Bah, Humbug! Bank of America Cancels Christmas for Alexandria Family

Photo by FLICKR/photos/ari/2347593532/ Scrooges at a Bank of America branch on Richmond Highway denied one of its longtime customers Christmas this year.

ALEXANDRIA, VA. - The Christmas holiday was effectively cancelled for one Alexandria family this week after a longtime Bank of America client went to his ATM for Holiday cash but found that his checking account had been completely depleted by a rapid succession of $35 overdraft charges.
 

Photo by RKO Pictures The story is reminiscent of "It's a Wonderful Life," the classic 1946 tale of banker greed run amok. "I feel like Jimmy Stewart in that movie; the people at Bank of America are like old man Potter...No amount of pleading will cause them to put that money back into my account so I can pay my utilities and put gifts under the tree for my kids," the bank's customer said.

"It's gone...all of my $840 in deposited wages went to fees from the Bank," the B of A customer told a reporter. "They charged my account 24 times this outrageous fee for only being overdrawn $128."
 
Because of the lofty overdraft fees, the man said he cannot buy Christmas gifts for his children and is facing disconnection of his household utilities over the Holidays.
 
To make matters worse, robocallers from the Charlotte, N.C. bank -- the largest bank in the United States and one of the most profitable in the world -- began calling the longtime Bank customer on Tuesday -- three days before Christmas -- scolding him for the $128 in bank overdrafts and demanding that it immediately pay them back $220 in additional fees for overdrawing his account, money that the bank said was not available in his personal checking account to add to its own $776 billion in bank reserves.
 
According to several studies, U.S. banks earned about $35 billion in overdraft fees last year. Last month, the Federal Reserve -- pressured by consumer complaints of such abuses -- implemented new rules outlawing excessive overdraft charges and streamlining bank practices to allow consumers to "opt out" of overdraft protection, thus curbing such abuses.
 
"There's been a failure to propose or enact necessary safeguards against a host of unfair practices dealing with bank overdrafts," said Eric Halperin, director of the Washington D.C. office of the Center for Responsible Lending. "The Fed acknowledges in its new rule that the fees charged for debit card overdrafts can 'substantially exceed' the cost of the overdraft itself. Yet, the rule does not prohibit institutions from charging an unlimited number of overdraft fees in a single day, even if the transactions are for small amounts, which most are. In fact, the typical debit overdraft is for $17. The typical fee a bank charges to cover that overdraft is $34."

Photo by RKO Pictures The greedy banker, Harry F. Potter, as played by Lionel Barrymore.

Halperin said he has been urging members of Congress to step in to stop the abusive practices the Fed has known about for nearly a decade, but has failed to address. Bills in the House and Senate, introduced in recent weeks by Rep. Carolyn Maloney (D-NY) and Sen. Christopher Dodd (D-CT.), would limit overdrafts to no more than one a month and six a year. The legislation also would require that fees be reasonable and reflect an institution's cost of covering an overdraft.

The longtime Bank of America customer, fearing retribution from B of A, asked not to be identified. He softly wept as he told the story and showed his statements to a Local Kicks editor, showing 24 overdraft charges at $35 apiece for such debit card charges as $1.32 for a Slurpee at a local 7-11, and $2.20 in stamps from the Alexandria Post Office. None of the debit card charges which incurred the hefty fees shown to a reporter were over $25. He also showed a reporter red-lettered disconnection notices from two of his home's utilities, as well as photos of his small children and wife.
 
"I had no idea I had even overdrawn the account," he said. "The bank told me it was my fault I'd overdrawn my account because I was not checking my account online and kept demanding to know when it would be repaid the extra $220...I told them that I needed the money to pay my utilities and to buy my kids Christmas gifts, but they didn't care...They pulled my entire last paycheck of 2009 out of my account and stuffed it into their own pockets. Then they kept demanding more money for something they called 'overdrawn account fees...' It's really sick..the greed and their lack of compassion around Christmas."
 

Photo by RKO Pictures Jimmy Stewart in "It's a Wonderful Life." Stewart plays the part of a savings and loan manager who misplaces $8,000 he was to deposit for his family's Building and Loan.

