FREE to FEE checking

TCF Bank Cutting Off 'Totally Free' Checking

Excerpt:

TCF Bank has long boasted of their offer to provide customers with "totally free" checking accounts, but that is soon to be a thing of the past.

According to a representative from the Twin Cities-based bank, TCF has already begun the process to no longer offer fee free checking.

The bank intends to introduce a monthly maintenance fee to over 1 million current checking accounts. The bank has not placed fees on these accounts for nearly a quarter century.

Free checking was first offered in 1986. They were the first bank in the marketplace to offer this opportunity, which bolstered their account base.

Comment: I read somewhere where they have 1.7 million checking accounts ... thus the change will impact approximately 60% of their customers!

Free Checking Could Go the Way of Free Toasters

Excerpts:

... free checking may be an endangered species.

Banks are feeling heat from all sides. This week, President Obama moved to limit the size and activities of the biggest institutions. Last week, he proposed a tax to recover bailout funds.

The biggest impact on checking accounts, however, is likely to come from new regulations governing overdraft protection. Starting in July, banks will need explicit permission from customers before allowing them to use their debit cards to spend more than they have in their bank accounts on a one-time purchase. Similar restrictions will apply to A.T.M. withdrawals.

Banks earn billions in overdraft fees, money that helps pay for free checking.

A chunk of that revenue will disappear when some consumers elect not to sign up for the opportunity to spend more than they have. This week, Bank of America said that $160 million in overdraft fee revenue had already disappeared, because of changes it made in its policies ahead of the new federal rules.

When that money evaporates as other banks comply with the regulations, they’re going to try to make it up some other way, particularly if they’re paying more taxes to the federal government and have fewer ways to trade their way to outsize profits.

...

In the 1990s, Washington Mutual brought free checking to the masses. “It was an anchor product that allowed them to get customers in the door,” says Jim Neckopulos, a Hitachi Consulting vice president who worked with Washington Mutual at the time. Then, the bank tried to get customers to sign up for loans and other more profitable services that could subsidize the free checking.

Soon, most every bank had some version of free checking, and they were helped by the rise of the debit card. “People’s behaviors changed dramatically,” says Aaron Fine, a consultant and partner at Oliver Wyman. “They were no longer balancing their checkbook and were overdrawing their accounts with the card. And that’s what allowed it to be profitable.”

How heavily did banks lean on the overdraft fees? Well, G. Michael Flores of the financial services consulting firm Bretton Woods estimates that the average customer paid 12 overdraft or other insufficient-fund charges in 2009, often at $25 or $30 per transgression.

Comment: Sad to think that people don't balance their checkbooks. I still do. By the way, there is no good reason to overdraw one's account if one has access to online banking. Most banks provide this for free. Additionally many banks have a service where one can sent a TXT message of "BAL" to the bank and get an SMS message back in seconds! (I have this set up with both Chase and Wells Fargo. I can send the same TXT message to both banks at once and see which one gets back to me faster!)

TCF to rid itself of TARP

TCF Financial Corp. to return $361.2 million in federal bailout money

Excerpt:

TCF Financial Corp. said it received government approval to return $361.2 million in federal bailout money, and will cut its quarterly dividend by 80 percent.

The Wayzata-based regional bank, which has $16 billion in assets, originally received an investment from the U.S. Treasury Department's Troubled Asset Relief Program, TARP, last November. But after tighter restrictions were placed on banks receiving the funds, TCF chief executive Bill Cooper filed notice in March that he intended to return the funds.

On Monday, TCF said the U.S. Treasury gave the bank permission to buy back all the 361,172 shares of preferred stock it issued to the government under TARP, effectively enabling the bank to exit the bank bailout program.

The move will boost TCF's profits because it means the bank will not have to make dividend payments to the U.S. Treasury. The bank estimates its earnings per share will improve by over 14 cents per share annually as a result of the move.

"Participation in the TARP has created a competitive disadvantage for TCF and we believe it is in the best interest of our stockholders to repurchase these shares," Cooper said in a written statement.

Comment: Good for them!

Treasury won't let TCF return TARP

Treasury Allows New Bank to Return TARP Funds, Keeps Other Bank Waiting

Excerpts:

... the Treasury Department is allowing another bank to return money loaned to it under the Troubled Asset Relief Program (TARP), it is still keeping one institution – TCF Financial – in the lurch, declining to tell it or CNSNews.com why it has taken more than the required 30 days to process the money-return request.

...

TCF Financial, based in Wayzata, Minn., also thinks that Congress has changed the rules and would like to return taxpayers’ money as soon as possible. However, according to TCF spokesman Jason Korstange, the Treasury Department has not approved the return yet, nor have they told TCF why they are taking so long.

“Not yet, we’re hoping to hear any minute, any day,” Korstange told CNSNews.com. “We have not heard back. We have certainly talked to them, but we haven’t received an answer yet.”

Korstange said that Treasury had not provided a reason for the delay, but noted that TCF had given Treasury everything it asked for.

“No reasons,” he said. “We’ve given them a lot of information, any information they ask for, any information we thought was necessary.”

Korstange explained that Treasury had originally invited TCF to apply for TARP funds, saying it wanted the participation of healthy banks to mitigate the shock to the financial system from the failure of large firms like Lehman Brothers and Bear Stearns.

TCF agreed, wanting to do its civic duty by aiding the government in keeping the nation’s hobbled financial industry going.

“They came to all the banks,” said Korstange. “They did come to us and suggested that it would be a good idea, that if you didn’t take it you would be looked on as a bank that couldn’t get it, that you were too bad to get it.

“It made sense to do it at that time. We thought we were being good citizens. We didn’t need the money,” Korstange added.

The $700-billion TARP was passed by Congress and signed into law by President George W. Bush last fall.

The law says that the Treasury Secretary "is authorized to establish the Troubled Asset Relief Program (or ‘TARP’) to purchase, and to make and fund commitments to purchase, troubled assets from any financial institution, on such terms and conditions as are determined by the Secretary, and in accordance with this Act and the policies and procedures developed and published by the Secretary. ...

“The term ‘financial institution’ means any institution, including, but not limited to, any bank, savings association, credit union, security broker or dealer, or insurance company, established and regulated under the laws of the United States or any State, territory, or possession of the United States ...."

Korstange said that changing the rules of TARP and demonizing banks that participate in it ultimately hurts the government’s own efforts, because the TARP program is the best recovery program the government is offering.

“It’s the best thing the government has going for it right now, as a matter of fact, [because] it’s not given to the bank, it’s a loan,” Korstange told CNSNews.com. “We’re paying dividends on it. They’re getting 5 percent. To be perceived as this ogre that’s out there gobbling up all this tax money is just wrong.”

That negative perception, fueled by the actions of both the Obama administration and Congress, pushed TCF to get out of TARP. Korstange said that when the government decided it could tell banks how to do business, it had gone too far.

Comment: Once the government's hand get's in your pocket it's hard to get it out!