Here’s the latest idiocy from the WSJ — we must repeal financial reform immediately because free checking is in danger:
Yet over the past few months, the middle class has seen a beneficial feature of modern banking—free checking—begin to vanish due to these “reforms” and the substantial loss of bank revenues that they’ve caused.
There are two main culprits in free checking’s demise: the Federal Reserve’s new rules, in effect since July, that restrict banks from charging overdraft fees when customers overdraw their checking accounts; and the amendment from Sen. Dick Durbin (D., Ill.) in Dodd-Frank that puts price controls on the interchange fees that merchants pay to banks and credit unions to process debit cards.
The decline of free checking is the first of many middle-class perks likely to vanish in the rush to regulate. As one of its first orders of business next year, the 112th Congress should introduce legislation repealing these policies and title the bill the “Free Checking Restoration Act of 2011.”
Perhaps guy who wrote this piece, who’s the “director of the Center for Investors and Entrepreneurs at the Competitive Enterprise Institute”, might want to consider this point, buried at the end of a USA Today story on the demise of free checking:
Michael Moebs, the founder of Moebs Services, said it is now up to the smaller Main Street banks to see an opening and grab customers from the big banks.
“Free checking could become a mainstay of community banks and credit unions in the future,” Moebs said.
If the market dictates that BoA can’t provide free checking while community banks and credit unions can, perhaps we should listen to the market. Or, we could just Google free checking instead of crying wolf, and see that dozens of banks are so worried about financial reform that they’re paying to advertise their free checking plans.
WereBear
All things considered, I’d like the big banks to withhold their productivity for, oh, the rest of my life. I don’t know if I can handle much more of their productivity!
MattF
May I point out that ‘free’-any service from any commercial enterprise whatsoever is an oxymoron? In point of fact– you, the customer, pay for all, every, and any services you get. Period. It’s called capitalism.
Southern Beale
The Competitive Enterprise Institute is just another corporate front group funded by Koch, Scaife, etc.
Same ol’ shit, different day.
arguingwithsignposts
Am I missing something, or isn’t free checking already a staple of credit unions?
J.W. Hamner
It was pretty interesting how I got bombarded with letters from my bank this summer about how I was going to lose overdraft protection if I didn’t act immediately. Gotta say that was pretty sweet.
And who even rights checks anymore?
nevsky42
Hey, good enough excuse to go Galt from BoA…
Thomas
NIce. By the way, of all the things to bemoan that the middle class is losing, free checking. Really? Yeah, your job gets sent to India/China and you can’t find a job in the sector that you were told to retrain in but hey, how about this free checking for the account that’s now drained?
Suck It Up!
unbelievable! – wait, no its not.
Its time for consumers to take advantage of the choices they have. I’ll be closing my checking with bank of america soon (thanks mistermix for the recommendation).
Apparently the Going Galt boys don’t think this can happen.
Southern Beale
Let me add this, from the SourceWatch link. CEI is big into the global warming denial game, hence all of the oil company funding. I’m sure they’ve gotten lots of BofA money, hence the new “OMG FREE CHECKING!!!!111!!!ELEVEN!!!” messaging:
Funding
CEI’s Budget
Since 1991, CEI’s budget has grown from less than $1 million to over $ 4 million.” David Callahan also noted that although the extent to which conservative think tanks rely on corporate funding support varies widely, CEI and the American Enterprise Institute “have two of the highest levels of corporate support, with both getting roughly 40 percent of their 1996 revenues from corporations.” [1]
In its IRS Form 990 for the fiscal year ending September 30, 2004, CEI reported revenues totalling $2,919,537 almost all of which were in the form of contributions from unspecified sources. Its net assets were $1,670,808. [2] (Pdf)
CEI’s Foundation Funders
Media Transparency lists CEI as receiving a total of $4,296,645 (unadjusted for inflation) in 123 grants from a range of foundations in the period 1985 through to 2004. [3]
Armstrong Foundation
Barre Seid Foundation
Castle Rock Foundation
Carthage Foundation Scaife Foundations
Charles G. Koch Charitable Foundation (Koch Family Foundations)
Claude R. Lambe Charitable Foundation (Koch Family Foundations)
David H. Koch Charitable Foundation (Koch Family Foundations)
Earhart Foundation
Gordon and Mary Cain Foundation
Jacqueline Hume Foundation
JM Foundation
John M. Olin Foundation
John Templeton Foundation
Lynde and Harry Bradley Foundation
Philip M. McKenna Foundation, Inc.
