BANK OF AMERICA TO CHARGE $5 MONTH FEE FOR USING DEBIT CARD

NEW YORK (The Blaze/AP) — Bank of America plans to start charging customers a $5 monthly fee for using their debit card to make purchases. The fee will be rolled out starting early next year.

A number of banks have already either rolled out or are testing such fees. But Bank of America’s announcement carries added weight because it is the largest U.S. bank by deposits.

Anne Pace, a Bank of America Corp. spokeswoman, said Thursday that customers will only be charged the fee if they use their debit cards for purchases in any given month. Customers won’t be charged if they only use their cards at an ATM.

The fee will apply to basic accounts and will be in addition to any existing monthly service fees. For example, one of the bank’s basic accounts charges a $12 monthly fee unless customers meet certain conditions, such as maintaining a minimum average balance of $1,500.

A fee for using debit cards is still a novel concept for many consumers and was unheard of before this year. But there are signs it may soon become an industry norm.

SunTrust, a regional bank based in Atlanta, began charging a $5 debit card fee on its basic checking accounts this summer. Regions Financial, which is based in Birmingham, Ala., plans to start charging a $4 fee next month.

Chase and Wells Fargo are also testing $3 monthly debit card fees in select markets. Neither bank has said when it will make a final decision on whether to roll out the fee more broadly.

 

“I might use all cash. Or go back to writing checks,” he said.

The debit card fee isn’t the only unwelcome change for checking account customers are seeing either. The banking industry has been raising fees and scaling back on rewards programs as they adjust to new regulations that will limit traditional revenue sources.

Starting Oct. 1, a regulation will cap the fees that banks can collect from merchants whenever customers swipe their debit cards. Those fees generated $19 billion in revenue for banks in 2009, according to the Nilson Report, which tracks the payments industry.

There is no similar cap on the fees that banks can collect from merchants when customers use their credit cards, however. That means banks may increasingly encourage customers to reach for their credit cards, reversing a trend toward debit card usage in the past several years.

An increasing reliance on credit cards would be particularly beneficial for Bank of America, which is a major credit card issuer, notes Bart Narter, a banking analyst with Celent, a consulting firm.

“It’s become a more profitable business, at least in relation to debit cards,” Narter said.

This summer, an Associated Press-GfK poll found that two-thirds of consumers use debit cards more frequently than credit cards. But when asked how they would react if they were charged a $3 monthly debit card fee, 61 percent said they’d find another way to pay.

If the fee were $5, 66 percent said they would also change their payment method.

Bank of America’s debit card fee will be rolled out in stages starting with select states in early 2012. The company would not say which states would be affected first.

Bank of America shares rose 9 cents, or 1.5 percent, to $6.25 in afternoon trading.

h/t to the Blaze

Dodd-Frank: The End Of Free Checking?

On Sat., Oct. 1, new regulations from the Dodd-Frank financial overhaul go into effect on debit cards. Specifically, they impose price controls on “interchange fees,” the fees that banks and credit unions charge to retailers on debit card transactions.

The average interchange fee is about 44 cents. The new rules limit the fees to 21 to 24 cents.

“The costs of processing debit card transactions doesn’t go away because you limit the price,” said John Berlau, director of the Center for Investors and Entrepreneurs at the libertarian Competitive Enterprise Institute. “That shifts the costs to consumers.”

These fees are used by banks to offer free checking and rewards programs. But now those programs may be be coming to an end. Just 45% of noninterest checking accounts are now free, down from 65% last year, according to a recent survey by Bankrate.com. The average monthly fee for those accounts has risen 75% in

the last year to $4.37.

Bank of America (BAC) just announced a $5 monthly fee for debit cards, starting early next year. BofA cited regulatory costs. Wells Fargo (WFC) and Chase (JPM) has experimented with $3 fees in some markets. Earlier in the year, SunTrust (STI) bank ended its debit card reward program.

