Financial services intermediaries such as banks, credit unions and brokerage houses have come under fire from lawmakers for helping wealthy clients avoid taxes.
But a growing number of lawmakers are calling on the Federal Reserve to consider whether the banks have been helping Americans avoid taxes or even avoiding their own costs.
In a letter sent Monday to Fed Chair Janet Yellen, Sen. Sherrod Brown (D-Ohio) said the banks are making “unreasonable” fees to customers who want to invest in their businesses.
“This is not a legitimate business, and the fees are unnecessary and unfair,” he said.
“There is no justification for such excessive fees.
You have said in the past that fees should be minimal for many transactions.
Why not for all transactions, and why not for every transaction?”
The letter is part of a growing effort by Democrats to make sure the banking industry is regulated, even as lawmakers and regulators grapple with the financial crisis.
Brown’s proposal could be a significant step in the right direction.
Federal law currently requires banks to file with the Treasury Department a list of customers and their accounts.
If banks fail to file that list, they can face fines of up to $250,000 a day, or more.
But that’s a small price to pay for more information on how much customers pay to banks, and more oversight.
A similar letter was sent by Sen. Sheldon Whitehouse (D, Rhode Island) to Fed Chairman Ben Bernanke on Monday.
Whitehouse said the banking companies are doing what they can to help the public understand their financials and the benefits they bring to the economy.
“I think we need to look at all of this and see what’s going on, and we can make some decisions, and make sure that this does not happen again,” Whitehouse told CNBC.
The Financial Services Industry Regulatory Council, a lobby group representing the industry, said last month that it is urging the Fed to make it easier for consumers to understand the fees that banks charge to customers.
“For consumers, it would help to have an explanation of the fees, including why those fees are reasonable and what the financial institution is doing to help consumers avoid these fees,” the group wrote.
Brown is not the only senator calling on regulators to take a closer look at the financial services industry.
On Monday, Sen, Tammy Baldwin (D) of Wisconsin said that the banking firms have “a responsibility to help their customers and to make our economy stronger.”
Brown and Baldwin are both Republicans.
On Tuesday, Senate Banking Committee Chairman Sherrod Sanders (D – Ohio) will unveil his own proposal.
The banking industry has a history of trying to minimize consumer costs, which have grown in recent years amid the financial crises.
But lawmakers are increasingly calling for an investigation into the financial industry.
The Treasury Department last year announced a $2 billion initiative to help prevent the kind of high fees that have plagued the financial sector.
The administration is also considering a plan to require banks to publish a list, known as the “S-10” list, of customers with high financial needs.