The Banking Industry Treats Its Customers Worse Than United Airlines

Tyler Durden's picture

Authored by Simon Black via,

Last week the Internet was ablaze with disgust after a man was physically dragged off a United Airlines flight.

What’s amazing, though, is that there are countless cases of another industry abusing its customers in far, far worse ways than the airlines.

I’m talking, of course, about the banking industry.

1. Banks treat you like criminal suspects too.

Sure, United had a man dragged away like he was a rape suspect being hauled off to jail.

But banks treat their customers like criminal suspects on a daily basis.

If you think I’m exaggerating, try walking into your bank and asking to withdraw $20,000 in cash.

See how quickly they start acting like police investigators, demanding to know what you intend to do with your own savings.

Thanks to a law called the Bank Secrecy Act, banks are legally required to fill out “Suspicious Activity Reports” on their customers and send them to the government.

Banks filed nearly 1 million suspicious activity reports in 2016 alone.

Think about that; United treated one passenger like a criminal suspect. Banks treated 1 million customers like criminal suspects last year.

2. Banks nickel and dime you even more.

The airline industry is constantly being ridiculed for its incessant and ridiculous fees. Selecting a seat, checking a bag, booking over the phone, even ‘payment fees’.

My favorite is the ‘fuel surcharge,’ which most airlines imposed back in 2007-2008 to compensate for the high price of fuel after oil prices surged past $120.

Of course, when oil fell to below $30, they didn’t get rid of the fuel surcharge.

Airlines rake in tens of billions of dollars each year on these fees that absolutely infuriate their passengers.

But once again, banks are no different, endlessly nickeling and diming their customers with unnecessary fees… especially if you’re a small business owner.

Some of the most infuriating are fees for sending and receiving money.

To send a domestic wire transfer, for example, banks charge a fee of $25 to $35.

Yet the actual -cost- of banks sending each other money through the Federal Reserve system is just pennies– as low as 3 cents per transaction.

So banks are literally charging more than ONE THOUSAND TIMES as much for a wire transfer as it costs them.

3. Overbooking? Try fractional reserve banking

Last week’s United incident highlighted the common practice of overbooking, in which airlines deliberately sell more seats for a flight than actually exist.

If there are 150 seats on a plane, an airline might sell 160-165 seats on the assumption that 5% of ticketed passengers won’t show up.

In other words, they make money by selling something that doesn’t actually exist… which isn’t a problem until all the passengers show up.

Well, this happens in the banking industry as well; banks routinely make loans and charge interest on money that doesn’t actually exist.

It’s called “Fractional Reserve Banking”, a type of financial system that only requires banks to hold a tiny portion (or none) of their customers’ deposits in reserve.

If you deposit $100,000 at a bank, for example, the bank might hold 5% of that money in reserve, and loan out the remaining $95,000.

That $95,000 will eventually be deposited in the bank, upon which the bank will hold 5% of that amount ($4,750) and loan out the remaining $90,250.

This continues again and again until the bank has made $2 million in loans on a single $100,000 deposit.

The other $1.9 million doesn’t actually exist. But the bank is raking in the interest.

Just like airline overbooking, fractional reserve banking is a risky practice. And we saw in 2008 how quickly the entire system unraveled.

But that’s OK because. . .

4. Banks are in bed with the government too.

After the 9/11 attacks, the already-troubled airline industry was quickly sliding into bankruptcy, so the US government provided a $15 billion bailout through the Air Transportation Safety and Stabilization Act.

Airlines, as it turned out, were too big to fail.

Seven years later, the banks received a bailout worth more than $1.7 TRILLION, over 100x what the airlines received.

So no matter how stupid or risky their practices are, banks expect the taxpayer to bail them out.

5. Yet they brazenly screw their own customers

One of the things that was most disturbing about the United episode was how quickly the situation escalated to violence.

After overbooking the flight, United offered $800 in vouchers to passengers who voluntarily got off the plane.

$800, apparently, was the magic number. After breaching that limit they resorted to violence.

It shows a pitiful lack of respect for human dignity and a terrible violation of the public trust.

It’s the same in banking.

Hardly a month goes by without some major banking scandal– colluding on interest rates and exchange rates, manipulating asset prices, manufacturing fake accounts…

It never stops.

At least airlines pretend to compete with one another and engage in the occasional ‘fare war’.

Banks actually conspire to screw their customers.

And even when they get caught there are hardly any consequences.

One guy got dragged off a plane and the Internet lost its mind. But banks abuse their customers on a daily basis. Where’s the outrage?

If people are angry about United, they should give serious thought to their financial system.

Sadly there are no real alternatives to the airline industry.

If you need to get from Vancouver to London, you pretty much have to fly.

But with banking, there’s a whole world of solutions.

Everything from deposits to lending to exchange services can already be done better, faster, and cheaper outside of the banking system.

With options like Peer-to-Peer platforms, Blockchain services, or even physical cash and precious metals, there’s no reason to keep 100% of your savings in a system that is rigged against you.

