Many of the banks that have raised fees recently are also giving raises to their chief executives, casting doubt on their claims that the new fees are needed to help banks recover from their dire financial situations.
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