US banks pre­pare to charge new fees for ser­vices

The Pak Banker - - Company& -

NEW YORK: Banks, which have ab­sorbed blame for ev­ery­thing from set­ting off the Great Re­ces­sion to be­ing tight­fisted len­ders ham­per­ing the nation's eco­nomic re­cov­ery, are hear­ing it on a new front. Too many bank­ing fees, say con­sumers and con­sumer groups.

Bank of Amer­ica Corp. and JPMor­gan Chase & Co. are among the large in­sti­tu­tions that have ei­ther raised some fees or promised new ones in 2011.

While San Fran­cisco-based Wells Fargo has held the line of late, it too has been crit­i­cized for hav­ing too many fees for rou­tine ser­vices.

Bank­ing an­a­lysts point to Wells Fargo as an ex­am­ple of a bank that fared com­par­a­tively well in the re­ces­sion due to rev­enue from fees.

An­a­lysts say a pro­lif­er­a­tion of bank­ing fees should come as no sur­prise: It was vir­tu­ally guar­an­teed with the Credit Card Ac­count­abil­ity Re­spon­si­bil­ity and Dis­clo­sure Act of 2009, signed by Pres­i­dent Barack Obama in May last year.

That act, hailed as a land­mark of con­sumer pro­tec­tion, strength­ened dis­clo­sure re­quire­ments, for­bade rate in­creases for the first year of new card ac­counts, man­dated that rate in­creases ap­ply only to new charges and capped some high-fee card prac­tices.

The changes are ex­pected to cost the bank­ing in­dus­try more than $11 bil­lion next year. New and in­creased fees are viewed by banks as a way to min­i­mize the im­pact of those de­creased rev­enues.

"This was ob­vi­ously not un­ex­pected. Banks have to gen­er­ate in­come one way or an­other," said Sung Won Sohn, an econ­o­mist at Cal­i­for­nia State Uni­ver­sity's Chan­nel Is­lands cam­pus. "When Congress passed that leg­is­la­tion, it was as­sumed that there would be other av­enues of in­creas­ing fee in­come." - PB News

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