Berlau notes other consequences:

Much of these costs will be transferred to consumers in terms of loss of free checking and debit card rewards, new charges for using an ATM, and other fee hikes and service cuts. In its rule, the (Federal Reserve) almost invited banks and credit unions to do this, “helpfully” pointing out that “the interchange fee standard would not limit the ability of an issuer to earn revenue from other sources, such as charging fees to cardholders.”

And there may be other nasty surprises, such as job losses. A Wall Street Journal editorial blamed at least part of the 40,000 Bank of America job losses on the loss of revenue due to the Dodd-Frank price controls. And late last week, Texas-based International Bancshares announced that due to the revenue loss from the price controls, it was closing 55 branches in grocery stores and shedding 500 jobs.

Even retailers may not get the full benefit they are expecting. According to one article, debit card processors can charge an additional fee when merchandise is returned, and that fee may not be covered by the regulations. Processors also may charge flat fees on transactions rather than a percentage-based fee, meaning retailers may pay more on small sales. Expect more processors to do that as the regulations take hold.

By David Hogberg   -  Thu., Sept. 29, 2011 11:30 AM ET  -  Capital Hill  -  h/t to Jean Stoner

Related:

The Secret Gov’t Bank That’s Financing More Solyndras

And at the core of this guy’s fiscal policies…

ACORN, Obama and the Present Mortgage Mess

The financial markets were teetering on the edge of an abyss last week. The secretary of the Treasury was literally on his knees begging the speaker of the House not to sabotage the bailout bill. The crash of falling banks made the earth tremble. The Republican presidential candidate suspended his campaign to deal with the crisis. And amid all this, the Democrats in Congress managed to find time to slip language into the bailout legislation that would provide a dandy little slush fund for ACORN.

ACORN stands for the Association of Community Organizations for Reform Now, a busy hive of left-wing agitation and "direct action" that claims chapters in 50 cities and 100,000 dues-paying members. ACORN is where Sixties leftovers who couldn't get tenure at universities wound up. That the bill-writing Democrats remembered their pet clients during such an emergency speaks volumes. This attempted gift to ACORN (stripped out of the bill after outraged howls from Republicans) demonstrates how little Democrats understand about what caused the mess we're in.

ACORN does many things under the umbrella of "community organizing." They agitate for higher minimum wages, attempt to thwart school reform, try to unionize welfare workers (that is, those welfare recipients who are obliged to work in exchange for benefits) and organize voter registration efforts (always for Democrats, of course). Because they are on the side of righteousness and justice, they aren't especially fastidious about their methods. In 2006, for example, ACORN registered 1,800 new voters in Washington. The only trouble was, with the exception of six, all of the names submitted were fake. The secretary of state called it the "worst case of election fraud in our state's history." As Fox News reported:

"The ACORN workers told state investigators that they went to the Seattle public library, sat at a table and filled out the voter registration forms. They made up names, addresses, and Social Security numbers and in some cases plucked names from the phone book. One worker said it was a lot of hard work making up all those names and another said he would sit at home, smoke marijuana and fill out the forms."

ACORN explained that this was an "isolated" incident, yet similar stories have been reported in Missouri, Michigan, Ohio, and Colorado -- all swing states, by the way. ACORN members have been prosecuted for voter fraud in a number of states. (See www.rottenacorn.com.) Their philosophy seems to be that everyone deserves the right to vote, whether legal or illegal, living or dead.

ACORN recognized very early the opportunity presented by the Community Reinvestment Act (CRA) of 1977. As Stanley Kurtz has reported, ACORN proudly touted "affirmative action" lending and pressured banks to make subprime loans. Madeline Talbott, a Chicago ACORN leader, boasted of "dragging banks kicking and screaming" into dubious loans. And, as Sol Stern reported in City Journal, ACORN also found a remunerative niche as an "advisor" to banks seeking regulatory approval. "Thus we have J.P. Morgan & Co., the legatee of the man who once symbolized for many all that was supposedly evil about American capitalism, suddenly donating hundreds of thousands of dollars to ACORN." Is this a great country or what? As conservative community activist Robert Woodson put it, "The same corporations that pay ransom to Jesse Jackson and Al Sharpton pay ransom to ACORN."

