What is going on with American banking?

[Jack Sprat]

They are holding millions of our deposit accounts, charging new fees, and paying the depositors as little as .25% on our deposits. Yet, they are charging interest on loans, credit cards, and making investments on those deposits even though they return little of anything on customer deposits. Many retirees and those who thought they might retire are having to return to work or continue working because they had previously counted on their savings earning interest income. Instead their bank or credit union savings are losing money on the real inflation caused by increasing food, gasoline, clothing and living expense prices. And still some banks default and have the Feds rescue the deposits in the middle of the night. What in the world is going on? Some kind of wholesale theft of the economy is taking place somewhere. People are raking in the profits somewhere even as the common folks are suffering. I know the big bankers and investment houses on Wall Street have been making loads placing shorts (betting against some of the very worthless bonds they sold). Why isn't our national media talking about this? Why does it seem Congress itself has been helping to cover up the quite obvious graft on a global scale?? This isn't a phenomena happening just here in the USA. This is occurring all over the globe. International criminals are getting fabulously wealthy while everyone else struggles. AND nothing is being done to stop them apparently. Nor does the national media in the USA even acknowledge it. Executives and account managers of Goldman Sachs should have been in jail already serving long terms. They trashed the retirement accounts of many municipalities, states and counties. If Teddy Roosevelt or Franklin D Roosevelt were alive today, they would be amazed that we are content to let this happen. I have no financial background, so I don't have a clue what's going down. Does anyone know?

[Sadie5]

1. I noticed too tht this month

chase started charging me a service fee. I had thought that if you had a direct deposit(SS check) and a senior account that you didn't have to pay an account fee. Silly me...there I go thinking again.

[ThomCat]

10. Citibank is adding fees and increasing their interest rates too.

They are really pushing customers to transfer balances from other banks and accounts too. I keep getting balance transfer checks in the mail at least twice per week.

In the small print they say that the fees and interest rate on transferred balances has gone up, so if you think you'll save money by consolidating your credit card balances, you're wrong. You'll get hit with a big penalty that will cost you more than you thought you were going to save.

Beware anything that the banks try to convince you is a bargain, or a deal that is supposedly in your best interest. It's always in their best interest, not theirs.

I'm still trying to find a credit union with local branches and good customer service that I can transfer my accounts to, that does not require me to be a working member of some company or industry. I didn't realize how few credit unions there were that openly accepted anyone as a customer.

[Jack Sprat]

11. Sometimes you can find credit unions

that accept members of the local community even if you doth not belong to their company or industry. Military credit unions often are open to members of the local community.

[ThomCat]

12. I'm looking.

I've been told by several already that they have restricted memberships and I'm not eligible. There are still a few more with nearby branches to check out. Hopefully...

[PBS Poll-435]

2. OD Fees have been cut back drastically because of legislation

So they are trying to pick up a few bucks somewhere else.

Keep in mind that when banks can borrow $$$ at 0% from the O/N window at the Fed, they aren't going to pay you jack squat for your deposits.

[Jack Sprat]

8. Don't you see?

They are receiving deposits almost free of interest from depositors and 0% from the Fed, but that money isn't just sitting idle in their safes. They are investing those deposits at risk and either making a huge profit or invested them recklessly and lost money off those investments. That's why many of them have defaulted. Yet, they have rewarded themselves with lavish bonuses regardless. In the Netherlands, depositors of their largest bank threatened to withdraw their savings if the bankers took bonuses they were planning to take. The bankers backed off and decided against taking the bonuses.

[Angry Dragon]

3. Credit Unions of small banks

Take your money out of the big banks and then sit back and watch them fail

[Curmudgeoness]

9. I am not sure that our little savings accounts at the banks

will be a blip on their radar if we all pulled our pittances out. But I like your suggestions to go to credit unions instead of the major banks. Just out of principle.

[MedleyMisty]

16. Every tiny bit helps

The more individual drops of water move, the more the river shifts.

[unblock]

4. same thing that's happening is most industries -- too much consolidation, too little competition.

less competition means excess profits, which mean both an ability to erect more barriers to entry for competitors and an ability to buy further protection from congress.

[RKP5637]

5. Corruption, ripoffs and opportunists. As well as a bought government. n/t

[TBF]

6. They are capitalists - this is what they do. nt

[socialist_n_TN]

13. Simple and succinct. It's what they DO........

Don't EVER make the mistake of thinking that ANY bank is on the side of the people.

[Yo_Mama]

7. Fed Bank is the answer

http://www.federalreserve.gov/monetarypolicy/openmarket.htm
Explained well there by the Fed. You can also go to H.15 to see the rates:
http://www.federalreserve.gov/releases/h15/current/

The Fed funds rate is being pushed so low in order to promote economic growth. The result is that you cannot get much in the way of interest on your money. The bank pays interest to you only as a function of the interest they can get on your money minus the servicing costs of holding your money. They're not making much, so you're not making much.

The reason this is supposed to create growth is that it is cheaper to borrow which theoretically should help spur investment. It doesn't work to well when we just threw a massive borrowing party.

Really, this is a way to shift money from savers to other segments of the economy. It is also official US policy.

[woo me with science]

14. K&R nt

[On the Road]

15. You are Correct That Fees Have Gone Up a Lot

and that expenses from paying interest have gone down.

I would think that the biggest dent in banks' earnings is still real estate foreclosures. Every time a bank seizes a house, it loses tens of thousands of dollars. That's why I can only give one cheer for court decisions preventing banks seizing houses without a full paper trail of mortgage transfers. It give lucky or litigious homeowners a windfall while risking another round of bailouts that might be much more costly in the long run.

Compensation is another factor. In the 70s and 80s, executive compensation tied on earnings was considered a forward-thinking way of incenting top management to maximize their companies' potential. But corporations have become very good at lowering the bar to the point where ordinary performance results in excessive compensation. Executive compensation is out of hand and boards, which are supposed to control it, are complicit.

In addition, banks have a lot of administrative, bricks-and-mortar, and other business costs. Businesses have to make a pretty healthy gross margin before they make any net income.