by Charlene Crowell
NNPA Columnist

(NNPA)—As investigations of lenders and their practices reach from every state house to Capitol Hill and the Department of Justice, most consumers are now all too familiar with the shortcoming of some of our nation’s banks and credit unions. Many community advocates feel that far too often, some institutions have not provided capital in communities and areas where the need is greatest. In other locales, if lenders do offer loans, the costs are higher and not much better than the rates available from the corner payday lender.  The litany of grievances continues to excessive overdrafts, jacked up credit card rates, and rising ATM fees.

Yet in the practicalities of life, unless you stuff your currency in a mattress, you will need to make a decision as to where to put your money.

It was this specific consumer concern that recently led to the Center for Responsible Lending (CRL) developing a guide designed to help people shop for the right bank or credit union by posing the right questions—the tough questions—to be sure that the institution they choose can be trusted to safeguard their money the way banks and credit unions are supposed to.

CRL’s guide,  “Keep Your Balance: A Shopper’s Guide to Better Banking,” recommends a series of questions that consumers should ask customer representatives at any bank or credit union where they may be considering opening accounts.  The guide is available online at: http://www.responsible­

Users of the guide can put institutions on the spot about whether they engage in certain questionable practices like subtracting the highest debit amounts first in balancing their customers’ accounts each day.  This high-to-low debit transaction ordering enables the financial institution to charge multiple fees, averaging $34 even for one incident of the account holder’s having a negative balance.  The fees are assessed even if the debit card purchases in question are just a few dollars.

Similarly, the section on checking account practices focuses on overdrafts and asking   institutions specific questions that will help determine whether they use software systems designed to artificially increase overdrafts. Typically, these systems reap $24 billion per year from Americans in unfair fees, and surveys show that they disproportionately impact people of color.

The guide also recommends questions about credit cards and offers tips on how to spot red flags in those complicated terms and conditions. And, since some of the biggest banks are now making high-cost cash advances that are virtually indistinguishable from those made by street corner payday lenders, users may find it quite useful to have the information in front of them that will help identify such predatory practices.

Years ago in response to the 1933 national run on banks during the Great Depression, President Franklin D. Roosevelt and Congress created the Federal Deposit Insurance Corporation as an independent agency charged to maintain stability and public confidence in the nation’s financial system. By insuring $250,000 per depositor and per insured bank, FDIC has served succeeding generations without a loss of consumer funds.

In recent years however, even with FDIC’s insured deposits, the number of bank failures across the nation has been rising.  According to FDIC’s own reports, only 25 bank failures occurred in 2008 but rose in 2009 to 140.  During the first half of 2010, an additional 86 institutions have closed their doors.  As of Oct. 28, the 2010 total stands at 139 failures.  Many of these developments have slipped by without large public notice thanks to FDIC’s efficient transfer of authority and insurance on deposits.

CRL continues to advocate aggressively for reform in banking and lending practices. As we do so, the new Guide to Better Banking should help consumers get engaged and informed about the practices that have the highest cost.

The year might have been 1933, but even in 2010, the words that President Franklin Roosevelt spoke to the nation in a radio address still ring true: “We had a bad banking situation. Some of our bankers had shown themselves either incompetent or dishonest in their handling of the people’s funds. They had used the money entrusted to them in speculations and unwise loans…It is your problem no less than it is mine. Together, we cannot fail.”

(Charlene Crowell is the Center for Responsible Lending’s communications manager for state policy and outreach. She can be reached at: Charlene.crowell@r­espon­sible­

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