Banking Takes a Beating

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food stamps." A survey by Sheshunoff & Co., a consulting firm, showed that 39% of U.S. banks boosted checking-account fees in 1983, and 55% were planning to raise them this year. Explains Robert Guyton, president of Atlanta's Bank South ($1.8 billion): "We've got to make sure that all the services we offer are paid for by the customers who are using them." Many banks, however, are charging more for some services than they actually cost. A study by New York State officials concluded that a bounced check costs the bank only about $6. Yet the 1,635 banks in the Sheshunoff survey charge customers an average of $9.46 for a returned check; some institutions ask $20 or more, and a few demand $30.

Consultant Whittle believes that banks should be allowed to set their own fees; he also admits that the financial institutions face a bad public-image problem. Says he: "If you maintain a balance under $100, banks should charge you $10 a month. But if they do that, they'll be run out of town on a rail." Indeed, the new fees have infuriated politicians and consumer advocates. They maintain that the charges usually hit individuals with $1,000 or less in their accounts, while wealthy depositors pay almost no fees and receive lavish services. Contends Stephen Brobeck, executive director of the Consumer Federation of America: "We are witnessing an increasing denial of banking services to the poor. The trend is toward serving the rich and ignoring the rest."

Legislators in several states are considering laws that would require banks to provide a minimum level of service, much like utilities. One recent study showed that 58% of consumers believed the Government should require banks to provide low-cost services for the poor. Bankers, however, view that as the next thing to socialism. "I think the industry is perfectly capable of meeting the needs of society," says Citicorp's Reed. "We're part of society, and we're decent people. I don't honestly believe it's necessary for the legislature to impose itself in this process." Some banks already offer so-called lifeline accounts with limited services but lower fees. Manufacturers Hanover, for example, provides free savings accounts for customers under 18 and waives fees on checking for retired persons.

Rising fees are only one item on the consumer grievance list. Another complaint is banking's continued use of the float on checks. While this is an old banking practice, it seems particularly irritating at a time when modern communications make it possible for banks to transfer funds around the world in a matter of seconds. Money deposited as checks can often be used by the customers only after holding periods that may range from two days to three weeks. During that hiatus, the bank has, in effect, impounded the money since it receives credit for the check and earns interest on the funds. This angers bank customers and can impose hardships. Says Walter Dartland, a Dade County, Fla., consumer advocate: "Students who get a check from their folks back in Iowa, for example, might have to wait two to three weeks before they can use the money. That puts them in a real bind."

Banks argue that the holding period is a safety precaution; they must wait to be sure the check will not be returned. Bankers resist changing their policy for another