Yikes! Do you know of a bank that has robbed from the small people? I work in finance and there's tremendous protection for the small people in everything we do. Their deposits are covered by government guarantees, whereas the richer clients are left more exposed.
But if you have an instance where banks have stolen from small people I would love to hear more about it, and I'm sure it will make front page news around the world.
this is certainly currently the case for the UK, with protection of deposits up to £75k for private account holders (http://www.fscs.org.uk/what-we-cover/products/banks-building...), though I'm sure we could find plenty of antecedents if we cast the net widely enough geographically and historically.
British banks (not the BoE) are shafting their poorer customers with lots of fees. They regularly get dinged for it by their regulator.
(Can't complain about eg German banks too much in that regard. But the British banks are really the scum of the earth as far as `not being evil' to poorer customers is concerned..)
As someone with UK and German bank accounts, I prefer the UK banks:
* Free real debit cards you can use online vs crappy card that only works in person
* Free, as long as you're careful not to go overdrawn vs frequently charge per month
* Usually free credit cards if you want one vs annual fee
* No charges for depositing cheques, cash, etc vs fees
* Withdraw money for free from any other UK bank cash machine (ATM) vs lots of fees
* Get paid 5 pounds/month for having a Halifax account!
UK banks are not good if you can't keep a positive balance, but if you're careful with your money they're great. The only issue I've run into UK banks is that they'll use bad exchange rates vs German banks, but they need to make money somewhere.
There's a debate to be had about "no such thing as free banking" - I'm very familiar with the world of prepay in the UK and retail banking practice is a big headwind here.
The big deal in the UK, a few years ago, was that a person would go overdrawn, deposit money to cover it immediately but then get charged an overdraft fee by an overnight process. This fee would put them overdrawn, leaving them liable for a second overdraft fee - which would be charged the next night...
This was ruled to be illegal and banks had to set up whole departments to process return claims. I suspect this is the main cause of the big headwind.
It was slightly more insidious than that - they were processing debits before credits, and charging a fee for insufficient funds if your balance dipped below zero (or below your overdraft limit) in the process:
Also, when you had a bunch of outgoing positions a day, they (used to?) ordered them from biggest to smallest, thus hitting you with the maximum number of overdrawn transactions.
They also charged a fee for standing orders that didn't go through because of limited funds in your account. Instead of just ignoring them.
They have to make money somewhere. If it's free checking account, then maybe the account interest is low, or maybe the connected credit cards have high interest, or maybe they do a hard push on loans, or... Basically banks are not charities - in the best case, the everyday banking is simply a loss leader for something else.
In principle I agree, that makes sense. In practice, we've had freeish banking for decades in the Netherlands and it's excellent. Further the other services are all decent, too, there's no real push on loans or creditcards. Mortgages are popular but the rates are very sensible (such that it's cheaper than renting atm, even disregarding the capital gains on your home). Below a short overview.
I was flabbergasted to hear about overdraft fees when I first saw them feature in social justice documentaries (e.g. Spent: looking for change).
My interest is low, but that's normal in 2016. .5% to .9%
Any CC payment I make is deducted from my checking acc 30 days later, no interest. It's essentially a normal debit card with 1 month free credit. After that it's 12-14% interest per year. That's very high of course, but it's not exploitative like a payday scheme. Further, keeping CC debt is quite uncommon here. And I can borrow up to $25k at 8.9% say for buying a car. That's pretty steep but not high compared to other countries, it's also not a very popular product. Mortgage interest is currently 2.9% fixed for 30 years.
As for my bank account, I pay about $15 a year for it. There's no costs to depositing or withdrawing money, putting it in or taking it out of a savings account. I mostly bank via an app on my phone, and payments arrive in minutes or hours. I don't pay anything for the shared acc with my gf either. For the CC I pay an extra $15 per year or so I think.
Now if this was a new startup in a growth phase where it's burning cash and offering free services, sure, but this bank was founded in the 1880s and has had roughly this pricing scheme as long as I can remember.
