Bank of America CEO: We Have a "Right to Make a Profit"

reply to post by Resonant


They have every right to make a profit. They have no right to make billions of dollars of profit at the expense of other people's livelihoods.

Originally posted by dawnstar
reply to post by Skorpiogurl
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what about those of us who found our mortgages had been transferred over to countrywide.....

just wondering here.....

Do you mean you had a HELOC or mortgage with Countrywide that was acquired by BofA?
If that's the case... and if it was a HELOC, I'm assuming the line of credit was previously frozen so you're stuck with a loan, with no access to funds, at a variable rate? Please let me know...

reply to post by CookieMonster09


Agreed!

reply to post by buddhasystem


Actually.... I think it's funny that most people assume the interchange fees are charged by the bank. If you've worked in banking, you would know that these fees are set by the credit card networks and are the largest component of the various fees that most merchants' pay for the privilege of accepting credit cards, representing 70% to 90% of these fees by some estimates, although larger merchants typically pay less as a percentage.

Interchange fees have a complex pricing structure, which is based on the card brand, regions or jurisdictions, the type of credit or debit card, the type and size of the accepting merchant, and the type of transaction (e.g. online, in-store, phone order, whether the card is present for the transaction, etc.). Further complicating the rate schedules, interchange fees are typically a flat fee plus a percentage of the total purchase price (including taxes). In the United States, the fee averages approximately 2% of transaction value.

Aside from the choice of which credit card they would like to use, banks have no say when setting the fee structure. The merchant, depending upon the size, does have the power to negotiate the fee with the credit network.

Unless you are talking about goods and services tax to financial services, or the input tax credit, investment management has little to do with interchange fees or reverse interchange fees.

Most information I got was from Bloomberg and Consumer Reports. I'll see if I can find the link.

What is the goal of this protest? The people want to make an impact on Wall Street and the banks that creates change in the current practices.

They are going about it all wrong.

The only way to make an impressionable impact on a bank is to hit them in the wallet.

The IRS requires that EVERY cash withdrawal over $10,000 be reported to the IRS. There is substantial paperwork involved in each of these transactions. The banks try to avoid these cash transactions because of the labor required to report these transactions every day until the end of the year. If one transaction occurs on January 1st, the transaction must be properly reported everyday (365 days) until the end of the year.

BEAT THEM AT THEIR OWN GAME.

SO if people want to impact a banks bottom line and overwhelm them with expenses, PEOPLE should withdraw $10,000 and then re-deposit the money. Then the next day, withdraw $10,000 and the next day re-deposit the funds. Keep doing this and the banks not only have to report the transaction once, but they have to report the same transaction again and again.

After one has withdrew and deposited 50 times, the bank will have to report these 50 transactions every day until the end of the year. This will keep a bank employee busy for hours each day just dealing with these 50 transactions well after a person has permanently left the bank.

This will force the banks to change or GO Broke.

Think about it.

If one million people exercise their right to withdraw their money over and over, there would be 50 million transactions requiring extensive paperwork every single day. 50 mllion x 365 = 18,250,000,000 transactions that have lengthy IRS reporting requirements.

Now that is leveraging your money.

Not through charging intrest and the fractional reserve system they dont. Its theft. People used to be hung for this.

Originally posted by Skorpiogurl
reply to post by buddhasystem

 

Actually.... I think it's funny that most people assume the interchange fees are charged by the bank. If you've worked in banking, you would know that these fees are set by the credit card networks and are the largest component of the various fees that most merchants' pay for the privilege of accepting credit cards, representing 70% to 90% of these fees by some estimates, although larger merchants typically pay less as a percentage.

Yes, I do know that. In the end, this doesn't matter to the consumer. It would have been a fairer thing to do to just terminate the debit card service altogether until these "credit card networks" lower their outrageous fees. Maybe $0.44 fee per transaction made sense back 25 years ago, but clearly, these days it's just fleecing. It's about as artificial as the price of CDs 15 years ago and you know what happened to that business model.

You are right in your post about the cost structure. But the numbers are still saying that the system is broken.

