Payroll Deposit Question

[PIGLEE]

I only do a couple of small payroll clients. The one takes her payroll deposit to the bank every quarter, and files a 944 at the end of the year. Friday when she took her deposit to Bank of America, they refused it, and said as of September they did not take the Federal Deposits any more. They told her she had two options, sign up for EFTPS, or sign up to have them do all their payroll reports and payments. She only owed 402.00, and is in the process of closing down her business, so I told her to hang onto the money and she could mail it in with her 944 report.

Has anyone else heard about banks not accepting the deposits? What are you doing?

[MLINDER42]

Payroll Deposits

Have the client sign up for EFTPS a lot of banks are refusing deposits.The couple of payroll clients I have this is what I did.

[Nashville]

No Fee

Piglet, I'm old enough to remember when you could deposit a check and the bank could sit on the money for 3 days. This was a big boon to the banks, even the ones in small towns with only a few employers.

Only recently when the govt insisted on direct EFT deposit for Social Security checks, the banks started salivating at the idea of more money quicker in their coffers, ease of making transactions, and being able to charge a fee for doing so. But the fee became a political issue for a govt encountering resistance from some SS recipients. So they passed a regulation that the bank could not charge a fee on these electronic transactions.

The banks were disappointed, but still enjoyed the benefits of having some 2 million new checking accounts, so they still accommodated.

Not sure whether this EFT regulation was passed on to tax deposits or not. Banks now have to transmit all such deposits electronically at the end of the day. If they are not allowed to charge a fee they essentially have to perform this service for nothing.

Bank of America and the big banks can refuse to do this. The only helpful suggestion would be for this client to find a smaller bank, maybe hometown owned, who would be glad to have her account and her business. Credit Unions are not allowed to engage in commercial activities so don't go there for this problem.

[ChEAr$]

In fact

Bank of America has decided to get out of this line of work.
I predict other banks will follow suit.

I've one client, who used to have maybe 8 welders on payroll, but now only down to one
office clerk. She insists on taking a blue coupon to the bank EVERY month, even for $118.
And she insists on paying her average of $ 20 per month with coupon to Alabama for w/h.

A computer? what's that, she asks. That's what I'm here for.

[JohnH]

I wouldn't be dealing with BOA in the first place, but if I were then this type of change would drive me to a competitor. I'd keep changing banks until the last bank in town stopped taking the coupons.

Hopefully by then somebody in the business would get the idea that changing "Customer Service" to "Customer No-Service" just isn't good for business in the long run.

[ChEAr$]

I wouldn't be dealing with BOA in the first place, but if I were then this type of change would drive me to a competitor. I'd keep changing banks until the last bank in town stopped taking the coupons.

Hopefully by then somebody in the business would get the idea that changing "Customer Service" to "Customer No-Service" just isn't good for business in the long run.

I'm guessing that your location has something to do with your opinion of BOA. (grin

[JohnH]

You would be correct.
However, this isn't something recent - it has been my opinion for at least a decade; maybe longer. It's the steady progession of these little sorts of dismissive actions by the banks, one step at a time, which point clearly to an arrogance that's impossible to ignore.

I'll have to add that even though I've always considered myself a free-market capitalist, what I've observed in the banking business has tempted me to alter my views somewhat. I discovered Simon Johnson less than a year ago, and now I read everything I find by him. In the future, the term "state capture" may do more to explain what has happened and continues to happen in our financial sector that any economic term in the textbooks.

Here's a recent article by Simon which appeared in the Atlantic.
It sends chills up my spine:

http://www.theatlantic.com/doc/200905/imf-advice

[dsi]

Great article John, thanks.

[ChEAr$]

I'll have to add that even though I've always considered myself a free-market capitalist, what I've observed in the banking business has tempted me to alter my views somewhat. I discovered Simon Johnson less than a year ago, and now I read everything I find by him. In the future, the term "state capture" may do more to explain what has happened and continues to happen in our financial sector that any economic term in the textbooks.

My sentiments, exactly, John.

[joanmcq]

Very good article. for once we agree on something!

[JohnH]

Oops!
How did that happen?
Could it be that we're both wrong this time?

[JohnH]

More bank stuff. I guess we'll have to add "regulatory arbitrage" to our lexicon if we want to begin understanding the problems with the financial system.

For years the debate has raged about how "economies of scale" are the driving force behind bank mergers. Yet, the external evidence is increasing fees and decreasing service, as evidenced by the little matter of "concern for customers" that started this string. Here's a more realistic take on the underlying reasons for bank mergers and why mixing retail banking & investment banking makes sense for the bankers but it's disastrous for their customers and all of us as taxpayers.

http://baselinescenario.com/2009/11/18/slow-cat-fast-mouse/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+BaselineScenario+%28The+Baseline+Scenario%29&utm_content=Yahoo%21+Mail

(When Simon Johnson & James Kwak stop publishing the Baseline Scenario, I'll stop posting links to it. These guys just keep hitting the nail squarely on the head).

[Black Bart]

http://baselinescenario.com/2009/11/...=Yahoo%21+Mail (When Simon Johnson & James Kwak stop publishing the Baseline Scenario, I'll stop posting links to it. These guys just keep hitting the nail squarely on the head).

I read Simple Simon's and James Quack's Baseball Scene and still cain't figure whether or not they're going to make banks quit charging us overdraft fees. Please elaborate.

[JohnH]

Fees will only go up. They won't make banks quit charging us any kind of fees. If they do, the banks will quit buying them off with huge campaign contributions and they might not get re-elected. Consequently, every time we see any attempt at regulation, it turns out that the odds are so well rigged that the banks always get more than even the house rakes off in Las Vegas. How's that for elaboration?

(I think Simple Simon and James Quack will say pretty much the same thing if you ask then to explain in terms of how betting works in baseball or any other sport)

[Black Bart]

Thanks for the tip and

Fees will only go up. They won't make banks quit charging us any kind of fees. If they do, the banks will quit buying them off with huge campaign contributions and they might not get re-elected. Consequently, every time we see any attempt at regulation, it turns out that the odds are so well rigged that the banks always get more than even the house rakes off in Las Vegas. How's that for elaboration?

since you know a thing or two about banks, let me ask about something else (my pet peeve).

Last year the Arkansas attorney-general, while in high dudgeon and the throes of righteous indignation (he's going to run for governor eventually), got all the cash payday loan people thrown out of the state. They were giving unbanked, high-risk broke folks $350 for holding checks a week or two and then collecting back $400 total for their trouble (seemed reasonable to me and I certainly wouldn't chance it for a lousy 50 bucks).

Anyway, the AG said: it's NOT A FEE, it's 400% INTEREST, a ****ed outrage, and bloodsuckers are fleecing the poor folks, etc. (they're probably paying loansharks 50% vig now).

Now it came up that somebody asked why banks aren't bloodsuckers too, since they charge $35 for overdraft fees (no problems-no risk-no calls-no contracts-just quick, quiet, safe debits to customer accounts). If the bank's lucky, three or four more checks will arrive before the customer realizes he/she's overdrawn and they can rack up $100-$200 OD fees right quick.

And it was explained to the unenlightened dopes that bank OD charges ARE NOT INTEREST, doncha see? They're FEES. And a darn good thing, too -- otherwise the interest on an elapsed hour or two before customers can get to the bank and cover the overdraft would be about two or three thousand percent.

The customer's at fault and I can see banks charging five-ten bucks, but $35 and up? Has there ever been any national political discussion about this travesty?