Financial Regulation

Thought I would post some items on this. In addition to all of the boondoggles our Congress has pursued this term, (and what they havent done like EUC) . They have passed new credit card and overdraft regulations, and are about to pass new regluations of the financial system "Fin Reg". Unfortuantely none of these things eliminates too big to fail, bail outs, or would prevent a financial meltdown like was experienced in 2008. Thats bad enough, until I pick up my newspaper this weekend and read the article below that all of this may likely end my free checking account with my bank.

To coin a phrase "this aint progress"

http://www.coshoctontribune.com/article/20100701/NEWS01/7010312/1002/RSS01

Our entire country is run for the Banks. Totally. Has nothing to do with people.

sc4ram wrote:

http://corner.nationalreview.com/post/?q=MDY3ODRiM2Q3ZThkMTFhMTM0NWMxOWY5MmY5NzNiM2Q=

This one's just fine with me! It's about time the cabal of old-boys networks were challenged in this country. All it takes is growing up female or in a minority in this country to understand what that means.

LOL Nancy, I forgot the world was out to get you . You may have a point, (if you look hard enough you may find fairness issues in this industry) .

I think the point of the article was with all of the legitimate issues in our financial system, this legislation doesnt address many of them, and some of the things it does address seems to be somebody's political ax they are taking this opportunity to grind. ......

Not to mention ending my free checking (which wasnt broken in the first place)

So who gave you the right to challenge my life experience, when it's not possible for you to have walked in my shoes?

It's true, the new reforms didn't address a lot of stuff that was needed, and if I were creating the legislation, I doubt I would have focused on the items of your objection. But frankly, I'm so disgusted with the financial industry leaders for the way they've behaved in general, the mess they've created, behaving like spoiled children of the worst kind, that I don't give a fig about any kind of hand-slap that they get. Free checking is such a penny-issue compared to the egregious tactics these people have used with what are now illegal fees and policies, that I think your objection is unbalanced. Is it really only about you?

A recent article (I don't have the link right now) reports a bank that decided to stop issuing credit cards to anyone with a high credit score because they knew they couldn't make any money on those people who actually deserved credit the most. Is this a sane financial industry? An involved retailer was suing them.

As for old boys networks, the current workplace is a far cry from the scene in the 60's and 70's when I first started venturing into the work world. But I didn't have to "look hard" at all to find a power blockade to any and all who would come to challenge it, no matter how smart or talented the challengers.

Well Nancy, you are correct in that I have no insight into your life experience. I have never worked in the inside of the financial industry either (although I have been a customer in many respects and have not had a bad experience, this entailed some due dilligence on my part and the willingness to pick up my assets and walk away when I thought I was not getting sufficient value) I have free checking, free credit cards, and I rolled my 401K to a IRA with a low cost custodian that allows for free trading. There are obviously sectors of our financial system that require reform. Things like the repeal of Glass-Stegal in 1999 that esentially allowed FDIC insured commercial banks to engage in more risky investment banking, banks writing NINJA loans to people to buy houses they couldnt afford, people lying on their loan applicatoin, the government incentivizing this thru such vehicles as Fannie Mae and Freddie Mac (which has come thru this legislation un-touched). I could go on and on but of all the gripes about the financial system, lack of affirmative action and work-place quotas has not been one of them. Which tells me that the Dems in charge of writing this legislation are interested in a political agenda, not neccessiarily prudent financal regulation reform.

(There is a lesson here for our EUC interests, if you have been following Fin Reg, it will probably pass, the DEMS have modified the proposed legislation a couple of times in order to pick up a few Repubs like Scott Brown R- Mass and Olimpia Snowe R-Main. If they would simply do the same for EUC like tap stimulus funds or TARP, EUC would pass as well, which makes me think the Dems want a issue here instead of a EUC extension)

Meanwhile back at my bank, You may well be correct that the 60s and 70s were not the finest hour of some Corporation's treatment of women (or other employees) . The reason I gave you a friendly scoff on your post is that I can speak from experience, that my former mid size company went out of their way to observe affirmative action and promote people from so called protected classes, too much so in my opinion. My former company was quite sensitive to this given they are a govt contractor. I had first hand info that during a lay-off many years ago, area managers were asked for a list of lay-off candidates, they produced one, HR came back and told them that they had too many people from protected classes on the list and they needed to put more middle aged white guys on the list. (all well intentioned to avoid a government reveiw of their personel practices.) In my case, a women who was in the upper management of my former company was instrumental in my lay-off. If I applied a similar spin to my situation I would have to say that I got stiffed by the "old girls" network, (which would be absurd) .