Perhaps everyone should just go back to writing paper checks. No doubt the banks hate them and they cause quite a bit more paperwork for all involved.

reply to post by buddhasystem

Yes, I do know that. In the end, this doesn't matter to the consumer. It would have been a fairer thing to do to just terminate the debit card service altogether until these "credit card networks" lower their outrageous fees. Maybe $0.44 fee per transaction made sense back 25 years ago, but clearly, these days it's just fleecing. It's about as artificial as the price of CDs 15 years ago and you know what happened to that business model.

You're right. The system is broken, and has been for a long time.

Right.. I made a small fortune on a one year CD some years ago. We'll never see those days again!

Believe me... I agree with you on most points and I'm also looking forward to the demise of BofA and other big players who are sure to follow suit. However, I'm tired of people being financially irresponsible and then playing the victim, know what I mean?

I don't know about anyone else but when I got my mortgage and when I opened my checking/savings accounts, I read the contract and understood the terms before hand. Who does that anymore?

No one has the inherent "right" to make a profit. How they run their business determines whether or not they do make a profit. Writing millions of fraudulent loans, ripping off savings and checking customers, scrambling deposits in order to produce overdraft and late fees, etc are not the things that will make you a profit in the end. So since BOA did this they have no right whatsoever to make a profit nor do they deserve to make a profit. They deserve to be broken apart and nothing less than that. Their investors deserve and have earned the "right" to lose all their money. There are plenty of institutions do deserve a profit, and I think they would all be willing to pick up where BOA left off.

reply to post by sligtlyskeptical

Writing millions of fraudulent loans

Those were originated with Country Wide.
Can anyone be responsible for their own financial health?

Just because I get a piece of paper that tells me I can buy a half a million dollar home, doesn't mean that I can.

When my bank told me I could do a HELOC because my house was worth twice as much as what I owed, my first question was "what happens when the RE market tanks and my house loses value?" But these days it seems that people are so greedy. They want everything right now. It doesn't seem like many people know how to save up for the things they want anymore.

Here is neat trick, some banks will let you get away with it, some won't:

Assuming you have a full time job with direct deposit and a HELOC with funds that you can still access...

Use a zero percent credit card for ALL of your montly purchases: Food, gas, coffee, whatever. Also use it to pay ALL of your monthly expenses: Electric, water, car payment, mortgage, other credit cards, whatever.

In the meantime, set up your direct deposit so that 100% of your pay goes directly to the HELOC as a bill pay.

Assuming that your monthly income is higher than your monthly spending & expenses.

At the end of the month when you get your credit card statement, use one of your HELOC checks to pay the full balance on the credit card.

A few things are happening here... You're not paying interest on any of your purchases since you're using a zero percent interest credit card. Since your direct deposit (weekly or bi-weekly) is being sent directly to the HELOC, you're only paying around 3 days worth of interest on the loan per month vs. 30 days, and you're taking about 10 to 15 years off the maturity date of the loan.

This is only going to work in your favor if you spend less than you make and if the institution that services your HELOC has the option of free checks, no penalties for using the checks and no penalty for early pay-off.

Maybe $0.44 fee per transaction made sense back 25 years ago, but clearly, these days it's just fleecing.

Not really. This is $0.44 on average for a typical $38 debit transaction. So, taken in its proper context, the fee is approximately 1.16% of the transaction. It's not a straight $0.44 on every transaction.

As someone else so eloquently explained earlier, these fees are complicated depending on a whole host of factors (including how the card is actually processed itself), and the retailer does have the power to negotiate with the processor.

My whole thing about this issue is that people pay $100+ annual fees all the time to keep their favorite credit card. This is essentially no different. If you like your debit card, and enjoy using it, then you pay an annual fee. If you don't want to pay the fee, then pay cash. No harm done.

To call it "fleecing", however, is over the top. Banks have overhead. Anyone running a business understands that there is a cost for doing business, and in today's day and age, it's not cheap for banks to keep the lights on, meet their payroll, and stay in business. You just have to look at the hundreds of banks that have failed in recent years to understand that few banks understand the concept of cost structure and value.