ACORN attracted Barack Obama in his youthful community organizing days. Madeline Talbott hired him to train her staff -- the very people who would later descend on Chicago's banks as CRA shakedown artists. The Democratic nominee later funneled money to the group through the Woods Fund, on whose board he sat, and through the Chicago Annenberg Challenge, ditto. Obama was not just sympathetic -- he was an ACORN fellow traveler.

Now you could make the case that before 2008, well-intentioned people were simply unaware of what their agitation on behalf of non-credit-worthy borrowers could lead to. But now? With the whole financial world and possibly the world economy trembling and cracking like a cement building in an earthquake, Democrats continue to try to fund their friends at ACORN? And, unashamed, they then trot out to the TV cameras to declare "the party is over" for Wall Street (Nancy Pelosi)? The party should be over for the Democrats who brought us to this pass. If Obama wins, it means hiring an arsonist to fight a fire.

ACORN, Obama, and the Mortgage Mess by Mona Charen

Trump: Silver Lining Is Declining Oil

Billionaire real estate developer Donald Trump is none too pleased with the markets, but he sees a silver lining. Oil should be falling, Trump says, and falling fast. “People aren’t talking about two very big issues, the war and the price of oil,” Trump told Fox Business News. “If people knew how to speak to OPEC the proper way, the hard way, the tough way, oil would be down to $50 instead of $150,” Trump says. There’s already far too much oil on the markets, and anybody in the oil business knows it. “They don’t know what to do with it,” Trump told Fox. “If we got rid of this war, and we got oil down, this country would be unbelievable,” he said. As for the $700 billion bailout, Trump is resigned that some kind of assistance for the banks will have to be arranged, calling the current market the “worst the country has seen since 1929.” “It’s sad but it’s probably something that has to get done. The financial system is going to come to a halt. It’s a sad day for the country,” Trump said. “Maybe things go to hell anyway. Nobody really knows what is going to happen.” © 2008 Newsmax.

Thought For The Day - 9.29.08

“In Major Crisis, It Seems To Be The Little Guy That Gets Hit the Worst, Therefore, Unfortunately, It Is Up To The Little Guy To Watch Out For Himself!”

(Renters are often the ones left hanging in the middle in foreclosure proceedings and there are no signs to believe that will change.)

With the current wave of foreclosures that has swept the country, that we hope will diminish after the recently announced bailouts, many renters are finding themselves in the middle between lenders and their landlord; who is now the foreclosed on owner. They are finding themselves homeless, like the Smiths, after their cash-strapped landlord stopped making mortgage payments or could 

only make partial payments and their houses, condos, townhouses or apartment buildings were foreclosed upon, even though they have been making their monthly rent payments. 

The California Apartment Association, the state's largest organization of rental property owners, reported that nearly one quarter of all foreclosed single-family residences are renter occupied. And the number of renters trapped in the foreclosure debacle in duplexes and other multi-unit buildings is considerably higher. Total California foreclosures of single-family homes statewide rose more than 400 percent to a record 31,676 in the fourth quarter of 2007 from a year earlier and has been rising ever since.

The Smiths received notice last month, when a Trustee Sale Notice was posted on the front door of their townhouse, after their landlord had missed 6-months of mortgage payments and the property was foreclosed upon. And this seems to be the way most tenants are getting their notifications; inciting a sense of panic and feelings of insult, betrayal and lack of control.

For many people, this can mean even steeper rents on the horizon because the wave of foreclosures has created greater demand in the rental housing market -- a blessing to landlords who are not having foreclosure problems, but also leaves the door open for some gauging. And invariably, these situations mean a total loss of deposits paid by renters, so it is generally suggested that renters stop paying rent as soon as they are made aware of foreclosure proceedings and definitely upon notice of an impending sale. 

State and local officials say many evictions could be avoided or at least made less painful if people knew the legal protections available to them. However, few owners, lenders and property managers make such information available during the eviction process, and often cause renters to move before they have to without a penny… no deposit refunds, no months of free rent to counter balance their loss of deposits and no assistance check from the bank.  So renters beware!

