Latest news with #A.T.M.
New York Times
15-05-2025
- Business
- New York Times
No, You Don't Actually Have a Right to a Bank Account
When Brian P. Brooks was a financial regulator during the first Trump administration, he would hear complaints about 'debanking' and force himself not to roll his eyes. The expression was being used by representatives of some rather polarizing businesses, such as private prisons and fracking operators, who complained to Mr. Brooks, the acting comptroller of the currency, that their bank accounts were being closed without warning. His reaction boiled down to the free-market equivalent of tough luck. He didn't see it as his job to compel banks to do business with anyone in particular. Five years later, Mr. Brooks, who now runs a brokerage firm and advises cryptocurrency companies, says he is convinced there is a problem. He is among a growing number of people in the finance world who have urged Trump administration officials over the past half-year — in meetings in Washington and at the Mar-a-Lago club in Florida — to crack down on the practice. 'The electric company can't deny you service because it doesn't like your looks, and neither can a bank,' Mr. Brooks said in an interview. In recent months, the cry of 'debanking' has rung out from conservative and religious groups and the Trump Organization to accuse lenders of politically motivated discrimination. It is coming from cryptocurrency companies that say regulations bar them from opening ordinary bank accounts, and from liberal lawmakers speaking up for individuals and businesses whose A.T.M. cards are shut off without warning. President Trump and Treasury Secretary Scott Bessent have brought up the issue, and so has Senator Elizabeth Warren, the Massachusetts Democrat. And dozens of state attorneys general have written to the chief executives of major banks demanding answers. But if there is a political consensus that debanking is a problem, there is less agreement on what to do about it. Or on what it is at all. The term is most often raised by those who argue that the financial system has locked them out because of their political positions. Those denials can include closing accounts or refusing to provide financing or underwrite loans for certain types of activities. No legal right to a bank account exists, however. Banks are prohibited from discriminating in lending on the basis of protected factors including race and gender, but are generally permitted to eschew categories of customers deemed too risky, such as adult entertainers or cash-dependent small businesses. What appears as prejudice to some is, to others, simply a bank's using its discretion to run a profitable business and avoid depositors who raise red flags. Lawmakers say there have been thousands of debanking complaints over the past few years, 'The debanking hysteria is all smoke, no fire,' said Adam J. Levitin, a professor of law and finance at Georgetown University. 'It's a lot of self-serving and unverifiable allegations from risky businesses and customers.' But even lenders and regulators who hadn't treated these complaints as a priority now say publicly that they are studying it seriously. The Trump administration told Congress in March that it would cease enforcing an esoteric bank regulatory tool — an assessment of whether a banking activity may harm a bank's reputation — that critics of debanking have assailed. Administration officials have separately discussed with bank executives and regulators a number of potential moves, including issuing a presidential executive order on the matter and reviving a proposal from the first Trump term that would force large banks to provide 'fair access' to their products, according to two people who have discussed the matter with administration officials but were not authorized to speak publicly. In a sign of how much the tide has shifted, the same bank lobbying groups that fiercely fought a fair-access rule for the past few years have signaled that they might not object if it is attempted now. Coal Companies and Debt Collectors The debanking conversation tracks back to the aftermath of the 2008 financial crisis, when regulators enacted rules to deter banks from lending to risky businesses. An Obama administration program, Operation Choke Point, cracked down on bank accounts for some payday lenders and gun-related businesses. The first Trump administration