The U.S. Public Interest Research Group and the Consumer Federation of America released a survey report June 8 accusing banks of charging "exorbitant" fees for consumer checking and savings accounts.

The two organizations surveyed 300 banks in 22 states and found that fees for consumer accounts had jumped 28% between 1990 and 1993.

Edmund Mierzwinski, the Public Interest Research Group's consumer program director, accused bankers of having a threetier strategy to cheat consumers: higher fees, higher minimum balance requirements, and new types of fees.

Last week, the groups' charges were aired on a national forum as the "Today" show's Bryant Gumbel interviewed Mr. Mierzwinski and Donald Ogilvie, executive vice president of the American Bankers Association.

Bryant Gumbel: What do you think the numbers in your survey say about the banking industry and its approach to consumers?

Edmund Mierzwinski: Well, very simply, the banks are gouging consumers. We think that the banks have their hands deep in consumers' wallets, because they can take the money from them, and they're paying us pennies for interest at the same time. We think it's a serious problem that Congress should address.

BG: Is it pretty clear to you that they now recognize fees as a legitimate and important source of income?

EM: Fees are a rapidly growing source of income for the banks. Their conferences and their reports are how to hook fee income, how to get money from the consumer. One banker says, "Raise fees in August and December, because those are the months nobody opens their statements."

BG: So they won't even look?

EM: They won't even look.

BG: Donald Ogilvie is the executive director of the American Banker's Association. He's in our Washington newsroom this morning. Mr. Ogilvie, good morning.

Donald Oglivie: Good morning.

BG: These numbers seem a terrible indictment of your industry. How do you view them?

DO: Well, let's take a look at the numbers. Using their own numbers, Bryant, there was a 13 or 13 1/2% increase over a three-year period. That's about 4% a year.

The average rate of inflation over that three-year period of time was about 4%, so banks' fees have been basically keeping track with what the rest of the economy's been doing.

BG: Well, that's not necessarily so.

I mean, even the FDIC says that operating costs went up 5% from '91 to '92.

That same year we saw that bank profits - my figures show - jumped 79%.

DO: Well, they - one of the big reasons that prices have been going up is because of regulatory costs imposed on the banks by the FDIC and other regulatory agencies have been literally sky-rocketing.

BG: Seventy-nine percent?

DO: Much more that that. Over the 1990 to 1992 period, FDIC premiums have increased from $2.9 billion to over $6 billion this year. That's a 300% increase over the same period of time.

BG: But with bank profits way up, Mr. Ogilvie, why haven't we seen any of that passed along to the consumer?

DO: Well, bank profits, first of all, were at a historically low level in 1990. Again, that's a problem with the study. Bank profits, thank goodness, now are finally strengthening. You know, I have to chuckle, Bryant.

I was on these shows just about six months ago defending the fact that banks were going to go out of business and there was going to be another S&L crisis.

Bank profits now are finally allowing us to rebuild our capital, to allow us to rebuild the FDIC funds so that we have enough money in that to pay for any contingencies, and that's the - that capital is the engine of growth for small business and for jobs in this country. And thank goodness we're finally getting some profits.

BG: Well except for small business isn't seeing that money. Look, I know you don't like these numbers, but let me let you look at some more. An average savings account - OK, most people can relate to this: $200 balance over three years. The cost is up a whopping 143%, but the rate paid is down 53%.

DO: Well, the cost, Bryant, and the rates have nothing to do with one another. The rates are down because overall interest rates are way down. The government has brought down interest rates in this country, and, frankly, in other countries- around the world.

So the rates have nothing to do with the fees. The fees are going up because bank costs are increasing, and that's largely a function of the federal regulatory system.

BG: Mr. Mierzwinski, how do your view that? I mean, is that basically true, that over-regulation is hurting the consumer?

EM: Well, that, Bryant, it's absurd. Our report documented extensively that the banks' own numbers show that costs are going down. Inflation, by the way, was less than half of the increase, if not less that one-third of the increase that we documented in our report.

The real problem with the banks, in addition to their price gouging, is that they discriminate against consumers, and they misrepresent the interest the consumers are receiving. They don't tell the truth about their fees, and that's the reason Congress has to regulate them.

BG: So am I better off at a small bank, maybe a credit union?

EM: We'd recommend a credit union first and a small bank second.

What's really odd about these price increases is that the big banks gouge consumers worse than the small banks.

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