May 19, 2000

Lawmakers plan raps bank fees

Banks in the ever-consolidating Massachusetts banking market would have to ask for state approval each time they wanted to raise their fees under a legislative proposal announced yesterday.

Efforts to more tightly regulate banks have failed the last two years, but supporters say this time is different: FleetBank's merger with BankBoston and mounting consumer outrage now make reform more likely, they say.

Rep. Jarrett T. Barrios said the Fleet-BankBoston and Citizens Bank-US Trust mergers had created mega banks'' that left consumers with little choice.

Barrios, D-Cambridge, said that lack of competition leads to more and more fees for traditional services such as check writing, ATM use and even speaking to bank employees on the phone.

Consumers are angry, and consumers have a right to be angry,'' Barrios said.

Barrios' proposal would require banks to receive approval from the state Division of Banks before introducing new fees. The bank would have to prove the fees are necessary to pay for administrative behavior or to deter certain behavior, such as bouncing checks.

Kevin Kiley, a spokesman for the Massachusetts Bankers Association, said the free market -- not the government -- should regulate the actions of banks.

But Bruce Marks, chief executive officer of the Neighborhood Assistance Corporation of America, said free market rules don't apply in the state's banking market, because it is now dominated by one bank: Fleet.

For 20 years, we had competition, but now we don't,'' Marks said. New England is subjected to the dominance of one major bank.''

Steven Antonakes, deputy commissioner for the state Division of Banks, disagreed.

There's no evidence to support that,'' Antonakes said.

Antonakes said the state still has more than 230 different banks, though that number has fallen 23 percent since 1980.

Consumers should educate themselves before choosing a bank, just as they would before buying a car, Antonakes said.

Jim Schepker, a Hartford-based spokesman for FleetBank, declined to comment.

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