Bank–Rott.Posted: August 13, 2014
Here’s what happened: Yesterday, I got an email from the woman whose apartment in Berlin I rent. Apparently I hadn’t paid rent for the last two months. I was, to put it mildly, a bit surprised by this, as I’d transferred her the money in a timely fashion. I emailed her PDFs of the details of the transfers from my account at the Commerzbank to hers at the Deutsche Kredit Bank and she was able to see the problem immediately: The International Bank Account Number (IBAN) on the transfers was wrong. Now, if this had been my error or hers then I would simply have shrugged my shoulders and said that, as it was my mistake, I would have to assume responsibility for any expenses incurred by the error. The mistake, however, was not mine: German banks are in the midst of a transition from a domestic to an international wire transfer system. My landlord had given me the information to transfer the rent using the old system. That information was then automatically converted to accord to the new system and in the process a mistake was made which resulted in my money being transferred to some, as yet unknown, third-party. The only recourse available at the Commerzbank’s branch office was to ask them to open an investigation into the missing funds, which they expect to conclude within the next few days– though, of course, they can make no guarantees.
Let’s perform a little thought experiment here. The amounts of money involved in this case are small in absolute terms, but represent a significant portion of my monthly income, and, as I work from home, can be roughly equated with the operating costs of my little freelance business. Unlike my operating costs, the operating costs of the Commerzbank are far from trivial. According to the Deutsche Welle (en!), Commerzbank were on track to reduce their 2013 operating costs to 7 billion Euros (approximately 9.34 billion dollars). Divided by 12, that yields monthly operating expenses of 583.33 million Euros. So let’s imagine that, instead of the Commerzbank absconding with my operating costs for two months, I’d run off with theirs– a cool billion, plus change. Even if it was, somehow, clear that this was an innocent mistake, I tend to doubt that they would come to my place of business at a time that was convenient for me and politely request that I take a few days to look into the matter and tell them, when I have the time, what happened to their money. Much more likely, it seems to me, is that a group of storm troopers would break down my door at two in the morning and haul me off to a dark cell someplace. One could make the argument that such violent interventions of State power to support the rights of the banks to reclaim or protect their property are, in fact, exceedingly rare. If this is the case (which seems highly questionable to me), it is only because governments the world over have provided the banks with the ability to dictate the costs of any inconvenience that may accrue to them as a result of the perceived malfeasance of customers of the bank. My bank sets fees if I overdraw my account, lose my debit card, request an international wire transfer, or in any other way deviate from what they perceive to be normal and acceptable uses of the services that they provide. Frequently these fees bear no relationship to the actual costs incurred by the bank as a result of my perceived malfeasance. The additional expense incurred by the bank if I overdraw my account by an insubstantial sum is negligible– a few cents of lost interest on the account on the money they use to cover the overdraft. Yet fees for overdrafts are far from negligible. The banks are allowed to enact a punitive scheme that stands outside the normal legal apparatus in that one enjoys none of the protections afforded by the law if one transgresses the bank’s regulations. Well, that’s not quite true. One, of course, does have the right to sue the bank to recover lost income, but that right is not relevant for the kind of people who overdraw their bank accounts; it is reserved for those who can afford to stage a legal battle with a bank.
The same condition on the ability of the consumer to protest applies in cases of a bank’s malfeasance. Add a number of zeros to the amount of money that Commerzbank has stolen from me and it would become reasonable to consider legal action against the bank. And if the case came to court, it seems likely that my lawyers would demand more than the recovery of the initial sum stolen from me by the Commerzbank. In Germany, at least, the bank, if they lost the lawsuit, would almost certainly be required to cover my legal fees in addition to whatever initial damages the court decided would constitute an appropriate restitution for the initial delict. Furthermore, I would expect that any suit would claim damages that resulted from the loss of my ability to use money that should have been in my possession. In this case that would mean: Interest on the money that was stolen from me, payment of any late fees that might have accrued as a result of the delayed transfer, and compensation for any negative impact on my credit rating that resulted from the bank’s failure to transfer my money to its intended recipient in accordance with their contractual obligations. The initial amount that the Commerzbank appropriated was approximately $1000.00, so the interest in this case is trivial– around $5.00, though this will vary a bit depending on how you structure the interest. Germany has stronger protections for renters, in general, than does the United States, so the maximum costs– at least as far as I can tell from a few minutes of Googling– incurred in late fees would also be reasonable, around 40 dollars.
