Banks are too big NOT to fail

It’s dinner party fodder, big banks and the too big to fail label they’ve procured. Stick around for a nightcap and you may get the dirt – big banks doing dumb things, and why, frankly, they deserve to fail.

Case in point

A friend tells me they recently applied for a loan, only to find out their credit score was not what they thought it was, instead really low. They pull their reports and find a Bank of America credit card they hold is the problem. They’ve had this card, along with other accounts at the same “institution”, for years, and rarely use it. They actually had a negative balance on the account a few months back too.

Bank of America didn’t like owing their customer money, so they transferred that credit into a savings account. The account holder eventually went to use this credit, but instead put a balance on the account…of roughly $25. They used online statements, and took care to keep track of all expenditures, so they didn’t think to check. The account went past due a few months, and the bank slaughtered their credit scores. This person will never do business with the bank again.

Bank of AmericaI had a B of A credit card, along with paperless statements, too. But I never carried the card – it was a credit line kept for special occasions – and I let the issue slide.

Here a fee, there a fee, everywhere a fee fee

Fast forward, I see B of A is about to start charging new fees for accounts, resetting their entire product line so to speak. The changes center on checking and such, with the goal to reduce face-to-face transactions (i.e. shut branches and teller services) down the road. Management points the finger at financial reforms, that, by the way, were pitched as a way to stop banks from ripping off their customers.

I once heard someone say “banks don’t want you to save…they are built to make it easier for you to spend.” A dearth of deposit slips in those checkbooks you pay for was the reasoning; still, they certainly loved handing out those credit lines, didn’t they?

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