As the fallout from the bank bailouts continues, Representative Brad Miller, a North Carolina Representative, has introduced legislation that will make leaving banks easier for customers fed up with high fees, poor customer service and other problems.
Miller states that with banks using tactics to keep people using the same service continuously, whether through cancellation fees, automatic bill payments, debit and credit card dependency and so on, customers simply stick with their banking institution out of habit rather than real loyalty or other form of satisfaction. Such a situation in no way resembles a free market, which should allow clients to come and go as they please, but rather resembles a mildly coercive combination of incentives and disincentives that keep people stuck with service they don’t enjoy.
Now that nearly every major bank has announced they will start charging customers debit card feesâ€"â€"$3 for Wells Fargo and Chase, $5 for Bank of America and a whopping $20 for Citibank under some circumstancesâ€"â€"customers are understandably fed up, leading to an unprecedented exodus toward credit unions, many of which charge no fees and offer higher interest rates for their clients, rather than funneling the money into bonuses and other lavish executive pay packages and privileges. Whether this represents a monumental shift in customer attitudes and patterns remains to be seen; but if so, it will diminish the power of the major banks and foster enormously increased competition for a ll customers.
The bill seeks to make that transition even easier. The bill would deny banks the opportunity to charge customers a cancellation fee, and force them to allow the cancellation, even if the account balance is negative. The account must be closed with 48 hours of the customer’s request. The bank must pay the customer the balance of the account immediately upon request, if in person, and must immediately issue and mail or transfer a payment if the request is made via phone or electronic means. The payment must be completed within three business days.
The fact that these requirements were not in place is understandably silly, but of course that is the apparent nature of the current American banking sector, and legislation needs to be introduced to create a free(er) market system. Opponents will of course declare vociferously that any regulation is a free market reduction, but regulations which reduce customer coercion in fact promote more freedomsâ€"â€"for the customers.
It will, of course, likely be a tooth and nail fight, as has been the case with all legislation in recent years, though momentum is clearly gathering with the Occupy Wall Street protests to support just this sort of legislation; though currently the protests are more concerned with sustaining the existence of the protests themselves, as they are currently in a formative state.
Bank of America’s response is yet to materialize, but if their response to the bailouts was to increase fees rather than cut executive pay, one can only imagine what further plans they have for diminishing customer assets. We shall see.
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