The next big battle between the nation’s financial giants and the Congressman who own them will be over interest rates and fees—an area where critics say the banks have been quick to pick up habits that would make Tony Soprano’s crew proud.
The Wall Street Journal is reporting the Capitol Hill committee monitoring the TARP program is looking into lending practices of bailed-out banks after complaints about increases in interest rates and fees.
Washington now gets to pick its poison. Hit the new fees banks have become fond of and the bailout bucks won’t be paid back as quickly. Don’t hit the new fees and see increasing pressure put on U.S. consumers and business who depend on credit to prime the economy.
The WSJ found three examples of the banks’ new lending habits:
•Last week, Bank of America Corp. told some customers that interest rates on their credit cards will nearly double to about 14% and also is imposing fees of least $10 on a wide range of credit-card transactions.
•Citigroup Inc. is trying to entice customers to borrow at high rates with ads promising: “You could get $5,000 today.” What they don’t say is that those loans often carry a 30% annual interest rate.
•U.S. Bancorp and Wells Fargo & Co. are offering “checking account advance” loans so customers using direct-deposit can get cash before its credited to their accounts. The short-term loans carry annual interest rates of about 120%.
Chart from the Wall Street Journal