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Today I had a rather substantial check to deposit. My bank has a tendency to place checks of this size on hold for a week until they clear the bank they are drawn on. I can usually get this kind of thing pushed through with a few phone calls. But I noticed that the check that I had was drawn on Bank of America, which has a branch not too far from my bank. So I thought, “Well I’ll just go cash the check at Bank of America and then I can deposit cash at my bank.”
So I went into the lobby of Bank of America and presented the endorsed check and my driver’s license. They also asked for some other form of ID with my name on it like a credit card which I also presented. I was then asked if I had an account with Bank of America. “No.” I replied, expecting to then get a sales pitch on banking with Bank of America. But I was surprised to discover that I did not get a sales pitch. Instead I was told that there is a $6 check cashing fee for non-account holders. “But the check is drawn on this bank.” I protested. “Sorry, we charge $6 if you don’t have an account here.” The teller replied. I thought, "There’s no way this can be legal.", but given the small percentage of money relative to the amount of the check, I accepted my fate and paid $6 for the privilege of watching the teller count my money.
On the way to my bank I began to think, “I write checks to people who may not have bank accounts, and they usually aren’t for very much money.” So let’s say I was a Bank of America customer, and I let the kid down the street come and cut my grass. As payment I write him a check for $20. If that kid goes to Bank of America to cash it, he will have to give up 30% of that money, unless he has an account there.
After making my deposit at my bank I began to do a little looking into this. Apparently in 2001 the State of Texas tried to stop this practice by passing the “par value” law which basically says that a bank in the state of Texas has to cash checks drawn on them for their face value if there is enough money in that account to do so. Several national banks including Wells Fargo Bank of Texas, Bank of America, Bank One, Chase Manhattan Bank, and Comerica Bank-texas, have so far successfully challenged this law on the basis that the National Banking Act prevents Texas from enacting such legislation. Further that Texas banking laws allow for Texas chartered banks to have the same rights as nationally chartered banks. So Texas banks may do the same thing to their customers.
The main point here is that check cashing has become big business. Ever since the large banks mostly abandoned low-income areas check cashing outlets have opened up all over. This is because in 1977 Congress enacted the Community Reinvestment Act to encourage banks to serve low income and minority communities. So many banks gave loans to these check cashing outlets to meet those requirements. They soon discovered that these outlets were making close to a billion dollars a year in fees. Not wanting to be left out, they soon began to charge fees of their own. When Texas and several other states began to enact legislation to protect consumers from this kind of behavior, the banks fought back under the National Banking Act which was enacted in 1864. So they can protect their fees.
This is just plain wrong! If I write someone a check, I expect that the check I write is worth what I wrote it for. When I deposit a check in my bank and they draw on it from the bank it belongs to, my bank doesn’t get charged a $6 fee. You can count on that! So this is basically all the banks in America, screwing Americans out of our money. And paying lawyers to make sure that their fees are protected. I am sending this same entry to my congressman and senator. I suggest anyone who reads this, please pass it on and write your congressman and senator. The banks are getting federal bailout money because they are so poor they can’t do business. Funny how they have so much money for lawyers to squeeze more money out of us.
"Some problems don't have solutions, only outcomes" --Isaac Asimov