dropped the Choke Point initiative, and Democrats also began arguing that a rash of small-business account closures was evidence that something needed to be done to curb debanking. In late 2020 the Office of the Comptroller of the Currency, under Mr. Brooks, said it saw evidence that the five largest banks in America — JPMorgan Chase, Bank of America, Citi, Wells Fargo and U.S. Bank — had stopped providing banking services to fossil fuel companies. In one instance flagged by the attorney general's office for Wyoming, Wells Fargo's website advertised that the lender would deny services to coal mining companies. The web page has since disappeared, and Wells Fargo spokeswomen declined requests for clarification on the bank's current policies. But other examples commonly cited by conservative media in recent years are disputed, such as the case of Indigenous Advance, a Tennessee Christian charity active in Uganda. The charity, with the help of a religious advocacy group, Alliance Defending Freedom, filed a complaint with the state's attorney general in 2023, arguing that Bank of America had apparently closed its account because the lender disagreed with its religious views. Bank of America firmly denied that, saying that Indigenous Advance was involved in debt collection and that the bank refuses to serve such entities. Jeremy Tedesco, senior counsel at Alliance Defending Freedom, said Bank of America had not given that reason when it closed the account but had raised it only four months later, after the media began writing about the case. One thing that isn't disputed: The Tennessee attorney general's office did not pursue the case. A Personal Matter For Mr. Trump, the issue appears to be both personal and political. The first lady, Melania Trump, wrote in her recent memoir that a bank had dropped her and the couple's son, Barron, though she cited no evidence and her office declined to provide any. And in March, the Trump Organization sued Capital One in a state court in Florida, accusing the bank of 'unjustifiably terminating' more than 300 of its bank accounts after the Jan. 6, 2021, attack on the U.S. Capitol because of ''woke' beliefs.' A Capital One spokesman denied that the bank closed any accounts for political reasons, but declined to provide any other reason for Trump account closures. A White House spokesman, Harrison Fields, said in a statement, 'The White House is, of course, concerned with the illegal abuse of power by banking institutions and their regulators designed to eradicate conservatives from public life.' The topic has also given Mr. Trump an opportunity to reward the crypto industry, which contends that it is de facto debanked by regulatory conditions under which banks can open accounts for crypto companies. The industry says these guidelines have made it difficult to engage in even basic banking services. ' In a statement, a Treasury spokeswoman called debanking 'un-American' and said Mr. Bessent had asked regulators to address the issue of 'reputational risk.' Some critics of debanking have said banks should not be allowed to use this risk as justification to refuse banking services to potential customers. 'The Treasury Department remains committed to ensuring that the banking system operates with integrity and provides fair access to Americans.' Senator Tim Scott, Republican of South Carolina, has advanced a bill that seeks to address debanking concerns directly. The major bank lobbying groups support the bill, which one prominent bank attorney, speaking anonymously to avoid angering policymakers, called 'an exercise in self-preservation.' The Federal Reserve, too, has said it is looking into the issue. Late last month, the Fed withdrew directives that required banks to notify it before doing business with crypto clients — one of the more hated rules for crypto firms. And in February, the central bank's chair, Jerome H. Powell, told lawmakers that it had removed language from a manual for its regional reserve banks regarding how they decide which financial companies gain access to the Fed's payments system. The guidance on these master accounts previously urged the reserve banks to 'consider the conduct of the institution and its leadership and whether association with the institution poses undue reputational risk.' It also raised the issue of whether the institution in question was engaged in 'controversial commentary or activities.'
