The Long, Slow Death of Free Checking

Bank of America is back at it, trying to figure out a way to make money on small checking accounts without bringing on the wrath of overzealous regulators—or customers who feel entitled to the free checking they have enjoyed since the 1980s.

The bank is experimenting with different fee structures in Arizona, Georgia, and Massachusetts for customers who have low balances, prefer in-person banking and dead-tree monthly statements, and don't use other products offered by the bank, such as mortgages or credit cards.

Such customers (read: poor people) cost the bank money, but they used to enjoy the perks of the rich because the bank hoped to capture their brand loyalty now and make more money off of them later.

So what happened? A reminder, from today's Wall Street Journal:

The fee experiments exemplify some unintended consequences of the 2010 Dodd-Frank financial-regulation overhaul, which clamped down on certain revenue sources of banks and motivated them to seek ways to make up the difference.

J.P. Morgan Chase and Wells introduced new account structures in 2010 and 2011 that imposed monthly maintenance fees unless customers maintained certain minimum balances or hit preset monthly deposit levels. J.P. Morgan said Tuesday that 70% of customers with less than $100,000 in deposits will become unprofitable for the bank because of new regulations, such as caps on overdraft fees.

At this rate, fee-free banking will soon the be province of the 1 percent. Say it with me now: "You Can't Call It an Unintended Consequence If You Knew It Was Going to Happen."