Thursday, March 6, 2014

M&T Bank's Little Secret

Authored by Dr. Lachin Hatemi
 Published by

With $80 billion in assets, M&T Bank is one of the biggest regional banks in the United States. Headquartered in Buffalo, New York, M&T Bank is a market leader in Western New York, Pennsylvania and Maryland.

Unlike other major banks, M&T Bank continued to churn out handsome profits for its shareholders despite serving some of the poorest urban markets in the country. Buffalo and Baltimore are two of the United States’ poorest cities, places where poverty and high-crime rates have destroyed communities. Coincidently, both cities – overlooked markets for other financial institutions – are where M&T Bank has the largest market share and made a fortune.

Low-income customers in densely populated urban areas can be surprisingly fertile grounds for a bank to exploit for profits. The dirty secret of the banking industry is the overdraft fee – the infamous $37 penalty, which a bank can levy on your account every single time you overdraw it.
Do not underestimate overdraft fees. It is big business for banks, generating more than $32 billion for the industry in 2013 alone.

In 2010, Federal laws under the Dodd-Frank Act regulated overdraft fees and gave customers more options as to how overdrafts were handled. Instead of automatically and involuntarily charging customers, banks are now required to ask for your permission to be able to charge you overdraft fees. If you decline, next time you try to charge your debit card, the transaction simply will be declined, preventing your bank account to be overdrawn.

Dodd-Frank Act was of great benefit to bank customers, who suddenly had power to stop costly overdraft fees by simply opting out of the services by filling out a one-page consent form.

In 2010, banks across the nation complied with the new Federal regulations by adopting written consent forms to ask for customer fill in order to opt-in or opt-out of overdraft fees. M&T, however, took a very unusual approach, which did not involve a standardized form to obtain consent.

M&T Bank claims that it obtains customers’ consent for overdraft fees verbally when account is opened, which leaves no paper trail of the transaction. This creates a huge problem for customers, since there is nothing in the bank records to prove how a customer consented. It is simply your word against the bank’s.

Federal banking regulators might uncover interesting things if they investigate M&T Bank’s records to see how more than a million bank customers’ consents were obtained. Until then, I guess regulators simply have to take the bank’s word for it…

Meanwhile, you can do something about it while regulators decide to take action to stop this practice. Please go to the closest M&T Bank branch and request them to provide you with the records of your consent in “writing” and watch what happens….

Lachin Hatemi is a physician in Buffalo, New York. His interests include human rights, economic justice and interfaith dialogue. You can reach Lachin at

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