Abstract

Bank Mergers Are Taxing Consumers

In a year that saw the three largest bank mergers in U.S. history, and in the same month that saw the U.S. President and the U.S. Congress's on-again, off-again effort to cut astronomical credit card rates, Citibank Corp., the nation's biggest bank, took two unprecedented steps: It halved its checking account interest to a miserly 2 percent and created a $50 annual account administration fee" for processing Keogh accounts. Taxing consumers by higher fees, higher borrowing rates and lower earnings on deposits is now the favored prescription for bailing out a banking system reeling from two decades of disastrous Third World and commercial loans. Banks are inflicting on consumers the death of a thousand cuts: A few fee increases here and lower certificate of deposit rates there and pretty soon it adds up to real money. Many of the same bankers who exercised poor judgment when handing out loans to build shopping malls and hotels that no one needed have shown great ingenuity in devising new ways to pass the buck to consumers.