Looks like some of our friends in the banking business are passing along the costs of their increased FDIC insurance coverage to some of their customers. According to an article from the Dow Jones News Service (July 29) the Federal Deposit Insurance Corp. (FDIC) assessed the nation’s banks $5.6 billion to restock its insurance fund after costly bank failures. And now some of the ‘big boys’ are passing that additional cost on to some of their customers.
Dow Jones noted that JPMorgan Chase & Co. paid $675 million out of second-quarter earnings and Wells Fargo & Co. paid $565 million. “But those two banks, along with many others, are passing their FDIC bills to some business customers,” the article said.
Both banks confirmed to Dow Jones that they are passing along the FDIC fees to some business customers, including some small businesses. A Wells Fargo spokesman said the fees affect business customers that account for a very small portion of its total deposit customer base.
Cincinnati-based Fifth Third Bancorp said it began passing its $55 million special assessment costs along to commercial customers in March.
Other banks, such as Bank of America Corp., KeyCorp., SunTrust Banks Inc., BB&T Corp. and Capital One Financial Corp., could not verify whether they charge fees to offset the assessment.
The article said line-item details of the fees aren’t readily visible and usually are found in “account analysis” or invoice documents, not on the account’s statement. It also noted banks levy the charges in a variety of ways, including basing fees on average account balance and fixed fees that mirror a bank’s assessment costs.
Credit Union deposits are Federally insured by the National Credit Union Share Insurance Fund who, dollar for dollar, is stronger than the FDIC. If and when any type of assessment is made to increase our insurance fund credit unions don’t pass along that cost to its membership. And besides, since we are ‘non-profit’ consumer cooperatives we aren’t driven to make profits for stockholders. That means we didn’t get into those risky business practices that caused the losses for the banks in the first place.
It just seems to me that since the banks are in business to make a profit for their stockholders it should be those stockholders who should pay the cost of this assessment and not the customer. But I guess that is just one more thing that really sets credit unions apart from the ‘for profit’ banking industry.
When we hear the traditional American folk song “On Top of Old Smokey,” many southerners think of escaping to the Appalachian Mountains for vacation. Splish, Splash!! Now think of a winning a trip to the Wilderness at the Smokies Hotel and Waterpark Resort! That’s right, refer a friend to be entered into a drawing to win this trip. A drawing for both the referring member and the new member will be held at the end of the entry period. For official rules and to print an entry ticket visit http://www.tvfcu.com/friends-family/ You have until June 30, 2010. The MORE you refer…the MORE entries you get…the HIGHER your chances of winning!
We want to say “Thank you” to all of our members! In celebration of International Credit Union Day, we are providing coloring activities for children and complimentary snacks for everyone. Please stop by any of our 12 branches!