Comments on: Regulatory failure du jour, overdraft-fee edition http://blogs.reuters.com/felix-salmon/2013/06/01/regulatory-failure-du-jour-overdraft-fee-edition/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: traduceri romana daneza http://blogs.reuters.com/felix-salmon/2013/06/01/regulatory-failure-du-jour-overdraft-fee-edition/comment-page-1/#comment-55031 Tue, 14 Oct 2014 09:57:17 +0000 http://blogs.reuters.com/felix-salmon/?p=21918#comment-55031 Thanks , I have recently been looking for info about this topic for a long time and yours is the greatest I’ve found out so far. However, what about the conclusion? Are you positive in regards to the supply?

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By: Stanford Spradlin http://blogs.reuters.com/felix-salmon/2013/06/01/regulatory-failure-du-jour-overdraft-fee-edition/comment-page-1/#comment-54415 Thu, 09 Oct 2014 14:29:48 +0000 http://blogs.reuters.com/felix-salmon/?p=21918#comment-54415 whoah this weblog is fantastic i like studying your articles. Keep up the great work! You understand, lots of persons are looking around for this info, you can help them greatly.

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By: traduceri daneza http://blogs.reuters.com/felix-salmon/2013/06/01/regulatory-failure-du-jour-overdraft-fee-edition/comment-page-1/#comment-53456 Mon, 29 Sep 2014 13:55:27 +0000 http://blogs.reuters.com/felix-salmon/?p=21918#comment-53456 “are asleep? Oh!” fiddle with the fire of the stick in the hands fling, maple carefully approached the night huddled under the full moon mulberries and Los dance.

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By: realist50 http://blogs.reuters.com/felix-salmon/2013/06/01/regulatory-failure-du-jour-overdraft-fee-edition/comment-page-1/#comment-47191 Tue, 04 Jun 2013 00:06:24 +0000 http://blogs.reuters.com/felix-salmon/?p=21918#comment-47191 @Twinkbait – the article to which you linked does not address my question. I am not disputing that overdraft fees are a profit center for banks. My question is – but for overdraft fees, are these customers profitable for a bank?

How much revenue does a bank generate from someone with an average checking balance of say $2,000 to $3,000? Outside of fee income, it is minimal. Fee income needn’t be just overdraft fees – could be merchant fees on a debit card, or customer fees for using out of network ATM’s, or a monthly account fee. A no-monthly fee checking account with that low of an average balance, however, is just a loss leader that the bank hopes generates revenue elsewhere. That revenue might be from overdraft fees, or it might be from being able to cross-sell mortgages, auto loans, and credit cards to enough of those customers.

A torrent of new customers is a curse and not a blessing if those new customers aren’t profitable.

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By: VirtualThumb http://blogs.reuters.com/felix-salmon/2013/06/01/regulatory-failure-du-jour-overdraft-fee-edition/comment-page-1/#comment-47182 Mon, 03 Jun 2013 14:43:56 +0000 http://blogs.reuters.com/felix-salmon/?p=21918#comment-47182 I’ve often wondered if it’s not simply a case of education with the “frequent overdrafters” … show them (in a manner that they grasp) how monetarily detrimental it is to constantly overdraft their accounts so that they will change their behaviors.

It seems clear to me that the current state of things ($30+ overdraft fees charged to individuals who can least afford it) should be considered unacceptable to all parties involved (except for the banks, which operate per the rules of capitalism, and therefore ignore any moral issues associated with their activities). Unfortunately, the author has shown that regulation has been ineffective in changing the status quo.

Perhaps current regulations aren’t sufficiently draconion in nature. What if the regulations required banks to charge at least $100 for the first overdraft occurance in a calendar year, and then close the bank account if a second overdraft occurs? While this would be initially painful for the “frequent overdrafters”, I believe it would act as an effective substitute for eduction in obtaining behavioral change.

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By: Twinkbait http://blogs.reuters.com/felix-salmon/2013/06/01/regulatory-failure-du-jour-overdraft-fee-edition/comment-page-1/#comment-47177 Mon, 03 Jun 2013 04:09:13 +0000 http://blogs.reuters.com/felix-salmon/?p=21918#comment-47177 Realist50 you would be incorrect.

See here as one example of many that are easy to locate: http://consumerist.com/2013/04/30/banks- raking-in-billions-in-profits-from-overd raft-fees/

The banks recognize the above, and all continue to collude, because it is so profitable. Once one breaks ranks, it’ll be a torrent of new customers to the leader.

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By: Harpstein http://blogs.reuters.com/felix-salmon/2013/06/01/regulatory-failure-du-jour-overdraft-fee-edition/comment-page-1/#comment-47174 Mon, 03 Jun 2013 02:28:55 +0000 http://blogs.reuters.com/felix-salmon/?p=21918#comment-47174 If we had (or ever have) some kind of national initiative to roll out broadband access, like electricity and water, then I would agree with @Twinkbait. But it seems like the demographic profile of folks that incur these fees precludes them from reliable internet access which means high overhead for banks that serve them in the form of storefronts and tellers. On the other hand, capturing just a quarter of that fee revenue would be an incredible amount of money for some other business model/venture, so seems like something would come along eventually that was better for them.

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By: realist50 http://blogs.reuters.com/felix-salmon/2013/06/01/regulatory-failure-du-jour-overdraft-fee-edition/comment-page-1/#comment-47168 Sun, 02 Jun 2013 05:48:37 +0000 http://blogs.reuters.com/felix-salmon/?p=21918#comment-47168 @Twinkbait – that presumes that these customers – or more precisely, customers who fit with this same group based on demographic profiling of income level – are profitable banking customers as a group without large overdraft fees being paid by some people. I’d submit that they probably aren’t.

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By: Twinkbait http://blogs.reuters.com/felix-salmon/2013/06/01/regulatory-failure-du-jour-overdraft-fee-edition/comment-page-1/#comment-47161 Sat, 01 Jun 2013 19:22:13 +0000 http://blogs.reuters.com/felix-salmon/?p=21918#comment-47161 To me, what this demonstrates is yet another demonstration of how regulations just don’t work and opportunity that can actually fix the problem.

Eventually, some banks will offer something competitive. Once that happens, so many dissatisfied customers who know they’re being ripped off because there aren’t at the moment any other options, will bail and go somewhere else.

That, will fix the problem and the graph will show a decline in this particular revenue stream. Until then though, it will continue to climb.

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