Tuesday, October 19, 2010

Say goodbye to traditional free checking

More unintended consequences of ill thought out legislation meant to give control of the banking system to the Federal government. Unintended? Naaaaaaaa!

Almost all of the largest U.S. banks are either already making free checking much more difficult to get or expected to do so soon, with fees on even basic banking services.

It's happening because a raft of new laws enacted in the past year, including the financial overhaul package, have led to an acute shrinking of revenue for the banks. So they are scraping together money however they can.

Bank of America, which does business with half the households in America, announced a dramatic shift Tuesday in how it does business with customers. One key change: Free checking, a mainstay of American banking in recent years, will be nearly unheard of.

"I've seen more regulation in last 30 months than in last 30 years," said Robert Hammer, CEO of RK Hammer, a bank advisory firm. "The bottom line for banks is shifting enormously, swiftly and deeply, and they're not going to sit by twiddling their thumbs. They're going to change."

Large banks are also under additional pressure because of curbs from new laws on high-risk trades with complex derivatives. Their trading desks have been large revenue and profit generators for banks in recent years.

Michael Moebs, the founder of Moebs Services, said it is now up to the smaller Main Street banks to see an opening and grab customers from the big banks.

"Free checking could become a mainstay of community banks and credit unions in the future," Moebs said.

AP article "Say goodbye to traditional free checking"

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