It was illegal to write a bad check, and businesses are allowed to charge pretty hefty fines if you pass one off on them. I guess the one business that can't is the business that people are expecting to honor their bad checks.

Please clarify:

Are banks supposed to risk their depositor's funds by lending to people who can't repay what they've borrowed and by floating free checking account loans to people who can't be bothered to live within their means? I really cannot fathom what the rules are anymore.

The money that people are borrowing by overdrawing their checking accounts is not the banks' money, and banks are expected to manage their depositors' funds carefully, which doesn't include extending free payday loans to anyone who opens a checking account and then decides to game the system.

I've lived from paycheck to paycheck, and I didn't do it by overdrawing my checking account. But then, my mother raised five children on wages and child support that was about one and a half times the minimum wage, and she did it without having check bouncing privileges extended to her, so please excuse me if I fail to see the wisdom in encouraging that behavior.

I don't believe that, when a check bounces, the money ever leaves the bank. Thus, there is really no loan, so any fee that is charged is just that: a fee. It shouldn't be considered interest. I believe the common complaint is merely the rapidity with which the various bank fees have climbed, and the justifiable anger is based on the opinion that the banks, which were the miscreants, are off-loading the wages of their own sins on their customers.

Banks do not "manage their depositors funds", that is a myth they encourage. None of the depositors money resides at the bank, which is o.k. and allows banks to loan money.

But the banks leverage that money up to 30 times now. And the money you "deposit" is legally a loan- maybe the bank can pay you back, maybe it can't, or won't.

Their is an entire industry that has taught banks how to increase fees (ie. by "reordering" checks/deposits). Yes, people should be financilly responsible, but let's jail those bankers and Rating agency heads who have done so much to destroy Capitalism, even the Crony version of it that would still be vastly profitable for them if all consuming greed had not caused them to EAT THEMSELVES.

True, when a check bounces, the money doesn't leave the bank, but banks typically honor overdrafts now and then charge the fees, and it would be lot more expensive for their customers if they didn't because those customers would be faced with hefty fees to the businesses that accepted their checks and sometimes even to the collection agencies that attempt to recover the funds. Since no one on this thread is complaining about the fees to businesses and collection agencies, which run about double to quadruple what the banks charge, I am assuming that the banks are floating their customers payday loans and saving them a lot of money in the process.

The simple solution to avoiding these fees is not to spend money that isn't in your account. If you do that, it doesn't really matter what the bank is charging you for overdrafts.

Maybe there are banks that post debits first and credits afterwards, but I have a few accounts at several banks across the country and have never seen that behavior. If they reorder my debits by dollar amount, I really don't care because no matter how they are ordered, they will clear, and while it might be true that banks reorder simply to increase fees, it could also be true that banks began reordering in response to customer abuse of the system.

Once banks made the decision to extend shadow lines to customers, customers soon learned that they could overdraw their accounts by small amounts to expand their money supplies. Reordering is a definite deterrent to that strategy. Do you really think that is behavior that should be encouraged? And eating themselves? The same could be said of many, many bank customers, but you seem bent on feeding that trend.

IWonder, it's worth remembering that the amounts involved are often quite small. I have an acquaintance that has "bounced checks" (by using her debit card) at least twice to rent a movie for $1.00 (plus eight cents in sales tax) at the grocery store. If covering a $1.08 transaction until her next deposit is really "risking their depositor's funds", then the bank has much, much, much bigger problems.

She's actually quite hopeful that she'll be able to convince her bank that if her account is down to its last penny, they should refuse her debit transaction. She'd rather skip the movie than pay a $35.00 overdraft fee.

Yes, the amounts involved are often quite small, but it's still money that the depositor doesn't have, and it still amounts to a loan. I would have a bit more tolerance on this point if I hadn't read that Americans are more likely to live paycheck to paycheck if their household income is $100,000 per year than if it is $50,000 per year and if I hadn't also read that a signifcant number of mortgage defaulters are the affluent who can afford the loans they chose to take out, but who make a calculated decision to buy an equivalent home for less and walk away from the original mortgage, leaving the rest of us who take responsibility for our choices with the bill. Wasn't the Republican mantra personal responsibility, and isn't that what the affluent bought into? Why should it only apply to others?

Your friend could balance her checking account and avoid those $35 fees, but she will probably be happy to know that banks are trending toward forcing customers to opt into having shadow lines extended to them; less happy to know that her bank's software probably doesn't support her being able to do that today so it's, at best, several months out. She can, however, take charge herself and track her spending in the meantime to avoid this happening until then, or she can consider the $35 fee her payment to the bank for floating her the small loan and for keeping track of her ledgers for her. The point is that this is an entirely voluntary fee, and the $35 fee is as much the result of her choices as it is the result of the bank's policy decisions.

