Before 1981 banks and thrifts used the"3-5-7" principle: Banks paid 5% interest on all accounts, banks charged 7% for mortgages, and bankers played golf at 3 pm. Equality for depositors was abandoned since 1981: banks have paid the rich more, and hit the poor with taxes on low balances.

CLNJ did a quick survey to see what 20 years of deregulation means to customers with less than $1,000 in the bank. The chart on page 2 is shocking. Banks are paying only 0.25% to 1% on Checking accounts. For low balance savings, the banks are paying 1.25% to 2%. What rate would low income customers pay for credit cards? These banks quoted 15% to 29%!! So when a person of moderate income deposits $500 into a bank, the bank pays him less than one percent for his money, and loans the money back to him at up to 29%! CLNJ calls excessive markups "greed ratios." Paying 0.5% interest on a checking account, while charging 29.47% credit card interest is a greed ratio of 59 to 1. Note that consumer electronics are sold at apx. 20% markup, a reasonable ratio of 1.2 to 1.

The poor and the middle class were saved at the last minute from an onerous bill to "reform" bankruptcy, when President Clinton used his pocket veto power.

The bill would have set many onerous requirements, even for those below the poverty level. Everyone would have to make a useless trip to credit counseling, just to get a letter saying he was there. It would become impossible to get an appointment. All would have to post their income tax returns, with grave danger of theft of identity. The bill would force the middle class into Chapter 13 payment plans, but then raise the number of debts which must be paid 100%, making those payment plans impossible to complete. We think this was intentional. The banks want debtors thrown out of bankruptcy, even those trying to save their homes from foreclosure by paying mortgage arrears in Chapter 13.

Shame on N.J. Senator Torricelli for sponsoring this disgrace. The Senator states that a contribution of $150,000 from MBNA, a credit card bank, to a committee he chairs, had nothing to do with his sponsorship of the bill. We respectfully suggest that Senator Torricelli has betrayed the trust of the citizens of New Jersey. The bank lobbyists are gearing up to try again in 2001. However, Sen. Torricelli will be gone from the Judiciary Committee, and the Senate has several new liberal members, so the prospects for a more moderate bill are good. However the consumer forces must fight this battle all over again.

Bank Dirty Trick:
Charging for Depositing Money!

Lowering savings interest paid is not the only obnoxious bank practice. Attorney Santiago Orozco, Clifton, advised us that the Bank of NY charged him a fee of $2 or 20% of the deposit to accept cash deposits on his business account! This bank has forgotten that banks exist to accept deposits of money. Mr. Orozco has complained to the N.J. Dept of Banking and Insurance. CLNJ thinks that a bank which does not give a customer full credit for every dollar he deposits is skimming and scamming. This practice, even if disclosed to the customer, should not be allowed to exist. What the banks are leading up to, is that consumers will have to pay the bank interest for the privilege of depositing our money. This ignores the small fact that banks invest our money in loans, credit cards, etc. which make money for banks. Lots of businesses would love to be a bank, and have thousands of people hand them money every day.

PS What did our brave N.J. Department of Banking do with Mr. Orozco's complaint? The N.J. Department of Banking had the audacity to write him that the Bank of New York is a NY bank, notwithstanding its many brances in New Jersey, hence he should try complaining to the New York Department of Banking. He sure could not do any worse!

Just as Sleeping Beauty should not bite the poisoned apple, customers of Chase Manhattan Bank should not cash the check for $1.06 in their mail. This check is a ruse to make consumers sign up for a credit card protection plan of $24 per year in perpetuity. You don't need the plan either: federal law will protect you if your card is stolen, for free.

The National Association of Consumer Bankruptcy Attorneys will hold its convention in Philadelphia on April 27-29. Keep up with current law and earn CLE credits. Also meet bankruptcy guru Henry Sommer and other NACBA attorneys who lobbied Congress not to ruin the bankruptcy laws for the poor and middle class families who need it.