So today I have two small posts bunched into one.  The first is a look at why banks aren’t lending, again.  The second was inspired by a recent bank fee I received.

Why The Banks Aren’t Lending, Again

You remember last year everyone was complaining about why banks weren’t lending?  The government wanted them to lend, but at the same time told them they couldn’t lend to people with crappy credit.  The banks responded by saying, “okaaaaay we don’t have anyone to lend to.”

Well now there’s a new reason.  The banks have figured out a way to make millions on the taxpayer’s dime.  The government, through the Federal Reserve and the Treasury has lent billions of dollars to the big banks.  The government obtains this money by selling treasury bills and bonds to investors.  Guess who those investors are, the big banks!  If you could borrow money at 1% and invest it at 3%, you’re getting a guaranteed 2% return.  In the unstable markets we’ve got these days, only this is guaranteed.

Meanwhile Congress half is having regulators reign in the lending to traditional customers like you and me, but the other half questions why the banks aren’t lending.  Shame on the banks for taking advantage of the taxpayer in this manner, but they’re doing nothing illegal.  It’s the government you should be disappointed in.  How on earth could the let this happen?  Oh yeah, it’s the federal government we’re talking about.

How Banks Can, But Won’t, Make Fees Easier

Thanks to the alert system set up on Mint, I was recently notified of a $20 fee assessed on my account.  This account has been idle for a few months so I wasn’t sure why this fee just showed up.

I explored the bank’s website looking for any explanation of fees.  I couldn’t find anything.  So I called customer service.  The first 15 minutes of the conversation was spent by the operator trying to determine what the fee was.  She couldn’t figure it out either.  Finally we did learn what the fee was; it was due to not maintaining a minimum balance on the account.  This was incorrect due to my previous arrangements with the bank but no matter.  The customer service rep gave me the fee back and I went on my way.

But I remain pissed as to why the fee just wasn’t explained to me on the website, especially in the friggin statement on the site.  It just says “fee”.  Why do banks do this?  They want to hide the reason from you because if you know exactly what the fee is, you might be more inclined to contest it.  They don’t want you to contest it because in the name of customer service they’ll probably give it back to you.

And it would be so easy to explain the fee in an online statement.  I have an IT background but you don’t need to know database of programming languages to figure this out.

Once a month, a system will ask a database for the following information “give me all the accounts of ‘type x’ with an average daily balance below ‘y dollars.’”  The system spits out a list of account numbers.  Next, another system will take that information, and deduct a fee of $20 on the account.  Because that fee is associated with just this kind of punishment, the system could easily be made to reflect an explanation of what the fee is.  But as I said before, they don’t.  An intern could do this in a week, an IT manager could have it working in a hour.  But they won’t.

If you leave today with a feeling of your government being the epitome of one hand not knowing what the other hand is doing, and hating your bank for hiding fees in obscurity, good.

By The Weakonomist

The Weakonomist is the founder of Weakonomics. Clicking the picture of the puppy will tell you more about him. If you like what you're reading consider subscribing to the blog, following him on Twitter, and checking out the related posts below. Please consider a donation if you really enjoy Weakonomics. Also keep in mind that nothing I say can be construed as financial advice.

categories: banking, business, government, personal