 

This entire experience can be terrifying!! "It's something a number of jurisdictions have been discussing because it's a growing problem.", says Michaelyn Jones, general counsel to the Santa Monica Rent Control Agency, which oversees some of California's toughest rent-control rules. 

Many foreclosed properties were purchased by real-estate speculators or novice investors taking advantage of dirt-cheap loans and rising property values, who subsequently rented them to tenants before falling behind on mortgage payments. Plus now there is a newly reported scam whereby some owners, knowing they are on the road to pending foreclosure are renting their properties anyway or again, right before the Trustee Sale, and then vanishing with what can be a tidy sum, including as much as first and last month's rent, a security deposit and sometimes additional cleaning or pet deposits; leaving renters holding the proverbial bag and having to move again.

Some tenants don't find out that they have to move until they receive a letter from the bank or lender, that has taken the property back, or from the new owner after the Trustee Sale, either in letter form or by a representative showing up at their door, which sometimes includes the offer of an "assistance check" varying in amount from $1000 to $2500, to vacate quickly. In many cases it is to the renters' benefit to accept this assistance check, which usually includes a warning like: "Please keep in mind that the eviction process has started".

Offering financial inducements is a common practice when renters are being pressed to vacate a foreclosed-upon property, but there are several factors to weigh. It's called "Cash 4 Keys" and can involve payments of up to $2,500, ostensibly to help a tenant resettle but also to get him or her to waive any claims to the rental property. However in the wake rising foreclosures and rising rents, in many areas you now have 60-days from the day you receive official notification to vacate before having to be out or before eviction procedures can begin, giving you 2+ months of rent free living. So you need to weigh the value of two free months of rent against the amount of the assistance check being offered. And if you have an active lease in place, that lease could have to be honored. Be sure to check with Renters Rights and give your options some thought before the representative appears on your doorstep. Also, if your property has been purchased by a new owner, be sure to ask if you can stay on as a renter. 

The Smiths were told that if they didn't agree to the assistance money deal right away, their resettlement amount would be slashed in half from the original offer within a week and then to third a week after that. Then it would drop to nothing, and they'd still have to move out within 30-days. Sometimes the money reduction is enforced and sometimes not. If they really want you out, they will work with you and you could still get the original offer, but it is a gamble.

 

Also be wary of your previous landlord trying to collect rent, present or past, (before or after the trustee sale) or asking for a share in the moving assistance money. Once they have lost title to the property, they have no claim or rights to anything involving their former property.  However, some owners who know they are going to lose their property will give their tenants notice to move before the Trustee Sale, stating other reasons, so that they can then try and collect the assistance check, as if they had lived there themselves.  In some states owners have a very short time to be out and in others they have up to 6-months, but in almost all states, owners occupying their properties are offered larger inducements to get out than renters.

State officials have said that under California law, existing rental agreements are essentially wiped out when a property is foreclosed upon, but changes and amendments have and are being made daily, so keep checking. A few months ago renters occupying a foreclosed property only had 30 days' notice before being evicted; now they have 60. And those officials also said state law can be trumped by local rent-control statutes, which often provide tenants with more far-reaching protections. These "just cause" provisions of many municipal rent-control laws limit the ability of landlords to evict tenants, even those on month-to-month leases. They also include cases in situations when ownership of a property changes hands, such as a foreclosure.  So make sure to check both your state and local statutes as well as with Renters Rights type of organizations in your area, before making any final decisions, because in these trying times the laws and statutes are continuously changing, and the people representing the new or old owner of your property or representing the bank or mortgage company that has taken the loan on property back, if it didn’t sell, will not necessarily tell you the full truth, and sometimes don’t know the latest changes themselves.  Plus their focus or job is not to represent you.

 

However, not all "just cause" provisions are created equal. Some require that a tenant occupy a property for at least two years before an eviction notice is served. Others allow an eviction to proceed if the landlord plans to remove the property from the rental market or have a relative move in. And, not all rental properties may fall under a city's rent-control protections, allowing state law to apply. 

