Thursday, March 03, 2005

One step at a time on wealth-exporting ATM fees

The problem with 2 dollar ATM fees is that they nickle and dime our residents for the benefit of the owners of the ATM who are often out of staters. Any publicly-traded bank is owned by all sorts of wealthy people, few of whom are Illinois residents or taxpayers. Since we have lost our status as a banking capital, we have even fewer reasons to favor the banks over residents on the margins of public policy. A bill I drafted for Senator Ira Silverstein is a good example of that thinking - and also an example of the incremental march of progress. (There are no revolutions in the legislature. Everything is incremental).

the bill is SB 156. The original bill is pretty tough: no bank can do business with the state if they charge more than 50 cents for their ATM. Well, the banks didn't like that, and to be fair that might be less than their actual cost. So somewhere between what they can get away with and their actual cost is a better deal for Illinois because lower fees keep that wealth in state for our taxpayers. The amendment basically kicks the policy over to the Treasurer who has the authority and discretion to consider a range of consumer-friendly services a bank offers if the bank wants a state contract. We'll see if the banks oppose even this seemingly innocuous step. Tune in next week for news.

8 comments:

Anonymous said...

(duff)

I'm ignorant, so help me here -- do you have regs in Illinois regulating the late charges that creditors can provide? charges for check bouncing? fees to order new checks from your bank? In other words, why are you singling out these fees for special treatment? I mean, other than the fact that it's cheap and easy political fun.....

Marie C. said...

Dan, along the lines of what the previous commenter said, I do wish you'd come up with something we could sink our teeth into. I don't know about other towns, but in a town the size of Springfield, for years I've had no trouble avoiding other banks' ATMs (since they've been charging those fees). For the everyday consumer, it's things like the bounced check and stop payment fees that are the killers.

Marie C. said...

Of course, I just read the title to this post, so are we safe to assume this is the beginning of something bigger?

Dan Johnson-Weinberger said...

Hi Duff -- I'm not aware of many (or any) state regulations on late charges / check bouncing / etc. on state-chartered banks. The federally chartered banks are beyond the regulatory reach of the state altogether. So trying to use the state as a market participant seemed like a neat way to avoid any constitutional problems. And Marie, maybe those other consumer-friendly procedures are more important than ATM fees. To be frank, I was inspired by a Pat Quinn press conference where he highlighted the issue, and I thought I'd follow up on it. I can't promise that bigger things will come if this bill becomes law, but if you get inspired to try to improve this bill and/or pass a better one, I'd call that progress. Nothing is stopping a city or a county from passing similar ordinances that give the local government some market influence over the banks they do business with. DJW

Lazerlou said...

Dan,

I don't want to sound harsh, but you're off your rocker. There are many manifestaions of corporpate power illegally organizing and conspiring to defraud consumers and nickel and dime them, but atm fees just aren't one. Nickel and diming happens when corporation shave such market power that they can subtley tie other fees and charges tho the primary service for which the consumer pays. However, ATM location and atm fees are now on the top of the list of factors consumers consider in making their choice of bank and/or checking acccount. It is not a hidden charge, and there are really viable alternatice options.

Marxist types are not afriad of monopolies -economines of scale are good!- we are just afraid of monopoly power and exploitation of consumers and price gouging. Remember, even Karl imagined a few stages of capitalism necessary to get to the point where we can start talking eqaulity. The way bank atm fees are right now does not seem so bad to me. Bankof america has atms closes enoughto me such that I never have to incurr bank fees unless i;m out of town. God bless the benevolent onopolies (I'm not saying Bof A is benevolent, just that their atm distribution is not exploitation, rather prgeress.)

N. Y. Krause said...

I'm afraid I still don't get this "wealth-exporting" business. Would it really make a difference if the bank that owned the ATM was privately held, and the owner lived in Illinois?

Anonymous said...

It's encouraging to see that even the Marxists don't see the problem with ATM machine fees. I pay $0 fees if I use Citibank (my bank) and a fee if I use another bank's ATM. Why is it so hard to understand that $2 is not some arbitrary number chosen by fat-cats, but is rather the market limit on such fees. Banks could charge $5 (I actually paid $7 at Sound Bar) or even $10, but then no one would use their ATM's. $2 seems to be the limit that people will pay to avoid walking to their own bank (unless they're trapped at a disco or strip-joint). And the whole "wealthy owners" of privately-traded companies stuff is classic Leftist idiocy. Without looking it up, I'm willing to bet $10 that the largest stockholders of EVERY publicly-traded bank in the United States are institutional holders like Teacher's Unions or mutual funds. It's not 1928 anymore. - CF

Dan Johnson-Weinberger said...

CF -- the market limit is higher than the optimal limit for Illinois consumers. There is a huge wealth disparity in who owns most equities in the country. There are lots of institutional investors, but lots of very wealthy people who have lots of equities. Don't pretend that the equities market is some egalitarian dream -- that's just Bush 'ownership society' marketing. As for lefty 'idiocy', the only idiocy I see is you paying seven bucks at Sound Bar. . . how much was your drink? Twenty?