Forum Post: BANKS HAPPY to get rid of customers. Ooops.
Posted 13 years ago on Nov. 9, 2011, 2:01 a.m. EST by electrictroy
(282)
This content is user submitted and not an official statement
"The irony of that is since the financial crisis, and especially over the last three months as there has been a panic about Europe . . . banks have been inundated with cash deposits..... The high inflow of deposits 'puts pressure on their margins because banks have to pay [Federal Deposit Insurance Corp.] premiums and overhead costs.' By removing hundreds of small-time accounts with low balances, they would actually be saving money on their premiums."
I've heard that before... that banks want less cash on hand, and some even started charging fees if a customer held more than $500,000.
if that was the TRUTH, which it isn't, Bank of America wouldn't have reversed it's charging fees to small accounts policy.
http://www.time.com/time/nation/article/0,8599,2098715,00.html
bank of america is a slow and inflexible behemoth.
bny mellon has already started charging for deposits.
Good point.
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Cracks me up that some folks are saying, "doh, you guys f*d up", If banks benefited and it's a win/win/win then that's great, it wasn't meant to hurt the banks but to empower consumers.
1st, as an expression of consumer power, it still made a statement that no wise business is likely to ignore, even if current circumstances allow them to weather it well and not take an immediate hit to their bottom line, or even benefit as this link claims. But don't let 'em fool ya into thinking that the banks didn't crunch the numbers and calculate the long term costs, they just aren't going to tell us those numbers, since the last thing they want is for us to feel empowered enough to do another event in 6-12 months.
I can't provide the numbers regarding long term impact, but I can point out some factors that would likely be relevant to calculating the real impact of the Bank Transfer day.
First the numbers we do know-- Wikipedia notes that The Credit Union National Association tallied 650,000 new accounts and $4.5 billion in deposits between Sept. 29 -- through Nov. 2. , which means in the one month following B of A's announcement of their intent to charge a $5 monthly debit card fee, credit unions nationwide opened more new accounts than the 600,000 consumers that joined credit unions in all of 2010.
Considering that a number of people deliberately waited until the final days before the Bank Transfer day action on November 5th to transfer their accounts, the number of actual new credit union accounts attributed to the event will increase since the known numbers are only up until November 2nd. There will also be a noticeable bleed into most of November as the perpetually late stragglers like myself finally transfer over.
But because this action has been a marketing boon for Credit Unions beyond anything they could have managed normally they could see a higher than normal number of new accounts well into next year.
And the fact that most of the accounts transferred are small ones is exactly why the true cost to the banks is impossible to quantify. Because while some may be from older citizens who have been wiped out, many of those accounts are small because the transferees are young. Unless the worst pessimists fears come true, many of those small accounts will one day swell. And from my experience, once people find something they are happy with, they stick with it. The banks didn't just lose x amount of small accounts, they lost the business of a nice chunk of an entire generation. And unlike pre-housing bubble, these Americans aren't going to be eager to take any loan they are offered, so they might not be able to be lured back even when they are finally to take out home loans.
helped banks indeed.
Bull..... especially when you spend the rest of your post explaining why the banks were hurt.
Did I? I thought I was showing that their claims of it being an aggregate gain for them was them whistling in the dark rather than acknowledge that consumers actions had a noticeable enough effect on both their short and long term bottom line to clearly relay the message that we have power in the marketplace too. In pretending to the claim that the action only helped them, the banking industry is yet again trying to weasel out of taking any responsibility for their behavior nor indicate any willingness to deal with the public's anger or expectations that they change their way of doing business, and the claim is also an attempt to deny the people's power, when we know they were freaking out when they saw we meant business and could defend our rights. This is not the same thing as arguing we hurt them.
But I can easily break it down for you :)
The entire line that you reference the first half of is: "It wasn't meant to hurt the banks but to empower consumers" The key terms here are hurt and empowerment, and my argument is based on a couple of basic assumptions regarding how one defines these words.