But anyone receiving a notice from a bank or property manager, which is often an assigned realtor, saying their rented home has been foreclosed on should contact City Hall and ask about rent-control rules that may exist in your area and whether your particular property is protected as well as checking with Renters Rights. Then ask the bank or property manager to specify the legal grounds for the eviction. If nothing else, this could result in a more generous offer of payout to get you moving or a little more time even with compensation.

And remember, do your homework and always get everything in writing!!!

How the federal bailout of the financial services industry will affect distressed homeowners remains unclear at this point.  Unidentified government officials said the administration has agreed to include some homeowner protections against foreclosures, which will hopefully reduce the numbers, but that won’t help renters when there are foreclosure situations.  Renters are often the ones left hanging in the middle in foreclosure proceedings and there are no signs to believe that will change with the bailout.

Time to Cowboy-up to Main Street

Last week, Main Street received an opportunity to sit in the front seat of the election, thanks to John McCain’s decision to suspend his campaign to go to Washington to help Congress fix the financial meltdown.

Whether that was an admirable decision by a man who once said he “would rather lose an election than a war” or a political stunt to boost his economic muscle, (and I personally think it was an admirable decision) it did accomplish one thing: The rhetoric of both candidates pivoted to Middle America and working families.

Let’s hope it stays there.

Until now, chin-wagging by the political elite and endless e-mails from the campaigns and the national parties have driven the hour’s story.

“Those clowns make it difficult for those elected ultimately to govern, because governing is reality -- it isn't campaigning,” says Purdue University political science professor Bert Rockman.

Rockman says a lot of focus has been on the wrong things -- sort of like looking at the zookeepers, not the animals.

Voters lose ultimately when politics consumes governing, when style overrides substance, when tough -- usually stupid -- words override reflective thought that might prevent you from being painted into a corner.

Politics is gut stuff. Good government and serious policy-making, in contrast, engage the brain.

“We didn't get to the top of the food chain by out-muscling some of the larger mammals,” Rockman points out. “We got there by outwitting them.”

Now that the campaigns have paused (and perhaps realized that they aren’t just preaching to their respective choirs), what should they be saying?

First, the candidates should ask without preconditions why the current economic crisis happened -- and then not respond with stock answers.

They can't just shout “Regulate more!” without knowing what it is they need to regulate, and under what framework and oversight Most Americans understand that you must balance your checkbook. They want to know that the guy they’re electing operates the same way; they want to hear that, under his administration, the Federal Reserve will be more incremental in managing the nation’s money supply.

No ideological themes sung to finger-wagging -- Middle America wants to know what political commitments we can and cannot afford.

For its part, the press should ask much better questions, departing from “gotcha” or silly questions and leaping into reality, such as “What are you actually going to do?” or “What’s the basis for the claim you’re making?”

Federal Reserve historian and Carnegie Mellon professor Allan Meltzer says we have faced serious problems such as this before, most recently the banking problems of the early 1990s.

Meltzer says that because banks lend long-term and borrow short-term, “Crises occur when the market changes.”

What most people want is to understand the problem, how it affects their pocketbook and what each candidate will do to clean up the mess.

University of Arkansas political science professor Rob Maranto says that because the press focuses on such things as intercepted e-mails, pregnant daughters, Obama's slickness or McCain's temper, we all understand the candidates’ personal characteristics and can make some sense of them.

But the larger issue is, who understands today’s financial meltdown?

Only time (short-term time, since we are now just 30-odd days from Election Day) will tell if McCain cowboy-upped during his “suspended” campaign and achieved something worthwhile or if he and Obama simply picked up where they left off -- allowing the chin-waggers to frame the campaign’s final month and leaving Main Street in suspended animation.  I will give McCain that he headed right back to Washington after the debate, while Obama went back to the campaign trail and phoning in to check on the 'real stuff'.

by Salena Zito

Source:  NewsMax