Sometimes You Just Want to Unplug From The World

So yesterday was a bit weird.   I received a letter from Capital One, thanking me for "applying for a credit account from the above merchant," and informing me that they were "unable to approve" my application "at this time."  I examined "the above" and found "Best Buy Company."   Here's the problem: I hadn't applied for a credit card from Best Buy.

I was a little alarmed and called the number in the letter that had been provided for obtaining "specific reasons or to review" my application.   I think I reached someone who was in the U.S., but it quickly became clear that it was someone who was working only with scripts and had little or no idea what Capital One did or why.  I explained that I had not applied for a Best Buy credit card and she stumbled through changing scripts to the "fraud" script.  After a lengthy pause, she asked me for name, address, date of birth, and the "reference number" in the letter.  After several more pauses she told me that someone applied online using my name and that it was OK, because Capital One required "additional verification" so the application had been denied.   I asked if that meant someone had used my correct name, address, and date of birth.   I'm not certain what her answer was, because she stumbled through that part of the script also, repeating Capital One's requirement for "verification." 

She told me the "least she could do" (I swear that's what she said a couple of times) was put a notation on the application file that it had not come from me and she would also enter it into Capital One's "fraud database."   I asked if that meant that should I actually apply for credit from a business that uses Capital One, I would be subject to providing additional "verification" information.  Her response: "That's a good point."  I wanted to ask what was the "most she could do" but by that time, it was clear it was the same as the "least."  That was apparently all her scripts told her.

The letter also included information about the credit bureau Capital One had used, Trans Union, who I could ask for the information used from their records, since "our credit decision was based, in whole or in part, on information provided..." by Trans Union.  There was an 800 number to call, so I called it.  As might be no surprise, Trans Union has designed its phone system to shield their employees from any contact with the public, and all the options were for automated systems to buy one of their "products," or obtain a copy of my credit report.   There was no one to ask if my credit report, going forward, will show I was denied credit from Best Buy.

Just a couple weeks ago, we had to close a credit card account because the bank (not Capital One) had identified a questionable online charge, which in fact, was not made by us.  So they issued new cards.  I don't know if it's coincidence, or if I should be very worried about what's going on.   I know Capital One has had a number of humorous TV ads over the years, but my encounter with them makes me wonder whether they are a real bank or that they know what they're doing.  They are clearly not invested in customer service.

The credit bureau report I looked over yesterday showed nothing unusual, so for the moment, everything's OK.  I can't wait to see what's in the mail today.

Riverboat Gambler On The Fed?

It's clear that investment banking is nothing more than riverboat gambling with suits.  We shouldn't have riverboat gamblers on the Fed.  

Here's a petition to demand Jamie Dimon of JP Morgan Chase either resign or be removed from the New York Federal Reserve Board of Directors.

 

Why We Hate Banks Part Deux

OK, so here's an addition to my 2/25/12 rant.  I criticize when criticism is warranted and whatever the opposite of criticism is when warranted.  In this case, it's not really 'kudos' but I don't know what it is.

The Regional bank I didn't name that charged for each iPhone processed deposit isn't the only bank in town.   The really huge bank with which we also do business, has an iPhone app which does check deposits.  Much to my surprise, this mega-Bank does not appear to charge for each transaction.   I'll believe it when I see my statement, but so far, there doesn't seem to be a fee for the "privilege." 

And this bank is way more evil than the Regional bank....  And famous for devising new fees...

Banks and Profits

In this recent (12/16/10) story on Marketplace, we learned that the Federal Reserve is proposing to cap fees that banks can charge retailers for purchases made with debit cards.  In the current system, retailers are charged 2% per transaction for purchases we make with debit cards, with no limit on the fee.   If you buy something for $1, the fee is about 2 cents.   If you buy something for $100, the bank collects $2, and for a $500 purchase, the bank hauls in $10.  These fees are paid by the retailer, but the cost is undoubtedly factored into the prices the retailer charges customers.

The banking industry response (via Scott Talbot, chief lobbyist for an industry trade association) to the proposal is to threaten to make up the lost profits in other ways:

As the banks that are involved in the transaction are unable to recoup their costs for operating this service and allowing merchants to accept debit cards, we're worried that those costs will be shifted down to the consumers.
He says some debit cards may soon charge annual fees. Others may charge a fee for each debit card transaction.

So Mr. Talbot says that with a cap on the fees, banks will be "unable to recoup their costs."  Most of these transactions are electronic, so is Talbot implying that the transaction costs change for a $1 purchase vs. a $100 purchase?  If so, I'd love to hear more about how that works.  If not, and I suspect that it does not, Talbot and his banks can whine somewhere else about how they're going to continue to fund their multimillion dollar bonuses and unconscionable profits.  

Every few years, banks go through cycles in which they decide that the small balance accounts are not generating enough profit and those customers lose their free accounts.  These less profitable customers are simply forced out of the bank to find banking services elsewhere.  Threatening that banks will start raising other fees doesn't impress me.  They've already done that in response to the financial reform law last year.

Banks (mostly) have no loyalty to customers, so we customers will gladly take our business elsewhere when they start charging annual fees for debit cards.

What's In It For Me?

