Monday, November 01, 2004

Check 21: The dog licking itself in public

Like many Americans, I was caught off guard by the passage of the law now known as "Check 21." I'm a bit upset at myself for not being better informed because I have been telling anyone who would listen why the practices of the banking industry, in general, are immoral and corrupt, so I should have seen this coming. But I have noticed that many people keep up with current events either found themselves not knowing what "Check 21" was about or they did not see why it is such a big deal.

"Check 21" allows banks to withdraw funds from your account immediately after you write a check. This means that if you are one of those people who practice floating, writing checks a couple days before your own paycheck is deposited, then you are likely to find that the processing time you have previously counted on is not there anymore. People who are used to floating may find their checks bouncing all over town.

I can certainly understand the argument that one should not write checks for money that one does not have. Though in the past I practiced floating, I don't have a problem ceasing (not that it actually applies to me). My problem is that the practice does not force banks to apply to themselves what they make others endure. They are not compelled to immediately credit an account when a check is deposited. In fact, they are able to "hold" a check as long as they please. They say they do this to make sure the check is processed and to see that the check clears. But the same technology that allows a bank to take money out of my account should be available to put money into that same account.

As with anything regarding the banking industry, the motivation is greed. The longer the money is in one bank, the more money the bank makes. The quicker they can take the money from you, the more likely you are to have to incur fees for bounced checks. And don't expect them to reimburse you for lost money should they make a mistake. Don't expect them to fix your credit history when the error is their fault. I've never known them to do so.

The arguments for this practice tend to either be 1) one shouldn't write checks for money one doesn't have and 2) it is legal, therefore it is okay. The first argument, as noted above, is off the point. I can grant the point if banks are willing to make it work the other way. The second argument is circular reasoning.

It reminds me of the old joke: Why does a dog lick himself? Because he can. Well, unfortunately, these same dogs playing with our money. Don't expect me to kiss or pet such a dog.

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