Posted on 01/17/2011 5:37:18 PM PST by CutePuppy
Federal limits on debit card processing fees will force banks to charge customers more for services, making accounts too expensive for as many as 5 percent of customers, JPMorgan Chase & Co's chief executive said on Friday.
The rules, proposed as part of the Dodd-Frank financial reform law, would cap the fees that merchants pay banks for processing debit card transactions at 12 cents each. That is almost 75 percent less than the average 44 cents per transaction that banks get now.
U.S. banks could lose about $13 billion of their annual industry debit processing revenues because of the rules, which the Federal Reserve proposed last month.
Bank executives have said they will raise their fees to compensate for losing debit card processing revenues. They predict that some people will be unable to afford the fees, forcing them out of the banking system into the realm of check cashers and payday lenders.
The term that the banks use for this is "unbanked." ..... < snip >
"You will not be able to profitably serve them," Dimon told analysts ..... < snip >
(Excerpt) Read more at cnbc.com ...
But that was not important to Democratic lawmakers; here's what was really important to them:
From Kanjorski on Jamie Dimon: 'I Took His Ass on and I Won' - CNBC, by Jeff Cox, 2011 January 10
Kanjorski, a 13-term Democrat and senior Finance Committee member from northeastern Pennsylvania, bragged in a recent interview with local media that he took on the omnipotent Dimon and won.
In an interview with the Scranton Times, Kanjorski was asked why he decided to run for re-election in the face of so much anti-incumbent fervor last year.
“It’s no heroic thing, but I could have just as easily walked away. I could have taken a job on Wall Street for millions,” said the congressman who wrote a good portion of the Dodd-Frank financial services reform bill, particularly the part addressing too-big-to-fail banks. “I was their greatest scourge, for Christ’s sake.”
Addressing his specific battle grappling with the titans of the Street, Kajorski thumped his chest, insisting, “I was the guy that stuck my thumbs in all their eyes.
“There were guys like Jamie Dimon, they’ll never forget me... He’s probably considered the most powerful banker in the world and I took his ass on and I defeated him. Not openly, nobody in the public knew... He tried to lead a cause to stop the Kanjorski amendment and the Volcker rule of incredible portions.” ..... < snip > Former Rep. Paul Kanjorski may have been a victim of the November electoral “shellacking” handed out to him and his fellow Democrats, but in his mind he took one big prize down with him: JPMorgan Chase CEO Jamie Dimon.
Thank you for your unadulterated hubris and display of unchecked government power in "sticking your thumbs" into eyes of millions of people who can't even get credit now and those who will have to pay for it, ex-Congressman Kanjorski... You are out on your ass now.
Aren’t the ‘poor’ already paying the fees now? I mean its in the price of whatever they are buying.
Competitors appear:
https://www.greendotonline.com/greendot
They can do it cheaper than the banks, apparently.
Yeah, I don’t see the problem here. Other entities will fill the void until unbanks are declared illegal.
I don’t remember Congress capping % rates on credit cards, even being charged 45% is not considered usury but legal.
No. The price was reflecting not only the cost of transaction processing (plus profit, obviously), but also the cost of risk. Now, if the profit on transaction is minimized or eliminated, the debit / credit cards issuers will go back to the olden days of charging annual fees for the privilege, which will make a certain percent of customers (est. at 5%) to become "unbanked".
Similar situation is developing in the checking / savings banking, where the "consumer protection" will not allow charging higher interest rates and/or fees to higher risk customers, so the services which used to be free or low-cost are either eliminated or the fees / requirements are raised on every customer... again pushing the unprofitable low-end accounts to exit bank services and become "unbanked".
Here are a just a few tales of woe, and the new "unbanked" thanks to Dodd-Frank FinReg bill:
See Lack of Credit Leads Some Borrowers to Controversial Payday Lenders - post #7, FR posted by CutePuppy | 2011 January 13.
Just as Sarbanes-Oxley started to drive corporate capital from the U.S. overseas and remove incentives for companies (foreign and domestic) to invest in the U.S., Dodd-Frank is pushing corporate and individual investors out of the U.S.
Jamie Dimon is just the first of high-profile banking executives to point this out in the open... His position allows him and he has issued non-PC statements before, which cost him at least two invitations to the Obama's WH (not that he misses it).
Of course if they could not get money from the fed at zero percent then they would appreciate the use of customer money.
How about an omnibus “stick your thumbs in Obama’s eyes” law?
Congress should pass a law repealing every law enacted since the Bamtard’s inauguration, including laws created by fiat of a government bureau.
Each and every one of them, in all particulars.
Absolutely, they are already paying the fees now, in terms of higher priced products, ATM fees at third party ATMs ($2 - $4 per transaction), Debit fees at markets and gas stations (up to a dollar per transaction.)
Even if they were 'forced' to pay $10 a month for their checking account, they'd probably come out ahead over a year. I suspect, however, that this is the usual doomsday statements that come before regulation is finalized, to help change how the final regulations will appear.
Mind you, most of these fees are taxes by the banking industry on mostly Mom & Pop businesses. Intercharge, connection, settlement, batch fees, as well as the transaction fees themselves would typically come to 3 percent of our family's business' total gross, and that was with us digging around to find the best possible deals. Others in the same shopping center as ourselves were paying upwards of five percent of their gross in transaction fees.
