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Just one small reason why we need a strong CFPB
Please excuse the somewhat off-topic post, but as I sit here at 11:20 a.m. exhausted from doing battle with USAA Federal Savings Bank, I can’t get my mind back to work until I get this off my chest.
Yesterday I deposited a $250 check from my local state college (Georgia Institute of Technology), drawn on a small community bank (Bank of America), into my USAA checking account in the only way possible for a bank with no retail outlets: at the local UPS Store, where USAA offers “Easy Deposit” services.
I then made a couple of payments & purchases, totaling $143.35, thinking the remaining $106.65 would get me through to my monthly check next week. Little did I know, USAA, not trusting that Georgia Tech and B of A would honor that hefty sum, released only the first $100 of the $250, holding the balance for 7 business days (July 30). And yes, the fine print on their website says “Your deposit will be reflected in your account immediately. Funds may not be available for immediate withdrawal,” but could I reasonably expect that this small sum from a state organization would be subject to a hold?
To answer that question, I consulted the Consumer Financial Protection Bureau (CFPB), the agency set up as part of Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act), and whose director, Richard Cordray, was finally approved by the U.S. Senate last week after nearly 19 months of Republican-threatened filibusters. Here’s what they had to say on the subject:
Generally, if you deposit a check for $200 or less in person to a bank employee, you can access the full amount the next business day. If you deposit more than $200, you can access $200 the next business day, and the rest of the money the second business day…
It may take longer for you to access your deposit for a few reasons:
- If you have a new account or if your account has been overdrawn too many times in the past six months;
- If you make a deposit over $5,000;
- If you make a deposit at an ATM owned by someone other than your bank or credit union; or
- If the bank or credit union reasonably believes the deposited check may be uncollectible.
So I called USAA, where I was told that all funds are subject to holds pending collection based on unspecified criteria in their “system.” I asked if all funds in fact were held, to which the supervisor answered “no.” “So on what basis were my funds held?” She was not at liberty to say, as that information is “proprietary.”
“So how can I, as a consumer, know when, how much, or how long my funds will be held before I deposit them in your bank?” She could not answer that question. She did inform me, however, that even after the funds are collected, which in most cases is between 48-72 hours (2-3 business days), the hold remains in effect for the entire 7 business days “in case there is a charge back from the issuing bank.” In other words, USAA can hold your money up to 5 business days after they get paid “just in case.” And this is not spelled out in their disclosure statement.
Frustrated, I hung up. Then I realized that one of the payments I made from this account was an electronic payment on a credit card bill. Since there was no sign that this payment had hit my account, I called USAA back to find out what would happen, and how, if at all, I could prevent further problems. I was told that USAA may pay the bill and charge me a fee, or they may return the payment request unpaid and charge me an even higher fee. He thought the latter was more likely, but again, the “system” would decide.
Realizing I would need to deposit funds to cover this $43.65 “overdraft,” I prepared to head back to the UPS Store to transfer funds from another bank account. I was in the car when I realized… “what if they hold some of all of this new deposit?” So I made a third call to USAA…
I explained the situation to the pleasant customer service representative, and after a long hold I was cut off (my fault). To my surprise, I immediately got a call back from this representative, who told me that they were now releasing the funds in my account, but that the payment was presented overnight, and was returned unpaid, which would prompt a $29 overdraft fee (remember, but for the held funds, I had a positive balance). I could, however, request the fee be waived once it showed on my account (given my experience, I’m not holding my breath).
Next I called my credit card company, who said that they would not be submitting the payment request a second time (something usually done for bank drafts), and that I would be hit with a returned-check fee of $25 dollars which could only be waived upon receipt of a letter on USAA letterhead stating that the problem was a result of USAA’s error (again, not holding my breath).
So, after wasting an entire morning, and incurring fees at this point totaling at least $54, I still don’t know where I stand. Once the dust settles, I see myself wasting another several hours of hypertension-inducing customer service calls to finally resolve this situation. And all because USAA bank chose to cloak its deceptive banking practices in overly-vague “disclosure” language.
Please, Director Cordray, now that you’ve finally begun your long-delayed engagement, make sure the CFPB has some regulatory teeth. In the mean time, please feel free to let USAA know how you feel about their policies. And remember to never expect your funds deposited at USAA to be available before 7 business days.
- 3 Easy Ways to Avoid Overdraft Fees (dailyfinance.com)
Inequality in the Creative City
As you may know from my previous post, last week I attended the Experience the Creative Economy Conference in Toronto. One topic of the “Small Group Chats,” — four 30-minute open-ended discussions repeated on two consecutive mornings — was on “Inequality and the Right to the City.”
During the session, I alluded to one of my favorite quotes from Dietrich Bonhoeffer, a pastor who broke from the German Lutheran Church over opposition to the Nazi regime, and who ultimately was executed for his role in a failed assassination plot on Hitler. In his essay “The Church and the Jewish Question,” he said that our role
“is not just to bandage the victims under the wheel, but to put a spoke in the wheel itself.”
As biographer Eric Metaxas1 notes, this is an awkward translation, but it is generally understood to mean that we must stop the wheel of injustice by jamming a stick in it, which is a pretty radical way to stop a wheel, as you know if you’re a cyclist like me (does anyone else remember that harrowing race scene in the 1979 classic Breaking Away?). My interpretation is that the two approaches are not either/or, but both/and. It is not enough to merely bandage the victims, nor should we ignore the victims while we continue in the larger task of spoking that wheel of injustice.
Applied to the issue of inequality, this means battling it at both the micro and macro levels. Much of the criticism of the move toward more creative work is that it seems inevitably tied to increased levels of inequality. First, it is important to note that to some extent, the increase in wage inequality is a statistical problem; if incomes rise for some, even if all do not benefit, those at the lower end of the income scale are not worse off in absolute terms because others are doing better. Income is not a zero-sum game, after all, but I do not wish to get bogged down in the debate about relative vs. absolute poverty today, though it is a legitimate debate.
Another realm of urban inequality is spatial. Gentrification and the resulting displacement of economically disadvantaged residents is a common outgrowth of an increase in creative workers, especially in the central cities of the U.S. where a blend of federal housing and transportation policies and private market forces led to “white flight” and the great suburbanization of the post-war period. But as Jane Jacobs and others have pointed out, the city is a constantly changing organism, and displacements are an inevitable result of the spatial equivalent of Schumpeterian “creative destruction.” Here is where I want to revisit Bonhoeffer: rather than blindly battling urban redevelopment, we should be fighting the root causes of inequality, while simultaneously aiding those victimized by a broken system.
From a policy perspective, this means seriously addressing the issue of residential displacement by both slowing down the sometimes rapid rates of neighborhood transitions with strong laws protecting both renters and owner-occupiers such as some kind of rent stabilization2 and/or property tax relief for owners and landlords catering to the long-term residents. At the same time we need to work on the causes of increasing inequality and decreasing social mobility.