Randolph Foundation
Rodney Fund
Roe Foundation
Sarah Scaife Foundation (Scaife Foundations)
Scaife Family Foundations
Shelby Cullom Davis Foundation
William H. Donner Foundation
Other Funding Sources
The Capital Research Center (CRC) formerly had a profile on CEI in its database on non-profit groups which listed corporate foundations and other groups not identified by Media Transparency. [4] However, since its profile was linked to this page in 2004, the profile on CEI has been removed from the database.
CEI does not publish a list of its institutional donors. However, in a CEI report sent to Philip Morris, the think tank identified a range of companies and foundations as having given $10,000 or more. [5]
Contributors included:
Aequus Institute
Amoco Foundation, Inc.
Coca-Cola Company, contributions were $25,000 per annum for the period 1991-1995;
E.L. Craig Foundation
CSX Corporation
Fieldstead and Co.
FMC Foundation
Ford Motor Company Fund
Curtis and Edith Munson Foundation
Philip Morris Companies, Inc.
Pfizer Inc.
Precision Valve Corporation
Prince Foundation
Sheldon Rose
Texaco, Inc.
Texaco Foundation
Alex C. Walker Foundation
In a 2006 profile of CEI and other global warming skeptics, Washington Post reporter Joel Achenbach noted that “the most generous sponsors” of CEI’s 2005 annual dinner were “the Alliance of Automobile Manufacturers, Exxon Mobil, the Pharmaceutical Research and Manufacturers of America, and Pfizer. Other contributors included General Motors, the American Petroleum Institute, the American Plastics Council, the Chlorine Chemistry Council and Arch Coal.” [6]
Tobacco Industry Funding
A listing of documents specifically about contributions and support from tobacco companies to CEI:
1991 – $10,000 donation to CEI from Philip Morris (PM) [7]
Feb. 9, 1993 – letter from Fred Smith of CEI to Thomas Borelli at PM thanking PM for support.[8]
1995: PM gives $200,000 grant to CEI for “general operating support” [9]
1995 : PM gives another $10,000 to CEI [10]
1997: PM gives $120,000 to CEI [11]
1998 PM Public Policy Contributions list. Says PM paid CEI $25,000 via check no. 390006 [12]
(Non-financial item) 1998: Activity Report of Beverly McKittrick of PM states, “Worked on plan for mobilization of third–party conservative groups. Met with CSE, ATRA, Chamber of Commerce,Frontiers of Freedom, and Competitive Enterprise Institute.” [13]
1999 Public Policy Contributions (PM): $5,000 paid via check No. 20601 [14]
1999 Activity report of PM’s Thomas Borelli states: “Secured policy group committee funding to support the Competitive Enterprise Institute dinner” [15]
Undated Brown & Williamson document listing pro-business organizations BW contributes to. CEI is on the list: [16] (see top of page 5, “Policy Organizations :Total $325,000”)
In 1999 PM budgeted $25,000 for CEI: [17]
Ash Can
Because the middle class is doomed if we have to shell out an extra $10 a year, don’tcha know.
Oh, and this:
Sentence structure FAIL.
BR
BofA is screwed in many ways at the moment.
Actually, I’m wondering – does anyone have any educated guess on how the timeline of the BofA thing is going to play out (the foreclosure fraud, etc.)?
Suck It Up!
@Ash Can:
$10 a year? try monthly.
cmorenc
Deep-Pocket Glibertarians are utterly shameless about not letting facts get in the way of a perfectly good ideological story. They’re counting on the MSM’s laziness and interest in political horse races and shiny things to only expose a fraction of the shoddy propaganda they spew, and those occasional times when someone from the MSM actually bothers to challenge them effectively, they go into “move along, nothing to see here” mode and quickly focus on spinning up the next faux controversy on a different matter.
dmsilev
To translate from WSJ-editorialese (also known as “lies”), big banks will no longer be able to rake in billions of dollars by gaming the overdraft system and by gouging merchants on interchange fees. Since the idea of reducing profits is doubleplusungood, the only alternative is to impose an across-the-board fee on all customers.
