Big, Bad Banks: High Fees, High Salaries

  • Banks Who Want to Waste Your Money, Not Theirs

    The past couple years have been tough on banks – or at least that’s what they would have us believe. Recent financial regulations are expected to cost banks as much as $25 billion each year, as these institutions will now be forced to set limits on credit interchange fees charged to merchants, ask permission from consumers to charge overdraft fees and generally be more straightforward with their customers about interest rates. “Regulatory and legislative activities have been working primarily against banks,” said Richard Davis, CEO of U.S. Bank, in a recent interview with MainStreet’s sister site TheStreet. “A lot of those are negatively biased against banks as they relate to profitability.” In response, major banks are expected to make up for lost revenue by coming up with new fees to charge consumers. In fact, some of the biggest banks have already begun to do so. Yet from a consumer’s perspective, there is something amiss with this strategy. Many of these banks justify the new fees by playing up their weakened balance sheets, only to dole out lavish bonuses and exorbitant salaries to their executives at the same time. But if a company can afford to pay its executives extremely well, isn’t that also a sign that its company’s finances are in better shape than it lets on? MainStreet took a closer look at some of the biggest banks that are imposing new fees this year and found that some have also increased the salaries for their chief executives, casting further doubt on their motives. Photo Credit: TheChristianAlert
    Bank of America
  • Bank of America

    Bank of America (Stock Quote: BAC) is currently testing a new set of checking account fees in several states that may cost consumers as much as $25 per month. Customers with basic checking accounts have traditionally been able to avoid monthly service fees by maintaining a certain minimum balance, but under the new fee structure, these customers would be forced to pay at least $6 a month, unless they increase their balances or take other steps like using a linked credit card once a month or more.  What’s more, the bank also launched several new checking account options including premium and enhanced versions, which offer multiple checking and savings accounts per customer and cost $15 and $25 in monthly fees, respectively. CEO Salary: Brian Moynihan will earn an $800,000 base salary this year, along with a whopping $9.05 million in restricted stock offerings. To be fair, Moynihan did not get a raise from his previous year’s base salary, but then again, with all that money in stocks, does he really need one? Photo Credit: TheTruthAbout
  • Chase

    Starting February 8, Chase (Stock Quote: JPM) will no longer offer new customers free checking accounts. Instead, the banking giant has rebranded its existing checking account as “Total Checking,” with the only notable difference being the cost. Customers will now be forced to pay a $12 monthly service fee, unless they keep a minimum of $1,500 in their checking account or $5,000 in total across all of their Chase accounts. At the same time, the Associated Press reported that Chase eliminated rewards points for new debit card holders this month, making it the first of the big banks to do so, but presumably not the last. So not only are consumers often being asked to pay more this year, but they are getting less in return. CEO Salary: Jamie Dimon earned a $1 million base salary in 2010, the most recent year on record, along with a cool $15.9 million in stock and more than $300,000 in other compensation. The previous year, Dimon received just his base salary of $1 million with $300,000 in additional compensation but no stock bonus. So clearly things can’t be all bad at Chase if they can afford to throw an extra few million his way. Photo Credit: Neubie
  • Citigroup

    Citigroup (Stock Quote: C) hasn’t been quite as aggressive with new fees as its peers, but the bank nonetheless introduced a new $7.50 fee last year on its Access and EZ Checking accounts, unless customers maintain a minimum balance of $1,500. CEO Salary: Vikram Pandit will earn a base salary of $1.75 million this year, along with an undisclosed amount of stock. This is up significantly from 2010, when Pandit agreed to work for just $1, and it’s also a healthy pay raise from his 2009 salary of $125,000. Photo Credit: Uris
    Wells Fargo
  • Wells Fargo

    Like Citibank, Wells Fargo (Stock Quote: WFC) now imposes a basic checking account fee of up to $10 per month, unless you maintain a balance of $1,500 or more. CEO Salary: John Stumpf isn’t exactly hurting for money right now. The Wells Fargo CEO earned a base salary of $5.6 million last year, along with $13 million in stock options and $2.7 million from other compensation, making him the most well compensated CEO on this list. Photo Credit: TheTruthAbout
    U.S. Bank
  • U.S. Bank

    U.S. Bank is one of the few major banking institutions in this country not to have tacked on more fees in recent months, but that doesn’t mean the bank won’t do so in the near future. In an earnings call earlier this year, the bank’s CEO, Richard Davis, suggested that the bank would consider checking account fees as well as debit card fees in the future to make up for revenue lost from card interchange fees. Of course, even as the bank struggles to make up for lost revenue, Davis himself is doing just fine. CEO Salary: Davis reportedly earned a base salary of $915,000 in 2009, with a cash bonus of nearly $700,000 and $5 million worth of stock options on top, putting his grand total for the year at almost $7 million. Photo Credit: TheTruthAbout
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