STRATEGIC PARTNERS
A popular survey of financial institution prices and fees may lack bite as a watchdog without the sponsorship of the Federal Reserve Board.
October 2, 2000
A new survey of bank fees -- including those charged at the ATM -- may be a swan song of sorts for Moebs $ervices Inc., the Lake Bluff, Ill.-based consulting firm that has produced the reports for the Federal Reserve Board for the past 10 years.
The survey, which the Fed released earlier this month, indicated a national average ATM charge of $2.43 (including both surcharge and foreign fee). Charges were highest, the survey found, at banks with $1 billion or more in assets. The highest fee, a whopping $4.02, was in the Houston metro area. The lowest, 50 cents, was in Iowa, where surcharging is prohibited.
(To see the entire survey, click here)
Consumer advocacy groups such as the Public Interest Research Group often use Moebs' data to supplement and reinforce their own studies.
The Fed first enlisted Moebs following the S&L bailout in the late '80s to determine if financial institutions increased their fees to cover increases in their insurance. And in 1994, when the Interstate Banking Bill was passed, the Fed monitored banks to see if they passed along the increased costs of doing interstate business to their customers.
By and large, said Moebs $ervices founder and chairman Michael Moebs, banks do pass along such costs to consumers, as evidenced by the fact that larger, interstate banks tend to charge their customers more for everything from ATM use to maintenance of checking accounts.
In 1995, Congress passed legislation to make the 1999 report the last one the Fed would pick up the tab for, even though some say it provides the only national benchmark for comparison of fees.
While the House passed legislation to restore the survey's funding last fall, it faces a less-than-friendly reception in the Senate Banking Committee. Chairman Phil Gramm (R-Texas) opposes restoring the funding.
Another of the survey's prominent opponents is Fed Chairman Alan Greenspan, who sent a letter to House Banking Committee Chairman Jim Leach (R-Iowa) a year ago saying that the Fed's use of the study in research projects does not necessarily justify its cost.
In June, Moebs $ervices conducted a 2000 survey on its own, hoping that a consumer group or other interested party would pay the $81,000 it cost to produce. So far no one has, which puts the future fate of the report in doubt.
The company contacted about 3,000 financial institutions in all 50 states to produce the most recent survey, split almost equally between banks and credit unions.
That survey found a national median ATM charge of $2.25 (including both surcharge and foreign fee). Moebs believes that median numbers, which throw out the highest and lowest fees, are more accurate than the averages the Fed reports.
"Throwing out the aberrations is the best way to examine what is truly going on in the market," he said.
Moebs said his company's survey serves an important function. "Even in a free market, you need stoplights and stop signs."
He would like to see the Fed continue as the survey's sponsor. "If you put up a stoplight, it may not be enforced without the government's help," he said.
