Gouging or Just Keeping Up? Two Views of Bank Fees
The U.S. Public Interest Research Group and the Consumer Federation of America released a survey report June 8 accusing banks of charging "exorbitant" fees for consumer checking and savings accounts.
The two organizations surveyed 300 banks in 22 states and found that fees for consumer accounts had jumped 28% between 1990 and 1993.
Edmund Mierzwinski, the Public Interest Research Group's consumer program director, accused bankers of having a threetier strategy to cheat consumers: higher fees, higher minimum balance requirements, and new types of fees.
Last week, the groups' charges were aired on a national forum as the "Today" show's Bryant Gumbel interviewed Mr. Mierzwinski and Donald Ogilvie, executive vice president of the American Bankers Association.
Bryant Gumbel: What do you think the numbers in your survey say about the banking industry and its approach to consumers?
Edmund Mierzwinski: Well, very simply, the banks are gouging consumers. We think that the banks have their hands deep in consumers' wallets, because they can take the money from them, and they're paying us pennies for interest at the same time. We think it's a serious problem that Congress should address.
BG: Is it pretty clear to you that they now recognize fees as a legitimate and important source of income?
EM: Fees are a rapidly growing source of income for the banks. Their conferences and their reports are how to hook fee income, how to get money from the consumer. One banker says, "Raise fees in August and December, because those are the months nobody opens their statements."
BG: So they won't even look?
EM: They won't even look.
BG: Donald Ogilvie is the executive director of the American Banker's Association. He's in our Washington newsroom this morning. Mr. Ogilvie, good morning.
Donald Oglivie: Good morning.
BG: These numbers seem a terrible indictment of your industry. How do you view them?
DO: Well, let's take a look at the numbers. Using their own numbers, Bryant, there was a 13 or 13 1/2% increase over a three-year period. That's about 4% a year.
The average rate of inflation over that three-year period of time was about 4%, so banks' fees have been basically keeping track with what the rest of the economy's been doing.
BG: Well, that's not necessarily so.
I mean, even the FDIC says that operating costs went up 5% from '91 to '92.
That same year we saw that bank profits - my figures show - jumped 79%.
DO: Well, they - one of the big reasons that prices have been going up is because of regulatory costs imposed on the banks by the FDIC and other regulatory agencies have been literally sky-rocketing. …