Where Have You Gone, John Dillinger?

During the 1930s John Dillinger robbed banks. And he was loved for it. Why? Because during the 1920s banks such as JP Morgan Chase and Bank Of America became heavily involved in the securities business, leading to huge investments in short term loans that failed, and in turn, created the great depression. Basically, they took other people's money and put it in high risk investments and screwed their customers. Which forced President Franklin Roosevelt to expand government programs in effort to save the failed financial system. Sound familiar?

I'm sure it does, because that's what we're living with now. I know we'd like to believe that banks are for their customers, but that's not the truth. The banks are for their customer's money. Not to benefit those that bank with them, but to benefit the institution itself.

It's not just that modern banks over leveraged themselves with risky investments or made loans to people that they knew couldn't afford them and therefore created the current recession. No, the most reliable way that banks continue to stick it to their customers is with fee income.

The three most common ways that banks do this is through credit cards, debit cards, and the order of check clearance.

I'll start with credit cards. Many people get a new credit card to take advantage of 0% interest rates for a predetermined length (often 6 months). But a common practice used by banks is that of switching your payment date on you. Say your monthly payment is on the 15th of each month. Then the bank changes your date to the 7th. How do they notify you? Do they put a card in with your new statement that declares that your payment date has been changed? Do they pay you a courtesy call or send a separate notice? No. They simply change the date on your statement in that teeny tiny little black ink that no one looks at. What happens next is you make your payment on say, the 13th. You think you're good. Then on your next statement you find that not only do you have a late fee of $39.00, but that your interest rate is jacked up to anywhere from 18% to 29%. Then, you call customer disservice, er service, and they say there is nothing they can do. Now your 0% rate is gone, you've got a late fee, and they don't care.

Next is debit cards. In the old days, if you attempted to use your debit card and you were short of the necessary cash in your account, then the transaction would reject. Which might cause some embarrassment but at least you didn't overdraw your account. Nowadays, the bank will not reject those purchases and allow you to overdraw at will. Once again this leads to more fees.

Similarly, the policies surrounding the clearance of checks also is set up to cause as many fees as possible. Say you have $600.00 in your account. You pay your rent for $550.00. Say you also have 6 other checks out at $20.00 each for a grand total of $670.00 in promissory notes. So now you're $70.00 short. But what the bank will do instead of paying the items in the order that they came through is wait until the end of the business day and send the check with the highest amount through first. If they were to do you a solid and pay the smaller items first, you would only have one overdraft fee. However, in this scenario you now have three overdraft fees. And just so you know, your debit card works in the exact same way. Highest to lowest.

Now, what the bank will say is "don't you want your biggest check to go through first." Their argument being that your rent is more important than your lunch purchase. True enough, but if you are someone whose money is tight (and nowadays whose isn't), then you may not be able to afford to pay the additional fees and eat too. Of course, they extend this rationale as if they are somehow looking out for you, but don't you believe it.

What they will say next (assuming you haven't accepted the first lame explanation), is that it is the customer's responsibility to know how much money they have in their account. Once again, true enough. But wouldn't it be in the customer's best interest to not create a system that maximizes fees? I mean who do they think they're helping with these policies? I can tell you who they are screwing, the working men and women of this country who are scraping to get by. The only thing they are helping is themselves.

Of course these fee policies aren't what got us in this mess in the first place. That was done by over leveraging debt and offering adjustable rate, "sub-prime" mortgages to people with weak credit. Not every bank was so foolish as Citibank, Bank Of America, Wells Fargo and so on. Although, only one bank really stands out in this morass. That would be JP Morgan Chase. Chase was much more conservative with their balance sheet and did not get nearly as deep in the "sub-prime" market as the other big banks. Which makes them fiscally and ethically superior to their competitors. Of course, that's a little bit like being the tallest midget, but you get the idea. And Chase still has the same awful fee policies as the rest of these ass clowns.

So why did the US government bail these shysters out you might ask? Because they were too big to fail. If these institutions would have been allowed to go down for the dirt nap, the entire financial system would have collapsed. Most everyone knows that if a bank fails that FDIC insurance covers up to $250,000 in deposits for that bank's customers. However, if Citibank and Bank of America had gone down, the FDIC would have needed it's own bailout. So either way, we lose. Let 'em fail or prop 'em up. It's the same proposition.

Now, this doesn't mean that there are no good people working at banks. At the branch level, you will find some decent people who are willing to work with you during trying times. But you should know that they are not encouraged to do so. Banks rely so heavily on fee income that for many institutions it is their make or break point.

So yeah, John Dillinger robbed banks. It was against the law and morally wrong. But people loved him. They understood that Dillinger may have been a crook, but the real criminals had their names on the front of the building. Over 70 years later, ain't a damn thing changed.

Sumo-Pop
August 8, 2009

Full disclosure:

I spent the last 3 1/2 years working for a bank. No more. "Free at last, free at last, thank God almighty, I am free at last."