Monday, January 4th, 2010   7:12 am | Author: Jerry | Life, Money
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The Wall Street Journal reports that banks and financial firms are gearing up to screw you just a little more.
They are planning on raising fees on checking accounts and credit cards ”to replace more than $50 billion in revenue wiped out by new rules that clamp down on certain business practices”.
“Credit-card issuers collected $22.9 billion in penalty fees—such as those assessed for late payments—in 2009, up from $19 billion in 2008.”
“Credit-card companies already have been racing to slip new fees and practices into customer contracts ahead of the law (that becomes effective in February). Issuers are closing accounts, switching cards with fixed interest rates to variable rates and introducing cards that have an annual fee.”
“The Fed estimates that banks generate $25 billion to $38 billion a year in overdraft fees.”
“..banks are expected to eliminate free checking completely, raise fees on safe-deposit boxes and charge customers more for issuing a stop-payment on ..continue reading
According to Financial Times banks are raking it in by trading with the Fed which has become one the banks largest customers.
The issue is that the Fed did not seem to set favorable terms on the trades and as a result the banks are make huge profits. What is worse because of the government’s insistence of transparency they typically announce their intentions before trading which gives the banks and other investors an opportunity to drive up prices.
“You can make big money trading with the government,” said an executive at one leading investment management firm. “The government is a huge buyer and seller and Wall Street has all the pricing power.”
A former official of the US Treasury and the Fed said the situation had reached the point that “everyone games them. Their transparency hurts them. Everyone picks their pocket.”
Apparently the government is resigned to take the hit.
Barney Frank, chairman of the ..continue reading
When the government provided liquidity to major banks it was “understood” that the banks would start lending again to help the credit squeeze. In addition the government created a program to incentivize banks to adjust loans for people who are on the brink of foreclosure. The incentive is $1000 for each adjusted loan plus and additional $1000 per year for the next 3 years.
When the government called in bank executives to explain why they are not moving faster on this the truth emerged.
The government loan adjustment is not enough of an incentive for the banks. They would rather collect fees from home owners on delinquent payments and they stand to make additional fees when a home goes into foreclosure.
It is hard to understand why when the government was holding all the balls and had the financial community by the short strings it did not dictate terms to the banks on what ..continue reading