First is the assumption that in order to for consumers to be empowered, they must refuse to remain passive recipients of a service as if it were a favor the banks bestow upon them. To do this requires consumers become active participants in a transactional relationship, and recognize that the funds they deposit in their banks is a fair contribution to the transactional relationship, entitling them to expect the banks attend to their concerns and engage in fair business practices. The next logical progression if the banks do not respect requests for fair dealing, (which they have not --thumbing their noses at every attempt to regulate or otherwise reign in their excesses), is for the consumer to send a message to the banks demonstrating that if the banks don't hold up their end of the deal their customers can end the relationship and seek a transactional relationship with other entities where the terms serve customers and the public interests as well the Bank's profits.
While the consumer doesn't owe the banks any of their business or any second chances, and the bankers would have deserved any amount of real hurt that could be inflicted, considering their repeated disregard of both their customers and the social contract, the consumer does owe it to the public not to initiate any action in protest that would risk doing significant damage to the economy, such as an actual run on the banks. Furthermore, despite the fact that the banks would deserve what they get in principle, the vast majority of consumers engaging in the bank transfer still harbored no desire to use their power to crush the entire banking industry, and the aim was only to send them a message and apply enough pressure to let them know that they need us to continue to do business and we expect them to do business within the bounds of fair play.
And the way the bank transfer was conducted is proof that the intent was not to shut them down, create undue panic, or in any way to inflict any more harm than necessary to make a point. To those ends, the call to transfer accounts from banks was sent out for a limited time with a clearly defined end point. While there may be some bleed beyond the end point set for the action, the bulk of the action was conducted by November 5th and there has been no attempt to try to keep up momentum or extend the time frame of the action. The call to action was worded so that consumers would transfer accounts over the course of an entire month and no attempt was made to compress the time frame, keep the calls to action secret from the banks so as to surprise them and give them no warning, or in any other way conduct the action in ways that might amplify the effect and interfere with the banks ability to conduct business with it's other customers.
Even if one takes my argument that when the numbers are finally tallied they will be significantly larger than the 650,000 accounts already reported and inflates the numbers to well beyond what is probable (to an extra 2,000,000 accounts rather than the more likely 400,000 or so lost accounts) the harm done to the banks would be a drop in the bucket within the scale of the overall banking industry.
So I guess it boils down to how you define "hurt". Did we do enough to eat into the extravagant Christmas bonuses they planned to reward themselves with? Yuh huh, we sure did :) The reports of the way Management was freaking out and trying to block the folks from closing 100k + accounts make that very clear .... Did we hurt the banking industry? Nope, not yet. But we can certainly do so if they don't pull their heads out of their asses, and that was the whole point.
You are using twisted logic when it's really as simple as F==ma.
Cash==an expense (it has to be insured).
Banks don't like expense. So getting rid of cash is beneficial to the banks.
"The hedge fund manager or the Goldman Sachs banker doesn’t want to compare themselves to someone unemployed in Detroit or a single mother somewhere else. It’s all about your perspective."
^^^The above is enlightening.
Agreed. They believe tothat have no reason to. I thought we were all americans. It says alot.
Whether the big banks miss them or not, you can bet the smaller banks and credit unions are more than happy for the influx of money. Whether the big banks care or not, I'm thinking that many depositers will find themselves much happier with the change.
if that is the case, i guess we'll find out how happy they are in their next quarterly statement and the one after that and one after that....
Bank stocks have already gone up since Saturday, because the loss of ~5 billion cash means they are now reducing cost, and stockholders love to hear that news.
Then go ahead and invest in those stocks if you feel that way. But moving away from the addiction of corporations that are only beholden to themselves and their shareholders and into credit unions will only strengthen those local institutions that has ties to the community. These multinational corporations have no ties to communities or country for that matter. Shifting that balance back to our communities, we can begin to build a local economy that will serve those communities better in the long run.