New York Times
18-04-2025
- Business
- New York Times
The $5 Limit on Overdraft Fees May Soon Be Struck Down
A $5 cap on fees for overdrawing your bank account balance is likely to be among the latest consumer protections from Joseph R. Biden Jr.'s presidency to fall. Congress voted last week to strike down the $5 cap on most overdraft fees approved by the Consumer Financial Protection Bureau late last year. President Trump is expected to sign the change into law, though the timing is uncertain. The change means that the biggest banks and credit unions will be able to continue charging hefty fees — often ranging from $15 to as much as $35 — for covering shortfalls when you write a check or use your A.T.M. card for more money than is in your checking account. Households that pay overdraft fees would have saved an average of $225 a year under the proposed rule, the consumer bureau said when it enacted the rule. Households that struggle to pay bills, save for emergencies and manage debt are more likely to pay overdraft fees, the Financial Health Network, a nonprofit focused on financial stability, has found. Such households are disproportionately Black and Latino, and most make $30,000 a year or less. For this group, which may lack options for affordable credit, overdraft fees compound financial challenges and 'can have a considerable negative impact,' the network reported in 2023. 'People with low incomes really bear the brunt of this,' said Nadine Chabrier, senior policy and litigation counsel at the Center for Responsible Lending. Consumers also won't see lower fees when they pay their credit card bills late. This week, the Trump administration scrapped an $8 limit on most card late fees, which hover around $32. According to the Pew Charitable Trusts, overdraft fees are unpopular, with 70 percent of Americans deeming a $35 overdraft fee to be 'unfair.' Most people would prefer to have banks simply decline transactions if they lacked funds in their account, Pew found, and 84 percent want the government to encourage banks to lower the fees. Banks, however, argue that 70 percent of bank customers find their bank's overdraft service 'valuable.' Consumers 'have indicated time and time again that they value and appreciate' the service, Rob Nichols, chief executive of the American Bankers Association, said in a statement after Congress struck down the cap. What exactly is an overdraft? An overdraft occurs when your checking account balance is too low to cover a purchase or withdrawal, but the bank covers the amount and, typically, charges you a fee. Overdraft fees began as a 'courtesy' in the late 1960s to help bank customers avoid bounced checks, according to Pew. As debit cards gained popularity, the fees became a significant source of revenue for banks — an estimated $12 billion in 2024, according to an analysis by the Financial Health Network. Does this mean banks will charge higher overdraft fees now? Not necessarily. The fee cap was not scheduled to take effect until October. So for now, at least, little has changed, said Jennifer Tescher, the Financial Health Network's chief executive. Scrutiny by the consumer bureau, along with competition from digital money tools, had led some big banks to eliminate or reduce overdraft fees in recent years, or to give customers more wiggle room to bring account balances out of the red before charging them. 'I don't expect banks to all of a sudden renege on positive changes they have made to overdraft policies,' Ms. Tescher said. Which banks have eliminated or reduced overdraft fees? It can pay to shop around to find banks with no or low overdraft fees, said Adam Rust, director of financial services with the Consumer Federation of America, although consumers must weigh the size of overdraft fees with other account fees that banks may charge. Some big banks have done away with the overdraft fees, although the details of how they handle overdrawn accounts vary. Some, for instance, may set limits — like $250 — on the size of the overdraft they will cover. Capital One eliminated overdraft fees in 2022. Its customers are not charged a fee if they overdraw their account and the bank covers the shortage, according to the bank's website. But if the shortage isn't covered 'promptly,' the bank may decline to cover further overdrafts and may close your account. Other banks that did away with the fees include Ally Bank and Citibank. Banks that have reduced their overdraft fees include Bank of America ($10), KeyBank ($20) and Huntington Bank ($15). How can I avoid overdraft fees? If your bank account does charge overdraft fees, make sure you understand your bank's policies and that the bank knows your preferences. At most banks, overdraft coverage means that the bank, for a fee, generally pays shortages caused by checks, automatic bill payments and recurring debit card transactions, like membership fees. But you must choose, or 'opt in,' to have optional coverage for shortages resulting from everyday debit card spending and A.T.M. withdrawals. If you don't elect coverage of debit and A.T.M. withdrawals and you overdraw your account, the transactions will simply be declined. (There's often no bank fee charged in those circumstances since many banks have done away with what were known as NSF or non-sufficient funds fees.) 