Most every financial company wants me to switch to "e-delivery" these days.   Actually the campaign to wean me from paper statements has been going on for some time, but I've mostly ignored it.   

When banks and such started making it possible to download statements, I began doing so, mostly because it's a lot easier to store and find PDF files than paper ones.   At least for me, I can locate a particular document much more easily if it's on my computer than if it's in a file cabinet someplace in the house.   And of course, it takes next to no space to save PDF files vs. paper.  However, I still find it easier to peruse a paper statement to see if anything unusual appears.  

Now banks and stock shareholder agents (e.g., Computershare.com) are getting more forceful in their efforts; more and more I'm finding I no longer have access to the downloadable statements unless I agree to forgo the paper version.

What really frosts me, are the reasons they give to convince me to "go green."   Do you see what is missing from this example?  These are largely bogus reasons:  I can retrieve documents 24/7 from these company websites, I don't have to print anything when they send me paper documents, and I can already save documents to my computer if they allow me to download them.  Nothing is said about the benefits to the company: they save postage involved in mailing statements to me and they save the cost of paper.  These are significant economic reasons for the company to want me to switch, much greater than the lame benefits to me if I "Sign up for eDelivery."  

How about if they give me a nominal fee, like $5 per quarter to forgo the paper statements?   Fat chance.  Another example of big business thinking we're all idiots.

Banks Are Not Your Friend

Anyone who is interested in hearing about how Big Banks are only interested in making money, not in benefiting customers or society, may want to listen/read to this article on Marketplace last week (8/6/09).

Up front, I want to say that it seems like a lot of people who have mortgage problems right now have no one to blame but themselves. Some never read contracts. Some should never have tried to buy any house, based on their income and past credit status. Some should never have bought houses that were far beyond their means. That said, some were mislead by bankers, brokers, and realtors.

The Marketplace story deals with the Federal government's attempts to get the banking industry to modify the mortgages of people who are struggling to hang on to homes in this recession. The Obama Administration recently released some statistics on how the mortgage modification efforts are going, and while some Big Banks are having some successes, some others are not. So if you're looking for another Big Bank to despise, you might want to add Wells Fargo to your list.

It seems that one of the obstacles to modifying mortgages is the same thing that some say started the entire mortgage meltdown and Big Recession: mortgage backed securities. These were loans that were bundled together with other mortgages and sold to investors. Unfortunately, many of these bundles contained less than stellar loans, and when people began defaulting, well, the rest is history. Since many of these Big Banks didn't retain the loans they made, but sold them off as fast as possible, some might say that they had relatively less incentive to make solid loans from the outset.

When the banks bundled these loans together and sold them off to investors, some banks, like Wells Fargo, remained as the loan "servicer." So while the homeowner sends his/her check off to Wells Fargo each month, the bank technically doesn't own the mortgage any more.

"...Wells Fargo sold the loan to Goldman Sachs. Goldman then bundled it with nearly 3,000 other loans, and sold off that package of loans to investors as a mortgage-backed security. It kept Wells Fargo on to collect payments from homeowners."

You may recall Goldman Sachs. Those are the investment bankers that reported record earnings for the second quarter of 2009.

At any rate, when homeowners now ask for lenders to modify their mortgages so they can keep their heads above water and keep their homes, some are being told they can't modify them because the "investors" won't allow it. In one particular case covered in this article, the reporter investigated the contract covering the mortgage bundle to the investors and it contained no restriction at all on the loan servicer's (Wells Fargo) ability to change virtually any aspect of the mortgage.

The situation seems to be such that once again, the bankers and their lawyers are mostly covering their backsides. If a contract is even slightly vague about what the loan servicer can do, the Big Bank will do nothing in order to avoid getting sued. The homeowner is left holding the bag.

However, in the case that's highlighted in the article, the reporter examined the contract sold the mortgage in question to investors, and it contains no limitations on Wells Fargo's right to modify the mortgages. In essence, this means that if it wanted to help the homeowner, it could. What was Wells Fargo willing to do? They offered to reduce the interest rate from over 12% to a little more than 4% (this mortgage had started out at about 7.5%). That sounds promising, but they also insisted on adding about $80,000 to the amount of the loan. The extra was an accumulation of unpaid fees, accrued interest, late fees, and what the reporter called "numerous other fees." That's $80,000 added to a $235,000 mortgage. The reporter also said that the contract did not require adding the "overdue debt" to modified mortgages. Predictably, Wells Fargo refused to answer the reporter's questions and insisted the new monthly payment offer was "reasonable." So we are free to reach our own conclusions and mine is that if Wells Fargo wanted to help these homeowners, it could. However, it appears that it is more interested in maximizing its own profit. This isn't a big surprise; after all, "the business of business is business." However, in the midst of the Biggest Recession since the Great Depression, wouldn't it be patriotic and symbolic if Big Banks acted like they cared? They don't have to actually care, just the appearance of caring would be nice.

So remember, Big Banks are not your friend and the only thing that they're interested in is separating you from your money. If a Big Bank (or any other Big Corporation for that matter) says they have your interest at heart, grab your wallet and head for the door as fast as you can. Perhaps it would also be reasonable to patronize a bank other than Wells Fargo for your banking needs.

I think my next post might be about why we need to bring back usury laws.... :-)