WASHINGTON - Activist Ralph Nader this week warned the banking industry against watering down consumer protection laws and charging customers ever-increasing fees.

"The current campaign against consumer rights and protections, the refusal of insured institutions to accept responsibility to their communities, and the preoccupation with 'fee gouging' is alienating millions of Americans," Mr. Nader wrote in a July 3 letter to American Bankers Association president Howard L. McMillan and Independent Bankers Association of America president Richard L. Mount.

"The stage is being set for a taxpayer and customer revolt," he added. "(T)he backlash to this greed, coercion, and domination will be forthcoming."

Mr. Nader's four-page letter keys off legislation pending in Congress that would scale back a host of banking laws and regulations.

Reserving some of his fire for the House and Senate Banking committees, Mr. Nader said the two panels are "competing to see which can shred the most banking protections."

Mr. Nader said the Truth-in-Lending and Truth-in-Savings acts - two laws that Congress is seeking to pare considerably - are necessary to provide customers with vital information about loans and accounts.

In addition, high bank fees take advantage of low-income and middle- income customers who have nowhere else to turn for banking services, Mr. Nader argued.

"The fees are clearly avaricious and bear little or no relationship to the actual costs of providing the service," he added.

Mr. Nader recommended that consumers be assessed fees only after agreeing to the charges. He also suggested that banks should bill customers for fees, instead of automatically deducting from their accounts. Financial institutions should also provide detailed annual fee statements, Mr. Nader said.

While Mr. McMillan was on vacation Wednesday, ABA spokeswoman Virginia Stafford said bank customers have consistently said they "don't want to wade through piles of paperwork."

The IBAA's Mr. Mount said community banks must offer competitively priced accounts to survive.

"I have a lot of problems with what Mr. Nader is saying," said Mr. Mount, who is also president and chief executive of Saratoga (Calif.) National Bank. "He is painting the whole industry with one broad brush. Community banks generally charge lower fees than the bigger banks.

"And most banks offer no-frills, low-cost checking accounts that can be used by lower-income customers." Mr. Mount added.

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