The News Journal Editorial: Banks Must Be Up Front About Their Fees

News Article

Ever open up a new checking account, only to learn later how much your balance is being dwindled away by unanticipated fees?

Congressman John Carney does. Last Friday he introduced legislation in the House of Representa­tives to force banking institutions to simplify their policies up front for customers.

"People opening a standard checking account shouldn't be surprised by hidden fees or get caught in unfair policies," he pointed out. "My legislation en­sures that Americans can make confident, informed choices when deciding where to keep their money."

The Checking Account Simplification Act would direct the Consumer Financial Protection Bureau (CFPB) to consult with the banking services industry to develop a standard, easy-to-read disclosure form with disclosures about overdraft fees, the costs of opening or closing a checking account, processing policies and procedures for resolving disputes be­tween consumers and banks. Banks would be re­quired to present the form to consumers before opening a new checking account.

Essentially, the congressman is forcing banks to be honest about their fees up front. And for good reason.

Checking account disclosure forms in Delaware are on average 49 pages in length, with an average 21 extra fees ranging from 10 cents to $125. In Dela­ware, 88 percent of checking accounts have monthly fees of an average of $14 per month. The average overdraft penalty is $35.

That's like highway robbery committed through the subterfuge of an overload of purposely confusing information that takes days to decipher in most in­stances. And more time than not, the customer who is elderly, of minimal economic means or just intimidat­ed about money management gets shafted. Not by some scam artist off the street, but by a supposedly trusted business institution looking out for their per­sonal finances.

Rashmi Rangan, executive director of the Dela­ware Community Reinvestment Action Council Inc., credits "Congressman Carney for introducing this bill, as it pushes for transparency and it illustrates the importance of the new CFPB working effectively with the banking industry."

DCRAC's mission is to ensure equitable treatment and equal access to credit and capital for under­served populations throughout Delaware.

It's become the go-to place for many lower-income residents to find relief from the burden of overex­tended pay-day loans and debts that harm credit eli­gibility. DCRAC, by the way, runs Stepping Stones, Delaware's first credit union to target low-income residents with credit counseling, and helps in estab­lishing savings and checking accounts.

Congress should ensure that the introduction of House Resolution 5188 -- the Checking Account Sim­plification Act -- ends with its immediate passage, regardless of any pushback from the banking lobby.

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