Banks that give away everything for free are usually the first ones to go belly-up because they don't have a handle on their true cost structure.

Large banks, for all of the complaints about fees, at least understand that there is a cost to doing business with the bank, and a bank's products and services have an inherent price tag. You have to credit Bank of America with being transparent about the cost to do business, and being up front about those costs.

Every consumer loves free - Who doesn't? But there is a heavy price tag to pay for tellers, computers, bank buildings, ATM machines, etc. -- all of the expenses associated with running a traditional brick and mortar bank.

Funny enough, all of these credit unions are so hyper ecstatic that they are taking clients away from the big banks. In reality, they are taking all of the clients that are low profit, freebie-seekers, and high complaint "toxic" customers. The big banks are more than happy to unload these unprofitable clients to a credit union, I am sure, and retain the high value, profitable clients that keep the big banks in business.

PEOPLE should withdraw $10,000 and then re-deposit the money. Then the next day, withdraw $10,000 and the next day re-deposit the funds. Keep doing this and the banks not only have to report the transaction once, but they have to report the same transaction again and again.

Creative? Yes, and it sure makes for a fun comment in a forum like this. But not advisable from a practical level. These rules are in place to catch bad guys doing bad stuff.

I'm also looking forward to the demise of BofA and other big players who are sure to follow suit.

The big banks got big because they found a way to be more profitable than their competitors -- gobbling up competitive banks because they had the profits to do so. Profits. Capitalism. (I know these are foreign concepts around here, but hey, it's worth a shot.)

These big banks are here to stay. Only the power of the Federal Government could force these banks to break-up into smaller banks. Ultimately, at the current pace of bank acquisitions, we will ultimately have only a single banking institution in this country.

No one has the inherent "right" to make a profit.

True. It must be earned.

So since BOA did this they have no right whatsoever to make a profit nor do they deserve to make a profit. They deserve to be broken apart and nothing less than that.

Opinion. BOA is very profitable, aside from the Countrywide Mortgage acquisition, which has drained profitability. All of there other divisions are doing quite well.

reply to post by Skorpiogurl


sorry, not really sure even what a HELOC is, so doubt if we have one???
and I really don't think the mortage was originated by countrywide, but it has been transferred a few times, countrywide has held it also, and eventually ended up at bank of america.....


and well, we didn't really bite off more than we could chose, we didn't buy a mc mansion, but an older home, or originally, our payments we less than it would have been if we had rented a similar house....

still are!!!

our house is close to a hundred years old and will still be standing when all those mac mansions fall to the ground because of shoddy workmanship and cheap materials!!!

When did these banks get it twisted and start thinking they were doing US a favor by letting them hold our money?
No one ever needed to use a bank. Ever.

reply to post by dawnstar


Mc Mansion... hahaha

Right. I am not saying that everyone did that. But a lot of people did.
HELOC = Home Equity Line of Credit. Ya know... take a second loan based on the value of your home.
It's never a good idea to use your home like a bank account.

Closed my account with Skank of America a long time ago. Will never look back

When did these banks get it twisted and start thinking they were doing US a favor by letting them hold our money? No one ever needed to use a bank. Ever.

When did consumers begin thinking that they had an inherent right to be lent money with no down payment, for a house they couldn't afford in the first place? And since when did consumers start thinking that all bank products and services should always be free?

If you don't like banks, then don't use them. Better yet, go work for a bank, and see if you can change the "system" from within if you feel that strongly about it. You might have a completely different perception if you personally witnessed the banking industry from the other side of the fence. You would get to witness firsthand that not every bank client is as angelic as you might think.

Closed my account with Skank of America a long time ago. Will never look back

With all due respect, I am sure that in most cases, the feeling was mutual. After all the collection calls, overdrafts, charge-off's, unreturned phone calls, and vociferous complaints about "fees", ad nauseum - all amounting to losses and not profits for the bank -- I am sure the bank was more than happy to see another "toxic customer" take a walk to another institution. (Don't take it personal. I am sure your case was "different".)