Now I'm not eager for federal regulation to step in, and here I think it's mostly a case of federal regulation trying to fix the problems that previous federal regulations put in. Banks found a great revenue stream with businesses held hostage, giving banking customers all sorts of incentives to use those debit cards to buy everything, while at the same time collecting huge amounts at the retail point of sale, then holding the money until they decided it was time to deposit.
My absolute highest hatred went for American Express which loved to charge a $15 'statement fee' in any month that an Amex charge done. We finally dropped accepting Amex simply because too many times, there'd be one or two charges in a month, both charges totaling less than $10, and we'd get socked with that $15 fee, on top of the 3.5% of the transaction, atop the 35 cent transaction fee, atop the 5 cent batch fee...
I don’t remember Congress capping % rates on credit cards
No worries, Elizabeth Warren, new "consumer protection" czar, had the credit card industry and its "usurious" interest rates and fees in her sights for a long time. She'll make sure that they will also be "safe" from bankers' abuse, and everyone will cheer new government-created opportunity for "competition".
The local ARCO gas stations charge a 45 cent “convenience fee”
to purchase gas with a debit card. Credit cards are
not accepted at all. Cash is messy and usually
requires going into the store and standing in line
at the register before pumping, then again to get
change and a receipt. That standing around could
easily add 10 to 15 minutes to the transaction
time to dodge the 45 cent charge.
Now, that the new law and new debit card rules are in place, courtesy of Sen. Dodd and Rep. Frank, do you think you'll get a break on that "convenience fee"?
What rate should the government mandate as a "reasonable" cost of credit and transaction processing?
“Women and children hardest hit!”
I avoid the ARCO station unless I’m filling my F150 with 15 gallons or more to amortize the fee across a big fill up. It just makes filling the Harley with 2.5 gallons a non-player next to a transaction at a slightly higher price per gallon at another station.
Exactly. Obviously, the ARCO station owner assessed his fee structure based on the level of closest competition and taking into account the potential cost to the customer (in money / time / distance, i.e., “convenience”) of getting either alternative station’s fuel or payment method. That’s how businesses operate.
You are doing the same thing, when choosing where to buy, based on the same facts of competing alternatives. Government didn’t interfere in that, and the new rules really won’t change anything for you, they just redistribute the cost / profit between the banks and the station owner. Whoever has lost part of the profit will try to get some of it back in other ways, fees or payment methods, but some credit will now become more expensive for all and/or unavailable to those with worse credit risk.
Government hasn’t changed the competing environment by inserting itself between you and creditors. Another gas station might have.
I do not support government interfearance but the banks are raping their customers more and more with excessive fees and expenses just so the fat cats can have their super bonuses.
The banks that we as taxpayers bailed out in 2008. And don’t tell me to move to another bank cause I have done that and all of them are doing the same thing.
Before Congress uncapped them during Bushes’ presidency, the states capped the interest rate at a rate specified by the state. Congress IS responsible for the 45% rates.
Good, a word of wisdom. Some here act like “free” checking is free to customers and NOT to the banks. Not so. Banks got free use of customers money for banking uses when not needed by customer. A good arrangement for all until the Fed started throwing “free” 0% money to the banks and now they feel they can abuse us.
Not so funny how the government herds the sheep but focus on Congress, they can override the president on many if not all issues if the right people are voted in, it’s are only hope.
To Arco gas stations, check for an Arco debit card that links to whatever account you want it to. It’s usually advertised on the pump in a pocket brochure. Use their card (linked to one of your bank accounts) and the $.45 fee is waived. Afraid it is used as another tracking device? Pay cash.
You can say that again...
From Fraud made easier: New rules backfire - NYP, by Kaja Whitehouse, 2011 January 18
When the Dodd-Frank financial overhaul act was passed last summer, its supporters promised greater scrutiny of big money managers, such as hedge funds and private-equity firms, that have long been allowed to fly under regulators' radar. Starting in July, huge firms such as SAC Capital and Tudor Investment Management will have to start reporting key information such as assets under management and staffing levels. What's less known is that federal regulators will also start shifting oversight of hundreds and potentially thousands of smaller money managers -- or those with less than $150 million in assets -- to officials in cash-strapped states. The move has legal experts warning of a proliferation of funny business among money managers who handle a lot of mom-and-pop investors. "The states currently have almost no examination staffs other than maybe a few like California and Texas," said Tom Westle, a partner in the New York office of Blank Rome. ..... < snip > ..... Investment advisers, who may manage mutual funds or hedge funds, must now have at least $100 million to register with the Securities and Exchange Commission. This change alone will push some 4,100 registered investment advisers from the SEC's purview on to the states, according to SEC head Mary Schapiro. ..... < snip > In a strange twist, new rules aimed at cleaning up Wall Street may make it easier for some investment managers to commit fraud.
Now the overspent, overburdened states will have additional unfunded mandates to enforce federal / SEC regulation and be in charge of identifying and catching the next Madoffs and Stanfords, which Mary Schapiro herself - then head of the powerful FInRA - failed to catch. Believe it... or not!
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