Chase drops fee tests as big banks feel the pain
With the hellhounds unleashed by the consumer pushback on Bank of America's debit card fee fiasco still hot on their heels, Chase and Citigroup ran for the hills last week in separate moves aimed at damage control and belt-tightening.
Chase quietly dropped the pain-testing of a $10 monthly fee that it had been charging since February to new basic checking account customers in Oklahoma. The fee could not be waived by direct deposit or online banking requirements.
Chase also ceased charging a $15 monthly checking account fee in the Atlanta area that could only be waived by maintaining a $1,500 daily account balance.
So now, Chase will begin offering Total Checking in those two markets, just as it has everywhere else in the nation. That's an account that charges $12 a month unless you keep a $1,500 daily balance, have $5,000 in deposit and investment accounts, or set up a monthly direct deposit of at least $500.
Last month, largely in response to BofA's aborted $5 debit card fee, Chase also canceled its own pain pilot of a $3 debit card fee that it had been charging customers in Georgia and Wisconsin since February.
Across town, Citigroup apparently plans to eliminate "slightly more" than 3,000 jobs as part of a reengineering and divestiture program, according to a Reuters report. Citi CFO John Gerspach was quoted as saying that every Citigroup unit is expected to create 3% to 5% in cost savings each year as the bank works to rein in expenses.
Citigroup becomes the latest big bank to shed bodies in the wake of financial reform. Earlier this year, Bank of America announced that it would eliminate 36,000 positions, more than 10% of its consumer banking workforce. Other banks shedding jobs of late include Goldman Sachs, Bank of New York Mellon Group and State Street, a major Boston holding company.
Wall Street apparently didn't welcome the news, as Citigroup shares fell 2% percent on the New York Stock Exchange.
Bank of America's ill-timed debit fee debacle seems to have painted the bigs into a corner of their own making, caught between heightened media and consumer fee awareness on the one hand and shareholder impatience for performance on the other.
Could this portend the coming of the perfect storm that finally tests whether these financial juggernauts are "too big to fail"?