It sits like a citadel of stone and brick on University Avenue at the tail end of the east campus's Dinkytown neighborhood, an opulent colossus of Big Ten football. Its outer concourses, paved with poured concrete, are ringed by towering columns that lift the canopy a full three stories overhead. Stamped in stone slabs circulating the stadium are the names of every Minnesota county in alphabetical order.
In a few hours, the stadium will fill with curious visitors. A parade, starting a ways to the west in Dinkytown, will spill onto the field a little before 8 p.m. Garrison Keillor will give a speech to herald the stadium's official grand opening. A pep rally will celebrate the triumph of its construction, of its very grandiosity.
But on this cold October evening, the stadium is empty, save a few dozen security guards. Towering over the southern end zone is the jumbo high-definition marquee, flashing TCF's corporate logo. Walk to the primary gate, facing the northern arm of the campus, and look at the stone pillars. Engraved like the epitaph of Ozymandias is a message: "This stadium was built with the support of the students of the University of Minnesota."
It's been called "The Bank" and "The Vault," but the University of Minnesota calls it TCF Stadium. In 2009, it will be the site of just seven Gopher games. It cost over $280 million, and it is the grand expression of the university's partnership with TCF Bank.
For 15 years, TCF has been the U's preferred financial institution, and its presence in campus life lies in the school's very marrow. TFC's branches dot the campuses; its ATMs saturate the streets and dormitories. The U Card, the university's ID document, features not one but two TCF logos.
It's a relationship of mutual sponsorship, one that has seen enormous two-way traffic of money and endorsement. You can't go a block on campus without seeing the TCF name.
The U of M is one of over 100 colleges nationwide that have partnered with a bank for student I.D. services. TCF gets a near monopolistic position on campus, which brings them the new accounts of almost 85 percent of all incoming students. In return, the university receives $1 million annually in contractual reimbursements from the bank, an amount that doesn't include the funds that sponsor countless on-campus events, a figure TCF doesn't disclose.
TCF has made a killing off of "courtesy overdraft protection," a standard feature of its free checking accounts. Buy a $1.50 latte with $1 in your account? TCF won't decline the transaction—they'll lend you the .50, and hit you with a $35 overdraft fee. Prior to last week's stunning announcement that TCF would be eliminating the practice, TCF was one of the most overdraft-dependent banks in the Midwest.
So the Gophers get a state-of-the-art football arena, and the students get stuck with the bill twice over—once as tuition, and again as TCF fees.
"If I'm the dean of students or the VP of student affairs, I have a responsibility to my student body," says Ed Mierzwinsky, consumer program director for U.S. Public Interest Research Group. "I have a responsibility to negotiate a contract that doesn't allow the banks to siphon money out of my students' wallets by encouraging them to overdraft and then collecting 35 bucks a pop. I'm shocked to find the university hasn't negotiated a fairer contract to protect their students."
When Morgan Adamson moved to Minnesota from Santa Cruz, she was in a fix. She'd been a Bank of America customer for years, but in the Twin Cities, she couldn't find so much as a drive-up ATM that wouldn't slap her with extravagant withdrawal fees. She needed a new bank, and she needed it quick.
The obvious choice surrounded her on every campus walk, on every bus ride to the East Bank, looming over her on innumerable billboards. Like tens of thousands of students before her, she went to TCF.
"They had displays all over campus," she says. "It was easy for me to connect. They have direct deposit. I got a free sweatshirt that I gave to my dad."
Adamson is an affable 30-year-old graduate student at the University of Minnesota, a dishwater blonde who came from California to pursue her Ph.D. in comparative literature. She'd always been a prudent banker and had infrequently overdrawn her account.
After the university informed her that a summer grant had been dispersed to her TCF account, she cut an overdue rent check and, with the breathing room the grant afforded, did some shopping. She went to Target and the Wedge, buying a few small things here and there.
But when she returned to a TCF branch to check her deposit, she found that she was suddenly $1,000 in the hole.
It was a bureaucratic bungle—the grant hadn't been dispersed after all, and when she made purchases on the grant money, TCF didn't decline them. They honored the purchases, and hit her account with massive fees.
Since coming to prominence in the '90s, the practice of courtesy overdraft protection has become an enormous cash cow for banks, one that has skinned customers of billions under the guise of consumer protection.
"This isn't just a few people who have their head in the clouds," says Linda Sherry, a spokesman for Consumer Action, a national watchdog group. "Many, many people don't know this is on their accounts. This courtesy bounce protection is shoved down their throats, hidden in fine print."
TCF made it easy to make the mistake. The bank queues its transactions so that large purchases, like rent checks or mortgage payments, clear first, and a miscellany of smaller purchases roll in afterward, increasing the likelihood of cascading overdraft fees.
For TCF, it's been an economic windfall. In 2008, overdraft fees earned the bank more than $470 million dollars.
"I use my card when I have a 20 dollar bill in the wallet," says Ginna Green, a spokesman for the Center for Responsible Lending. "It's easier to swipe and go. It's that ease that makes it so appealing, and it's that ease that makes it a guaranteed source of revenue for the banks. They're lending 10 bucks, and charging 35 bucks. They're making a killing."
