The Big Fees Squeeze Footnotes
1 "Commercial Bank Performance, First Quarter Report,"
Federal Deposit Insurance Corporation and accompanying press release
(PR-42-97), 17 June 1996; "Commercial Bank Performance, Second
Quarter," FDIC, 11 September 1997. See Appendix A, pg. 22.
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2 Appendix A, pg. 22.
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3608 mergers of financial institutions occurred in
1995, and 554 took place in 1996. "Commercial Bank Performance,
Second Quarter," FDIC, 11 September 1997. 198 banks were
absorbed by mergers in the second quarter of 1997 alone.
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4 See section on service fees, below, at pg. 17.
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5"Big Banks, Bigger Fees: The 1997 PIRG Bank Fee
Survey," by USPIRG, July 1997; "Banks Think Fees, Not Free: The
1995 PIRG Bank Fee Survey of 271 Banks in 26 States," by USPIRG
and Janice Shields, August 1995; Crushing Consumers: The 1993
PIRG/CFA National Survey of 300 Banks in 23 States," by USPIRG,
CFA and Janice Shields, PhD; "On a "Fee-"ding Frenzy; How Banks
Profit from the Poor," by the Minnesota Association of Community
Organizations for Reform Now, (ACORN), February 1996; "Charging
Ahead: ACORN's Fight for Fair Bank Fees," Minnesota ACORN, July
1997.
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6 National Credit Union Administration and Credit
Union National Association v. First National Bank and Trust
Company, et al, Cases 96-843 and 96-847, were the first cases on
the U.S. Supreme Court's docket this term. The banks have
brought suit against credit unions claiming credit unions are
improperly expanding their fields of membership.
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7See discussion of bounced check fees below, at pg. 18.
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8 In 1992, the Office of the Comptroller of the Currency, a
federal regulatory agency, preempted the application of a New Jersey
Lifeline Checking Account Law to national banks, finding that the
state was attempting to regulate in an area already controlled by the
federal government. Consumer groups argue that the decision should be
overturned, because the federal government has not mandated lifeline
checking accounts, or issued any other requirement which would
conflict with the New Jersey law. The decision was also strongly
condemned by Congress. Conference Report, Riegle-Neal Interstate
Banking Efficiency Act of 1994, H.R. 3841, Report # HR 103-651, 2
August 1994 at 53.
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9 12 U.S.C. §§ 4301-4313, and relevant federal
regulations at 12 C FR Parts 230 and 707.
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10 The Truth in Savings Act also requires depository institutions to
follow rules governing advertising; the provision of disclosures
about the yield and terms of consumer deposit accounts; the
circumstances in which the terms of such accounts may be changed;
notices of maturity for certificates of deposit; and the contents
of periodic statements. The Act also mandates notice requirements
on certain types of interest bearing accounts and mandates
specific disclosures that must be made on an institution's
periodic statements, if statements are provided to the
institution's customers. It also imposes standards for paying
interest on accounts, including how institutions calculate the
account balance on which interest is paid.
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11 15 USC § 1693-1693r; 12 CFR Part 205.
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12 MN Statutes 1996, Chapter 47.76.
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13 MN Statute 1996, Chapter 47.62.
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14 Liberty State Bank Fee Brochures, obtained by
MPIRG researchers.
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15 Several researchers were told this by branch
managers, and the author confirmed the large banks' policies by
telephone.
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16 "Commercial Bank Performance, Second Quarter
Report," FDIC September 1997.
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17 Web site of the National Credit Union Administration,
(www. ncau.gov).
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18 American Banking Association's 1991 Retail
Banking Survey Report.
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19 The conservative nature of these numbers is
apparent when comparing the ABA's 1991 and 1994 Retail Banking
Survey Reports. For example, the 1994 survey shows that the
average regular checking account holder makes eighty-four ATM
withdrawals a year, compared to the thirty reflected in the
formula used by MPIRG, USPIRG, and CFA.
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20 This average was calculated originally by Janice
Shields for bank fee reports by the Consumer Federation of
America and USPIRG, using consumer trend statistics from the
1991 American Banking Association's Retail Banking Survey Report.
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21 Five additional branches of small banks, (four
additional branches of First American, and one additional branch
of Premiere Bank) were also surveyed.
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22 "Charging Ahead: ACORN's Fight for Fair Bank
Fees," Minnesota ACORN, July 1997.
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23 "ATMS: Banks Report That Use of Surcharge Fee
Has Increased," U.S. General Accounting Office, June 11, 1997.
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24 The March 1997 USPIRG ATM survey included sixteen
machines in Minnesota, nineteen percent of which had a
surcharge. US PIRG ATM Survey, March 1997. MPIRG surveyed 178
Minnesota machines not connected to bank branches, and in
addition polled the surcharge policies of 80 financial
institutions. The surcharge rate calculated by MPIRG, is over
four times the USPIRG rate, probably due to the small sampling
pool in the USPIRG study, and a steep rise in practice of
surcharging in Minnesota and the rest of the nation. The
USPIRG ATM surveys show a ninety-six percent increase in the
numbers of ATMs that surcharged over a six month period, a trend
that probably continued throughout 1997.
