Banks Keep News Of Soaring Fees Secret From Customers
BY JOHN TOSCANO

"Americans devote a lot of their hardearned money to bank fees. Many of these fees are for useful services that most consumers are happy to pay for, and banks have the right to make money for these valuable services. Problems arise, however, when consumers get smacked with unexpected bank fees- that's just not fair."

Bank fees have been going up into the billions of dollars in recent years, but banks are failing to inform customers about them, in violation of government regulations that require doing so, a report issued last week by a government agency reveals.

Congressmember Carolyn Maloney, chairperson of the House Subcommittee on Financial Institutions and Consumer Credit, who had requested the report by the nonpartisan Government Accountability Office (GAO), said she has introduced legislation to crack down on the abusive bank fees.

"I'm troubled that many consumers may find it difficult to obtain account terms and information about fees before opening an account," Maloney stated. "You don't have to buy a car before you find out how many miles per gallon it gets, and you don't have to buy a house before you find out what your taxes will be. Why should consumers be forced to walk blindly into the terms and conditions of a bank account?"

The GAO Bank Fees report, Maloney said, found that a number of average bank fees have risen by 10 percent or more since 2000. The report also said that in 2006 alone, consumers paid more than $36 billion in various fees associated with checking and savings accounts at depository institutions such as banks, thrifts and credit unions.

Maloney noted, "Americans devote a lot of their hard-earned money to bank fees. Many of these fees are for useful services that most consumers are happy to pay for, and banks have the right to make money for these valuable services. Problems arise, however, when consumers get smacked with unexpected bank fees- that's just not fair."

Maloney (D- Queens/Manhattan) in an attempt to remedy the situation, introduced H.R. 946, which would crack down on abusive overdraft fees and equip bank customers with more control and information about overdraft fees.

The lawmaker has also introduced the Financial Consumer Hotline Act, which would establish a single, toll-free telephone number that consumers can call if they have a problem with their bank and want to speak to the bank's federal regulator.

A number of different governing bodies currently regulate banks. Consumers therefore can find figuring out who they should contact with concerns and complaints difficult.

The GAO Bank Fees report details consumer complaints to regulators, but the numbers may be low because many consumers may not have known who to contact about their complaints, Maloney added.

For more information about The Financial Consumer Hotline Act, go to http://maloneyhouse.gov/index.php?option=com Content&task=view&id=1516 & ltemid=61.

In compiling the Bank Fees report, Maloney said, GAO staff from 12 cities across the country made undercover visits to 185 branches of 154 depository institutions. They were unable to obtain detailed checking and savings account fee information and account terms and conditions at more than one-fifth of those institutions.

GAO staff also examined the Web sites of all the institutions they visited and could not find detailed fee information on more than half of them. Federal rules require that banks must disclose fees and interest rates to consumers.

Maloney stated, "Banks should not withhold information from customers about their accounts and their money. Fairness is an essential component to a safe and sound banking system. The free market works properly when consumers know the terms of a contract and can make informed choices based on complete and accurate information."

Maloney added that the GAO report recommends that federal banking regulators assess the extent to which consumers receive disclosures on fees and account terms and conditions prior to opening an account. It also recommends that the regulators incorporate into their oversight steps to assure that disclosures continue to be made available to consumers.

Maloney added, "The regulatory agencies should follow the GAO's recommendations and take immediate action to ensure that consumers have access to the information they need to make informed decisions about their own finances."