Besides, we all know that if Congress repeals financial regulation, no matter what Orwellesque name the legislation is given, the result will be that the big banks will charge massive overdraft, etc. fees *and* will charge for checking accounts. Because that’s just how they roll.
dms
Ash Can
@Suck It Up!: Online payment is a wonderful thing.
gene108
The fees and deposit requirements banks charge consumers will change, because banks built so much of their revenue model on fees, like overdraft fees, which isn’t going to be possible.
Banks need to make up the revenue somehow.
Free checking may go out the window, but is it really so big a problem compared to the old rules, which allowed the imminent failure of the financial system as we know it after the collapse of Lehman Brothers, too big to fail and the ushered in the worst recession since the Great Depression?
Yeah, I don’t think so.
Omnes Omnibus
@Ash Can: No, per the sentence structure, “the decline of free checking” is a middle class perk. They have editors, so they must mean what they say. After all, the WSJ is a respected, professional news organization, right?
Nick
Clearly if Obama had used the bully pulpit…
Agoraphobic Kleptomaniac
To which 1/4 of Americans say, “What’s a check?”
Ash Can
@Omnes Omnibus: The WSJ has become a laughingstock in every other way, so why not grammatically on top of it?
Comrade Javamanphil
Why do you people hate capitalism? I, for one, would be happy to spend $10 a month for a checking account to ensure that all the boys in the financial product division can still buy the yacht with the gold faucets. Do you think they will actually eat me after they’ve killed me?
PIGL
In other words: “We got nothing…. bupkes…squat…and yet, we get paid by the word.”
mai naem
Hey, I still use checks once in a while. B of A can go screw themselves. I hate hate hate B of A. They freaking charge you $6 to cash a check of their customers if you don’t have an account there which was the only reason I maintained an account with B of A. That’s more than if you go to the grocery store and have them cash it and it’s not even their check so the store is taking a way bigger risk than the freaking B of A. BTW a cashiers check is something like $35. Are you people kidding me?
Face
Yea! Lets get government involvement in the free market! Hot damn!
Signed,
TeaTard Republicans….wait….what?
Capri Sun-Bagger
Yep, I opened a CU acct recently, and I am pulling my business from BOA. And I would literally piss on its Board if I could.
Linda Featheringill
Really? They forgot to tell my bank about that.
Or maybe it applies to banks of a certain size.
Rosalita
there’s an ad for free checking right above the title of this post…
Capri Sun-Bagger
Nick: Your trollish monomania is showing. Maybe you think teh Joos control the baking industry, in addition to the media?
Linda Featheringill
@mai naem:
Bank fees:
You need to go shopping. Seriously.
Steve
@Linda Featheringill: The new rules apply to ATM and debit cards, not checks. Basically, the bank can still offer you “overdraft protection,” meaning you pay an extra fee to be covered when you overdraw your account with an ATM or debit card, but you have to affirmatively opt in to the program. Without your consent, the bank has to simply decline the transaction – they can’t say “okay, we allowed you to buy that pack of gum, but now there’s a $20 overdraft charge on your account.”
different church-lady
So I’m wondering: what good was free checking when the bank would charge you $35 a pop for overdraft protection that you didn’t sign up for? And could do that three or four times a day because there was no regulation?
You know what kind of “productivity” really gets withheld under a regulated system? The productivity of cat-and-mouse business arrangements.
James Gary
Nick: Your trollish monomania is showing. Maybe you think teh Joos control the baking industry, in addition to the media?
They’re hatching a secret plan to make us all eat bagels and rye bread. Oy!
different church-lady
The bank… won’t let you spend… money… you don’t… have?
WHAT A CONCEPT! WHY DIDN’T ANYONE THINK OF THIS SOONER?!?
