WASHINGTON -- Two major consumer organizations asked the Department of Justice to investigate whether bank fee-setting practices violate antitrust laws.
"Many of the prices posted for bank services seem to appear in lockstep across the industry and across the nation with narrow variations in format and price," the two groups said in a letter to Anne K. Bingaman, assistant Attorney General for antitrust.
"This parallel behavior, we believe, may well be the result of an industrywide pricing strategy," they added.
The letter was signed by Chris Lewis, banking lobbyist for the Consumer Federation of America and Ed Mierzwinski, consumer advocate for U.S. Public Interest Research Group.
Edward L. Yingling, director of government relations for the American Bankers Association, said he doubted Justice would take the complaint seriously. Concept Called 'Ludicrous' "The idea that an industry as competitive as the banking industry could be in violation of the Sherman Act is ludicrous," he said. "It is a very competitive industry."
It was not possible to obtain comment from the Justice Department Wednesday.
The two consumer groups told the department that industry pricing practices are discriminatory, falling most on the shoulders of the less well-heeled.
"It is tantamount to a grocery store placing a surcharge on the customer who buys only a loaf of bread, a quart of milk, and a package of ground beef, while dropping the surcharge for the customer who comes to the checkout counter with $50 of gourmet food."
The two groups said the industry benefits from federal deposit insurance, which it uses "as a tool to exploit the unsophisticated customer lured into the bank by government-sponsored security."
Meanwhile, the banking industry came under fire on Capitol Hill Wednesday as the House Banking subcommittee on consumer credit heard Mr. Lewis and others Complain that bank fees were too high.
"These fees are growing at an explosive rate," said Rep. Joseph P. Kennedy 2d, D-Mass., chairman of the subcommittee. "Today, lenders are charging higher fees for more services, even though they are enjoying record profits and lower costs through technological innovation."
James M. Culberson Jr., chairman of First National Bank and Trust Co., Asheboro, N.C., told the panel that no bank is able to set its fees in a vacuum.
"Competition is simply too great and today's consumers are far too smart to pay for services that they don't believe provide real value," he said.
Rep. Kennedy and others on the panel attacked Mr. Culberson repeatedly, demanding to know why fees for bounced checks are so much higher than the cost of handling such items.
"It is a deterrent to you, not to write checks that bounce," Mr. Culbersom responded, noting that it is illegal to write bad checks intentionally.
"So now you are law enforcement," Rep. Kennedy said.
"We don't like handling accounts with a lot of bad checks," Mr. Culberson answered. "If you don't like the way we charge, you should go somewhere else. Don't use my bank."
A Child's Tale of Woe
The panel also heard from Ryan Lorrraine Cobb, a 10-year old Girl Scout from Arlington, Va. whose credit union account was wiped out when a check she deposited bounced.
The check, written by a neighbor who purchased Girl Scout cookies from Ryan, generated $24 in charges when the credit union tried to clear it.
With the account below zero, a check Ryan wrote for her weekly school lunch ticket bounced. Her father helped her open the account to teach her about handling money.
One banking lobbyist called the young girl "the perfect witness" for industry critics.