-
I just don't understand the argument that it is more important for banks to be able to compete with equal capital levels in Shanghai than in Omaha unless big banks care more about bringing jobs to China than small business loans to middle America.
June 27
Like a good bartender, the kind who knows when it's time to let up, Midsouth Bank Chief Executive Rusty Cloutier is concerned about some of his customers.
People who repeatedly overdraw their accounts are very profitable, but Cloutier isn't so sure that what's good for the Lafayette, La., bank is necessarily good for these customers.
This year Midsouth started a program called Fresh Start and staffed it with two "account analysis counselors."
Their job: contact customers who have overdrawn their accounts six times or more in the span of a year and help them learn to live within their means-even if it means less in fees for the $1 billion-asset Midsouth.
The Federal Deposit Insurance Corp. last year urged banks to counsel chronic users of overdraft protection about the cumulative costs and make them aware of lower-cost alternatives. While many community banks now have informal outreach programs, Midsouth appears to be unique in employing counselors whose primary job is to help people who consistently overdraw their accounts.
Since March, Midsouth's counselors have reached out to 1,800 customers.
It's not easy. Voicemails left for customers often go unreturned, and when contact is made, some customers refuse help or lash out in anger.
Counselors are trying to work with "people that are having difficulty," says Cloutier. "It's not like they're talking to people who just won the lottery."
Customers who accept the bank's help can pay back overdraft charges at their own pace, with no additional fees or interest, based on their take-home pay. But they must agree to have their overdraft privileges suspended until they prove they can balance their checkbooks.
"Some people get caught in this bind that they can't get out of and what we teach them is how not to depend on account protection each month," says Marcia Angelle, a collections supervisor who oversees Fresh Start for Midsouth. "A lot of people have told us that they wished we had called them a long time ago."
Jeff Platter, vice president of business intelligence at consulting firm Haberfeld Associates in Lincoln, Neb., says a program like Midsouth's can help a bank quickly identify customers who truly are in financial trouble and can least afford to pay overdraft fees. But he questions whether an ombudsman-as MidSouth calls its counselors-can do much to change customer behavior. He says research has shown that 5 percent of bank customers account for roughly 65 percent of all overdrafts and that, on average, these people will overdraw their accounts 60 to 80 times a year and have no problem paying the fees.
"In the real world, these are the people who drive overdraft programs, and they don't need or want the bank to intervene," Platter says.
Cloutier understands that and says if customers decline the bank's help, the counselors promise not to call them again. But since Fresh Start began, Midsouth has discovered that many customers want help managing their accounts but are too afraid or embarrassed to ask.
"Customers want to know that their banks are looking out for them," Cloutier says, "even if it's just sitting with them and convincing them that the sun will come up tomorrow."
