U.S. banks extort customers for $38 billion in overdraft fees

While bonuses paid to executives at nine bailed out U.S. banks in 2008 were greater than the net income at some of the banks, Reuters reports U.S. banks will generate $38.5 billion in customer overdraft fees this year, and a large portion of that revenue comes from the "most financially stretched consumers."

The median bank overdraft fee rose this year by one dollar to $26. "Banks are returning to a fee-driven model and overdraft fees are the mother lode," said Mike Moebs, of Moebs Research Services. Overdraft fees accounted for more than 75 percent of service fees charged on customer deposits, said Moebs.

Bonuses for Goldman Sachs Group Inc, Morgan Stanley and JPMorgan Chase & Co were "substantially greater" than the banks' net income. U.S. Sen. Sherrod Brown, an Ohio Democrat and member of the influential Senate banking committee, called Goldman "tone deaf" on the issue of compensation.

Here are a few comments from authorities in France and Britain on bank sector bonuses:

"Fury erupted in Britain over news that Royal Bank of Scotland, which needed a government rescue, was paying an annual pension of 703,000 pounds ($1 million) to its former chief executive Fred Goodwin. Months later, after a campaign that included windows of his Edinburgh home being smashed, Goodwin agreed to reduce his pension, to 342,500 pounds annually.

"FRANCE -- France reacted to public anger over bonuses for financial traders this week by summoning bank chiefs for a meeting and telling the central bank to ensure that new rules on payouts are respected. President Sarkozy instructed top banking executives to report to him on August 25 on their bonus policies."