WSJ on overdraft protection
March 26, 2009 | Wall Street Journal, alternatives, industry, media coverage | Comments (0)Good story on how consumers of venting over overdraft protection:
Most banks and credit unions automatically sign customers up for what they call overdraft “protection,” that allows — rather than blocks — purchases and ATM withdrawals that overdraw their bank accounts. For this service, the institutions charge customers fees ranging from $10 to $38 per overdraft, according to a study released last November by the Federal Deposit Insurance Corp.
Some 86% of banks the FDIC surveyed had overdraft programs in place in 2006, and three-quarters automatically enrolled customers in such programs. The survey also found overdraft fees were most common among young adults, ages 18 to 25, and low-income accounts. A separate analysis from Mike Moebs, who runs Lake Bluff, Ill.-based Moebs Services, a research and consulting firm, shows banks and credit unions earned $36.7 billion in consumer overdraft revenue last year, about three-quarters of their total service charge income.
Save the economy
February 27, 2009 | Wall Street Journal, alternatives, industry, personal finance | Comments (0)The Wall Street Journal asks economists to tell people what to do with with $8 per week in stimulus money they will get. We liked this one:
If you’re stuck for ideas, just keep on using ATM machines, owned by other banks, so you can pay large fees to take out small sums of money from your checking account. When you need to, take all of your withdrawals and deposit them back in the account once again and start all over with the process.
Don’t clampdown on credit cards
December 18, 2008 | Wall Street Journal, alternatives, industry | Comments (0)From the Wall Street Journal’s opinion piece today:
But now seems like a particularly inopportune moment to tell banks that they should do less to manage their exposure to credit risk. Banks are already pulling back on consumer credit as the economy worsens and the credit crisis drags on, with lower credit limits and higher rates. If the Fed votes in favor of its new rules Thursday, expect that trend to accelerate.
WSJ: Credit Crunch for Consumers
November 24, 2008 | Wall Street Journal, alternatives, industry | Comments (0)The Wall Street Journal reports:
In some cases, banks’ former darlings — consumers who paid consistently and on time but let their balances ride — now are being hit hardest, asked to stomach higher interest rates and fees or try their luck with different card issuers.
$10 to transfer your own money
November 12, 2008 | Wall Street Journal, alternatives, industry, personal finance | Comments (0)The Wall Street Journal investigates banks boosting their revenue by ratcheting up fees:
Last week, Citigroup Inc.’s Citibank started charging some customers a new $10 “overdraft protection transfer fee” to transfer money from a savings account or line of credit to cover a checking-account shortfall. Citibank had already raised foreign-exchange transaction fees on its debit cards and added minimum opening deposit requirements for its checking accounts. Over the past year, J.P. Morgan Chase & Co.’s Chase, Bank of America Corp., and Wells Fargo & Co. have boosted the fees they charge noncustomers who use their automated teller machines to as much as $3 per transaction.
OH, AZ initiatives get national attention
October 28, 2008 | COHHIO, Wall Street Journal, industry, industry critics, media coverage, regulation | Comments (0)Even the Wall Street Journal is now writing about the Ohio and Arizizona ballot initiatives:
Now payday lenders are fighting back with the ballot measures. They are pouring $30 million into initiatives that will be on the Nov. 4 ballot in Arizona and Ohio, where payday-lending branches outnumber Starbucks and McDonald’s outlets combined. The two states have laws that kicked in this year that cap annual interest rates at 36% and 28%, respectively, effectively outlawing payday lenders, which have a business model that depends on average annual rates of 391%.
“Most people think eliminating a credit option in a time of credit crisis is a bad idea,” said Stan Barnes, chairman of Yes on 200, a political-action committee that is championing the Arizona ballot initiative. Yes on 200 is financed by the local affiliate of the Community Financial Services Association, a national payday-lending group.
New card on campus
September 11, 2008 | Wall Street Journal, alternatives, industry, industry critics, media coverage, personal finance | Comments (0)Pre-paid debt cards. Now that a great way to keep kids on a budget. From the Wall Street Journal piece:
This fall, financial-services companies are focusing more of their campus marketing on “prepaid debit cards,” which work like standard debit cards except that they aren’t linked to a traditional checking account. Among the issuers aggressively marketing their cards this year: U.S. Bancorp and Wal-Mart Stores Inc.
The cards typically carry hefty fees and offer fewer consumer protections than credit cards. Fees are often charged when the card is activated, when it is used at an ATM and even when there’s a lack of transaction activity.
What does the housing crisis have to do with payday lending?
August 9, 2008 | Center for Responsible Lending, Wall Street Journal, industry, industry critics, media coverage, regulation | Comments (1)Nothing, but lawmakers who are impotent to deal with the housing crisis feel the need to beat up on lenders, any lenders. Today’s Wall Street Journal sums up the political climate:
“State legislators are really frustrated that they can’t do anything about the subprime-mortgage stuff,” said Steven Schlein, a spokesman for the Community Financial Services Association of America, a trade group representing payday lenders. Mr. Schlein said legislators are going after payday lenders because “it gives them something to say that they’re doing something about lenders, even though it has nothing to do with the housing crisis.”
That’s exactly right.
Rent-A-Center sticks it to the Wall Street Journal
May 1, 2008 | OH CRL, Ohio, Wall Street Journal, industry critics, media coverage, states | Comments (0)I don’t know what it is with the Wall Street Journal, but they seem to have it in for the payday lending industry. An article today about Rent-A-Center says the company asked a charity it supports not to endorse an effort to ban payday loans. Rent-A-Center put out this reply.
The Wall Street Journal wrongly reported this morning that Rent-A-Center threatened to end its financial support of America’s Second Harvest unless the endorsement was withdrawn. In reality, the company asked that, if the Ohio food banks were going to be members of the Ohio Coalition for Responsible Lending, then Rent-A-Center wanted its donation to be redirected to the other 49 states “where fighting hunger was their sole purpose.”
Rent-A-Center, like any other contributor to a charitable organization, wants its donation be used for its intended purpose, not to support a group completely unrelated to the charity’s mission. According to Gus Whitcomb, VP of public affairs for Rent-A-Center, “We made a commitment to help put food on people’s tables. We don’t want our money spent on anything else.” A reasonable request.
Good for Rent-A-Center to respond so quickly and so toughly. Wall Street Journal reporters, like most journalists, love to listen to anti-business advocacy groups and do their dirty work for them.
If something has a high interest rate should it be banned?
April 24, 2008 | Wall Street Journal, industry, media coverage, positive media coverage, research | Comments (0)Interesting discussion on a the Volokh Conspiracy blog prompted by a column, “In Defense of Usury” in the Wall Street Journal by Dean Karlan and Jonathan Zinman.
Several of the commenters raised the challenge that nothwithstanding the authors’ conclusions, very high interest rates are still “immoral” and should be banned. But I don’t really follow the logic of the critique–if there are no externalities, and those that borrow are better off as a result, what exactly is the argument for why high interest rate loans are immoral and should be prohibited?
