Sunday, June 27, 2010

Financial reform may not protect the "average joe" bank consumer: watch the trash talk and urban legends

The AP has a useful summary of the financial reform bill that has passed both houses of Congress and seems to need only minor tweaking before one more Congressional “rite of passage” and presentation to the President. Here is the Los Angeles Times link.  Both the New York Times and Washington Post have temperate editorials today urging quick passage, and both papers point out that a lot of power will be given to regulatory agencies, perhaps too much.

There’s a lot of discussion of “too big to fail”, or “proprietary investments” by banks and manipulation of derivatives (probably a legalized “conflict of interest”. The definitive source on the technical aspects of the bill seems to be Govtrack’s entry for H.R. 4173, link (web url) here.

The real concern is how it affects average Americans. There is trash talk around that banks, stressed now as to making enough profits, will start charging the average checking account holder $30 a month. “Safe” and insured cash accounts may pay even less. Credit card fees could rise, especially for the “freeloaders” who actually pay their balances every month, having at least a small effect on their own personal liquidity. Discounts for cash (while legal now, as at some gas stations) could become more common (there would exist some restrictions).

But on Saturday, June 26, Ron Lieber and Tara Siegel Bernard wrote a Business Day (p 1) column, “Wave of new rules to protect consumers”, link here.

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