I manage nickles and dimes on my day to day finances, free checking is a part of that. As a tax payer I expect my government to fix problems and not create more or unecessarily add cost burdens to my daily existence. You sound like a generous person, if you think free checking is insignificant, pehaps you can pay for mine if it goes away.

In your example of issuance of credit cards, if I found myself in that situation I would simply get a card via my local Credit Union. To me in a free market there are always alternatifves, if you dont like the service at a specific establishment simply pick up your marbles and move to another one. Ive found many times simply threatening to move fixed most of the problems (fees) with the financial establishment that I was dealing with.

More of us should vote with our feet.

sc4ram wrote:

http://blogs.trb.com/business/columnists/brackey/blog/2010/08/_credit_card_reform_good_1.html

This is a little out of date in terms of the new reform, since many of those high fees will not be allowed under the most recent reforms.

But my personal view of the previous watered down reform, the bill that became law on Feb 22 of this year, not the most recent new rules, is that there were two big pluses and minuses. The plus was getting rid of that ridiculous "universal default" clause in raising interest rates, that part where the bank could raise your rate just because you missed a payment on just about any other bill you paid. (But then of course all or most of the banks rushed to either raise rates or fees or simply get rid of some customers before that law went into effect.)

Possibly the least noticed little subterfuge the banks gained in that bill was the thing about paying down the highest interest first. When I heard from the news that was in the bill I was glad, thinking that my interest payments (on what shredded bits of credit I have left) would go down considerably as the months went by. But then I quickly found out that the banks had an out--they only had to use your payments to pay off the highest interest with the amount you paid OVER your minimum monthly payment!!! So if you're on a financial ledge and can only afford minimum payments anyway, it does you no good; whereas, someone who needs less help and who could make larger monthly payments would be able to save. Go figure.

Typical lobbyist induced concessions, rather cleverly disguised, at first.

I would add this is a case activity being confused with results. Under the name of do-gooders, the usual suspects in Congress (Sen Dodd comes to mind with his special Countrywide Mtg deal as a "friend of Angelo")enacted this "reform" appealing to the emotional aspects of citizens complaining that even though they highly leveraged themselves (easily via their credit cards) that they should be entitled to low interest rates and fees. When in reality it is enacting more regulation (even though the previous regulatory regime was ineffective and the above mentioned Senator has a corrupt relationship with the financial industry) with a actual result of raising fees and misery for the rest of us who pay our bills on time or in boom times managed to pay down our debt.

sc4ram wrote:I would add this is a case activity being confused with results. Under the name of do-gooders, the usual suspects in Congress (Sen Dodd comes to mind with his special Countrywide Mtg deal as a "friend of Angelo")enacted this "reform" appealing to the emotional aspects of citizens complaining that even though they highly leveraged themselves (easily via their credit cards) that they should be entitled to low interest rates and fees. When in reality it is enacting more regulation (even though the previous regulatory regime was ineffective and the above mentioned Senator has a corrupt relationship with the financial industry) with a actual result of raising fees and misery for the rest of us who pay our bills on time or in boom times managed to pay down our debt.

I think we agree that this law (the February one is what I assume you are referring to) is a poor one, but in some respects for slightly different reasons. The banks (Citibank was the worst) took advantage of even people who did pay on time and have good credit by raising their rates ridiculously high for no announced reason, just before this act went into effect.

And even those who are "highly leveraged" at this point in this recession should be allowed low rates, as long as they pay on time, since the banks are getting this money now for a song and are making giant profits on those who can least afford it. This notion that has dominated banking for so long, that those who can afford the most get the lowest rates, might make sense in a good economy, and if the banks hadn't lied there way though most of their consumer transactions. But keepng up this policy mythology now is in the long run cutting their noses to spite their faces, if they end up with no customers and the economy tanks even further.

