US banks prepare to charge new fees for services
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