As two U.S. Senators have asserted, simpler is better when it comes to bank disclosures.

After many banks proposed controversial monthly debit card fees, Sens. Dick Durbin (D-Ill.) and Jack Reed (D-R.I.) called on banks to limit their financial disclosures to one page. This call comes at a time when the Occupy Wall Street movement has thrown a spotlight on banks’ perceived abuses against consumers and lack of clarity with fee disclosures.

The controversy began in large part in September, when a group of banks proposed monthly fees for customers who use debit cards. The banks said this fee was necessary to make up for revenue lost after the Dodd-Frank financial legislation limited the amount they can charge merchants who accept debit cards. The fee was met with widespread criticism and customer discontentment, which grew more intense when Bank of America reported a quarterly profit of $6.2 billion at the same time it claimed the fee was needed.

These fees have proven costly to consumers. A 2009 study found that households pay a median of $43 to financial institutions in monthly fees, which include overdraft fees, checking account fees and interest on credit cards. Banks have even felt the sting of fees considered onerous to consumers. A federal judge recently required Bank of America to pay $410 million to customers who were charged overdraft fees when the bank changed the order of their transactions to place the most expensive first.

The fight over fees has taken its toll on bank customers. A Harris Interactive survey found that 9 percent of Bank of America customers said they planned to leave the bank, and 40 percent said the bank’s customer service was fair or poor. Many have also left large banks for smaller credit unions instead, many of which do not charge fees. Since September more than 650,000 customers have joined credit unions, the Credit Union National Association reported. The backlash also led some like Bank of America and JPMorgan Chase to drop the debit card fee.

Still, critics assert, more must be done. A study from USA Today found that many banks fail to disclose certain out-of-network ATM or withdrawal fees on their web sites. Another study from the non-profit  Pew Charitable Trusts found the median length of checking account disclosures at the nation’s major banks is 111 pages. Pew lent its voice to the movement, suggesting that banks adopt something like what Sen. Charles Schumer (D-N.Y.) created for credit cards. He required these companies to place the most pertinent information, like interest rates and other terms, in an easy-to-read box that became known as “Schumer’s Box.” The Consumer Financial Protection Bureau, which was created by the Dodd-Frank financial bill to crack down on banks, also said it would take action to make sure banks are transparent with consumers. Other resources have arisen to help consumers find information on banks, like the site BankRatings.net, which allows them to search a database of banks with fees and checking account perks displayed clearly.

By EL Hengst

American prime money-market funds showed a lack of confidence in Germany’s largest bank in October, pulling back investments to the tune of $8.1 billion.

Among the eight largest funds in the U.S. which purchase corporate debt–a group that includes JPMorgan Chase and Co., Fidelity Investments and BlackRock Inc.–the amount of Deutsche Bank short-term holdings dropped 56 percent in October, to $6.3 billion in total. An analysis by Bloomberg found that the cut in investments in Deutsche Bank constituted the largest drop among 35 of the largest banks in the U.S., Europe, Japan and Canada. While the chief financial officer at Deutsche Bank said the money funds constitute only 3 percent of the bank’s total holdings, financial commentators see the move as a sign of the effects of a growing debt crisis in Europe.

The pull-out of American investments will likely have little effect on Deutsche Bank, said Kinner Lakhani, a financial analyst with Citigroup Inc. The bank was likely well-prepared for the pull-out, and the bank’s own performance shows it has felt little ripples. While the banking industry in general finished the week up 1.4 percent, Deutsche Bank rose 6.1 percent.

The news for Deutsche Bank comes as other financial institutions across Europe come to grips with the effects of a debt crisis there. Banks in France saw money-market funding drop 66 percent billion in October, to $1.3 billion. The last year has been difficult for French banks, with the eight largest money funds pulling out $61.3 billion in total, a 78 percent decline. Societe Generale, France’s second-largest bank, saw investments cut by $15 billion in the past year, causing a loss of 750 million euros ($1 billion) in the process.

There have been signs of hope for the debt crisis. This week Greece swore in a new prime minister, the former vice president of the European Central Bank. The new leader, Lucas Papademos, proposed plans to erect a new national unity government. Also this week the Italian Senate approved an austerity plan, easing fears about the nation’s 10-year government notes climbing above an unsustainable level. This measure of stability in Europe helped performance in U.S. markets, sending stocks rising after a volatile week. On Friday the Dow Jones closed up 260 points and the NASDAQ rose 53 points.