My conclusion these last few years is that the majority of bankers and financial market people are narrow-minded idiots who don't seem to be capable of seeing the big picture and so are no better than common criminals, except they are protected by the laws that they helped make.

There are a few respectable banks left. One I know of is a relatively small bank in Arkansas, Simmons National Bank. I have dealt with them over the years and they never got into the "bait 'n' switch deals that many of the others did, had fairly low interest on cards, were relatively conservative in giving out credit, and now are even giving their customers in financial trouble quite a few breaks, compared to other banks and credit card companies. If anyone on this board who actually has some credit left is looking for a good bank or credit card, I would have to recommend them.

I would only hark upon my own experience, just recently ( i have to assume cause and effect here from the Feb legislation ) I checked my Wachovia statement and there was a service charge on my free checking /ATM acct. [Keeping in mind that Wachovia had been acquired by Wells Fargo just before the financial crisis and in a previous post there was a article that said Wells was no longer offering free checking as a result of the Credit Card legislation]. I immediately called the institution and asked that the charge be removed, they did so cheerfully ( I was also cheerful because if they didnt I was pulling my finances out of the bank that day and setting up free checking and ATM at my local Credit Union) With the flood of credit card solicitations that I get in the mail If one my issuers ever gave me a hard time I would simply move on to another one (and take my balance with me if I had one) .

Perhaps many bankers "are narrow minded idiots " although they have a fiducary responsibility to act on behalf of their shareholders. You're right that many banks received taxpayer backed TARP money, just keep in mind that many banks didnt ask for it, then Treas Sec Paulson forced many of them to take it (the idea was if only some of the big banks took the TARP, that there would be a stigma for those institutions, thus most of the big banks were forced to accept TARP with the idea of increasing confidence in the whole banking system during the crisis). Also many banks have paid much of the money back to the Treasury with interest (which is sitting there in a Congresional slush fund) Im certaintly against usuary, and none of us wants to see people taken advantage of, but I would ask you to suspend disbelief for a moment and partake in a empathy excercise.

Lets imangine that you have a bucket of money and you have it on your credenza in your hallway . And being the generious person that you are you will allow me (and anybody else on this board) to take as much money out of the bucket as we want, anytime, while we are anywhere, for anything. The only stipulations are that if we dont pay it back in 30 days there will be a revolving monthly interest charge that is subject to change (within the usuary laws) and the charge will stop at anytime we pay back the outstanding balance, In addition we get frequent flyer points for every dollar we borrow. Given that you dont know what kind of credit risk our boardmembers are , charging a robust interest rate for a outstanding balance is probably reasonable considering all of the easy money you are making available to us. Perhaps you notice one day the bucket is getting low, so you devise a more robust fee structure so the viability of the bucket is maintained. Lets suppose I dont like that and think its unfair, I'll simply put my borrowed money back in your bucket and move on (especially if UIO comes along and will loan me some money out of his bucket with a more favorable fee structure than your bucket) BTW- You are so generous in this example (given my understanding of deliquent consumer debt) that if I started to miss my monthly payments and after several months you got tired of trying to collect them from me, you could turn it over to a collection agency and they would settle with me for only half of the balance owed. (what a deal [for me])

The moral here is that in this fictional example, you are being very generious considering all of the risk you are taking on people possibly not paying you back what they owe you, and you are making this money easily available 24/7 on demand. I would expect you to get paid well for doing this.

In the financial industry there is a cost for making that easy credit available, I dont expect them to do it for nothing and their shareholders expect them to maximize their profit, its a matter of who is going to pay it. Given my real life status per below, I am not volunteering to do so .

In real life since I hate fees and interest, I rarely use my credit cards, but its convenient when I do (airplane tkts etc) . I usually pay off my balance , I dont get dinged with interest, the Credit Card co gets a percentage from the merchant, and I get a line of credit 27/7 thats ready to serve me @ no charge. (and if that fee structure changes for me, i'll cut it up and move on to the next offer in my mail box) . And I have a ATM card that I can use @ no charge all over the South and Southwest. To me thats a lot of credit and bank service at little or no cost to me, Id like it to stay that way.

This is sooo dissapointing that our elected Representatives perpetuated this ...........



http://www.wftv.com/video/25306598/index.html