October 4, 2011

Why I'm Leaving Bank of America

By Bill Smith, the Ozark Guru: As a former active duty military, now retired, I banked at an independent "Military Bank" which understood and worked with  military members and their families.   They were able to assist members who relocated often and were assigned in strange locations sometimes separated in distance from their families. A few years ago, this military bank was acquired by Bank of America. Interesting enough, we also had a home loan with Countrywide which also bought by Bank of America. No, it was not have one of the "special" Countrywide loans that cost the taxpayers money. It was a traditional home loan which Countrywide purchased.

When we unwillingly became Bank of America clients, we experienced problems with their branch banks wanting to charge us fees for using our debit card to withdraw funds from our checking account. This resulted in numerous calls to the Corporate BOA offices and they finally issued written instructions to its BOA branches not to charge fees to its military bank clients for cash withdrawals. Bank of America finally adopted this policy for all of their clients using any BOA banking teller machines. A second issue was that local branch banks had trouble depositing checks to our bank account. After several months, they resolved this issue.

Then, Bank of America starts appearing much too often in the morning and evening news. First there reports that BOA was issuing credit cards and bank accounts to undocumented (illegal) aliens under an agreement with Mexico. Not sure how that worked out. Then there was the Federal banking bailout loans. Next, was information that Bank of America was supporting various social programs which did not line up with our beliefs. Although bothered, we still did not change banks.

Bank of America had agreed to honor all the then unique benefits offered by the Military Bank. Rumor has it that BOA may have stopped doing this for new military clients. Then, over the years, I noted that Bank of America was supporting certain social policies and groups which did not align with beliefs.

Recently, we all learned that Bank of America was suffering financial losses. Maybe it was caused by those credit cards issued to illegals or by the bad loan assets acquired from Countrywide. Regardless, Bank of America became a major contributor to the number of people unemployed. They cut 30,000 people nationwide. I was now upset - something was not right at BOA.

Now, we learn that Bank of America is going to charge its customers for using their debit card at retail stores. When someone uses a debit card, they have two options. First a person can use it as a debit card and the payment is simply removed from the person's bank account. In other words, they are spending their own money. They may also opt to use the debit card as credit card. The funds still comes out of their checking account unless they are out of money in their checking account. Then the charge is treated as a credit card purchase with accompanying interest if the amount is not paid on time.

Consider why so many people use a debit card. A major reason is that they can access and spend or withdraw funds from their checking account without having to go to the bank or bank cash teller machine. That is a real advantage in rural and isolates areas where it easier to visit stores like a Dollars General or a Wal-Mart than at a bank that is closed. Even in major cities, people often do not wish to be at risk of being robbed after they use a bank teller machine. Stores are far safer.

Why should a client pay to use a debit card that the bank marketed as one of their free services? A debit card which accesses their own checking account and no checks have to be processed by the bank.  I like our local BOA tellers. However, the decisions by Bank of America corporate needs major attention. Since, I can not even get their attention let alone do anything about the decisions by BOA corporate management, it is time for our family  to stop lending Bank of America our money to use.  It is time to move on to another bank. 

Below is a good post by RedState's Moe Lane which discusses Bank of America, CARD Act, Dodd-Frank, and soaking the poor.
Congratulations, Congressional Democrats: you’ve managed to soak the working poor again.
Bank of America will start charging debit-card users $5 a month to pay for purchases. The move comes as the cards increasingly replace cash and as banks look for ways to offset the loss of revenue from a new rule that will limit how much they can collect from merchants.
Via Instapundit. You see, what happened here is that Senator Dick Durbin took a break from throwing minority kids out of private schools to extend his legislative magic to the field of merchant debit card fees. The plan? Force the banks to give up their greedy, greedy profits by limiting merchant-to-bank transaction fees, thus saving the merchants money, which they would then pass along to the customer in the form of lower prices. Which sounded… actually, it sounded stupid in theory, even then. It sounds really stupid now because Durbin and the rest of Team Jackass didn’t consider the possibility that their Congressional mishandling of the economy from 2007 to 2001 might have resulted in a poor economy in 2011. So what happened? Well, the banks still need the revenue – because of the economy – so they’re going to raise debit card fees to make up for it. And the retailers aren’t doing much better – because of the economy – so they’re not racing to lower their retail prices. Assuming that they do it at all. End result? Your monthly expenses are probably about to go up. Hope you have a job! …Oh. Right.

Anyway, the Atlantic takes up the tale from there:
The worst result of this new rule may be that it will specifically harm lower- and middle-income Americans. Think about who banks will force to pay for checking now. A bank has two customers: one with a high income that carries a few thousand dollars in her checking account and another with lower income who carries a few hundred in his checking account. It would value more deposits, so it will charge the lower income individual a larger checking account service fee.

Indeed, we see this already. Some banks offer free checking accounts if a minimum balance is maintained. So the wealthier person who can afford to keep a larger balance will continue to enjoy free checking, while a less affluent person who basically lives from paycheck to paycheck will have to pay. Before, neither faced a direct fee for their checking.
Double oops. And before anybody says that this is unexpected… no. No, it was not. I was telling people back in JANUARY that this was going to happen, and I even explained why:
What’s going on? Well, it’s a handy primer in why government interference in markets is something not to be entered into lightly. For the last few years Congress was run by the political party whose members are just ever-so-slightly more willing to believe in conspiracy theories about the evil, evil big banking industry and its quiet plan to turn us all into techno-serfs*. When times are good, this isn’t that much of a problem; when times are bad, though… well, that’s when the Democrats’ economic paranoia can bubble up, and the results ain’t always pretty. And so it was in this case. Regulating an industry – and banking is an industry – needs to be done dispassionately if it’s to be done at all; if you want to go in and punish groups, you end up being sloppy. The CARD Act and Dodd/Frank were both punitive bills dressed up as ‘reform:’ so it’s not surprising that the laws’ immediate targets are not going to reform. Predictable, in fact.
…Unless you’re a Democratic legislator, at least. It must be nice to not have a long-term memory: every morning’s sunrise is a new wonder, and the shame felt with every failure at basic math is swiftly drowned out by the ever-flowing river of Now. A shame that we have to live in the country that these amnesiacs are currently trusted with running, alas…

Moe Lane (crosspost)

Tags: Bank of America, BOA, banking, banking problems, lending to illegals, illegals, credit cards, debit cards, swipe fees, bailouts, home loan scandal, financial problems, layoffs, video, Card Act, Dodd Frank, RedState, Moe lane, Bill Smith To share or post to your site, click on "Post Link". Please mention / link to America's Best Choice. Thanks!

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