Friday, December 30, 2011

Bank Fees Predicted To Rise In 2012, As Banks Try To Boost Revenue

Because bank profits are not high enough:

Squeezed by regulations under the Dodd-Frank financial reform law, banks are looking to find new ways to wring fees from customers. In 2012, expect to see higher minimum balance requirements and an ongoing push to increase customers' credit card spending, according to a "2012 U.S. Banking Sector Outlook" report from Trepp, an analytics company that provides information to the banking industry.

Other industry analysts predict that some banks could raise overdraft fees from $35 to a new high of $40 and that more institutions will increase monthly maintenance fees on basic checking accounts to between $12 and $15.

Over the past three years, various new regulations under the Dodd-Frank Act and the Credit Card Act have reined in certain aggressive fee practices. More regulations in 2012 are expected to further hamper banks' ability to make big profits off the basic banking activities of consumers.

Yet banks' losses from Dodd-Frank and other regulations haven't been as dramatic as portrayed. In 2007, the percentage of revenue that came from fees was more than 40 percent, according to Trepp. In 2011, that percentage dropped just 4 points to 36 percent.
Full article

It was an off year for the banks. You might even see some CEOs being laid-off:
So is Dodd-Frank “killing” the industry? In fact, “bank profits rose substantially” in the first quarter of the year, with banks showing the biggest profits since before the recession. Things were sunny in the second quarter as well:

    – Profits at JPMorgan Chase, the nation’s second largest bank, were up 13 percent.

    – Third-largest Citigroup’s profits soared 23 percent.

    – Fourth-largest Wells Fargo’s profits shot up 29 percent.

    – Fifth-largest Goldman Sachs, meanwhile, “disappointed investors” when it merely “more than doubled its profits.”

    –Sixth-largest Morgan Stanley’s profits were up an impressive 17 percent.

The only top-tier bank to have a rough second quarter was the nation’s largest, Bank of America, which has been dragged down in part by its acquisition of investment house Merril Lynch — a move that, ironically, would not have been allowed under the Glass–Steagall Act, the repeal of which Gingrich spearheaded as House Speaker in the 90s.

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