The story is reminiscent of "It's a Wonderful Life," the classic cinematic tale of banker greed run amok, which is screening several nights this week at the Old Town Theater on King Street. The 1946 film, produced and directed by Frank Capra, takes place in the fictional town of Bedford Falls shortly after World War II and stars Jimmy Stewart as George Bailey, a man whose imminent suicide on Christmas Eve gains the attention of his guardian angel.
 
Stewart plays the part of a savings and loan manager who misplaces $8,000 he was to deposit for his family's Building and Loan; when a greedy banker (Harry F. Potter, played by Lionel Barrymore) discovers it, he hides it. That day, the bank examiner is to inspect the Building and Loan's records. When George's frantic search fails to uncover the money, in desperation, he appeals to Potter for a loan to save the company, but Potter turns him down.
 
"I feel like Jimmy Stewart in that movie; the people at Bank of America are like old man Potter...No amount of pleading will cause them to put that money back into my account so I can pay my utilities and put gifts under the tree for my kids," he said.
 
A phone call to a bank spokesman from a reporter was not immediately returned, and repeated calls to the bank's Richmond Highway office were looped into a voice prompt system, disallowing contact with any of the bank's tellers or its branch manager. The customer said he would have to immediately pay the charges to the bank, or close the account and face further collection actions.
 

A cartoon from Punch Magazine, Vol. 152, June 27, 1917. "I warn you, Sir! The discourtesy of this bank is beyond all limits. One word more and I—I withdraw my overdraft."

On Dec. 14, President Barack Obama invited the heads of the nation's major banks to The White House and slammed them for being "fat cats" who don't get it, marking an escalation of tensions with the industry.
 
"I did not run for office to be helping out a bunch of fat cat bankers on Wall Street," Obama told "60 Minutes" after the meeting. "They're still puzzled why is it that people are mad at the banks. Well, let's see...You guys are drawing down $10, $20 million bonuses after America went through the worst economic year that it's gone through in decades, and you guys caused the problem. And we've got 10 percent unemployment."
 
Obama also knocked big banks for opposing a bill in Congress that would tighten regulatory controls over the financial industry, and expressed frustration with the same banks that the government has assisted.
 
In 2008, Bank of America borrowed $45 billion from the Federal government, on it way to earning $9.5 billion in earnings in 2009 and a $37 billion growth in revenues. On Dec. 16, Bank of America announced that its new CEO Brian Moynihan would earn $50 million in his first year on the job.
 
Bank of America's history dates to 1904, when Amadeo Giannini founded the Bank of Italy in San Francisco, for the purpose of catering to immigrants other banks would not serve.
 
Amadeo was raised by the Fava/Stanghellini family when his father was shot while trying to collect on a $10 debt, according to Wikipedia. When the 1906 San Francisco earthquake struck, Giannini set up a makeshift desk of a few planks over two barrels, lending money to anyone willing to rebuild. In 1930, Giannini renamed his Bank of Italy, calling it Bank of America.
Today, the sprawling bank, which services customers in 150 countries, is perhaps not one that Amadeo, the poor Italian immigrant founder, might recognize.

In August, BofA agreed to pay a $33 million fine, without admission or denial of charges, to the U.S. Securities and Exchange Commission over the non-disclosure of an agreement to pay up to $5.8 billion of bonuses at Merrill Lynch, which it acquired last year for $50 billion.

In January, after its $50 billion takeover of Merrill Lynch, Bank of America got a loan guarantee of $118 billion from the Federal government for potential losses at the company. This was in addition to the $45 billion given to them by U.S. taxpayers through TARP, which last week the Bank's CEO Ken Lewis said it would repay immediately. This, after the Wall Street Journal reported that it was operating under a secret “memorandum of understanding” from the US government that requires it to "overhaul its board and address perceived problems with risk and liquidity management.”

With the Federal action, The Journal said that the Bank has taken several steps, including arranging for six of its directors to resign. Still, it faces several deadlines with the Feds next year, and if not met, could face harsher penalties by Federal regulators.