Bank of America announcing 16,000 of the proposed 40,000 layoffs to happen sooner than later. Also, according to recent news, they want to reduce 6 billion in operating expenses. Are the consumer banks in trouble? Well, yes, because many consumers are having economic difficulties.
Consumer banks typically make their money off of late fees. They charge $35 if your checking account is $.45 (45 cents short). So a consumer becomes $35.45 in debt to the bank. Many consumers no longer use the banks because it cost them too much to have their little bit of money tied up in the bank. And the rich don't need the bank. The consumer banks do not offer enough returns on their savings account. So unless it is a Cayman Islands account or a Swiss account for tax shelter purposes, banks just do not serve as much purpose anymore.
Banks were making good money off of loans and mortgages, but employment was key to securing the loan. Now, employment is too unpredictable now. Twenty years seniority with the same company may still net the employee a layoff or downsize which can cause a default on a loan. There is nothing sure right now. Preferential treatment can work in your favor one day as far as job placement is concerned and put you at a disadvantage on another day when someone else becomes the favorite. There is nothing steady nor stable right now.
With gasoline around $4.00 per gallon, rising healthcare premiums, rising prescription drug cost, do people really have any extra money to put into a savings account?
I would not bank on it.
As 2018, Bankruptcy laws may prevent a bailout option if your loans and credit cards go in default. Bank levies will wipe out your bank accounts to repay a credit card leaving you in a negative. Banks are a gamble. I use them strategically. Consumer trust is slipping. Somehow, I think history is repeating itself.
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