TD Bank Upping their Fee Structure Once More

It’s only been months since TD Bank raised the fees associated with some of their checking accounts, now they’re bumping up the costs of other established fees.

New Cost of Fees for TD Bank Customers:

Wire Transfers:

Old Cost – $10. New Cost – $15.

Money Orders:

Old Cost – $4. New Cost – $5.

Certified Checks:

Old Cost – $4. New Cost – $8.

Stop Payment Fees:

Old Cost – $25. New Cost – $30.

Also, if you happen to hold one of their liquid savings accounts (like a money market account) you may be hit with an additional fee when you make too many withdrawals and/or transactions. On some of these accounts, if you go over your 6 allowed monthly transactions, you’ll get dinged 9 bucks.

Granted these aren’t your typical everyday transactional fees or general, wide-sweeping fees, in which Bank of America was considering imposing, but they are still another drop in the bucket for already wavering big banks.

Big bank consumers in general have been put off by the imposition of new and/or additional fees their banks have been imposing throughout much of 2011. This has lead to a boon in new accounts for local credit unions as well as highly publicized disgust of the big banks through social media outlets.

Bank of Ameria Taking Back it’s Debit Card Fee Proposal

That was quick.

After an immediate outcry from consumers and politicians regarding Bank of America’s proposal to charge a $5 monthly fee for debit card usage, they are now rescinding this proposal.

When Bank of America first went public with this there were little signs of it not becoming a realty, and in fact, more likely becoming an industry standard. Following B of A’s decision to charge for debit card usage other big name banks (ie Chase, Citi, Wells Fargo, etc) began to follow suit with their own plans to test such fees. However, within hours of these announcements, the internet and social media outlets erupted with negative sentiment leading even President Obama to go public with his concern over the matter.

As we noted last week, many big banks then freaked out over the threat of losing consumers en masse and responded with immediate retractions of these plans. Subsequently this lead the reluctant Bank of America to finally, as of late last week, decide not to impose such fees out of fear that they would be the only one doing so.

Reversal of Debit Card Fees

It appears the nation’s largest banks are changing their mind on the imposition of fees on consumer debit card usage. After the recent outcry from debit card consumers across the country Chase Bank, US Bank, PNC Bank, and Key Bank have all just issued press releases stating they WILL NOT impose fees on their checking account customers’ debit card usage.

A huge trend had previously been settling in after news that Bank of America, CitiBank and Wells Fargo (among others) had all begun testing the imposition of small fee(s), typically $3 to $5 per month, for those using their debit card for purchases and not meeting certain account requirements (ie minimum balances, etc).

This almost immediately lead to vocal outrage by consumers with an explosion of tweets, disgusted facebook threads, and the like raging against these new rules.

Here at BankVibe.com, we had already discussed the terrible timing in which these new fees came about. In general consumers have had an unfavorable opinion of the nation’s largest banks – which undoubtedly originated from the bank bailouts of 2008 and has only worsened with a growing number of fees and penalties imposed on low revenue generating customers (ie those with low balances and very few accounts).

The industry-wide response has been an influx in credit union and community bank deposits and a loss of accounts from the nation’s largest banks. Throughout the course of the last few years we’ve seen consumers pouring out of big banks to opt for accounts with smaller, locally based institutions (mainly credit unions or online banks like this one) who don’t impose fees and, in the case of credit unions, who don’t have profit-hungry shareholders to report to.

Glad to see things have reversed for the time being. We’ll see if it sticks.

Chronological Run-Down of Debit Card Fee Imposition:

- 2010 provision to Dodd-Frank financial-overhaul law reduces amount banks can charge merchants for debit card usage by nearly 50%.

- Industry analysts suggest that banks will lose $6 billion due to new amendment.

- Banks test new ways to make up for losses (mainly by imposing debit card fees to low revenue clients)

- Bank of America goes public with decision to impose $5 monthly fee. Chase Bank follows by testing $3 monthly fees in February.

- Immediate outcry from public through social media as well as disdain from main stream media and politicians (most notably President Obama).

- Small credit unions begin raking in new customers at unprecedented rates. BethPage Federal Credit Union of New York reports adding 1,500 new customers the week following Bank of America’s initial announcement of debit card fees.

- Banks pullback swiftly with many large institutions pledging to impose ZERO fees for debit card usage to differentiate themselves from the likes of Bank of America and Wells Fargo.

Zions Bank gets Slapped with Lawsuit for Shady Overdraft Fees

This appears to be perfect timing for a lawsuit seeking class action status over a bank’s overdraft fee practices.

After weeks of buzz surrounding bank fees, primarily triggered by two of the nations largest banks (Bank of America and Wells Fargo) going public with the intent to impose fees for simply using your debit card, a popular bank in the west, Zions Bank, is now being sued for it’s underhanded overdraft fee system.

Allegations Against Zions Bank (Salt Lake City, Utah):

- Customer claims Zions Bank makes it nearly impossible to avoid their overdraft fees.

- Customer claims Zions Bank manipulates order of debit postings to maximize overdraft fee potential.

- Customer claims Zions Bank does NOT regularly deny attempted charges to their debit cards when bank account is close to or below zero.

