Findings

At the National Fee Producing Conference of 1993, bankers and industry consultants promoted a variety of strategies for introducing "New Fees for Old Products" and chief among the feeraising suggestions was clearing checks, largest first, in order to maximize the number of bounced items hitting an account on a single day and thereby maximizing NSF or overdraft fee income.

Three years later, a banker described to me how great this largest-item-first clearing idea was because "this way, if your account got messed up, at least your mortgage payment would clear and just all your little checks would bounce."

Over a period of just those three years, these bankers transformed a moribund service - lines of credit banks provided as a courtesy or for a small charge that were triggered by insufficient funds - into overdraft protection which was omnipresent within the industry and a cash cow fee to which banks became increasingly addicted....... (members please download / non-members please purchase to read more)