NSF fees for low-income people, soaring profits for the banks
Posted September 23, 2021
Fair banking needs to be an election priority, writes Donna Borden
It’s again that time of the year when the big banks are releasing their quarterly results — no surprises here. Same headlines over and over — profits of banks and compensation of billionaire CEOs continue to soar. But what also remains unchanged or has in fact worsened is the hardship faced by low-to-moderate income people.
The Royal Bank of Canada (RBC), the country’s largest bank, reported a profit of $4.3 billion for the quarter ending July 31, up 34 per cent from the prior year. The story of all other banks is no different. But what’s more startling is that the RBC alone took in $4.08 billion in fees, including bank fees, credit card fees, investment management fees and mutual fund fees.
This, at a time when the country is in the grip of a fourth wave of a pandemic that has caused massive job losses, disproportionately impacting the low-wage, precarious workers and those most vulnerable. The pandemic is not over yet, and millions of Canadians will soon be left with no source of income as the feds wind up the support programs, including the short-term changes to the employment insurance system. In fact, the federal government supported the big banks with $750 billion worth of liquidity support during the pandemic but the only support those banks offered was deferral in mortgage payments and credit cards, affecting very few people.
Antonietta, an ACORN member from East York in Toronto, was expecting her pension payment, which got delayed due to some glitch in the system. RBC charged her four NSF Fees ($45 each) and then for an overdraft, so the overdraft interest. Added to that was the monthly bank fees for the account. All this while she was struggling and trying to find where her pension money was. She says, “Banking fees are discriminating, an added hardship for people on the edge of a cliff … With limited funds, we at the bottom support the towers of greed. The banks are like the towers of power; when the elite look down and see us as ants, they are so far away from the reality of our lives.”
NSF fees ($45-$48) push people to take a payday loan with a 500-per-cent interest rate. The banks — RBC and BMO — are in fact financing these predatory lenders, buying $53 million of EasyFinancial’s debt as “convertible debentures” due on July 31, 2022.
ACORN Canada has championed the campaign for fair banking for years. ACORN’s federal platform for 2021 elections is calling on the banks to lower the NSF fees to $10, reimburse all fees to low-income people charged during COVID and stop financing predatory lenders. The federal government needs to play a much larger role to end two-tier banking and predatory lending. It must mandate banks to provide an affordable loan for low-and-moderate income people backstopped by the government and support postal banking. People need low-interest alternatives so they can avoid predatory lenders.
Fair banking for all needs to be a priority in this election and beyond. Headlines must change!
Donna Borden is the National ACORN leader and acting chair of the East York Chapter of Toronto ACORN.