Housel is sadly, not only a motley fool, but a veritable idiot. I get better returns on my portfolio than from listening to him
Bullshit makes no sense.
I agree. 'Banks want less cash.' Makes no sense, they're banks.
-- BANK OF NEW YORK CHARGES FOR CASH HOLDINGS
http://www.cnbc.com/id/44019510/Bank_of_New_York_Puts_Charge_on_Cash_Deposits
It's a tough one for banks. The average "all in" costs for banks to provide a checking account is about $12/month. They are willing to provide free accounts as long as they are making profits on other services that a checking account customer may be using (loans, credit cards, etc.)....They absolutely would like to get rid of customers who only have a checking account and carry low balances..absolutely....those accounts used to at least break even with the debit card interchange fees that banks rec'd but now that those fees have been cut those accounts are not a profitable service...what will they do? Look for more subtle fees! Watch out for those!
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“Every generation needs a new revolution.” - WRONG.
Jefferson said that when he was still young. He changed his mind when he saw how the French revolution devolved into a bloody mess that executed Innocent citizens and then turned to dictatorship. That is the fate of almost all revolutions. .
Dear occupants of wall-street, please understand what a ridiculous and absurd movement this is. How can you protest people who only want to grow and expand as far as economy and business go and create jobs in the process. Why not protest those holding us back like d.c oh ya that would go against you liberal one world government ideas. So sad that you are corrupting the minds of the ill informed to create a country that will only suffer from socialism you should be ashamed.
"First, let me state a positive party point for you. Corporations are necessary for a world growing like ours. This is true. They can provide infrastructures and research to develop technologies that small businesses would not be able to effectively produce on their own (at least without a great deal of effort). We are not opposing this. We are, however, not ignorant to the atrocities that they have committed in order to further their monetary actions. There are select people of extraordinary wealth that have exploited the system for personal, selfish gain, at the expense of the American people (or, really, any country in the world). The morality of it is reprehensible. That is something that we do oppose."
"Anti-Socialism. This is perhaps the stupidest thing I've ever heard. What do they think the public school system is? Or police? Or fire fighters? Or transportation? If they hate socialism, they clearly hate the majority of the functions that make their life worthwhile; not to mention the lives of everyone else who lives in our country. I understand that they've been constantly told to believe that socialism is bad and then referenced to people like Hitler (who, by the way, was a fascist, not a socialist), but for god's sake, educate yourselves on what economies actually work and why. The fact is, having a capitalistic society AND a socialist society is far better than having one or the other. Why? Because if you have a public option (say, public school), then all of the options that would require you to pay (a capitalistic option, such as private school) have to be that much more impressive, competitive, and effective than they otherwise would. Without that competition (again, these guys LOVE competition), we just apathy by those in charge who don't have to really bother competing. They can just do whatever moderate job they feel like, effectively becoming the free standard, but paying for it."
Support the constitution and pass H.R. 2990 The National Employment Defense Act of 2011 (1) To create a Monetary Authority which shall pursue a monetary policy based on the governing principle that the supply of money in circulation should not become inflationary nor deflationary in and of itself, but will be sufficient to allow goods and services to move freely in trade in a balanced manner. The Monetary Authority shall maintain long run growth of the monetary and credit aggregates commensurate with the economy's long run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates. (2) To create a full employment economy as a matter of national economic defense; to provide for public investment in capital infrastructure; to provide for reducing the cost of public investment; to retire public debt; to stabilize the Social Security retirement system; to restore the authority of Congress to create and regulate money, to modernize and provide stability for the monetary system of the United States, and for other public purposes. (3) To abolish the creation of money, or purchasing power, by private persons through lending against deposits, by means of fractional reserve banking, or by any other means. (4) To enable the Federal Government to invest or lend new money into circulation as authorized by Congress and to provide means for public investment in capital infrastructure. (5) To incorporate the Federal Reserve System into the Executive Branch under the United States Treasury, and to make other provisions for reorganization of the Federal Reserve System.