Banks Laughing All the Way to You

Ha! Ha! Ha! Haw! Haw! Hee! Haw! Hee! Haw! That’s the sound of your big friendly bankers as they keep one step ahead of spate of new laws and regulations passed by Congress and signed into law by the President of the United States last year. Laws that prevent instant and random credit card rate hikes without warning, not explaining stuff clearly to consumers, limiting rate increases (effective in February), etc. The banks – the same banks who wanted government help when their balance sheets tanked with bad subprime mortgages and failing commercial real estate loans and who had no problems taking taxpayer-funded TARP money – are screaming like stuck hogs that the government is messing with a free market with all these new rules that they claim will cost them $50 billion a year.

So dem banks are messin’ with your checking account and your plastic – raising fees for all kinds of stuff (there will be a lot fewer ads for “free checking”), higher credit card fees, lower credit limits, higher interest before the limitations on interest rates kick in, “dormancy fees” when you don’t use your card enough, moving to variable interest rates and the list rolls on. Banks are even complaining that the requirement to notify consumers in advance of account changes is going to cost them tons in postage and paper. Woo hoo! I feel bad that they cannot sneak up on you anymore. How about not changing the account so often so you don’t have to send out all those nasty, piggybank-breaking stamp costs?

The one thing that these bankers are going to make sure of: dollar for dollar, they are not going to bear any financial burden for the new rules. They’ll take the bailout money, but if there is a cost that they can figure out how to charge to a consumer, well, they’re gonna go there. Of course, this refusal to accept the burdens of regulations aimed at the bankers in the first place, and shifting the entire burden to the consumers that the legislation were clearly intended protect, will probably piss off the same legislators who thought they were doing the public a favor.

So there’ll be a pile of Senate and House subcommittees considering this reaction from the financial community, a gaggle of lock-step-Congress-people who always buy any banker who uses the “free market” argument, even though the banks have been the primary beneficiaries of a very banking-friendly-subsidy-non-free-market policy, and some banking bigwigs who will testify, with straight faces, that their new assessments against consumers are necessary for their very survival. I wonder if they will fly to DC in the company jet or slum by just sitting in first class? There will be new laws, new regulations… but the banks will find a way to limit the changes and then create new loopholes to dance around the next set of changes… but they are banks… whaddyaexpect?!

Sigh, there is no free market. Big bullies push individuals around because of a profoundly uneven playing field. They can aggregate billions, hire the most expensive lobbyists and lawyers they can find, sponsor huge-fund-raising efforts for politicians running for office… while ordinary people only get to aggregate their power at the ballot box. It’s the only balancing act we can get… and the thought that free market competition will create efficiencies and consumer benefits is a theory that fails in an era of credit impairment and this strange reality that banks seem to impose pretty similar looking fees and charges (or at least fees and charges that, in the aggregate, generate roughly the same result) no matter what the market conditions.

Banks aren’t really interested in little people with little purchases and small savings anyway. It’s not about the little rivulets at the source of a great river, these banks want the ocean that the big river runs into. And it is very necessary that our elected representatives push back… hard!

I’m Peter Dekom, and I approve this message.