Colonial Bank

P.O. Bx 1108

Montgomery, Alabama 36101

Dear Colonial Bank,

How are you? It must be very odd running the twenty-first largest bank in the U.S. from inside a post office box. I’ll bet your desks are awfully small and office parties can be awkward as all hell, but I imagine that Colonial Bancgroup has had to downsize a lot lately, what with that $880 million hit you guys took in ‘08 from bad Florida mortgages, as well as the $168 million CBG lost in the first quarter of ‘09, not to mention the multi-million dollar shareholder class action suit filed against you in March that alleges, among other things, extremely shoddy management issues from the top on down. And I see that you have petitioned the government for $540 million in bailout funds but it doesn’t appear that can happen until you cough up $300 million in private equity. Things have been tough for you, Colonial. I’m so sorry. I’ve done my best to help you, though, and that is the point of this letter.

Let me start out by saying that I am disabled and the main source of my income for many years has been Social Security Disability. I receive supplemental income from time to time that does not conflict with my disability benefits so it’s safe to assume that I live on a tight budget, pretty much hand-to-mouth and month-to-month. When I first opened my account at Colonial in January ‘09 I was extended a complimentary credit of $600.00 for overdrafts; what that means, in essence, is that Colonial would cover any charges I incurred against my account up to $600.00, charge me a fee of $36.00 for every processed transaction, and then I would make it all good, offsetting the deficit with the next deposit, usually that of my co-signer on the account. We had a good thing going there, Colonial. If I needed to pay my gas bill or electric bill or phone bill, you were there to make up the difference if I fell short. (You’ll notice, incidentally, that all of my expenses are day to day expenses — rent and utilities and groceries; rarely, if ever, will you see a charge for a restaurant or a movie theater or an airline or a hotel or … well, you get the picture).

April was a bad month for me, Colonial. My supplemental income dried up and went away, gone with the Great Recession. I continued paying my bills but you began refusing to honor my transactions whenever my account was too low or in overdraft; this resulted in numerous items being returned after processing — often twice, at $36.00 a pop to me — and a mad, month-long scramble in April to keep up with what was being paid and what was being returned. Once I received an NSF notice in the mail postmarked a full seven days after the transaction was made. All in all, I paid Colonial Bank $783.00 in fees in the month of April. It was a crazy time, I tell you, but not as crazy as what happened next.

On May 1, 2009, my Social Security Disability direct deposit landed in my account, as usual. But right behind it dropped in two NSF fees for $36.00 each. I called my local branch manager, Anna S., and requested that she reverse the fees since federal law and Social Security regulations mandate that a bank cannot offset an account’s negative balance, including overdraft and NSF fees, against future direct deposit SS benefits (Lopez vs. Washington Mutual, Federal Ninth Circuit Court of Appeals, 2002).

“I’ll reverse two of your charges,” Anna S. told me in a gruff tone as if reprimanding a child, not a 50-year old grown adult, “and I will also note in your account that no further courtesy reversals can ever be made against this account and, further, I would like to remind you that we reserve the option to close your account at our discretion.”  

Anna S. made me very sad, Colonial.

“Reverse two charges?” I  balked. “There are multiple offsets that were made against my direct deposit. The law requires that you reverse them all.”

Anna S. (who apparently has never heard of the FDIC or the federal government, for that matter) would hear none of it. The matter was over. And, further, Anna told me, my complimentary overdraft limit has been reduced to $150.00, down from $600.00, something that “automatically happens … out of our control” when an account exceeds five overdrafts.

Let me cut to the chase here, Colonial: I went over Anna’s head, straight to the Regional District Manager, David B., because I did not warm up to Anna’s attitude or her attempt at a compromise. You know what I got for my efforts? Five NSF reversals — an admission of error if I’ve ever seen one – and a strong admonition that my personal account was now on probation: one overdraft, even for ten cents, David assured me, and then they would shut down my account without notice. I should mention in passing that David B., when hearing the tale of financial hardship that $783.00 in bank fees has created for me, rendered a long oration about how bankers cannot make decisions “based on emotion” because “the system is not set up that way” but when I mentioned that Anna S. was the branch manager I had an issue with, he enthused:

“Oh, I’ve known Anna for years; we came up in the banking business together and worked at another financial institution togther before Colonial.” I could practically see them trimming flowers together and sipping coffees on the Left Bank in Paris (the artificial one they have created somewhere here on the Vegas Strip).

And it was on Anna’s decision, Branch Manager Dominatrix, David told me, that he conceded to lock up the account against future overdrafts. Was that a decsion based on “emotion”? I’m not sure. The complexities of David and Anna’s relationship are not my concern here. All I know is I got back $180.00 of my money that Colonial snatched from me but as a result of my effort my complimentary overdraft limit was reduced to zero and now I have to consider the possibility of paying only my groceries, medical expenses and co-pays, and utilities this month and not my rent.

But wait until you hear the part when I was afforded the opportunity to eavesdrop on a telephone conversation between Amanda, a customer service rep at your phone bank in Alabama, and Anna S., my branch manager in Las Vegas, about me and the problems with my account. I don’t think sweet-talkin’ Alabama peach Amanda is all that bright, Colonial, she didn’t realize I was still on the line during the three-way conversation.

More tomorrow …