I sip “The Wealth of Nations” Kool-Aid. I’m down with Adam Smith. Self-interest does promote commonwealth but, honestly, coming from the guy who wrote a book about moral sentiment I don’t think this is what he meant.
Banking is profitable again. Citigroup, Bank of America, JP Morgan Chase and Goldman Sachs all posted second-quarter earnings of more than $2.4 billion, with Citigroup leading the pack racking in about $4.28 billion and Sachs rolling along with an estimated $3.44 billion.
Great, the same banks that used our TARP funds are once again making money. Makes you proud to be American, right? Wrong.
The problem is, banks this year will collect a disturbing $38.5 billion in overdraft fees. And what stems from that shit is even more disturbing. According to Moebs Services, an economic research firm, roughly half of all U.S. banks and credit unions have overdraft income greater than their net income. The trip to the water closet doesn’t stop there; banks have, for the first time in history, raised their fees during a recession.
The financial industry isn’t weathering the economic crisis; they’re just taking a huge dump on Americans. First, it was TARP and now it’s fees. Seriously, what happened to engineering a good ol’ housing bubble? Can a guy get another Enron? At least that took intelligence, something we could all laugh about later.
Sadly, the elaborate reality of money making has vanished. Shit’s really hit the fan and someone’s got to do something about it. An overdraft fee is basically a loan. The bank pays for a purchase you couldn’t otherwise afford. This payment doesn’t come free though.
The banks charge what they called a “fee” but, in reality, it’s just an insane amount of interest. Think about it. A customer can overdraft $6 and get charged a $33 fee. Just because it’s a flat rate doesn’t mean it’s not usurious in nature.
Congress needs to regulate this type of abuse because really — who’s affected by this? It’s the incoming college student. We’re not yet financially savvy. We’re over reliant on Web-based accounting — a faulty feature provided by most financial institutions — and we’re generally low on cash.
You can blame it on irresponsibility but why is anyone, young or old, matriculated or not, responsible for the financial industry’s underhanded shenanigans. Where is the morality in charging a $33 fee for a $6 loan?
This isn’t an argument about usury — our state governments already regulate interest. This isn’t a matter of government intrusion, either. This is a matter of morality and of preserving commonwealth. It is time for these usurious fees to be regulated.
They have raided our pockets in the world of public finance via bailouts and now have swindled the world of private finance via fees. The economy is floundering because of practices like this.
Banking needs to become profitable but not like this. Germany, Japan, Canada and France have all found their way out of the recession. The United States, however, is engulfed in it. And, this overdraft debacle is just another reason to laugh at the dying superpower.
Zien Halwani is a sophomore molecular biology major and an assistant opinions editor for the Daily 49er.