'Make sure you are opted out for debit card transactions,' said Lauren Saunders, associate director of the National Consumer Law Center, if you don't want to risk overdraft fees for everyday spending. If you do want overdraft coverage as a backup, opt in. But be prepared to pay fees if you overdraw your account. Either way, it's smart to set up low-balance alerts, via text or email, to warn you if your account falls below a certain limit. Most banks offer the option to link your checking account to another account — a savings account, say — at the bank. If your checking account balance goes negative, funds are automatically transferred into your checking account to cover the shortage, often with no fee or, at least, a lower fee than one you would pay for an overdraft. That may mean keeping some funds in a savings account that earns a low rate of interest, Mr. Rust said. Many people now stash free cash in high-yield savings accounts at online banks, which tend to pay higher rates. But, he said, the overdraft transfer option generally isn't offered for accounts at outside institutions. Many banks and credit unions offer low-cost bank accounts with no overdraft fees through partnerships with Bank On, a nonprofit-run program that works with banks nationally to certify safe, low-cost accounts. You can ask a bank if it offers Bank On accounts, or search on the program's website. Thomas Rudzewick, chief executive of Maspeth Federal Savings in New York, suggested that consumers consider smaller institutions like his, which have no-fee accounts and are willing to work with customers to improve their budgeting skills if they run into problems overdrawing their accounts. Are there alternatives to using overdraft services? More banks are offering short-term installment loans or lines of credit, which can help people get through a cash crunch. The loans can be quickly approved, based on the account holder's track record at the bank. Payments can be spread over several months, and rates are lower than for high-interest 'payday' loans. US Bank's 'Simple Loan' offering, for instance, lets customers apply while logged in to their checking account to get a 'real-time' decision on borrowing $100 to $1,000. Funds are deposited directly into their accounts, at a cost of $6 for every $100 — roughly a 36 percent annual percentage rate. That means a loan of $400 has a fee of $24, according to the bank's website. (By comparison, traditional, payday loans can have triple-digit interest rates.) Other banks offering similar 'small-dollar' loans include Bank of America, Huntington Bank, Regions Bank, Truist and Wells Fargo. What about digital financial tools? Some financial technology firms or 'neobanks' promote banking services with no overdraft fees, but there's reason to be cautious about using such apps. While the firms team up with banks to hold deposits, they are not banks themselves, and your money may be vulnerable when it's in transit, as The New York Times has reported. The Federal Deposit Insurance Corporation recommends that if an app claims to offer federally insured deposits, 'you should identify which specific F.D.I.C.-insured bank or banks' will hold your money and confirm the bank is insured by searching in the agency's BankFind tool.
New York Times
28-02-2025
- Business
- New York Times
As Ramadan Nears, Syrians Feel the Pinch of a Cash Shortage
Days before the start of Ramadan, lines of people snaked down the stairs outside a bank in Syria's capital, Damascus, waiting for hours to withdraw the equivalent of about $15 for the requisite holiday shopping. The new government has imposed severe daily withdrawal limits of about that amount at Syrian banks, dampening what would usually be a festive time as many struggle to buy even the basics for the holy fasting month. 'That can buy maybe a kilo and a half of meat,' said Sleiman Dawoud, a 56-year-old civil engineer among those waiting in the A.T.M. line to withdraw that $15 — 200,000 in Syrian pounds. 'But what about the bread, and vegetables and fruits? Ramadan is coming, and we need to spend.' Ra'if Ghnaim, 75, a retired civil servant, fretted about how he would afford the tradition of giving children small amounts of money at the end of Ramadan as he waited to take out some cash. 