Bank of America Announces a New Plan for Taking Money from Those Who Can Least Afford It

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Recently, Bank of America announced a new debit card where card holders will be charged $4.95 per month for overdraft protection.  The pitch to cardholders is that if they overdraw their accounts they will not rack up sizable overdraft fees.  On the surface, this might sound like a good deal to people who keep a low balance in their account and worry about accidentally triggering overdraft fees.

But, the reality is quite different.  That’s because bank customers can’t overdraft their accounts unless they opt in for overdraft protection.  Gone are the days when banks could opt you in (without your knowledge) for overdraft protection  and then charge you hefty fees ($35 per overdraft)  for going pennies below your balance when you use your debit card.

Allowing unaware customers to overdraft their account and then forcing them to pay $35 for this “privilege” mobilized consumers and their advocates to press for reform.  Thanks to banking reform legislation passed in 2010 (which Green America and its members supported), bank customers have to opt-in for overdraft protection.  If they don’t opt-in for the protection, and they attempt to overdraft their account, their card is simply rejected and no fee is charged.  Unfortunately, many consumers don’t understand this.  A 2011 survey of consumers who opted in for overdraft protection found that 66% of them mistakenly signed up for the service because they thought that if their debit card was rejected for trying to make an overdraft they would be charged a fee simply for being rejected.  They didn’t realize that the law prohibited the bank from charging any form of overdraft (or attempted overdraft) fee without the customer’s consent.

Bank of America is preying on this misperception to offer consumers a new “benefit” – an account that prevents overdraft fees – that no one actually needs.  And, consumers will pay almost $60 per year for this faux benefit.  Sadly, it is consumers who have the most to lose, those that are low- or moderate-income, that will fall for this latest megabank scheme to help the gullible part with their money.

Consumers would be much better off banking with a local community development bank or credit union that doesn’t seek to profit from gotcha clauses and ever-expanding fees.  You can bring in $60 to open an account, and support your local community.  Hundreds of options are available at Green America’s Break Up with Your Mega-bank site.  And, while you’re at it, if you are still carrying a Bank of America credit card, you can get a great credit card from a community development bank or credit union with Green America’s Take Charge of Your Card campaign.  Then, make sure to let Bank of America know you are leaving them because you don’t approve of the way they do banking.

 

Rep. Waters Is Right: Wall St. Needs to Support Financial Reform

Following the JP Morgan debacle in which $2 billion, no wait, $3 billion has been lost due to risky bets, Representative Maxine Waters (D-CA) makes the following requests of all financial industry executives in a recent blog posting:

  • Stop undermining the Dodd-Frank legislation
  • Stop pressuring regulators to weaken rules
  • Publicly declare support and full funding for the SEC and the Commodity Futures Trading Commission so they can exercise needed oversight

She notes that “big banks will fight against regulation, even when it is in their own best interests.” How true….and how dangerous.

Leave your big bank today: www.BreakUpWithYourMegaBank.org

 

Yet Another Mega-Bank Debacle…Move Your Money Now!

The latest mega-bank debacle, JP Morgan Chase’s loss of at least $2 billion within several weeks, is yet another example of the problem with banks deemed too big to fail. The nation’s largest financial firm in terms of assets, JP Morgan has fought important banking regulation while it obviously needed tough regulation to protect investors and the health of our economy. Learn more from the Center for Responsive Politics about the bank’s lobbying sums that are in the top tier of its industry.

Of course, JP Morgan happily took billions of dollars from the government – our tax payer money – when it needed a bailout. And now this?!

Two lawsuits have now been filed inManhattanfederal court against the bank and CEO Jamie Dimon, one by a trust and another by an individual investor.

JP Morgan Chase is one of the mega-banks featured in Green America’s Break Up With Your Mega-Bank Tool Kit – available as a free download at www.BreakUpWithYourMegaBank.org.  If you haven’t ended your unhealthy banking relationship with JP Morgan yet – now is the time! Use our website for pointers on ensuring a smooth break-up and for finding a community development bank or credit union whose values you can trust.

 

 

$26 Billion Settlement With Mega-Banks

Attorneys General from all 50 states recently announced a $26 billion settlement with the largest home mortgage servicers in the nation – Bank of America, JP Morgan Chase, Citigroup, Ally Financial and Wells Fargo (all which qualify for our Mega-Bank Hall of Shame) – for improper foreclosure practices.  While $26 billion sounds like a lot of money, it is a drop in the bucket compared to the fact that Americans collectively owe $700 billion more on their mortgages than their homes are now worth.  In addition, the banks can use the funds to write-down bad mortgages (which they might have done anyway).  Also, while some homeowners will see a bit of relief from the settlement (and some of the worst foreclosure practices will be curbed), millions of homeowners will still face foreclosure in the years to come.  Considering the massive harms that mega-banks caused, and the ongoing harms that resulted, the settlement starts to look puny.

