Banks Under Federal Scrutiny

This just in from The Red Tape Chronicles:

If bank fees are a mystery to you, you're not alone. Government investigators dispatched by Congress last year to find fee schedules at banks around the country came back empty-handed 22 percent of the time. And at one-third of the banks, information on overdraft fees and procedures was nowhere to be found.

The Government Accountability Office study, which was released Monday, concluded that consumers lack the most basic information to "comparison shop" when selecting banks.

Lack of a clear and conspicuous fee schedule violates the 1991 Truth in Savings Act and Federal Reserve Regulation DD. But while banking regulators cited firms for ignoring fee disclosure rules 1,674 times between 2002 and 2006, the GAO found that significant consequences for violations are rare. Only twice did regulators undertake formal enforcement actions.

In other words, it's far more likely that you'll get a parking ticket for breaking parking rules outside a bank than it is the bank will be fined for disobeying federal lending laws.

The article goes on to say that while fees may be a carefully guarded secret, their consequences are obvious. Last year, banks grabbed $36 billion out of depositors' accounts in fees, the GAO said. Fees are up 11 percent since 2000, and are becoming an ever more important part of bank business, accounting for 27 percent of banks’ "non-interest income" last year, up from 24 percent in 2001, the report said.

This is an important lesson for all of us. Ask plenty of questions of your bank to make sure where the penalties are going to come from. Often times, we get penalized for using a different ATM or Overdraft protection may not be any protection at all. If you don't like what your bank is telling you....SWITCH BANKS!!! Someone out there wants your business and there's no need to settle for someone who isn't transparent with their rules. It is up to you to read everything carefully so you can make a sound decision.