If the current crisis were simply the result of predatory practices, it would fall disproportionately on the poor and powerless, and most would not be at all fussed about it. It's not. It has been a long time coming, and it evolved primarily because of the demands of the affluent, who now seem to think they ought to be insulated from their bad choices. Your friend ought to be grateful that she can afford the overdraft fees and take action to ensure that she doesn't have to. Most are not so fortunate.

BTW it's worth noting that the ONLY entity that can ensure that no overdrafts occur is the customer. The bank cannot control when checks cleared through other banks come in so the $1.08 transaction might well be good at the time that it is processed, but not that evening in batch when checks are processed. Only the customer has complete visibility into her checking account ledger at all times so only the customer can guarantee that overdrafts don't occur.

Sorry, but we're not all as perfect as you are. Neither are we "writing bad checks" or stealing from a fucking bank just because we have an accidental overdraft.

Please excuse me if I disregard your smug drivel...

And excuse me for not being as foul as you are.

In my experience, if you don't make overdrafts a habit and you accidentally overdraw your account, the bank will work with you and will reverse the fees if you ask nicely. On the other hand, if you make it a habit to accidentally overdraw your account, then I imagine the bank will want to recover its administrative costs.

I'm a single mom, and I travel a lot in my job so I'm probably more prone to making mistakes than most. I did make a very costly mistake a couple of years ago and ended up bouncing three checks because I wrote them on an account that I closed after my purse was stolen. When I sent my son to go into my closet and grab new checks, I had no idea I even had any checks from that account left, and when the bank left messages on my phone in an attempt to determine whether to honor my checks or not, I was out of town and couldn't be reached.

The upshot? I wrote a bad check to my son's trumpet teacher, who very kindly traded the bad check for a good one. I wrote a bad check to the milkman, and the company worked with me to set things straight at no cost to me. And I wrote a bad check to Pizza Hut, and even though by then, I was well aware of what I'd done and I called the store FIRST to set things right, that bad $17 check cost me over $120 in fees - just over $60 to Pizza Hut and the rest to the collection agency. And I was lucky. It could have been much worse, and if you look at it that way, the $35 fee for the float seems like a bargain. I certainly wasn't happy about the fees, but I can hardly blame Pizza Hut for my mistake. Nor can I blame them for mitigating their risk by pricing their fees to cover all the check amounts that don't get recovered and by turning bounced checks directly over to a collection agency that charges very hefty fees itself.

The bank? They didn't charge me anything, they honored the checks that hadn't cleared after I explained my dilemma, and they were very nice about it to boot.

And I'd rather be smug than be a jerk who refuses to take responsibility for his actions. To each his own, I guess.

IWonder:

I agree that entities, including people, should have sufficient reserves on hand before they extent a check or to take on a risk. Unfortunately we have experienced much in such a manner over the last 8 years where entities have felt they can take risky positions as business keeps growing. When business decreases or fails, the others to whom the originating enty is indebted to, come looking for those reserves. When reserves are not available or be raised on the open market, the entity can go bankrupt, be taken over, or rescued by a government entity such as the FDIC, the treasury or a non Government entity such as the Fed.

In any case, it was the depositing banks who were allowed to take on the additional risk with depositor money and without increased reserves. Are banks supposed to risk depositor's funds by lending to to other banks who have invested on W$ in risky ventures for which neither has sufficient reserves on hand? :) I can understand why people are a tad miffed with banks when they in turn are hit with hefty fees after have loaning to the banks taxpayer money to bail them out of their risky ventures with billions are being set aside for bonuses. And today, the investing in risky ventures still continue on the part of those "too big to fail."

It would seem a more modest fee would be appropriate. In 99% of the bounced checks, I don't beleieve it would be a case of "uttering" (I believe that is the proper term for writing numerous bad checks).

I am not, and never will be, an entity. I am a person, benefitting from the protections afforded by the Constitution and other laws. On the other hand, businesses are, always have been, and always will be, entities. They are our oxen, fit only to pull our plows, or become hamburger!

Phil:

Still an entity to the gov, a number, and a PIA to them. Just making a point . . .

I looked it up. There were 62 definitions, the most intriguing being "Pain in the Ass".

IWonder, you have a nice theory, and it works just fine for people like me, who can keep a cushion of cash in their checking accounts without going hungry. But the person I was speaking to is apparently trying to live on disability payments (massive physical injury), and she is apparently trusting enough to believe that when the bank's telephone system says she still has $20 in her account at three in the afternoon, and she knows that she hasn't bought anything for a couple of days, that it means a $1 transaction won't result in 'bounced check' charges just four hours later.

Personally, I think she needs to hand over her financial transactions to a third party, but 'only about average skills keeping track of a checking account' isn't the legal standard for having a (quite costly) conservatorship appointed.