CU questions vague promises in proposed bank mega-mergers
April 14, 1998
West Coast Office
Group Urges Bank of America & NationsBank to Make Explicit Commitments to California Consumers
SAN FRANCISCO, CA – The following statement is attributable to Gail Hillebrand, senior attorney and head of the credit and finance team at the West Coast Regional Office of Consumers Union, nonprofit publisher of Consumer Reports. These comments include some of the issues that consumers, regulators and the public should consider in evaluating the proposed merger. The banks have not yet filed formal merger documents, and therefore are able to make commitments on these issues as part of the application for merger approval.
In the last decade, banks have told consumers that “bigger is better.” At the same time, studies by the Federal Reserve Board and others show that large banks charge higher fees for many types of accounts than smaller banks, and that out-of-state banks charge higher fees than in-state banks.
Californians shouldn’t have to settle for vague promises of future efficiencies after a merger is approved. Instead, the public deserves to receive clear, specific details about the promised benefits of the proposed NationsBank/Bank of America merger, as well as full disclosure about the harms likely to come from such a merger.
Unfortunately, NationsBank’s record in customer service is not encouraging. According to the American Banker, in May 1997 NationsBank announced it would charge one dollar to accept deposits at a branch if the customer had not brought his or her own deposit slip. In April 1997, NationsBank announced that it would adjust its customer service phone line so that consumers who are not in the most profitable 30 percent of customers would be routed to a separate group of customer service representatives. The bank acknowledged at the time of the announcement that this means that less profitable customers may have to wait on hold longer than other customers.
Before these two banks submit a proposal for merger approval to federal banking and antitrust regulators, they should make specific commitments and promises detailing exactly how California will be affected. These promises should be made part of the merger application so that they can be enforced by federal banking regulators if they are broken.
Bank of America and NationsBank should answer, publicly and fully, questions regarding:
Branch closures, fees, and customer service
Will consumers pay for the merger through higher bank fees? If not, what will NationsBank/Bank of America do to ensure that consumers don’t pay for the merger through higher fees? Will they commit not to impose new fees on checking accounts, savings accounts, and ATM users? Will they commit to a moratorium on new fees and on fee increases?
Preservation of BankAmerica’s existing community reinvestment act commitment and support for California nonprofit organizations
Loss of local control in the California banking market
Consumers Union urges the banks to make specific commitments, rather than vague promises, on these important consumer and community issues.