All in all I think I've paid maybe $250 for all by banking in the past 10 years.
Rapidly? Slow constant fall for 3 years against USD (actually the same as 7 and 10 years ago), pretty stable against EUR, starting to go up against GBP. It's all relative :)
Yes, exactly. Credit is by far the biggest the driver for income in the financial sector, and consequently its biggest source of pain for those swept up in disasters of their own or others making. Anybody thinking of starting something disruptive in the fintech industry needs to have a very clear understanding of the absolutely central role that credit plays in the entire system.
> Do you know of a bank that has robbed from the small
> people? I work in finance
There was that whole subprime crisis thing.
Now you could split hairs here, and say that rather than technically robbing their clients, the banks involved merely cheated them, but as you follow with:
> there's tremendous protection for the small people
> in everything we do
I'm guessing you're not going to do that.
Matt Taibbi sums it up nicely, so rather than paraphrase him, I'll just quote him:
> > about two-thirds of all subprime loans between
> > 2000 and 2007 were made to people who already
> > owned their homes. The targets were often
> > elderly, in particular men and women of color.
> > Visiting loan officers convinced these borrowers
> > to use the homes they'd poured their savings into
> > their whole lives as ATM machines.
> > The pitch was: refinance your home, and get a
> > little extra spending money each month! Lots of
> > people went for it. But there was mischief hidden
> > in the fine print of many of these "refi" deals,
> > which often quickly exploded. Before long, the
> > now-departed agent's promises would evaporate into
> > a toxic quicksand of debt, unforeseen penalties
> > and foreclosure.
As the same article goes to point on, Wells Fargo paid a $175,000,000 settlement for this shit. From the Baltimore Sun[1]:
> > "80-year-old African-American resident of the
> > Baltimore area with a 714 credit score and a
> > rock-solid credit file who received a subprime
> > loan instead of a prime loan, and who was not told
> > that she may have qualified for a prime loan with
> > better terms."
> > "By the time she realized she had an
> > adjustable-rate mortgage, and not the fixed rate
> > she thought, it was too late,"
Does it get worse? Of course it gets worse, we're talking about a bank! Not content with merely going after vulnerable people with predatory lending practices, they made to sure to refer to the POC they lent to as "mud people"[2]
Tell me again about those protections for the small people? They sound great.
agreed - though I think the grandfather comment was probably referring to the UK marketplace and the US experience of subprime credit sales is somewhat different at the mortgage level. Payday loans are a different story all together and have the a similar, or even more vulnerable target market here in the UK as subprime mortgages in the US. However payday loans are not usually offered by traditional banking vendors in the UK and as such banks get off the hook here.
Having personally had a £10 unarranged overdraft turn in to over £200 of fines, the idea that UK banks get off the hook is ludicrous. They've been forced to tone it down now.
Yes, I've been stung with these sort of charges myself in the past here in the UK - the banking code has cleaned up this practice a bit in more recent times; however I think it's fair to say there's a material difference between being stung for £200 and having your house being ripped from under you by sharp banking practice. I recommend watching the film "99 homes" - it's not a perfect film by any means but illustrates many of the coal face issues of mortgage repossession in the US.
> however I think it's fair to say there's a material
> difference between being stung for £200 and having
> your house being ripped from under you by sharp
> banking practice
Seems 2008 didn't happen in your reality. The small people have to suffer because if what the banking industry did. Always been that way. How brainwashed you must be to defend this whole industry which has more blood on its hand than any other. Greed seems to get even the smartest people...
Not to mention how banks now push European Countries to get rid of cash so they can earn more by bank accounts/transfer fees.
As for getting rid of cash, I'm confused by your comment. I live in Europe (UK) and have free banking; free, less than 2 hour online transfers; free debit and credit cards; and free and convenient contactless payment. So does everyone else. Not having to carry cash is great!
Part of me wonders where the banks are making any money, but there are mortgages I suppose (and 2008).
But if you have an instance where banks have stolen from small people I would love to hear more about it, and I'm sure it will make front page news around the world.