'How are we going to celebrate and give gifts to the children?' he asked. This year, Ramadan falls three months after the ouster of the Assad dictatorship that ruled Syria with an iron first for more than five decades. The rebel coalition that has taken over the government in Damascus has instituted several economic changes. It opened the market to imported products. It eliminated bread subsidies — making the staple food 10 times more expensive. It laid off thousands of public-sector employees. And it capped cash withdrawals at A.T.M.s. The prices of many goods other than bread have fallen since the new government took over, but many Syrians still can't buy them because of the withdrawal limits in a cash-based economy where the widespread use of credit cards and e-payments has never taken hold. Getting cash out has become a part-time job of sorts as Syrians spend hours or even days trying to withdraw enough cash to live, much less splurge during a time of large family gatherings and feasts. As Syrian pounds have dried up and the government has started shifting economic policy, the currency has begun to strengthen after more than a decade of weakening. Before the Syrian civil war began in 2011, the exchange rate was about 50 Syrian pounds to the U.S. dollar. When the government was overthrown in December, it was about 15,000, but has since fallen. The Syrian Central Bank, Economy Ministry and Interior Ministry did not respond to questions. The Central Bank alluded to the withdrawal limits in a December statement, saying the measures would be temporary. But they have now lasted for months. This month, a planeload of newly minted Syrian pounds arrived from Russia, where they are printed, according to the state news media. The amount was not made public. 'They indeed do not have enough bank notes. They have a liquidity crisis,' said Karam Shaar, a political economist and senior fellow at the New Lines Institute, a Washington-based think tank, who has been meeting with Syrian officials. 'The current monetary policy that the Central Bank is considering is not finalized, and it doesn't seem to be coherent' he added. More than 90 percent of Syrians live in poverty, and one in four is unemployed, according to the United Nations. And on the ground, and in long bank lines across the country, many are suffering. 'We'll have to cancel the suhoor,' Mahmoud Embarak, a 60-year-old retired military officer, said of the pre-dawn meal that Muslims eat before the start of the daily fast. He said that the new government had recently cut his pension and that his family was now living off his wife's nursing pension. 'It won't be as happy of a time as it has been in the past,' Mr. Embarak added. Ahlam Kasem, 45, cringed at the mention of Ramadan. She was waiting in the bank line to withdraw 200,000 Syrian pounds (about $15) from her monthly salary of 380,000 (about $28) as a civil engineer with the agriculture ministry. 'They told us the government doesn't have any money, the Central Bank doesn't have, the banks don't have,' she said. 'We have so many questions and there are no answers.' So, along with her husband, she took a minibus from their town of Saboora, about 10 miles away, and paid 10,000 Syrian pounds each to get to an A.T.M. at the Damascus bank. She will have to make another trip on another day to withdraw the rest of her salary. That still won't buy much for her family of five — much less for the large gatherings to break the fast characteristic of Ramadan. 'There won't be dinner parties or anything' said Ms. Kasem, who is among the many civil servants who have been laid off with a severance of three months' salary. As she spoke, a man rapped on the bank's metal door, trying to get the attention of an employee inside. No one came. 'We have now gotten to point in Syria where even a cup of coffee may be too much of a hardship for someone to offer you,' she said. 'We're a very social people, but we've gotten to the point where we don't want to visit anyone so as not to put any pressure on them for even a cup of coffee, much less lunch or dinner.' Those concerns were top of mind at the Bab Sraijeh market, a bustling cluster of shops and street vendors along a cobblestone street in the old city of Damascus. The sound of motorcycles driving through occasionally drowned out the competing offers that sellers were yelling out. 'Ten, ten, practically free,' a young man hollered repeatedly, offering a kilogram of olives for 10,000 pounds, less than one dollar. At a small shop selling Ramadan decorations — wooden crescent moons, colorful lanterns and string lights — it was mostly quiet. Occasionally, someone would inquire about the price of an ornament and then walk off without buying anything. 'People don't have money,' said Nour al-Hamwi, 37, who was helping her husband at the shop. 'The banks don't have money, Syria doesn't have money.' Last year, the items were flying off the shelves, her husband said. Now, people are buying only necessities. 'The Ramadan atmosphere will be weaker this year,' Anwar Hamid said. Fatima Hussain Ali, 56, and her husband, Ha'il Ali Jasser, 59, were each carrying several stuffed grocery bags of spices, cheese and flour as they made their way through the market. The staples of Ramadan — olive leaves, oil, rice, bulgur wheat — are cheaper than before the ouster of President Bashar al-Assad. But the couple, who have eight children, were still buying much less than in previous Ramadans. 'Prices are cheaper, but there isn't money,' she said. Except for bread, which has gone from 400 pounds to 4,000 pounds. She doubted they would host any dinner parties this year. If they did, she joked, they might have to ask their guests to B.Y.O.B.: bring your own bread.