This stability overseas comes at an important time for America. Banks have been the center of protests stemming from the Occupy Wall Street movement, and the imposition of unpopular fees has drawn attention to the confusing and difficult-to-find terms on disclosures. Some organizations and politicians have called on banks to simplify disclosures, and sites like CheckingAccount.com have emerged to give consumers an easy way to compare rates and fees at banks.

By David Morse

Many economic experts have backed off fears that the U.S. economy is headed for a double-dip recession, but the Federal Reserve still wants to be sure.

The Federal Reserve plans to conduct a fourth round of stress tests on banks, hoping to determine how they would fare in another recession. The vice chairman of the Fed, Janet Yellen, said the test is needed because of how the debt crisis in Europe has created vulnerability in the U.S. markets. The Dow Jones fell 3.1 percent mid-week as an unclear situation in Europe caused concern that the debt crisis overseas could affect the American economy. Then the Italian Senate approved austerity plan and in Greece a new prime minister, former European Central Bank President Lucas Papademos, was sworn in with plans to erect a national unity government. These events sent U.S. stocks skyward again, touching off two days of gains including a 260-point gain for the Dow Jones to end the week.

Other domestic signs point to a strengthening economy as well. Consumer confidence had larger-than-expected gain in November, and unemployment is close to falling below 9 percent in November, its lowest level in six months.

Since 2009, when the housing market bubble burst and sent the economy spiraling into recession, the Fed has conducted periodic stress tests on the 19 major banks it oversees, a group that includes Wells Fargo, Bank of America and JPMorgan Chase & Co. Yellen said the newest test could also become an important way to identify weak points that could send the economy back deeper into a recession. The test would be the third in close to a year, with previous tests taking place in late 2010 and early 2011. Another test was conducted in 2009.

The Fed’s previous tests were believed to help build confidence in major U.S. banks, with markets responding favorably in the past. For banks, another vote of confidence with the current test would come at an important time, when many Americans have expressed discontentment or a loss in confidence in the banks. After the Dodd-Frank financial legislation cut the amount of money banks could charge vendors who accepted debit cards, many banks introduced controversial monthly fees for debit card holders to help make up lost revenue. This was met with widespread criticism, including calls for banks to simplify their customer disclosures. The banks’ lack of clarity also created an opening for sites like CheckingAccount.com, which allows customers to compare rates and fees at different banks. The discontentment also manifesting in a Harris Interactive survey that found more than 30 percent of customers at Bank of America, JPMorgan and Wells Fargo all rated their banks fair or poor at valuing customers.

Almost all businesses around the world have a common feature which is banking. Banking is a vital part of any business, but you should know the kind of account you want to open before you start prospering from your business. The right guide will provide you with sufficient information that will teach you how to find the best bank for business accounts.

One of the first steps you have to make is to find out the type of bank you want. There are many banks that provide various features for all kinds of businesses. When you choose a bank you might want to speak with some members of the staff about what you want in your account. Banks love small businesses and provide all kinds of offers like a free checking account. By comparing several banks, you will eventually come across one that will give the best deal for your business. Common banks are Bank of America, Chase, Wells Fargo, and Key Bank.

One of the next features to look for is fees. Fees are a typical thing in daily life, but you should look for accounts that will provide you with a complete overview of your penalties if something goes wrong. You should always remember to compare the fees so you can obtain the best deal.

Another feature to consider is online banking. This type of banking gives users an easy way to use their accounts at any moment in the day or night. By making sure your account can use the online option, you can handle your payments and other financial activities over the internet without having to work with your local bank. If you want to know more about this specific option, you should contact your local bank. It is an option that helps you save a lot of time as you do other tasks.

Before you start business banking, evaluate all of your current banking habits. For instance, find out if you always have a positive balance because then you can find banks that will provide you with a higher interest rate. You can also look for the lowest interest rate if you need credit to make a payroll. Also, business owners who use a credit card can attach it to their business account if they have understood the terms. If you make a good amount of cash withdrawals, you should make sure you know the locations of your bank’s ATMs. There are also some banks that will become partners in your business and provide free, valid business consultation. It might be helpful for you depending on your type of business.

