Rubber checks and balances It's the unfairness that upsets many

March 13, 1992|By Jean Marbella | Jean Marbella,Staff Writer

Shirley Carter: check bouncer.

it's so embarrassing!" Ms. Carter said, confessing to that occasional (maybe twice a year?) and entirely unintentional (it's her husband's fault!) lapse into deficit spending.

But Ms. Carter, who lives in Owings Mills and works at a Baltimore non-profit clinic was willing to be named -- without the months of political pressure and public outcry required before Congress yesterday finally agreed to name names of those 355 current and former members who bounced checks at the now-closed House bank.

"This just burns me up," Ms. Carter said of the check scandal, speaking outside a branch bank in Waverly where she had --ed to make a quick ATM transaction. "I have paid $25 to the bank for overdrafting, and $25 to the store I gave the check to,

even if the check was just for something like $2. And you know those [congressmen] weren't writing $2 checks."

Indeed -- 134 House members apparently wrote 581 bad checks for more than $1,000 each. And as the numbers pile up and a red-faced House continues to wrestle with the scandal, the jury of public opinion already seems to have ruled. This is an issue that flies in the face of that most American of values: fairness.

"Shame! They need to clean house over there," said another bank customer, James Gibbons, a security guard currently on disability who keeps himself from bouncing checks by paying for purchases exclusively with cash. "Suppose I were to bounce a check. They'd have me in jail and fined so fast . . ."

"People are outraged. It is the hot button on talk radio today," said Tom Marr, a WCBM-AM host whose shows have been dominated with calls on the subject since the story broke. "They feel the members of Congress feel they are better than we are . . . that they can do this with no penalty while the rest of the peasants have to pay $17 to $35. People are angry about Congress anyway, and this is part of their pattern: 'We are above you.' "

The scandal couldn't have come at a worse time -- for anyone. For the politicians, it is an election year. For the rest of us, it is another year into the recession, another year of living dangerously closer to the edge, with each check threatening to tip the balance into the red zone. It is a fortunate few who have never written a check on the fly -- hoping it wouldn't reach their banks before their next deposit arrived to cover it.

Banks saw about a 16 percent increase in bad checks between 1989 and 1990, the most recent statistics available, due in part to the impact of the worsening economy, said John Hall, spokesman for the Washington-based American Bankers Association.

"For some individuals, who are suffering from hard times, it's an honest mistake," said Jim Fulcher, Signet Bank's vice president for branch administration. "Things have gotten pretty desperate for some people. People are playing it closer to the edge."

Still, rubber checks comprise a tiny fraction of all checks written -- of the 50 billion checks written annually, a mere 1 percent bounce, Mr. Hall said. Furthermore, just a few check writers tend to be responsible for the bulk of those overdrafts: One industry survey found that less than 5 percent of bank customers paid about half of the fees collected for bounced checks.

Those fees are on the rise as well: The nationwide average penalty for bad checks is up to $17.86, a dollar more than a a couple of years ago, said Robert K. Heady, publisher of Bank Rate Monitor, a financial newsletter that surveys such fees.

In the Baltimore-Washington area, banks tend to charge about $25 for a bounced check, he said. The worst city in which to bounce a check is Philadelphia where some banks charge as much as $30; by contrast, banks in some cities that are otherwise more costly to live in, such as New York and San Francisco, charge as little as $9 or $10, Mr. Heady said.

There's really no rhyme or reason to what banks charge for bad checks, he said, rather, banks tend to charge what other banks in their area charge.

"The banking industry is notorious for its lemming-like behavior," Mr. Heady said. "They tend to track one another in the setting of fees and in the setting of savings rates and borrowing rates. It's whatever the market will bear, and what they can get away with."

Mr. Heady said banks have come to realize that a tidy profit can be made by penalizing bad check-writers.

Bankers, however, say the fees are necessary: both for the processing involved and the deterrent effect.

"It's just like a $50 fine for speeding, you're discouraged from doing it," said John Bowers, executive director of the Maryland Banking Association. "The bottom line here is people should remember not to write the check until you've deposited the funds. A lot of folks try to play which check will get there first."

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