Agreed that it's not the best solution, but it is what every bank (at least here in the UK, and from the sounds of it, in America too) does.

As to storing the PIN in plaintext, that's not even the bank's decision, a single bank can't decide to go against the entire chip+pin system.

Side question: AFAIK, chip+pin is far less common in America than in UK/Europe, with many people still using magnetic+signiture. Am I out of date, or is this still the case?