Non-trivial costs might, however, accrue if I were to receive compensation for the time that I am forced to invest in resolving this issue. And, um, I was forced to do work that I didn’t want to caused by an institution more powerful than me. There’s a word for being forced to labor against one’s volition for those in a position of power over you, but even I am hesitant to use it here. Were I to be compensated fairly, the costs of my compensation would not be so negligible. An actuary would be able to estimate my earning capacity with a precision and independence far greater than my own, but some back of the envelope calculations might still be useful here. If earning money were a priority for me at this point in my life I would likely apply to work at a management consulting firm, where, conservatively estimated, my base salary would be around $80,000.00 a year. A full-time employee in Germany works 1664 hours a year. That yields a base hourly rate of $48.00 an hour. For the sake of simplicity, let’s call it $50.00. But this labor would come with a number of other benefits– first of all, this would be a guaranteed regular paycheck rather than an unscheduled interruption into my normal working life; a job at such a firm would provide me with opportunities for advancement within the corporation and valuable contacts outside of it; I would be provided with office space, travel expenses, and a support staff; I would receive health insurance, a retirement plan, and other benefits. That’s why the firm that I worked for would bill my time at some factor that far exceeded my own pay rate. The numbers here are more difficult to ascertain, but friends who work for law firms tell me that a good rule of thumb is that their time is billed at three times their own hourly pay rate. So if I were earning $50.00 an hour working for Boston Consulting, say, they would likely bill my time at around $150.00 an hour. So far I’ve spent about 40 minutes in contact with my landlord (it took a while to find the appropriate evidence that I’d paid and to inform her of the results of my meeting with the Commerzbank). It took me about twenty minutes to walk to the nearest Commerzbank, and another twenty minutes to walk back. I waited for the first employee at the bank for about fifteen minutes, and then talked to him for about five. I then waited for another employee for about half an hour, and spent another twenty talking to her. So that’s 2.5 hours of my time that have been devoted to trying to resolve this issue. And the issue hasn’t, in fact, been resolved yet. Billed at $150.00 an hour, that yields $375.00 of compensation from the Commerzbank.
This estimate, high as it may seem, is actually extremely conservative in comparison to the practices of the banks. The fee at the Commerzbank if one replaces one’s debit card more than once is around $10.00. Blank credit and debit cards can be purchased for $00.01. We’ll add an extra dollar to account for postage and labor, and can then come to the conclusion that the Commerzbank is extracting roughly ten times the costs of their labor in providing me with a new debit card. If, then, I value my own inconvenience as highly as the Commerzbank values theirs, I should demand compensation for my lost time in the amount of $3,750.00, plus $40.00 in late fees for the payment of my rent. We’ll be generous and assume that the costs of lost interest are accounted for by the late fees, so that yields a total cost of $3790.00 in addition to the recuperation of the initial $1000.00.
