The cost — to the company — of Bank of America’s fees was all of my business. The final straw came when I found out the hard way that, when the bank automatically transferred funds from savings to checking to cover checks, it took the fee from the checking account, thus increasing the odds of further overdrafts. Somebody made the decision as to which account would decrease for the fee, and that slimy somebody chose the account that had already come up short.
That said, RI Senator Frank Ciccone’s latest legislation is, at best, poorly considered, and at worst, cynically misinformed. It’s of the genre of bills in which General Assembly members specialize whereby they try to come up with anti-annoyance legislation in order to distract from the fact that they’re ripping off their constituents much, much more than any corporation could dream of accomplishing:
During these times of economic distress, said Sen. Frank A. Ciccone III (D-Dist. 7, Providence, North Providence), banks are taking advantage of their customers by charging exorbitant overdraft fees.
In an effort to prevent Rhode Islanders from paying overdraft fees which can amount to $35 or more, Senator Ciccone has introduced legislation that would limit the overdraft charge to $5.00 for a check issued with insufficient funds.
Now, $35 sounds like a lot to me, although I’d note (with a smirk) that Democrats generally like the idea of fees (or taxes) reaching punitive levels to discourage particular behavior. More important, though, is the question of Ciccone’s research toward coming up with a number. Why $5?
I ask, because if Rhode Island forces banks to lower fees below a certain threshold, they’ll just increase rates for everybody to cover those whom they can no longer penalize. If, for example, it somehow costs BoA $15 to deal with an overdraft, but it can only charge the customer $5, then it will simply take the further step (for example) of totaling its relevant losses and dividing them up among its all of its customers.
Once again, it’s possible that the legislation would wind up making everybody pay for a limited group’s bad behavior.