Sen. Leichter chided Manufacturers Hanover and Chase MAnhattan Bank for raising their fees unreasonably during the past year. For example, he said, Manufacturers last year charged $6 per month for checking accounts with balances below $500. He claimed it now charges $8 a month for all checking account balances below $1,500, plus a 50 cent fee per check.
Joyce Healy, senior vice president for retail banking at Manufacturers Hanover, said she could not comment on Mr. Leichter's study because she had not received a copy. Manufacturers' 'Relationship Pricing'
She did day that the bank's new prices resulted from a shift four months ago to "relationship pricing" -- where deposit and loan charges decline as the consumer's account balances and number of accounts go up.
At Manufacturers Hanover, the $1,500 minimum may be divided between a checking account and a savings account at 5-1/4% interest, Ms. Healy said. Also, the cost per check varies according to three different pricing plans; the 50-cent-per-check plan requires no maintenance fee. Furthermore, a total balance of $3,000 in any combination of checking, savings, money market account, and certificate of deposit entitles the customer to free checking. …