Two congressional Democrats seek data on the number of e-banking customers switched into accounts that have $12 in monthly fees.
Concerned about Bank of America’s phase-out of a program that provided free checking, two Democratic members of Congress on Friday sought information about the banking giant’s action.
Reps. Elijah Cummings, D-Md., and Jimmy Gomez, D-Calif., in a letter questioned the decision to complete a shift of customers to checking accounts that require monthly fees at a time when Bank of America is expected to reap a multibillion-dollar windfall from the federal tax overhaul.
“It is difficult to understand why one of America’s largest banks would end a program that many low-income families rely on just weeks after benefitting from one of the largest tax cuts in American history,” wrote Cummings and Gomez, who serve on the House Committee on Oversight and Government Reform.
“Surely, your corporation could have devoted at least a fraction of these massive savings to maintaining existing programs that help low-income families move towards financial security and independence rather than forcing them to turn to alternative financial services providers,” the letter added.
Cummings and Gomez set a Feb. 9 deadline for the bank to provide:
The letter referred to a December report about Bank of America’s projected windfall from the tax overhaul by ThinkProgress, a news website that says it provides reporting and analysis “from a progressive perspective.” The report cited a Goldman Sachs estimate that Bank of America would achieve $3.5 billion in savings from the federal tax changes.
“We stopped offering this account five years ago and we will be pleased to explain to these members the many ways we provide straightforward and transparent service, including to low-to-moderate income customers,” Betty Riess, a Bank of America spokeswoman, said in an emailed response.
Sent without Republican members of the House panel, the congressional request focuses on the bank’s switching of e-banking customers to regular accounts that require $12 monthly fees unless the customers make either a direct monthly deposit of at least $250 or maintain a minimum $1,500 daily balance.
Charlotte-based Bank of America, the nation’s largest bank by deposits, this week said it stopped offering the basic, e-banking accounts to new customers in 2013 and began migrating existing customers to “core checking” accounts more recently.
Bank of America said a small segment of its customers had remained in the e-banking accounts until recent weeks. The e-banking accounts were not designated formally as no-fee, the bank said. However, customers who used e-banking were only charged an $8.95 monthly fee if they used bank tellers for routine transactions.
Bank of America also said its e-banking accounts were not designed to attract lower-income customers.
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The core checking accounts provide access to ATMs and other banking services. The requirement for a $250 or higher monthly direct deposit “is one of the lowest qualifiers in the industry” and “a great value,” Riess said in a statement issued this week.
Riess also pointed out the bank offers what it calls the SafeBalance account, which has a $4.95 monthly fee and doesn’t allow for overdrafts.
However, a Change.org petition that urges Bank of America to reconsider its action said many lower-income customers can’t meet the financial requirements for avoiding fees on core checking accounts. The online site for the petition showed it had drawn more than 106,000 signatures as of midday Friday.
Follow USA TODAY reporter Kevin McCoy on Twitter: @kmccoynyc
