The Banks Verses the Middle Class

         It seems every few weeks banks are trying to implement a new fee. The last one was the debit card fee banks retreated from due to the public outcry. Usually these fees or changes to the banks account terms go through with very little notice. These changes are never in the customers’ best interest. The most recent notice I received from Wells Fargo puts arbitration language in the account terms limiting account holders options to sue the bank. If we look over the past 15 to 20 years you will see several changes that banks have made that have basically taken money from their customers’ pockets to put into their own. The biggest change was when banks stopped crediting direct deposits when they are received two days prior to your pay dates. About 20 years ago when banks first started this practice you were able to change to smaller regional banks to avoid this. I have not been able to find a bank that credits your account when the funds are received in about 12 years when I moved to Denver. The second change has been banks handling of withdrawals. Banks hold your withdrawals and process the largest first to increase the income they receive from overdraft charges. All of these changes have transferred money from your pocket to the banks. It is time customers stood up for themselves and look for other alternatives to banks and their high fees.

         These changes are the direct result of reduced competition in the banking industry. In the 1990’s the big banks bought up smaller regional banks and due to the barriers of entry new banks have not filled the void left by the consolidation of the banking industry. According to the Office of the Comptroller of the Currency 55% of U.S. bank assets are held by National banks that are exempt from the protections that the individual states may have implemented.  The agency that is charged with overseeing  the banking industry and Congress even support the larger banks, making rules and passing laws that increase the power of the banks and hurting the middle class. This reduced completion has given banks oligopoly power and tipped the balance of power from the customers in favor of the banks.  Since there is essentially no competition in the banking industry people need to look elsewhere for the services they are currently getting from banks to restore the balance of power. The banks are all mature companies that can only continue to grow at the rates demanded by their management and stockholders by charging their customers ever increasing fees. We have seen the results of the increased power that the banks hold in the collapse of the housing market and the abuses in overdraft fees. Banks and the middle class have competing needs and this is one reason the middle class is shrinking. Once the middle class recognizes this and starts looking for lower cost options for banking services such as credit unions, prepaid cards, or other low cost options.