Kill the Mega-Banks

[cross posted at the difficult to use Change.org]

There's a major factor in the current raping of the poor I hear nothing about: bank fees, penalties, and interest rates on credit cards. The giant banks we have been shoveling money to make most of their profits from fees and penalties. Bank of America and CitiBank are now instantly increasing credit card interest to a whopping $29.99% if you miss one payment. The only people affected by this are the poor who are living on the edge.

Let me give you two personal examples of how this works and how incredibly unfair the system has become:

1. This summer on two different occasions my bank, after holding a local check for four days (I could have walked one block and gotten cash for the checks) credited the check to my account at 5:01pm. At 5:00pm they charged me multiple NSF (insufficient funds) fees for items purchased with my debit card, mostly purchases less than $10. The NSF's were $36 each. Basically they were charging an APR of over a billion percent to loan me money for a fraction of a second while their computer balanced the account. This can only happen to people who are poor and have no cushion to fall back on. It's worse than mob lending.

2. Around Christmas time a check written to me bounced, sending my checking account deeply into the negative. The bank, despite having my e-mail address and telephone number, informed me with a letter, sent two days after the check had bounced, arriving a week later (it was Christmas time, after all). During that time the account accumulated over $300 in NSF fees. But it gets better. I noticed the bounced check quickly, got cash from the person whose check bounced, and deposited it in an ATM (I'm charged a fee to use the main counter). I then deposited several more checks in the next few days equaling over $4000. Well, my bank had blocked my account, without informing me, and by the time I finally realized this they had declined two credit card payments. The credit card companies both charged me almost $100 each for returned payment and late payments and then bounced my interest rate to 29.99%. There is no recourse whatsoever. My only fault in this is being poor but these two credit cards, which I was managing to pay down, now have monthly payments almost double what they were.

Oh, but it's my fault for accumulating the debt in the first place, right? Sure, you can say that. For years these cards had monthly payments that I could easily make and pay down. The cards got me through some rough periods, for instance a client stiffed me for three months' of work and in my scramble to pay for materials and labor as well as my mortgage and utilities I was forced to use those checks they send every month. Even with those huge expenses sitting on the card I was able to double the monthly payments and slowly decrease the amount owed. In what is a common practice, Bank of America then failed to send a bill one month and my $60/mo payment increased to over $200 and the interest went up to 19%. Oddly enough, two other cards that I had not missed payments on also increased the interest they were charging me because I missed on the other card. Though supremely unfair, there is nothing you can do about it.

The mega-banks' entire profit model is based on stealing from poor people and now that the poor have run out of money they are attempting to squeeze the last drops of blood out of them to continue this profit model. To what end? Apparently they will not be punished for this criminal profit model. I hear not a peep about capping credit card interest rates or regulating penalty fees, ATM fees, and other bank charges that disproportionally effect the poor. Even our state and local governments are using the fee model to fund programs, again placing the burden on the poor. The cascade of failing mortgages is a direct result of the increasing drain on the resources of those of us at the bottom of the economic scale. We have no money left so the banks take our houses and at the end of our lives when we become sick they take everything so there is nothing left for us to give the next generation.

We have allowed the banking industry to tear down all the protections we put in place during the Great Depression and we need to put them back. Break up these mega banks, rebuild the wall between banks and speculation, and force them to make money the way they're supposed to: by charging reasonable interest rates on loans. Period.

There's a word for what they're doing: usury. We must stop them.