Fees Charged by Bailed Out Banks Finally Draw Some Ire
This should have happened a long time ago: Banks that received government bailout money and continue to charge consumers excessive fees on credit cards and other services are getting a second look, The Wall Street Journal reports.
The committee overseeing federal banking-bailout programs is investigating the lending practices of institutions that received public funds, following a rash of complaints about increases in interest rates and fees.
Since the Troubled Asset Relief Program was launched last October, banks bolstered by capital infusions have boosted charges on a wide range of routine transactions, hiked rates on credit cards and continued making loans criticized as predatory by consumer advocates. The TARP funds are intended to open lending spigots and make it easier for people to borrow money.
I hope the committee doesn’t stop here. The way banks handle their bloated inventories of foreclosed homes, or Real Estate Owned (REO) properties, should also be looked into. As TWI has reported, some banks maintain their REOS, but others leave them to fall into disrepair, creating neighborhood blight and causing property values to fall. Congress never attached any conditions on TARP money regarding REOs – so there’s been nothing so far to stop banks from this practice.
It’s finally time someone is looking into bank lending abuses – but let’s hope the REO problem doesn’t continue to be ignored. Leaving foreclosed homes behind in already struggling neighborhoods only adds to their decline. And the fact that the damage comes from banks receiving taxpayer funds makes it even more of a scandal.