Are Big Banks More Expensive than Small Banks?

From Stacy Mitchell of the New Rules Project (click image to enlarge):



The Fed’s 1999 report, published five months before the Financial Services Modernization Act passed, found that overdraft fees were 41 percent higher at big banks compared to small. Big banks charged more for almost every fee imaginable, including 43 percent more for bounced checks, 57 percent more for stop-payment orders, and 18 percent more for ATM withdrawals.

“But rather than allow the evidence in favor of smaller banks to guide policy, Congress decided to get rid of the evidence. At the urging of then Fed chairman Alan Greenspan, Congress ordered the Federal Reserve to stop publishing its annual report on bank fees. . . .

“But, as it turns out, the firm that the Fed once employed to gather this data, Moebs Services, has continued to survey fees at more than 2,000 financial institutions. Moebs agreed to share its 2009 data with the New Rules Project. As our charts show, the biggest banks still impose much higher costs on their customers than small financial institutions do.

“Not only are fees lower, but several studies have found that smaller banks and credit unions pay higher interest on savings accounts. In a study published by the Federal Reserve Bank of Cleveland, researchers Kwangwoo Park and George Pennacchi examined data from 1998 to 2004 and found that rates on one-year CDs were an average of 14 percent higher at small banks (under $1 billion in assets) than at large ones (assets of $10 billion or more) and rates on interest-bearing savings accounts were 49 percent higher.

Federal Reserve Raises Discount Rate

via Marketwatch:

The move by the Federal Reserve to hike the discount rate on Thursday afternoon makes the central bank look a little more impatient today than it appeared 24 hours ago.

In making the announcement, Fed officials insisted that they are not signaling any immediate change in policy.

Fed watchers generally take them at their word, but they said the move does signal a shift in the thinking at the central bank, and that the Fed just looks a little more eager to get rates up.

"They give every appearance of signaling a loss of patience, which is noteworthy in its own right from a market perspective," said Lou Crandall, chief economist at Wrightson ICAP in a note to clients.

Check out this video for more analysis:

MoneyAisle in the News: The Wall Street Journal

The Wall Street Journal has a great article out today called Sites That Help You Fight the Fees, and MoneyAisle is listed as one of the sites:

With MoneyAisle.com, consumers enter their savings goals and the site holds an “auction” among 130 participating banks to find the best cocktail of CDs and savings accounts. It only takes accounts that are insured by the Federal Deposit Insurance Corp., rejecting pitches with teaser rates.

“People are just getting ripped off constantly,” MoneyAisle CEO Mukesh Chatter says. “People have a right to know.”

Federal Govt. to Banks: Loan to Small Businesses

U.S. regulators on Friday again reminded banks that they should extend loans to creditworthy small businesses.

Per Reuters:

In an interagency statement, regulators said supervisors will not criticize banks for extending such loans, as long as they have done a thorough review of the small business's financial condition.

Banks have argued that they are getting mixed messages with supervisors telling them to build their capital positions and policymakers telling them to increase lending.

"Regulators are mindful of the harmful economic effects of an excessive tightening of credit availability in a downturn and are working...to ensure that supervisory policies and actions do not inadvertently curtail the availability of credit to sound small business borrowers," the statement said.

Will More Banks Fail in 2010?

Bank failures have been an unfortunate fallout of the current economic situation - 2009 saw even more banks fall.

Check out the video interview below with FDIC head Sheila Bair. She addresses the issue and what some of us can expect as the current year unfolds.

Shopping for a CD: Be Informed, Be Safe

With many investments in the stock market or real estate declining in value, certificates of deposit (CDs) remain some of the safest and most reliable places for your money. But as with most financial products and services, it pays to do some research and take other precautions before you buy. Check out this video from the FDIC:



You can get great CD Rates from FDIC banks at MoneyAisle.com.

Move Your Money?

A new movement that's gaining online popularity is Move Your Money. Move Your Money urges customers of large banks to move their business (and money) to smaller community banks.

"The response has been dramatic," Huffington Post creator Arianna Huffington told ABC News. "Over half of the zip codes in the country have already been searched for a local bank, and people are really eager to move beyond anger and frustration into action."

One woman, Stephanie Frost, created a youtube video of the big moment:



What do you think? Do you plan on moving your money? One way to find community banks is by using the MoneyAisle network of over 100 community banks, all willing to give you great rates on deposit accounts. Check it out.

Will Interest Rates Rise in 2010?

Short answer: Not bloody likely.

Long answer: As this article explains, part of the Fed's plan for rescuing the failing banks is keeping interest rates down, giving them low loan rates on our deposits. Unfair? Sure, but most of the bailout could be described that way.

The practical answer: if you're looking for amazing returns on your CDs or savings, you're going to need to keep waiting. You can still get good rates using online tools such as MoneyAisle, but we're a ways off from seeing interest rates rise in 2010. Hopefully we can reassess as we get further into 2010.

What do you think?

Happy New Year from MoneyAisle

MoneyAisle would like to wish everyone a safe and happy New Year.

We've got some amazing things coming up in 2010. I can't wait to tell you about them.

Thanks for reading.

GMAC may receive 3rd round of bailout funds

GMAC is close to receiving a third round of bailout funds from the Treasury Department, according to a published report today.

The announcement for GMAC to collect an additional $3.5 billion in aid on top of the $13.5 billion already received is expected shortly, the Wall Street Journal reported.

"As we have previously stated, GMAC has been conducting a strategic review of its business and evaluating options to address the challenges at ResCap and the mortgage operations," said GMAC spokeswoman Gina Proia in a statement. "Critical objectives in the process would be to take actions that position GMAC for improved financial performance and to repay the U.S. government."