Originally posted by CookieMonster09
When did consumers begin thinking that they had an inherent right to be lent money with no down payment, for a house they couldn't afford in the first place?

What does it have to do with the topic of this thread? Seriously?

If you don't like banks, then don't use them.

Is that the usual thing to say to whitewash price gouging? Because charging $0.44 per simple, 100 byte transaction does seem like a case of unabated gouging. I do realize that's the network like VISA etc doing this and not necessarily the bank itself, but still.

You might have a completely different perception if you personally witnessed the banking industry from the other side of the fence. You would get to witness firsthand that not every bank client is as angelic as you might think.

Been there, done that... Still, what does "angelic" have to do with anything? You seem to have a knack for posting irrelevant insinuations.

With all due respect, I am sure that in most cases, the feeling was mutual. After all the collection calls, overdrafts, charge-off's, unreturned phone calls, and vociferous complaints about "fees", ad nauseum - all amounting to losses and not profits for the bank -- I am sure the bank was more than happy to see another "toxic customer" take a walk to another institution. (Don't take it personal. I am sure your case was "different".)

Again and again, what does "toxic customer", whatever you meant by this, have to do with topic at hand???

If the customer does not meet his/her obligations as legally defined, they sure are due to get some heat from the bank and maybe law enforcement. But it's 100% irrelevant in the framework of what fees get charged.

I also notice that you included 'vociferous complaints about "fees"' in your ad-hoc definition of "toxic customer". Wow, just wow.

I'm about as angelic a customer as any bank will ever hope to get. I keep tons of $$$ in my account (for real) and let the bank loan these monies to someone else at a considerable APR, and I really don't get any cut off that since the interest is close to zero on consumer accounts. But same goes for any customer, really, even if they only have $1100 to their name. You seem to indicate that people by and large are losers who deserve to be charged $0.44 per simple card swipe, you really are going out of your way to try and prove that people are swine and deserve any gouging that comes their way. I despise that kind of attitude.

What does it have to do with the topic of this thread? Seriously?

Because there are 2 sides to this debate. First, the side of the "disgruntled" consumer that is claiming foul play against the banks by alleging "gouging of fees" for use of a debit card. The second side is the side of the bank, who is being gouged by the nefarious Durbin Amendment, which interferes with the private marketplace by dictating the profit margin between 2 private parties - the bank and the retail vendor.

Banks stand to lose tens of billions of dollars due to the Durbin Amendment and its interference in the marketplace. Some are estimating the banks stand to lose as much as $36 Billion over the next couple of years.

We certainly have heard from the "consumer" loud and clear. There are 2 sides to every debate. In the interest of fairness and a level debate, the other side's viewpoint should not be kept silent.

Is that the usual thing to say to whitewash price gouging? Because charging $0.44 per simple, 100 byte transaction

Erroneous on all accounts. The bank isn't charging $0.44 on all transactions. Do your research, or read my prior retort to this falsehood. The $0.44 number is the average fee charged for the average $38 debit card transaction.

That's a fraction over 1 percent, or a penny on every dollar transaction. Hardly price gouging.

Contrary to popular opinion, it actually costs money to issue debit cards, process transactions, maintain computer infrastructure, provide fraud protection on debit cards, send out marketing literature, maintain a web site, etc. There is a cost structure, and the retailers aren't going to cover that cost structure anymore due to the Durbin Amendment.

Banks, therefore, are doing the only sensible thing they can: simply passing on the cost structure to the consumer - If you like the debit card, you pay an annual or monthly fee. Don't like the fee? Pay cash. Simple enough.

Customers that are upset, will leave. Most of these will be unprofitable clients to the bank anyways, because they want every bank product and service for free. Like any good business, the banks are more than happy to rid themselves of freeloading clients that are unprofitable.

Been there, done that... Still, what does "angelic" have to do with anything? You seem to have a knack for posting irrelevant insinuations.

The gentleman bragged that he walked away from the bank. I was simply noting that, oftentimes, the bank is all too happy to rid itself of "toxic" clients that are both unprofitable, but also ridiculously expensive to keep. Not all customers are created equal.