Commercial businesses require options for owners to keep their money with easy access. This is usually accomplished through a business checking account, which may make such procedures like tracking costs, reconciling accounts, and managing cash flow much easier. Many banks all over the country provide business accounts that come with debit cards and checks. Even so, some financial institutions can give much more such as special offers and tiered interest rates that will help both small and large businesses.

The European debt crisis combined with Hurricane Irene are lead to a scramble for cash, significantly impacting the performance of the money market. Money market mutual funds have turned from putting money into investment grade corporate securities to investing in European banking debt. Specifically, money market mutual funds have invested in debt issued by European banks that, in turn, hold debt issued by troubled governments like Greece, Ireland and Portugal. According to Fitch Ratings, which released a report on money market mutual funds in June, 50 percent of all prime money market fund assets are invested in European banking debt. (1)

If that was not bad enough, the approaching Hurricane Irene is causing turmoil in New York financial markets as traders scramble for cash. Market participants sought to lock up short-term loans through Tuesday in the repurchase market, which is a key source of liquidity for Wall Street traders. These loans are backed by Treasury bonds. Concern about being able to access cash to fund operations at trading desks resulted in repurchase rates rising by as much as 10 basis points or 0.1 percent. (2) Hurricane Irene is putting pressure on money markets at the very moment when it faces renewed threats from Europe.

To make matters worse, investors have been withdrawing funds from the money market. Money market funds saw their assets decrease by over $2 billion to just over $2.6 trillion for the week ending August 24. (3) Granted, this is quite a lot of money. With over 50 percent invested in potentially insolvent European banking debt, the actual amount of recoverable money in those funds may be half that number or $1.3 trillion. This represents a staggering loss for money fund investors, and by implication the larger money market, since money funds are big participants.

Other problems are plaguing the money market as well. The Federal Reserve recently committed itself to low interest rates for another two years, dealing a blow to savers and money market investors. With the inflation rate holding steady at 3.6 percent, according to the Consumer Price Index, this implies negative real interest rates. (4) Inflation is slowly eating away at the value of money market accounts, and with interest rates at record lows, there are few good news items to look forward to. Another liquidity crisis like 2008 may be on the horizon for the money market.

Low interest rates are both a blessing and a curse. In an economy riddled with huge debt loads, low rates mean lower borrowing costs and lower monthly payments. Low mortgage rates are spurring waves of refinancing as new record lows are reached every few weeks. Thanks to the Federal Reserve’s zero interest rate policy (ZIRP), interest rates throughout the economy are lower than ever before. Certificate of deposit (CD) rates are pathetically low, so low that CD investors are being ravaged by inflation. CDs are similar to bonds, both being part of the fixed-income market. Bond and CD investors can arrange their purchases by maturity, creating a ladder from short-term to long-term securities.

The Federal Open Market Committee (FOMC) meeting on August 9, 2011 resulted in a decision to keep the Federal Funds Target Rate close to zero percent through mid-2013. This locked in the short-term end of the yield curve and effectively guaranteed low interest rates for the 2-year Treasury note. The yield on the 2-year fell to below 20 basis points or 0.2 percent. The benchmark 10-year yield fell below two percent for the first time ever. (1) Such record-low yields are reflecting increased investor demand for income, whether in bonds or CDs. CD rates are heavily influenced by bond yields, and low yields translate into low rates.

A brief glance at the current market for CD rates reveals a dire situation for investors. Record low interest rates combined with an inflation rate of 3.6 percent means that inflation is eating away at the fixed-income market. (2) The highest CD rate currently offered is a mere 1.27 percent. (3) At an inflation rate of 3.6 percent, this results in a real return of negative 2.33 percent. With a one year CD and a minimum balance of $1,000, a CD investor will lose $23.30 at the end of one year, leaving him with a balance of $976.70 in real terms.

Even the best of the worst CD rates are not enough to register gains against inflation in this environment. Fixed-income investors across the board are being taken to the cleaners, whether retirees or savers. Investing in CDs and bonds may be the only way to gain any investment income in this kind of economy. CD investors can look forward to inflation eating away at their returns for the next two years. Unless interest rates go up, the cost of living will continue to hurt fixed-income investors.