- Melinda Barlow, the customer initiating this class actions lawsuit, claims she was hit with overdraft fees totaling up to $100 in one day in ’09.

- Customer also claims Zions Bank posts debit transactions ahead of deposits in an attempt to capitalize on more overdraft fees.

Overdraft Fee Practice and Litigation:

As an industry banks collected roughly $40 billion per year in overdraft fees alone before July of 2010. During this month legislation was passed which required banks to seek the permission of their customers to enroll them in overdraft protection programs. When the customer enrolled, this would eliminate, among other things, the possibility of charging a purchase with your debit card without sufficient funds in your account.

Because of the recent increase in bank fees by the nations largest retail banks, it’s been suggested both in the media and here at BankVibe.com that many consumers have begun a migration towards credit unions as an alternative. Since credit unions are not-for-profit institutions, they do not engage in profit maximizing efforts. Profits rendered from these institutions are regularly returned to the members in the form of better rates and lower fees.

Roughly 35 class action suits have sprung up around the country centered on a malpractice of overdraft fees since 2010 implicating some of the nations most well known banks including: JP Morgan Chase, Regions Bank, U.S. Bankcorp and BB&T Corp.

Markets get Crushed, Big Banks Follow Suit

Wall Street’s taking another beating today, with the the Dow looking to close down around 4.20 percent.

The roller coaster highs and lows we’ve been seeing appear to be here to stay, and whenever the markets get crushed the major publicly traded banks at least follow suit with equal losses – and in some cases much more.

Current Status of Publicly Trade Banks:

1) Citigroup Inc: (NYSE: C) – Down roughly 7.50%.

With a market cap of $70 billion (and almost twice that amount earlier in 2011) Citigroup is still one of the largest banking institutions in the United States. Thanks to the repeal of the Glass-Steagall Act of 1998, which allowed consumer banks to merge with investment banks and insurance institutions, Citigroup rose to mammoth heights almost over night in 1998. With their current market cap of $70 billion they are just a small fraction of their original size – once controlling $700 billion in assets.

2) Bank of America (NYSE: BAC) Down roughly 5.60%

Even with the help of a $5 billion injection from Warren Buffet at the end of last month, Bank of America still encountered substantial losses today. In fact, they lost more than half of what Berkshire invested in market cap losses from today’s trading alone. And even though Warren negotiated a nice little 6% annual dividend for his holding company, it seems gains from an increase in stock price wont be encountered anytime soon.

3) JPMorgan Chase & CO (NYSE: JPM) Down roughly 5.60%

Looks like JPMorgan Chase will end up with an almost identical percentage loss as Bank of America (although they have almost twice the market cap). That’s a big hit for what Forbes once called the “world’s largest publicly traded company.” JPMorgan Chase controls roughly $2 trillion in assets.

4) Wells Fargo (NYSE: WFC) Down roughly 3.50%

Considering the circumstances, Wells Fargo actually made out alright.

5) US Bancorp (NYSE: USB) Down roughly 1.31%

US Bank is today’s big winner! Down just 1.31% it managed to only lose a half of a billion dollars in market cap. Congrats.

No Bailout for Banks Second Time Around

The FDIC (federal deposit insurance corporation) voted unanimously today to require banks with $50 billion plus in assets to write “living wills to the FDIC” should their institution face the potential of bankruptcy in the event of another financial meltdown.

According to this Associated Press article featured on Yahoo News, “The largest U.S. banks will be required to show regulators how they would break up and sell off their assets if they are in danger of failing.”

On top of this measure, these banks will need to rework their “wills” and send their revisions to the FDIC annually. These revisions will be kept on file and essentially treated as contracts should any of the FDIC-insured institutions begin to show signs of imminent bankruptcy in the wake of another financial crisis.

If the balance sheets and assets of the reported 126 financial institutions participating in this measure are compromised, regulators would then have the power to seize and dismantle the bank(s) that threaten the broader financial system.

Furthermore, the FDIC will also have the power to designate other financial firms as potentially threatening to the financial system and require them to submit plans.

The largest banks affected are Chase Bank, Bank of America, Citigroup and Goldman Sachs.

How much did Banks borrow from FED in 2008?

A report was just issued today on the whopping sum in which banks borrowed from the FED during the financial meltdown of 2008 along with ‘who’ exactly borrowed ‘what’ amount.

Prior to the Dodd-Frank regulatory reform law, the FED refused to disclose the sum it divvied out to our country’s most well known banks, however, this information has now gone public. And the sums are quite staggering! Check out the figures and facts below.

Bank Borrowing from FED:

1) Morgan Stanley — $107.3 billion
2) Citigroup — $99.5 billion
3) Bank of America — $91.4 billion
4) UBS — $77.2 billion
5) Goldman Sachs —$69 billion
6) Deutsche Bank — $66 billion
7) Barclays — $64.9 billion
8 ) JP Morgan Chase — $48 billion
9) Hypo Real Estate Holding — $28.7 billion
10) Societe Generale — $17.4 billion

Apparently there was significant borrowing from foreign banking institutions as well. The Royal Bank of Scotland, based out of Edinburgh, received $84.5 billion while Zurich’s UBS got $77.2 billion. Another noteworthy borrower abroad was Germany’s Hypo Real Estate Holding which received $28.7 billion – a whopping $21 million for each of its 1,366 employees!

