Help! We’re being sucked into the overdraft!

October 21, 2009, 2:08 PM UTC

OBAMAThose who wonder why the President took a hectoring tone last night with the guys on Wall Street who run the banks that run the banks that manipulate the markets that shape the economy need look no further, I think, than the story sent in by Laura Cosino in Cincinnati, Ohio. It’s an inspiring tale — if you’re an accountant. It demonstrates just how creative and innovative that profession can be, particularly when its practitioners work for a big institution that makes its own rules. Laura writes:

“I actually let my bank know how much I appreciate Over-draft protection! I got a letter in the mail stating that I was $374 over-drawn and they would like me to do something immediately. I was confused by this because I didn’t remember making any purchases. It turned out that I had overdrafted my account by $1.36 through a subtraction error I had made in my checkbook. I called the bank to tell them there was a mistake! I had only overdrafted one time, but yet they had charged me 7 overdraft fees. I told them that I had gone through my check register multiple times and no matter how I did it, I was only short on one transaction. They informed me that they don’t do their accounting the same way as I do, they don’t deduct the transaction the same day that it is made. The bank likes to put everything in “pending” deduct it from my balance, then pick the largest transactions and let them clear first (they thought larger transactions may be more important-paying a credit card bill) and after they do that…they leave all of your other small transactions for the end. They then pay those transactions, and charge you a fee for every single one. I was totally confused by this, I don’t remember my high school accounting class teaching to balance your check book this way. Needless to say, they don’t refund any charges no matter the reason…and according to the rep on the phone, there is no one higher at Fifth Third Bank than him.”

Too bad, Laura! You’re out of luck. We all are, actually, if the audience at that fund-raiser gets its secret druthers. They might have paid $30,000 to attend their public flogging, but I would venture to say that not one person in that room is willing to submit to the lesson that was articulated. And when Finance is allowed to implement its own ideas of regulation and control we can all look forward to being caught in the overdraft.