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25 U.S. Senate Hearing Record, Fair ATM Fees for
Consumers Act, S. 1800, S. Hrg., 104-740, 11 July 1996, pg. 79.
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26"Money Making Machines," Pioneer Press, Oct. 19, 1997,
pg. D1.
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27These rates are higher than those found in USPIRG's
national survey in March 1997, which found that nationally
forty-five percent of banks throughout the U.S. charged their
customers for using a foreign ATM, at an average of $1.15.
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28 "Big Banks, Bigger Fees: The 1997 PIRG Bank Fee
Report," USPIRG, July 1997, citing the industry trade paper Fee
Income Report.
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29National 1996 Statistics for Insured Commercial
Banks, Federal Deposit Insurance Corporation, available on the
FDIC website, at www.fdic.gov.
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30 "Fuming Over Fees," Star Tribune, November 2, 1997.
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31Star Tribune, November 14, 1993, p.1D.
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32"Bounced Check Fees 7.5 Times Bank Costs,"
Center for the Study of Responsive Law, December 1994.
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33 Of the financial institutions surveyed,
sixty-five percent had maximums for the amount of bounced check
fees that could be charged in one day. The average maximum was
$78.87 a day, but maximums ran as high as $180.00 a day. Some
banks had no maximum at all, allowing banks to charge a customer
several hundred dollars in penalties if multiple checks bounced
on one day.
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34Catlin, Bill, "Banking on Fees, Part 1:
Turning Rubber into Gold," Minnesota Public Radio, September 10,
1997. Catlin quotes Pat Hanson of Norwest, who confirms the
so-called "hi/lo" policy exists at Norwest.
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35"Customers Accept Higher Fees when Banks Use a
Little Finesse," American Banker, April 14, 1993, p.4.
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36MidAtlantic Journal of Business, v. 23, n.3,
December 1993, p. 339 (7).
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37Overdraft charges at big banks surveyed average
$21.82.
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38Overdraft charges at credit unions surveyed
average $14.97.
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39Overdraft charges at small banks surveyed
average $18.15.
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40"Big Banks, Bigger Fees: The 1997 PIRG Bank Fee
Survey", July 1997, pg. 5.
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41See discussion of Truth in Savings Act above at page 5.
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42Minnesota HF 1278 and Minnesota SF 1493.
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43Mississippi Code Ann. § 81-5-100, 1996; Wyoming
Stat. Ann. 13-1-502, 1997.
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44Alabama Code Ann. §5-5A-30, 1994; Cal.Ann. Code
§ 13080, 1997; Tenn. Code Ann. §45-16-103, 1996.
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45Bills related to ATM transactions which have
been introduced in state legislatures in 1997 include: AZ HB
2212, CA AB 1104, CA AB 46, CT SB 989, FL HB 1961, GA HB 630, 8L
HB 833, IL SR 13, IL SB 11, IL SB 12, IL HB 74, IN SB 13, LA HB
2386, LA SB 1370, LA HB 1513, LA HB 851, MD SB 481, MD HB 57, MA
HB 1866, MI HB 4889, MI HB 4890, MI HB 4891, MI HB 4892, MI HB
4893, MN HF 2085, MN HF 1322, MN SF 1201, MO HB 701, MO HB 702,
MO HB 79, MT HB 488, NY AB 8399, NY SB 5041, NY SB 4247, NY SB
4162, NY SB 4164, NY SB 4163, BY SB 4160, NY AB 6784, NY AB
5891, BY SB 2385, BY SB 1897, BY AB 1722, BY AB 591, BY AB 592,
BY AB 406, NC BY 916, NC SB 808, OH SB 147, OH HB 347, OR HB
3626, OR SB 802, OR HB 3142, OR HB 3143, OR HB 3144, OR HB 3145,
PA HB 1264, PA HB 640, PA HB 131, RI HB 6369, RI HB 5346, RI HB
5434, RI SB 70, TX HB 2967, TX HB 3124, TX SB 1261, TX HB 617,
VT HB 24.
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46U.S. Senate Bill 885. See also U.S. House Bill 264,
introduced by Rep. Roukema.
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47Minnesota SF 1201 and Minnesota HF 1322;
Minnesota SF 1983, Minnesota HF 2085.
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48Refer to the discussion of the federal Truth in
Savings Act, above at page 5.
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49While Firstar branches charge $25 for
overdrafts, they only charge $22 for a check returned for
non-sufficient funds (NSF).
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50Eastern Heights Savings Bank charges $20 for
overdrafts, and $17 for NSF fees.
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