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TD Bank is planning a merger with First Horizon Bank; the combined entity would be our sixth-largest bank.
TD Bank, based in Toronto, is planning a merger with Memphis-based First Horizon Bank, in a $13.4 billion all-cash deal. The merger has been delayed twice. If the merger goes through, the combined entity would be our sixth-largest bank.
Among the other arguments against excessive and anti-consumer bank mergers like this one, which are routinely approved by the Federal Reserve, is TD’s appalling record on bank overdraft fees. TD is an outlier even among other U.S. banks.
According to research and complaints by the Center for Responsible Lending, TD charges U.S. customers more than $100 a day for overdrafts by levying $35 fees three times a day. These fees bear no relationship to the bank’s actual costs. They are purely opportunistic.
In Canada, where the authorities regulate these practices, TD and other banks may charge overdraft fees no more than once a day, at a maximum of five Canadian dollars, which is about US$3.50.
It reminds you of the differential drug pricing between the U.S. and other nations, which control drug prices. Since the giant drug companies are prohibited from gouging consumers overseas, they soak Americans.
First Horizon operates mainly in the Southeast, in such states as Tennessee, Arkansas, Texas, and Florida, where there are large Black and Latino communities and a lot of poverty. Excessive overdraft fees in these communities are unconscionable.
Today, a coalition of 13 consumer and financial reform groups led by the Center for Responsible Lending, sent a joint letter to Michael Hsu, the acting comptroller of the currency (OCC), asking for regulatory actions against excessive overdraft charges.
As the letter pointed out, “Overdraft practices typically started as courtesy programs designed to help bank customers avoid bouncing checks, with the intent that they would be used infrequently when their accounts had negative balances. At the time, the programs were largely manual, and the fees charged aligned with the costs of manual operations. Yet technological innovation and industry practices have morphed what was once a simple, courtesy program into an automated, high-revenue business line.”
The letter requested the comptroller to require reform of these abuses “before any OCC-supervised bank is allowed to expand using mergers or asset-increase approvals.” Even better would be across-the-board regulation limiting bank overdraft charges, as Canada does.
