‘Banksters’ gone wild - A question for Malcolm Berko

‘Banksters’ gone wild

POSTED: Tuesday, December 6, 2011 at 03:26 PM PT
BY: Malcolm Berko

Malcolm Berko

Dear Mr. Berko: I’ve had it with Bank of America. Their customer service is terrible, and their greedy attempt to assess a $5 debit card fee is the final straw. I’d like to move my account to Ally Bank if you think it’s safe and if they have the proper insurance. What do you think? Or is there another bank you could recommend? – S.A., Vancouver, Wash.

Dear S.A.: According to a company spokesperson, the “banksters” at Bank of America listened to their customers and decided to cancel their $5 debit card fee. But I don’t believe that this bank listens to anybody, God included. What Bank of America’s management heard was tens of thousands of feet leaving its branch offices, and that scared the bejabbers out of them. But they will soon sneak in other small charges.

Ally Financial (formerly GMAC) became a bank holding company in December 2008 and officially changed its name to Ally in May 2009. And yes, it’s insured over and above the hilt. Ally is covered under the following: FDIC; PAL; SIPC; E&O; blanketed bond; employment practice and liability; bankers professional liability; privacy liability; CD; A/D; and EEOC. Whew. And if that weren’t enough, Ally may be the only bank that offers a free, $25,000 life insurance policy to depositors unfortunate enough to be killed by falling space junk.

Meanwhile, the U.S. Treasury owns 74 percent of Ally, a perk from its $20 billion bailout of GM. Yes, your money is safe at Ally, and it won’t stick you with a $5 debit card fee … yet.

Ally, the largest lender to U.S. auto buyers, will finance almost any new car purchase with practically no money down. In fact, my neighbor’s dog, Matzo Ball, bought a new Buick Enclave for $41,000 at 1.9 percent and financed it over seven years (although my neighbor had to co-sign the loan) through Ally.

And Ally isn’t easy only on its loans, but also on depositors. It doesn’t have debit card fees or ATM fees. It provides post-paid envelopes to mail your deposits. Its CD rates, while not the best, are far superior to Bank of America. You’ll get a decent rate on your checking account balances without monthly credit card, savings or checking account fees.

So you’ll save a few hundred bucks a year by moving your account to Ally – if you can get Bank of America to cooperate. Some big banks charge you a fee to move your account (most stock brokerages do) and in the process create a hassle so annoying that in your idle time, you may conjure up some very evil thoughts.

The plain truth is that while many banks don’t charge ATM, debit card and checking account fees, the end is near. In a few years, most banks will charge checking account fees; a fee for each check you write; a fee each time you use the Internet to pay a bill; a fee to accept deposits; a fee to mail statements; a fee to talk to a teller; a fee to open an account; a fee to post CD interest to your account; loan and credit card application fees; and fees if you don’t charge a minimum amount on your credit card each quarter. The list is endless. In the U.S., banks are not successful if they fail to increase their revenues, earnings and dividends every year.

The problem is that there are 8,000 banks in the U.S. (compared to fewer than 35 in Canada) with hundreds of thousands of branches. The scope is so gigantic that our banking system is too large to be profitable. There’s one bank location for every 1,000 U.S. citizens. In fact, just up the street from my office, I have to pass seven bank branches to get to the corner, where there are six banks.

This is an instance wherein competition becomes so counterproductive that banks must increase your costs to support hundreds of thousands of branches that occupy every curb, corner and cranny of most American neighborhoods.

Changing banks is no picnic. Many folks have direct deposit, Internet apps to pay bills, automatic payment deductions, credit cards, etc. And that makes switching banks a nightmare worse than getting audited by the IRS. They have you by the ring in your nose. While you’ll save a few hundred bucks for a few years by moving to Ally, the process may be more unpleasant than coping with Bank of America.

Address your financial questions to Malcolm Berko, c/o The Daily Journal of Commerce, P.O. Box 8303, Largo, FL 33775, or email him at mjberko@yahoo.com.

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