More mind boggling facts regarding these loans:

- This balance was more than 25 times the Fed’s pre-crisis lending peak of $46 billion on Sept. 12, 2001.

- If loaned out in $1 bills, the $1.2 trillion would fill 539 Olympic-size swimming pools.

- Federal Reserve Bank of New York staffers in February said the central bank netted $13 billion in interest and fee income from the programs from August 2007 through December 2009.

- Bank of America’s bond-insurance prices last week surged to a rate of $342,040 a year for coverage on $10 million of debt, above where Lehman Brothers Holdings Inc. (LEHMQ)’s bond insurance was priced at the start of the week before the firm collapsed.

You can read more here and here.

New York Bank Adding Fees to their Deposits

Care for a little salt on that wound?

One bank in New York is now adding fees to their deposit products (which already come with record low interest rates). The Bank of New York Melon Corp. said late last week that they will begin adding fees to customers who hold over $50 million in deposits with them.

So ok – at least they aren’t nickel and diming regular consumers looking to snag bank CD’s with FDIC insurance – but it still stings to the pension fund and money market fund holders looking for a safe place to park their clients’ cash. And, in our opinion, it sets a frightening precedent in an already unstable economic environment.

Why has the Bank of New York Melon Corp decided to go this route?

“The bank said it has seen such a large increase in deposits over the last month that it will charge a 0.13 percent fee to clients with “extraordinary high deposit levels.” Bank of New York Mellon, which has $23.6 trillion in client assets under its custody, said customers have moved money to cash as a safe haven in the past month as investments like stocks and bonds have become increasingly volatile.”

In a normal market, banks pay interest rates to consumers for depositing money with them. However, with the combination of short term rates at close to zero interest and an increase in FDIC insurance premiums, banks can get dinged for holding large amounts of cash on their balance sheet. Because deposits can get withdrawn at anytime (even with a penalty imposed for early withdrawal) they are considered liabilities. And when liabilities go up, banks must fork over more cash for FDIC insurance.

Check out some historical CD rates from New York banks in our archives.

Read more about the decision by New York Melon Corp here.

Big Banks Ready to Restore Dividends

Image Source: etftrends.com

With many of the nations largest banks posting massive gains in 2010, some of these institutions are ready (and even eager) to restore dividends to their share holders. Financial analysts say that the nations largest banks are ready to begin restoring the dividends in the first half of this year. These banks halted these dividend payments for 3 years to recover from the financial (and largely ) bank collapse.

How big will these payouts be?

We don’t know precisely how big they will be but some clues to their size came late last week, when JP Morgan Chase became the first large bank to report its 2010 performance. After posting earnings of $17.4 billion in 2010,  chief executive Jamie Dimon said he was eager to restore the quarterly dividend as soon as regulators allow.

The Boston Globe reported on this over the weekend saying, “If the big banks deliver a second straight year of rising profits, as many analysts expect, the conditions would be in place for regulators to approve dividend increases by as early as March. As the crisis worsened in 2008 and 2009, all but a handful of financial institutions cut their once-lucrative dividends to just pennies a share, hurting ordinary investors who had come to see them as sources of income. JPMorgan, for example, now has a dividend of 20 cents a share annually, down from $1.52 before the crisis.”

They also went on to state that, “Before approving a dividend increase, regulators must sign off on a bank’s stress test and conclude that the bank can meet the higher capital requirements put in place by new international agreements and the recent overhaul of US financial regulations. They also must have fully repaid any federal bailout funds.”

You can read a full review of the bank dividend restoration plans here.

Related: Publicly Traded Banks Status

3 month CD Rates in India pushing 9%

In complete contrast to the bank CD rates we’re seeing here in the United States, short term CD rates (as in 3 month CDs) in India currently provide more than twice the APY in which our nation’s best 20 year CD rates provide. An interesting article from the business standard was forwarded to us by BankVibe.com reader Trevor this week making note of this phenomena. Below is the summary.

Mumbai, India:

“Short-term rates seem to be shooting through the roof. Acute shortage of liquidity made banks raise three-month funds via certificates of deposits (CDs) at nine per cent.

According to dealers, Bank of India raised three-month CDs at nine per cent today. Another government-owned lender, Syndicate Bank, raised Rs 300 crore at 8.99 per cent, while Corporation Bank raised Rs 500 crore via three-month CDs at 8.97 per cent. Rates for the three-month paper have increased 60-70 bps in the past one week owning to tightness in liquidity.

According to a treasury official, a south-based private sector bank has raised around Rs 200 crore through one-year CD at 9.55 per cent. Syndicate Bank today placed one-year CDs worth Rs 215 core at 9.25 per cent.

Liquidity continued to be tight today with banks raising more than Rs 1.25 lakh crore from the liquidity adjustment facility of the Reserve Bank of India.

Dealer said advance tax outflow, which is expected to suck out Rs 50,000-60,000 crore from the system, will put further pressure on rates.”