Nationwide, abusive overdraft lending rakes in $17.5 billion annually, up 35 percent since 2006, on a balance of just $15.8 billion lent. In a 2007 report on lending practices with young customers, the Center for Responsible Lending found that on average, young adults pay more than $3 for every $1 borrowed for debit card overdrafts.
"The only way that customers like me, who have almost no money, are profitable to them is because of overdrafts," Adamson says. "They lure students into all kinds of bad banking practices, with consumer loans and education loans that are really sketchy."
Visit the U of M campus in early September, and you'll see throngs of incoming students being led on orientation tours. The streets are a maelstrom of maroon and gold. Coffman Union, the university's great plaza that looms over the eastern shore of the Mississippi, holds huge sign-up conventions for student groups and campus organizations.
TCF is the chief sponsor of Welcome Week. The bank's banners festoon campus areas. TCF booths, where students can sign up for free checking accounts, are omnipresent. Get an official U of M Welcome Week gift bag, and it's stuffed with a TCF sweatshirt and ad pamphlets.
In 2008, Jon Schober was one of those thousands being shepherded through Welcome Week. A transplant from Plano, Texas, he came to the university with a keen interest in working for Radio K.
He had no interest in banking with TCF, but found it almost impossible to resist the gravitational pull.
"It gets blown up by the university that it's this big deal," he says. "Like it's the only bank that you should be using if you come here. They don't offer any options to incoming students."
The relationship between the university and TCF goes back to 1995, when the school instituted its U Card program. The idea to create a unified identification card tied to a checking account that could be used to charge meals at the cafeteria, buy books from the campus bookstores, gain access to campus buildings, and draw money out of an ATM.
Richard Pfutzenreuter goes by "Fitz" and has been the University's CFO for almost a decade. When he describes the relationship between TCF and the U of M as a win-win, he manages a conversational but careful tone.
"The university gets a payment," he says. "The benefit to TCF is they're our preferred U Card partner, and they get the deposits from the students. And the university gets an amount of money, and we turn around and put that money back into scholarships."
It's unclear how much the university makes from this arrangement. The contract provides $1 million a year, but there's also additional revenue that comes through TCF's sponsorships of countless campus events and organizations. It's a number Fitz can only ballpark—$10,000 here, $20,000 there. He sees it as a positive for students.
"We don't force students to do it," he says. "Sure, there's a stuffing in the Welcome Week package...but they're our preferred bank. They're our partner. And they've been a good partner."
Good enough to build a stadium. Back in 2005, the Gophers were sick of the Metrodome. They wanted to play outdoors. They wanted something that reflected the majesty of Big Ten football. And they needed $288 million.
For fundraising options, the University was hardly at a loss. The lion's share, $137 million, came from the state. Best Buy contributed $1 million, and donated all the televisions in the building. General Mills gave a million. Target gave two.
But it was TCF that gave the most. In a deal to secure the naming rights, which would earn the bank a dozen engravings in the stadium's stone face, TCF gave a staggering $35 million dollars—$2 million upfront, a million a year until the stadium's construction, and almost a million and a half for every year after that in a contract that won't expire until 2030.
"We preferred to enter into this with a local company," says Phil Esten, the U of M associate director of athletics who oversaw stadium construction. "Somebody we have a good relationship with. Who's a good corporate citizen. They've been a partner since 1995. They've been a corporate citizen since the 1920s. It made a lot of sense."
But for students like Schober, the alliance between TCF and the university feels just a little too corporate. From the West Bank to Dinkytown, the TCF name is married to the Gopher M. The stadium is just the worst offender.
"Seeing TCF's name on that was another thing that everyone was getting sick of seeing," Schober says. "Every single thing on campus seems to be sponsored by TCF."
In the wake of the financial meltdown, banks are coming under increased scrutiny. Sen. Christopher Dodd (D-Connecticut) chairs the Senate Banking Committee and has introduced a bill that would demand banks disclose their overdraft policies to new customers in clear language.
Perhaps seeing the writing on the wall, TCF announced last week that it would do away with overdraft fees. The raft of changes is scheduled to take effect in the first quarter of 2010, and when they've been put in place, TCF's checking and debit policies will be nearly unrecognizable. Totally Free Checking, which has been the bank's flagship service, will be gone, replaced by Convenience Checking. Under the new rules, an overdrawn account will be penalized by a daily fee rather than repeated fees for every new expenditure.
"It's a completely different product," says TCF spokesman Jason Korstange. "It seemed to us that a lot of things needed to be changed. We felt we had to answer our customers' questions."
It's a step in the right direction for a bank that exhibited an unhealthy appetite for the overdraft dollar. It'll take a bite out of TCF's bottom line, which the bank hopes to absorb by implementing account maintenance fees on the front end.
Ultimately, the partnership between TCF and the University of Minnesota still rankles, as does the lack of training for students who are first-time accountholders.
"The U says they partner with TCF to provide financial literacy so [students] better understand how to manage their finances," says Josh Winters, CEO of the on-campus advocacy group MPIRG. "With a relationship like this, they should have some responsibility to provide financial literacy, but it simply doesn't occur."