More needs to be done to expose fraud in the banking industry, to hold the responsible executives accountable, and to help homeowners whose lives are being wrecked by the foreclosure crisis.  As a consumer, you can play your part by closing your accounts with mega banks and shifting your funds to community development banks and credit unions instead.  Take action with our Break Up With Your Mega-Bank campaign (www.BreakUpWithYourMegaBank.org) today, and start using your savings to build communities that mega-banks so callously wrecked.

Mega-Bank Hall of Shame: First Inductee Citigroup

We have many Halls of Fame in the US: every sport has one and there’s one for rock and roll. However, sometimes we need to “honor” those who are the worst of the worst, to call attention to their abuses and hopefully get them to change course while getting people to consider alternative.  In those cases, we need a Hall of Shame.  Based on its proven capacity to do harm to the United States and the world, we think no industry deserves a Hall of Shame more than banking.

As part of Green America’s Break Up With Your Mega-Bank Campaign, we’re now launching the Mega-Bank Hall of Shame.  We’ll be periodically adding financial institutions to the list and taking nominees from readers.  We’re launching the Hall of Shame with Citigroup, one of the largest banks in the world.

What qualifies Citigroup for the Hall of Shame?  Here’s a partial list of their actions that we think merits their inclusion.

Predatory Lending Practices.  For the past decade, there have been multiple allegations of predatory lending practices by Citigroup.  Predatory lending is financing that saddles borrowers with exorbitant interest rates and fees and unfair terms.  The result is the stripping of wealth from low-income communities.  In 2001, Green America and the Social Investment Forum called attention to Citigroup’s predatory lending practices a decade ago and an outcry from thousands of consumers got Citigroup to clean up some of its worse practices.  In addition, the Federal Trade Commission sued Citigroup for predatory lending practices and settled with the banking giant in 2002 for $215 million. However, as late as 2009, data analyzed by Fair Finance Watch found that Citi, and three other major lenders (JP Morgan Chase, Wells Fargo and Bank of America) were still saddling minority borrowers with higher cost loans, while also turning them down for loans more frequently.

High Fees.  Citigroup and other major banks keep coming up with new fees for many of its account holders.  Most recently, in December 2011, Citigroup raised its fees on a basic checking account.

Illegitimate Foreclosures.  Citigroup is one of the banks that is being sued by Massachusetts and other states for engaging in improper foreclosures against homeowners.  A key claim of the lawsuit is that Citigroup and other banks used “robo-signers” in foreclosing on homeowners and failed to perform due diligence.  In addition, Citigroup and other banks are alleged to be improperly foreclosing on US Service Members.

Abusing Investors.  The Securities and Exchange Commission (SEC) sued Citigroup for lying to investors about the soundness of its investment products.  Citigroup was allegedly telling investors that the investments were sound, while betting against the same investments.  According to the filed complaint, Citigroup made $160 million, while investors lost $700 million.  The SEC recently tried to settle this case, but the presiding judge refused to sign off on the settlement, essentially saying that the SEC was letting Citigroup off too easily.  The Federal Housing Financing Agency is also suing Citigroup and 16 other lenders for misleading Fannie Mae and Freddie Mac about the safety and soundness of mortgages the entities purchased from Citigroup.

Gender Discrimination.  A group of woman plaintiffs is suing Citigroup for allegedly laying off female employees disproportionately, retaining men with lower performance evaluations, and/or treating women to a hostile environment.

Fostering Climate Change.  As I wrote in a previous post, Citigroup is one of our major banks that claims to screen its lending for climate change issues, but continues to be a major supporter of sources of  climate change.

The bottom line:  if you are a person of color, a woman, a moderate-income account holder, an investor, or someone who cares about people and the planet, then Citigroup is not the bank for you.  If you bank with Citigroup, check out Green America’s Guide to Community Investing to find financial institutions that build communities and treat their customers well.  If you need help in breaking up with Citigroup, you can download our free kit.

If you break up with Citigroup, please share your experience on our blog.  And, if you have more to say about Citigroup than what you see above, please share it.