Let's hear it for Iowa, Connecticut, San Francisco and Santa Monica, Calif. Earlier this century, these four states and municipalities attempted to ban ATM surcharges. Sure, you can call that unwarranted interference into the workings of the free market, if you like. But one also suspects that the politicians involved were representing the wishes of their constituencies. If the people are annoyed by bank fees, in a democracy they have the right to express their ire by electing politicians who pass laws that order banks to behave differently.
Well, not exactly, at least not in this country as it is currently operated. District and appellate court decisions struck down the ATM surcharge bans. The common theme: States no longer have the right to tell national banks what they can and can't do. That privilege can only be decided at the federal level. And at the federal level, the government, mainly in the form of an obscure agency known as the Office of the Comptroller of the Currency, is disinclined to serve at the pleasure of the consumer. Far from it! In court, the OCC supported the position of the national banks. Even worse, as detailed in an excellent New Republic article earlier this month (sub. req.), the OCC, under the aggressive leadership of chief counsel Julie Williams, has a long history of routinely suing to stop states from imposing consumer protection laws on the big banks.
Before I go any further, let me stress that yes, as consumers, we have a responsibility to not let ourselves be screwed. Personally, I strive to avoid ATM fees. I try to ensure that I use only my own bank's machines, rely on my debit card whenever possible, and get cash back at the grocery store on a regular basis. I understand that if I want free access to, say, the Bank of America's network of 17,000 ATM machines, I can sign up for a checking account at BofA any single day I please. Banks are under no obligation to make my life easier -- I have the power, and, one hopes, the will, to organize my life in a disciplined fashion so as to not allow chunks of my flesh to be gouged out at random intervals.
And yet I still feel rage at the news that the Bank of America is bumping up fees at thousands of its machines from $2 to $3. And I don't think I'm alone. ATM banking was free to all comers for some 20 years, until 1996. Since then, fees have steadily risen, and excuse me if I am skeptical of any suggestion that a 50 percent increase might be justified by the rate of inflation or a rise in the cost of operating an ATM network.
Gratuitous insulting of my intelligence doesn't improve my disposition, either. Here's the Bank of America's own justification for the hike: It's all about keeping lines short at machines for the convenience of the bank's own customers.
"We really want to make our ATM network convenient for our customers," [said bank spokeswoman Betty Riess]. "In order to maintain that, it is appropriate to charge people who aren't our customers for accessing our convenience."
Oh, really! Let me get this straight: The goal of the fee hike is to reduce the number of people using the network, and not to increase the profits generated by the network.
The gods scream balderdash.
Here's the deal. We deregulate the banking industry so the big guys can buy up all the little guys, and thus reduce competition. Then we forbid states from protecting consumers, by limiting that power to the federal government. And then, we stand by and watch as the banking industry consolidates its control over its own regulators, who then proceed to ensure that nobody gets in the way of their rapine and pillage.
Not surprisingly, there's even a subprime angle! As the New Republic's Stephanie Mencimer writes:
Over the past decade, state officials who have tried to rein in some of the more egregious practices of the nation's banks -- passing laws banning ATM surcharges or cracking down on predatory mortgage lending -- have found themselves facing off with [chief counsel] Williams. In court, she has successfully asserted that states have no right to enforce their own consumer protection laws against national banks or their subsidiaries, particularly those laws involving predatory lending, which has been a major factor in the more than 1 million home foreclosures last year. "What's disgraceful is for a federal agency to spend all these resources preventing consumer protection activities," says Prentiss Cox, a former assistant attorney general who tangled with Williams in the Fleet case. "It makes it look like their clients are the banks and not the customers or the public."