Steve
It’s such a tired old schtick for businesses to blame the government any time they decide to stick consumers with new fees, and these libertarians consistently go along with the lie.
Our drugstore chain doesn’t have “no pets” signs – they have signs that say “we love your pets – but sadly, the state says we can’t allow them.” Hopefully everyone understands this is a fib, in the sense that the drugstore chain doesn’t give a shit about your pets. But it’s an example of the genre.
The government is not mandating that banks charge a per-check fee or that they get rid of their rewards programs. Those are pure competitive choices that they are free to make or not make. They should respect the consumer enough to say “look, we’re imposing these fees because we’re a behemoth that doesn’t really care how you feel.” At least they might be respected for their honesty!
TaMara (BHF)
It would be nice if they got their facts straight. If I understand the information from my bank correctly – if I didn’t sign up for their overdraft service, they would deny me a debit transaction if I didn’t have the funds. But if I still managed to overdraw my account all fees still applied. Hefty fees I believe.
Svensker
@Capri Sun-Bagger:
I think he was making teh jokey.
Edited to add: Wait, teh Joos now control the BAKING industry? OMG. Does that mean no more caramel bacon muffins?
Steve
@different church-lady:
A serious answer: it was good if you were one of the people who never overdraws their account. In effect, the people who incur those $35 charges over and over again were subsidizing the free-checking perk for everyone else.
Similarly, credit-card rewards programs are subsidized by all the poor schmucks who pay huge amounts of interest and penalties. If the government limits how badly the credit-card companies can exploit those schmucks, then yeah, there might be fewer free benefits for the people who always pay their bills on time. But you’re not necessarily entitled to get subsidized like that. At some point the regulators have to draw the line in the name of basic fairness.
4jkb4ia
Yes! It is not as if the large banks do not have a great number of advantages over the small banks in being TBTF and able to finance better interest rates, etc. Community bankers in Bakersfield testified to this.
(Angelides, same hearing: “There seems to be a toxic brew here of incompetence, greed, and stupidity.” Great line.)
Dennis SGMM
The “Wall Street Journal;” stenographer of the new Gilded Age.
The “Wall Street Journal;” too stupid to know when the parasite is killing its host.
The “Wall Street Journal;” because free checking means so much when you’re living in your car.
MattF
@Svensker
And no more cheeseburgers, ever.
The Republic of Stupidity
Well… perhaps the ‘too-big-to-fail’ banks could simply make up for lost income from overdraft fees by doing something innovative… like ramping up foreclosures on peoples’ homes, even if they don’t have clear title…
Oh wait…
catclub
I posted on another thread that there are some ( I found one)
credit unions and banks which offer (free) checking with a hefty
(for the present day) interest rate of 3.56%.
If you compare that with money market funds (0.08%) it is VERY good. The only catch is that the interest only pays on amounts UP TO $25,000 and you have to have 12 debit card transactions per month. Not sure why, but it may be to keep money that jumps around looking for the highest rates, away.
3.56% of $25,000 is about $800.
Good Luck finding one near you. I found it at Gulf Coast Community Federal Credit Union and noticed another in Louisiana.
Capri Sun-Bagger
There is a thin line between baking and banking, what with all the dough involved, but that doesn’t change the fact that our own little Nick, of The Mom’s Bassement Times, was letting his antisemitic freak flag fly in the Nasr thread. And he didn’t think it was antisemitic if you are cool with ‘teh joos’ controlling the media. And he didn’t know how to spell ‘antisemitic’.
OTOH, he does like to generalize about ‘the left’ and its insufficient loyalties, so guess he passes for a VSP around here. Maybe if he rambled on about train electrification and utility monitoring, people would stop taking him seriously, but apparently until then he’s our boy, pin a medal to his chest.
Dennis SGMM
@4jkb4ia:
Mmmmmmmm, quantitative easing. Funnel a shit-ton of money to the big banks at 0% interest, enable them to buy treasury bonds and earn 3%.
Why? Well, remember when the gov was “reforming” the financial system? Remember when the big banks unanimously declared that they should be able to mark assets to book rather than mark to market because mark to market was unfair?
