Durbin urges transparency by banks
EDWARDSVILLE — U.S. Sen. Dick Durbin wants banks to be more transparent when college students open checking accounts and is calling on assistance from colleges and universities to help.
Durbin, D-Ill., spoke Tuesday to students, staff and administrators at Southern Illinois University Edwardsville about a plan for financial institutions to voluntarily adopt a disclosure form for fees.
“There is something going on today is terms of financial institutions,” Durbin said. “Consumers are asking questions they’ve never asked before, and they’re demanding accountability in ways they never did before.”
Durbin said many questions started to come after Bank of America imposed a $5 monthly fee for debit card holders; a woman started an online petition to protest the fee and got more than 100,000 signatures.
“Within days, Bank of America reversed their policy and said there would be no $5 monthly fees,” he said. “Then, all the banks across America said ‘no monthly fees.’”
He said community banks/credit unions began advertising they would not charge fees. In October, after Bank of America’s announcement, 650,000 people moved their checking accounts to credit unions, Durbin said.
“It represents 50,000 more than switched to credit unions during the previous 12 months,” he said. “What’s happening is that banking consumers are starting to vote with their feet.”
He said that if consumers don’t feel like they are being treated fairly by the institution with which they are doing business, then they are walking out the door and shopping for a place that does.
Durbin said if a consumer believes in the free market, then he or she should look for two things — transparency and competition.
“Consumers are asking, ‘What am I being charged?’ and ‘Can someone offer me a better deal?” Durbin said. “That’s the whole basis for the free-market approach.”
Durbin said that Pew Charitable Trusts did research on checking and debit accounts, and the average disclosure form that describes fees to bank customers is 111 pages.
“Not many of us have ever asked for it, let alone read it,” he said.
He said Pew designed a 1-page disclosure form, which gives a summary of what’s in the 111 pages.
“It gives you the basic information,” he said.
He said information is available on interest rates, charges for bounced checks and how soon money clears an account. He said the form is as simple as reading health information on food labels.
“It’s everything you want to know on one page,” he said.
Durbin said he and U.S. Sen. Jack Reed, D-R.I., held a news conference two months ago challenging financial institutions to adopt the Pew disclosure form.
“Initially, only two credit unions stepped up — not in Illinois — and said, ‘OK, we’ll use the Pew disclosure box,’” he said.
He said he asked Illinois banks and credit unions to use the form, but they’ve resisted, saying there was too much paperwork involved.
“All of that resistance blew away two weeks ago, when Chase Bank said they were going to adopt this,” he said.
He said the information now is available on the bank’s website.
“You know exactly what you’re being charged if you have a Chase checking or debit account,” he said.
Durbin said he is making an appeal at colleges and universities across the state to call upon its member banks to use the form. He said he knows that the Bank of Edwardsville and SIUE Credit Union do business on campus and would hope they would adopt the Pew form.
He doesn’t want to force anyone to use it, but if Chase can do it, then they should be able to do so, as well.
“What we’re trying to do is put consumers in a place where they are better informed,” he said.
He said consumers should be able to shop for a bank to find what works for them.
Durbin has written a letter to the Illinois State Board of Higher Education, as well as the Federation of Independent Illinois Colleges and Universities, asking for their help in contacting lending institutions.
Durbin said if a bank is going to enjoy a favored status in dealing with a university in terms of where it can place its branches and what the relationship might be with an ID card, for example, he thinks it’s only fair that the relationship with students be transparent and competitive.
“I think students have a right to know what they’re being charged,” he said.