Why are bank/brokerage fees so high?

March 22, 2007

images-14.jpegI don’t know about you, but each time I turn around, it seems like my bank or credit card company or brokerage firm is implementing some new fee or upping an old one. And then, when you actually call them about it, they try to pretend that you’re paying for their superior customer service. As if!

What does this have to do with SEC filings? Well, the crop of proxies coming out from some major financial services companies provides some details on what some of those nuisance fees are paying for: perks for top executives. A quick skim of the footnotes in the proxy for Mellon Financial (MEL), whose brands include mutual fund giant Dreyfus Funds and which is in the process of merging with the Bank of New York (BK), provides a long list of perks heretofore unknown to Mellon’s investors (or customers). Highlights include $194K for Chairman and CEO Robert Kelly’s use of the corporate jet to ferry him between Pittsburgh and North Carolina, $94K on a car and driver, $66K on his country club membership and another $52K spent to provide him with financial planning services (hopefully, he used someone at his own company).

While the proxy filed by Washington Mutual (WM) doesn’t do as good of a job of breaking out the perks in detail, it does note that Chairman and CEO Kerry Killinger spent $143K on his personal use of the corporate jet. Just below that, the company notes that Killinger began reimbursing the company for his personal use as of January. Sounds like that’s potentially good news for WaMu’s customers.

Of course, not every financial services company went whole-hog. This proxy filed by Prudential (PRU) earlier today shows a pretty meager cost of perks: just $12.7K for Chairman and CEO Arthur Ryan’s home security and another $24K for a car. That’s downright frugal, compared to some of the other disclosures out there.

And now an update on Espeed (ESPD). Chap-Cap filed an amended 13-D late yesterday that included an email exchange between Chapman and one of the “lackeys” for Espeed CEO Howard Lutnick. Just goes to show you that it pays to pay attention to what you write in an email.

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