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ATM fees need harder look: FDIC's Bair
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By Karey Wutkowski
WASHINGTON (Reuters) - Banks that hit customers with exorbitant fees to use automated teller machines leave a sour taste in the public's mouth and deserve a hard look from regulators, the chairman of the Federal Deposit Insurance Corp said on Tuesday.
"Fees are something we need to take more and more of a look at," Sheila Bair said during the Reuters Regulation Summit in Washington.
She said her agency doesn't have rule-making authority over how much banks can charge to withdraw money or check account balances at their ATMs, but it would be a worthy target of study from other regulators such as the Federal Trade Commission.
"It just causes general displeasure," Bair said about the high ATM fees, recounting her own experience of talking to the head of a bank and soon after being hit by a $6 fee charge for a visit to one of that bank's ATMs. She said she called the bank executive back to complain.
According to Bankrate.com, the average ATM surcharge for non-customers was $1.78 in 2007, nearly double of what it was in 1998. It also noted in its study, which was released in September, that 43 institutions raised their surcharge in the prior year, compared with just three reducing the fee.
In September, Bank of America Corp (BAC.N: Quote, Profile, Research) said it had raised the fee it charges non-customers to withdraw cash from most of its ATMs to $3 from $2. The company said at the time that it needed raise the fee for non-customers to maintain and grow its network.
Bair said the financial services industry is fee-heavy right now and that the Truth in Lending Act was written at a time when the interest rate was the primary cost of a financial product, not fees.
The law was passed in 1968 and is designed to protect consumers by requiring clear disclosure of key lending arrangement terms and all costs.
She said recent scrutiny given to credit card fees has caused the industry to somewhat back down from charging excessively high fees and that overdraft protection fees are also being studied by regulators.
"I do see some products where the fees are over the top," Bair said.
[-] Text [+]
By Karey Wutkowski
WASHINGTON (Reuters) - Banks that hit customers with exorbitant fees to use automated teller machines leave a sour taste in the public's mouth and deserve a hard look from regulators, the chairman of the Federal Deposit Insurance Corp said on Tuesday.
"Fees are something we need to take more and more of a look at," Sheila Bair said during the Reuters Regulation Summit in Washington.
She said her agency doesn't have rule-making authority over how much banks can charge to withdraw money or check account balances at their ATMs, but it would be a worthy target of study from other regulators such as the Federal Trade Commission.
"It just causes general displeasure," Bair said about the high ATM fees, recounting her own experience of talking to the head of a bank and soon after being hit by a $6 fee charge for a visit to one of that bank's ATMs. She said she called the bank executive back to complain.
According to Bankrate.com, the average ATM surcharge for non-customers was $1.78 in 2007, nearly double of what it was in 1998. It also noted in its study, which was released in September, that 43 institutions raised their surcharge in the prior year, compared with just three reducing the fee.
In September, Bank of America Corp (BAC.N: Quote, Profile, Research) said it had raised the fee it charges non-customers to withdraw cash from most of its ATMs to $3 from $2. The company said at the time that it needed raise the fee for non-customers to maintain and grow its network.
Bair said the financial services industry is fee-heavy right now and that the Truth in Lending Act was written at a time when the interest rate was the primary cost of a financial product, not fees.
The law was passed in 1968 and is designed to protect consumers by requiring clear disclosure of key lending arrangement terms and all costs.
She said recent scrutiny given to credit card fees has caused the industry to somewhat back down from charging excessively high fees and that overdraft protection fees are also being studied by regulators.
"I do see some products where the fees are over the top," Bair said.