Do you have a Plan B?

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ebworthen's picture

Banks got bailed out to the tune of $11+ Trillion, Citizens got the shaft.

What does that tell you?

FreeShitter's picture

Its a big club and you sure as fuck aint in it.

NidStyles's picture

Banks charge you to keep your fake money on it's hard-drives FFS... Then they have the balls to charge you to use it as well.


Charging you to store what makes their living possible, and then charging you fees to use it as well. Banking is a fucking scam, always has been.

FreeShitter's picture

Yes it is same as insurance and america's biggest scam, "voting".

2_legs_bahhhhhd's picture

Bankers.....because there are some things even a lawyer won't do.

Stuck on Zero's picture

At least banks don't lock me into a coffin-sized seat for hours on end. Truly inhumane conditions.

JRobby's picture

"Thanks to a law called the Bank Secrecy Act, banks are legally required to fill out “Suspicious Activity Reports” on their customers and send them to the government."

There  is a quota on this particular report. Ask anyone who works in retail banking (or beat it out of them if they are uncooperative) A certain number a month must be filed depending on the size of the customer base. So the assumption is that the depositors are criminals.

The reality is that the magnitude of criminality at banks, insurance co's, large corporations and GOVT's has now reached an unprecedented level. So massive in scale that at some point, there will be a backlash. I pray for those days.

Four chan's picture

customers = fucking goy scum

2_legs_bahhhhhd's picture

You might want to rethink that, the banks have locked us into the most inhuman Ponzi scheme since the beginning of time. They have subverted liberty, funded and lobbied never ending war, and exploited the whole fucking planet.

While I despise all multinational monopolies..Apologizing for banks? Wtf, i gotta down vote you for that shit.

chubbyjjfong's picture

Fuck banks all the way to Hades and back. Fucking thieving scum of the earth wank stains. Legalised crime at the highest level. Assholes.

1980XLS's picture

Not Customers, Muppets & Victims

blargg's picture

Banks got bailed out to the tune of $11+ Trillion, Citizens got the shaft.

What does that tell you?

That I need to become my own bank.

bobdobolina's picture

Well, one thing is that they enable consumers to get loans they can never repay, thereby screwing over everyone in the long run

NidStyles's picture

Any society that lets such an obviously criminal enterprise exist off of it's hard labor deserves what it gets from allowing such a thing to exist.

Lumberjack's picture

SWIFT warns on vendor security after documents leaked by hackers

SWIFT, the global bank messaging system, on Monday advised clients to pay close attention to security when selecting firms to help them access the network following the release of data that suggested the U.S. government sought to spy on their clients.


Tesla chemical spill at battery plant.

Rum Runner's picture

It shouldn't be too much longer before the banks start groping us before we can speak to a teller

Moe Hamhead's picture

I withdrew $15k to buy a car off craigslist. The bank asked questions and I told them a friend of mine hooked a bale while out fishing and I was going to buy it and try to re-sell it. Nothing ever happened!

smacker's picture

One of Simon Black's v/interesting articles.

I too had a huge problem a year or two back trying to withdraw a large cash sum from a London bank and the only way the manager agreed to it was when I threatened him with posting about it on Facephuq and Twitter which I suggested would cause queues around the block within 24 hours by people pulling their money out of his bank. ha-ha. That worked.

Donkey Hotay's picture

If the airlines were interested in competition the other 3 major carriers would currently be picking a fare war on routes with which they directly compete with United, but the opposiite is happening, as they are raising rates to take advantage of customers avoiding United. 

Thalamus's picture

I agree banks are a criminal enterprise made legal by crony lawmakers. Their reserve requirement currently averages 11%, and their loans don't exceed their deposits (max 89% loaned out). They pay you .10% and if their loans default you lose--good risk/reward investment.

stant's picture

Those exercise places are closing up as well

monad's picture

Before the S&L "Bailout" banks had a fiduciary obligation to depositors, whose moneys they held.

After the S&L "Bailout" banks had a fiduciary obligation to the agents of the government whose moneys they held, on behalf of the "depositors".

One bubble after another ever since, until Fred Yellen even looks like an ass bubble.

They hold organized crime so tight they have to stage huge busts in order to launder their own money.

bobbbny's picture

The S&L "crisis" was the Wall Street banks putting thier pesky competitors out of business & then buying them up for pennies.

The 2009 crisis was the same players taking down Bear, Lehman, and securing trillions from thier friends at the Fed.

The ultimate goal is complete collapse so they will own everything of tangible value.

If you do business with them, you are aiding and abetting your own executioner.

DoctorFix's picture

Bankers are to a degree all alike no matter where you go but I have to admit that where I live now there are ATMS located conveniently everywhere and banking hours are until late in the evening at shopping centers and grocery stores.  In the states?  Hell...  I'd be lucky to find one open except for the drive through. Weekends?  Fuggedaboudit 

Rakksan's picture

RATS like Greenspan and Dimond are greeted and treated like rock stars.

not a yahoo's picture

I think Simon Black treats his readers worse than United their passengers. Not just once, nought, many times! Comparing fractional reserve banking to overbooking must have resulted in permanent brain damage in a few unsuspecting zhers.

