Talk of government pillaging and vague threats of a ballot box revolution at yesterday’s nationwide “Tea Party” protests missed a prime opportunity to advance a cause we can all get behind — ending abusive bank overdraft charges by the very institutions taxpayers bailed-out courtesy of the Bush Administration’s 2008 Troubled Assets Relief Program.
Our Washington Independent colleague Mike Lillis has the skinny on just where the pitchforks and torches should be aimed.
Now, as Congress is preparing to tackle a series of proposals tightening oversight and regulation of the finance industry, a growing chorus of lawmakers and consumer groups is urging Democratic leaders to include overdraft reform as a part of the package. In an economy where taxpayers have already bailed out Wall Street banks to the tune of billions of dollars, they argue, those institutions shouldn’t be permitted to turn around and slap abusive fees on their rescuers.
“They’re taking the TARP funds and then they’re raising fees and rates on the same people who funded TARP,” Pam Banks, policy counsel at Consumers Union, said of the banks benefiting from the Troubled Asset Relief Program. “They’re double dipping with the taxpayers’ money.”
But reform won’t come easy. Overdraft fees are a whirling profit engine for banks, and the industry is fighting tooth and nail to keep Congress at bay. Indeed, in a report released last November, the Federal Deposit Insurance Corporation found that overdraft fees range from $10 to $38, with a median charge of $27. And those fees add up. A 2007 report from the Center for Responsible Lending found that overdraft fees bring in roughly $17.5 billion each year — more than the estimated $15.8 billion in overdraft loans that generated them.
See you at the next rally with bank statements dangling from my hat.