Like the banks that were fined for manipulating the libor - the people in charge learned not to do that again, since in the end their profits suffered for it.

Did they?

Do you remember back, oh, about 2 years ago in 2013, when overdrafts and the related fees started to become a big issue? You probably do, because your bank (if you have one, and it's in the US) would've sent you a couple pages' worth of disclosures explaining when they would pay overdrafts, and when they wouldn't, but you had to opt in in order to have any of them paid going forward. That was a good thing for consumers.

A related issue to this is something called "high-to-low transaction ordering." This happens when your account becomes overdrawn but maybe you have more transactions pending or you initiated more transactions before your bank caught up with you and stopped approving transactions because you were overdrawn (or maybe your bank just let you keep overdrawing). So of course, you as a consumer already understand that means that you are going to go more negative. And every time you went more negative you'd get charged another fee (probably $35 but depends on the bank).

Well banks got smart and the practice back in those days, to maximize the fees you would have to pay, was to rearrange the posting order of your transaction so the highest one went first. So let's say that you had $49 in the bank at 8 AM Monday morning. You buy breakfast at 8:30 AM for $3. Then you bought lunch for $5.95. Then a $200 transaction at 1pm (landlord cashed your utilities check late and you missed it). Then you bought candy at 3 PM for $6. Then one $50 transaction went through at 5 PM.

Rationally, if these posted in order, this would be your balance throughout the day:

$49 at 8 AM

$46 at 8:30

$40.05 after lunch

-$159.95 after that damn check (BAM! First over draft fee. Real balance is now -$194.95)

-$200.95 after candy (SECOND fee = real balance now -235.95)

-$285.95 after the last $50 transaction (THIRD fee - real balance now -$320.95)

Here's what the bank would do - "high to low processing":

8 AM your balance = $49

Wait til end of day for all transactions to post. Now, take them out in order of size - largest to smallest (hence high to low):

First out= $200. Now you are -$151. FIRST fee. -$186

Next = $50. Now you are - $236. SECOND fee. -$271

Now = $6. You are -$276. THIRD fee. -$311

Now = $5.95. You are -$316.95. FOURTH fee. -$351.95

Now the last, your tiny little $3. That was your first actual transaction of the day by the way. -$354.95. FIFTH fee. $389.95

The bank just made an easy $70 by fucking up the order of the transactions you put through today. And you're that much more in the whole. And even if you had an overdraft line of credit, chances are you'd have to pay the following fees: a transfer fee every time you accessed the line of credit (usu $10-ish); another fee just for going in the LOC (have seen $35ish); plus interest & finance charges (depends on your rate).

So anyway the CFPB and all those regulatory folks got in a big huff about it. Here, read more. I could swear there were some consent orders issued which basically is a regulatory agency going "You done fucked up and stop it!" and also involves fines and punishments against the bank (like they are not allowed to expand/build more branches in additional states until it is lifted). Can't actually find those but know there were lawsuits. Anyway. All the big banks were scared. Most of them realized they were going to get boned by someone or other if they didn't stop so they have. Also maybe someone up the chain realized they were being shitty when they did this. (But probably not.)

Despite all the lawsuits flying and consent orders and fines and so on going on in 2013, one or two banks who had the practice were able to escape CFPB and regulatory scrutiny over this through convenient loopholes. These banks, despite being well aware that their overdraft practices were abusive and problematic and essentially would not stand under regulatory scrutiny, were able to dodge said scrutiny for the time being due to their size categorization (previously, they'd been governed by a smaller regulator, who had also been shitty, and although that regulator had been dissolved by this point in time, they were able to argue they shouldn't be expected to hold up to the bigger, more stringent regulatory agency's standards due to their historical status). So they got away with what they were doing scott-free - for the moment and by a technicality.

Did those banks then stop their abusive practice and thank the lords they'd scraped by on a hair? Nope.

They refused to stop those practices.

So yeah. Not so sure about banks learning from the mistakes of other banks. More like, "patting themselves on the back for not getting caught, and continuing to tempt the devil with their other hand."

here you go, bank of america got charged a shit ton for this practice

wells fargo was the other one

So like, two of the Big Four banks were getting slapped upside and downside with multi-million dollar lawsuits and settlements, and these little rinky dink regional banks figure, "Hey! Since we're not as big as them, we can get away with it!"

Seriously, I shake my head.