I value the mint 1965 Corvair Corsa sitting in my garage at $2,000,000. They wont even loan me twenty grand on it.
The Republic of Stupidity
@Omnes Omnibus:
Well, I, for one, am disappointed in Rupert Murdoch’s WSJ… I was expecting a Pg 3 Girl by now and it’s just not happening…
The Republic of Stupidity
@4jkb4ia:
That s/b one of the tag lines under the Balloon Juice banner at the top of the site…
Or is it already one?
Ash Can
@Capri Sun-Bagger: Uh…sure.
Capri Sun-Bagger
Ash Can: I’ll put you down as ‘doesn’t care’.
Do you want to sign up for the full Juicebagger package?
gorillagogo
@gene108:
The fees and deposit requirements banks charge consumers will change, because banks built so much of their revenue model on fees, like overdraft fees, which isn’t going to be possible.
Tell me about it. I worked briefly as a temp at a large bank and the amount of money that came in from ‘fee based revenue’ was staggering. It seemed like all we did was invent new fees and then come up with clever marketing to tell the customers what a great deal they were getting from all the new fees.
liberal
@gene108:
I’m not against the new rules that have led to the banks pissing and moaning like this, but if you think the overall finreg package has fixed the financial system in a manner that will greatly reduce the likelihood of another financial crisis, I have a bridge in Brooklyn I’d like to sell you.
liberal
@Capri Sun-Bagger:
Link?
liberal
@Capri Sun-Bagger:
Very Special Person? No, that would make him a typical O-bot Balloon Juice commenter.
inthewoods
Off topic, but if you haven’t read this – it will make you a bit sick:
http://www.ritholtz.com/blog/2010/10/how-a-gang-of-predatory-lenders-and-wall-street-bankers-fleeced-america-and-spawned-a-global-crisis/
malraux
@catclub: My bank is one of those. 3.75% on the checking account (up to $15,000), 2.01% on the saving account. The account is free, they reimburse atm fees from other banks, etc. All around a great account. I can’t imagine paying for a checking account.
Bill H
Actually, my switch from Wells Fargo to Mission Federal Credit Union was caused by the fact that the latter offered free checking and the former did not. I can’t remember how many years ago that was; twenty or so, maybe closer to thirty.
The guy at AAA looks at me wierd when he notices the card reads “Member 64 years.”
Capri Sun-Bagger
liberal: Link.
Suck It Up!
Note: those who are bragging about their banks, please share the wealth. We need to pass around the names of these banks.
Capri Sun-Bagger
Very Serious Person, y’know, the only people to be listened to.
Malraux
@Suck It Up!: Bank of Little Rock, so obviously a local bank.
liberal
@Capri Sun-Bagger:
Huh. He really does come off as an anti-Semite.
But true to form, he also comes off as not very intelligent. Furthermore, and extremely amusing given his pattern of commenting here, is JSF’s comment:
My own favorite Nick quote is where he said that Japan suffered from high inflation sometime during the aftermath of the burst of their own bubble.
Capri Sun-Bagger
liberal: Yes, Fuckhead does have a way with words. I hope one day that John and he consummate (again) their love and produce a brood of strapping young Fuckbags.
ThresherK
@Southern Beale: I never say this, but SoBe has it wrong!
The Competitive Enterprise Institute is there for when the American Enterprise Institute just gets too wishy-washy on the issues.
liberty60
There is a reason why “Free Checking” is referred to as “Fee Checking”.
Saving the monthly checking fee is no benefit whatsoever when set against the massive overdraft charges that careless consumers incur, aided by the “magic” of never having a POS transaction declined.
It is much much better for consumers to have transactions declined and pay the monthly service charge for a checking account.
grumpy realist
Considering that this article was on the WSJ’s notorious Op-Ed page, I think we know exactly how much credence to place in it: zilch.
Given the increasingly politicized slant of the WSJ’s articles, I’m surprised they’ve managed to keep their readers. Forming a news circle-jerk may be great for political wonks, but business has typically had to be at least a little more in touch with reality. You can slant your news articles as much as you want, but the more you mislead your readers into making bad business decisions, the less likely they will read you in the future.