Both radical and conservative critiques of this reasoning are possible. A conservative might say that because the bank provides a public good, they should be entitled to extract additional capital for those that make it more difficult for the bank to fulfill its designated function. Punitive fines for lost debit cards or overdrawn accounts, on this reasoning, are necessary in order to ensure that individual consumers who rely on the services the bank provides do not destabilize the bank and thereby the financial system to which it contributes by incurring expenses that the bank must cover and which it cannot anticipate. It’s hard to take this line of reasoning seriously, however– there have, as we all know, been any number of banks whose instability has threatened the global economy over the course of the last six years. I, at least, have never heard of a bank that was in danger of failing because a large number of customers overdrew their accounts by $20 or $30 at the same time. Nor have I heard of a financial institution that reported a loss because they were forced to cover the costs of distributing new debit cards to their customers. The conservative critique of the above argument yields an unexpected result then: If, in fact, punitive fines are warranted in order to ensure that the banks are in a position to ensure a stable financial system, then it seems difficult, given the shape of recent upheavals in the financial sector, not to believe that it is the banks themselves that must be subjected to those punitive fines. This, of course, has started to happen, ever so slowly, in the case of massive abuses on the parts of various banks. But a lost debit card or a small overdraft are hardly massive abuses of the system, so if punitive fines are also appropriate in the case of relatively minor transgressions, that would suggest that the Commerzbank should provide restitution (either to me or to the State) in an amount that would serve to make them financially insecure if such behavior continues. The conservative critique, followed to its end, would then suggest that the Commerzbank should be forced to pay a fine well, well into the millions for stealing my money.
I am, unsurprisingly, more sympathetic to the radical critique of the argument I’ve made above. Why, this critique would ask, should the bank assume that my time is more valuable than the time of a janitor, of a construction worker, of a dishwasher? To compensate me differently than people with less inherited privilege only reinforces the structures that provided me with that privilege in the first place. This critique, then, leads us to a more difficult position. This is hardly a surprise, as it is hardly a surprise that the left in general is far less cohesive than the right– the precondition for being a leftist is simply that you think that the world is unjust and that injustices must be remedied, whereas conservatives are bound together by the agreement that any change is, like, really, really scary. So leftists might suggest a number of different solutions to the (minor) injustice perpetrated on me by the Commerzbank, ranging from the abolition of private property in its entirety to the reorganization of the financial system on the basis of worker’s cooperatives. Both of these are positions that I find reasonable. In the meantime, though, I have a more immediate suggestion that might, maybe, help to bring about a truly just world. Why not compensate anyone who has to waste their time dealing with the bank’s errors at the same hourly rate enjoyed by the highest paid employee of the bank. The Commerzbank, in this case, should be grateful for the relative moderation of their CEO, Martin Blessing, who was, in fact, not the highest paid executive at the firm in 2013. That honor belongs to Michael Reuther, who took home around $2 million last year, or $1201.92 an hour. Had Mr. Reuter been forced to spend 2.5 hours of his time (so far) addressing a problem I had created, then, he might “reasonably” bill me $3004.81. I suspect that, like me, the vast majority of inconvenienced customers would be satisfied with that compensation for the time they spent resolving issues created by the bank.
There were two women in line in front of me at the bank who were also dealing with issues that the Commerzbank may have been complicit in helping to create. I tried not to listen in, so it’s possible that these women were simply asking for more credit or trying to resolve an issue that arose as a result of their own malfeasance. But their aspects were desperate and their dress and mannerisms led me to believe that, unlike me, they did not have inherited privilege to insulate them from possible malfeasance on the part of the bank. Seeing them, I had the perverse thought that I was glad that this thing had happened to me, as if there were some natural allotment of bank errors that must be distributed, and better, then, that I be made to bear the costs of the bank’s fuck-up than that it be borne by those for whom the money in question is more essential. If these women were, in fact, at the bank to deal with similar issues of the bank’s own malfeasance, then the potential consequences for them could be dire. I can ask my parents for a loan so that I can make sure my landlord gets paid posthaste. If I couldn’t, like so many can’t, the consequences could be eviction, and possibly deportation; the destruction of the life I’ve made for myself here through no fault of my own. In the light of the possible consequences of the bank’s malfeasance, the word that I was uncomfortable to apply to myself above starts to seem more relevant– the bank extracts labor, by ransoming funds from its customers, in order to resolve its own failures. That’s coerced and uncompensated labor. That’s slavery. And slave labor, even if it only happens for a few hours at a time, must be resisted.