Common_Cents22's picture

bank with local/regional banks.    destroy the big banks, they are disaster.  it could happen overnight if people every woke up and got off their lazy asses

Westcoastliberal's picture

What pisses me off to no end is the never-ending fees for merchant accounts.  I recently dumped First Data (avoid at all costs) for another company promising much lower fees; low and behold in the last statement they charged me $14 to process a $399 transaction because it was a "business" card.  What utter bullshit, and small biz has ZERO protection from the Fedgov.

tony bonn's picture

the federal reserve is a jewish invention, and i don't get why people don't run the jews out of this country - they are a cancer on the nation. the airports are like jewish soviet concentration camps. you are a criminal and must humiliate yourself by taking off belts, shoes, phones, etc etc....because you are nothing but chattel to the jewish overlords who brought us the soviet patriot act.

i don't fly any more. i will not bow to a fucking jew and those stupid nigger tsa idiots whose iqs could be challenge by a rodent.

whenever somebody says that it is "for your own safety" they are telling you that you are a slave and a piece of shit.

so it is no surprise that the jews want to know every time you take out money from their precious federal reserve system. do you not realize how much better of your lives would be without jews and the federal reserve? if you don't you are a total fucktard.

AlbertthePudding's picture

I transferred $6000 pre Easter from my trading account to my cash reserve account with the same bank and 5 days later I still dont have access to it even though the accounts are linked. They gave me some BS about this being due to the Easter close but these accounts are linked online with the same bank. What a bunch of criminals..They have had the cash for five days and I cannot access it.This is one of the largest banks in the country. Never let them go fully digital or we will all be screwed mercilously.

Thejackasswhisperer's picture

Unless of course you do your banking through a local credit union. You know, the ones that look like the local banks in your home town used to look, before they were swallowed up by the congomerates. If you bank with a bank, you deserve everything you get. Oh and nothing beats cash, phys, food and arable land(1-5 acres) in your possession.

PhiPhi's picture

All true but you can say the same thing about many government services and any big company, monetisation of every little customer/service user interaction is out of control and presented under the guise of choice.  Banks, corporates and governments keep pushing the boundaries of what was once considered to be fair and decent, their "all for us and none for you" attitude is reaching a tipping point which is permeating up to the middle classes (a healthy middle class provides a buffer between the elite and the have-nots).  Eventually these greedy, arrogant bastards will reap what they sow.

Farqued Up's picture

It's only going to get worse, the whole system is about to collapse. Always take the time to read the fine print on any investment with a bank. Example, they will sell investments for CDO's in which all of the loans in the portfolio performing as planned. No matter, they will team up with another bank as a custodian and your investment is in a tranche, or pecking order. Then they have this bunch of crooks called MARKIT evaluate the CDO pool of tranches. If your pecking order is anything but the top two tranches, the agreement calls for calling the funds in if the value drops. If MARKIT arbitrarily rates the value below a certain value, say 95%, the lower tranches go to ZERO and your investment is called with no notice or recourse. POOF!!!

In this real life example, the loans were all performing and paying interest each quarter, no matter, the pool was liquidated with the top two tranches losing nothing, collecting the interest, and proceeding as nothing ever happened.

Who held the top 2 tranches? Why, the bank of course!!!! Bail ins are scaring the hell out of me. The big banks are SCUM.

konadog's picture

The insurance industry isn't too far behind the banks and the airlines. Remember AIG?  It was the center piece of the 2008 disaster. $170 billion. But the important thing is that the executives got their $165 million in bonuses so it's all ok.

Rakksan's picture

Yes, and Massachusetts has an Insurance Commissioner appointed by the Governor, approved by the BIG Insurance Companies in Boston. Look at the skyline for identities.

SilvaDolla's picture

No shit. The other day, the balance in my checking account was $12.45...then the monthly "maintenance fee" of $10 came out

In Soviet America, banks robs you.

Rakksan's picture

Get smart! Join a Credit Union.

Whodathunkit's picture

How about those foreign exchange fees. Let me understand this: banks wanted to be able to have offices in countries around the world so they could compete. Ergo they work with all the worlds major currencies yet they charge me a percentage of my transaction should I attempt to transact in a foreign currency. FUCKERS DIE

logang's picture

Let's not forget that our system of banking - fractional reserve banking - was invented by Jewish counterfeiters in the Middle Ages. They covertly privatized money creation. Today, an international Jewish mafia has America and a lot of other countries by the throat.

logang's picture

Let's not forget that our system of banking - fractional reserve banking - was invented by Jewish counterfeiters in the Middle Ages. They covertly privatized money creation. Today, an international Jewish mafia has America and a lot of other countries by the throat.