Banks that benefited from bailout funds through the Troubled Asset Relief Program are being investigated by the Congressional Oversight Panel, the body that is in charge of overseeing bank bailout programs, according to the Wall Street Journal. The panel is looking into the lending practices of bailed out banks, many of which have hiked fees and interest rates on customers during the past six months.
From the Journal:Last week, for example, Bank of America Corp. told some customers that interest rates on their credit cards will nearly double to about 14%. The Charlotte, N.C., bank, which got $45 billion in capital from the U.S. government, also is imposing fees of least $10 on a wide range of credit-card transactions.
Citigroup Inc., another recipient of government cash, is trying to entice customers to borrow at high rates. "You could get $5,000 today," Citigroup's consumer-finance unit wrote in fliers mailed to customers. The ads don't disclose that the loans often carry annual interest rates of 30%.
The interest rates "compare competitively to similar offers in the market" and vary depending on the creditworthiness of borrowers, a Citigroup spokesman said. Citigroup has received $50 billion in capital from taxpayers, and the U.S. government will soon own as much as 36% of the company's common stock.
"To continue to offer competitive products and services and responsibly lend in this current environment, we must adjust our pricing," said a Bank of America spokeswoman about the company's new fees and interest rates.
We've been talking about these rate and fee hikes for at least six months. Wonder what took the regulators so long to get around to this. If my email is any indication, and it often is, many people will be pleased with this latest development.
That said, anyone want to wager a bet as to whether this ever turns into anything more than a probe? I'm not holding my breath. I'll be very surprised if this barking ever turns into a bite.
Read the rest of the story here.
Monday, April 13, 2009
Bailed-Out Banks Face Investigation Over Fee And Rate Hikes
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9 comments:
Gotta love the Australian version of WSJ. :)
Awesome!
Got a surpise from Chase last week, they're now holding all payments for 7 days. No explanation as to why and the overseas customer service can't speak English clearly enough to make a solid point in the secured message system. This is an insideous way of minimizing their exposure. They don't cut your line they just cut your access to it for those of us actually paying bills on time. I hate Chase.
Grogo, I remember writing something about Nordstrom last year. Same deal. At Nordstrom they can hold your payment for up to 21 days. No access to the limit until the payment clears. Sounds as though Chase is exercising its right to hold payments. Somewhere, some place, there is a disclosure saying that Chase can do it.
So why doesn't the US just formally nationalise the banks?
This now marks the second attempt at political interference in the banks. It would be so much better if the US just ripped the band-aid and got on with it.
Bank of America and Citigroup are insolvent. They're trying to raise as much money as the can so they can pretend to stay afloat longer.
How typical of congress, create a problem and then run then try to pretend to run to the rescue when things blow up.
I think Congress would be better served investigating itself.
Carnap!
+1.
Congress for years has passed laws that don't apply to it. It is time for a change, from Wall Street to Washington D.C. They are all crooks and liars. 2 sides of the same coin.
All I can say is good for them!! Talk about the party being over!!
I have accounts with Chase and Nordstrom.
Payments made electronically are posted and cleared within a day or 2. My credit line availability is restored right after the payment.
However, I did receive a notice in the mail indicating Nordstrom could withold my avail credit line for something like 21 days?
But I have never seen a payment not post and credit like any other bank....
I dont send anything in via snail mail - ever.
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