Exciting news courtesy of Dodd-Frank, et al: "Free" checking, isn't

I’ve yet to resolve my quandary over which of President Obama’s signature legislative ‘achievements’ I find more distasteful — ObamaCare, or Dodd-Frank. Yes, ObamaCare boasts the audacity of stomping on individual freedom, taking over an entire economic sector that particularly cannot afford to have its works gummed up by bureaucratic inefficiency (since there are actual lives at stake), and will strangle medical innovations, among many more ill effects; but the regulatory complexity of Dodd-Frank is going to rear its ugly head in so many different industries, expand government interference in the business world across a a whole host of different avenues, ensure that the biggest banks get bigger, and has escalated economic uncertainty to such a degree, that it’s quite the tough contest. Really, I am in a pickle.

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I mean, the massive regulatory behemoth of financial reform that sidelines free-market competition in the ostensible effort to make those nasty, big bad banks offer more user-friendly services, is actually making everything more costly and inefficient for everyone involved? Who could’ve seen this coming? From the WSJ, emphases mine:

So-called free checking accounts are more expensive than ever, as the lumbering economy and new regulations squeeze bank revenues. …

Banks have raised fees on automatic teller machines, overdrafts and checking accounts for customers who don’t meet new standards tied to account balances or regular deposits. …

The fees come as the banking industry looks to lose more than $10 billion a year in revenue through federal restrictions on debit cards and overdraft policies, according to bank consultants. …

Customer fees are just one way banks are trying to step up profits. Most financial institutions also are cutting costs. Bank of America Corp., BAC -0.60% for example, is seeking to shed 16,000 jobs by the end of the year. …

Rising fees aren’t the only frustration to bank customers. Most traditional accounts these days earn next to no interest as the Federal Reserve seeks to keep rates at record lows, a strategy intended to jump-start the U.S. economy.

Behold, the hubris of the federal bureaucracy manifested in the form of widespread financial hindrance and borne of a regulatory bureau meant to “protect” us from private companies that dare to seek a profit by offering a useful service. Putting businesses in a costly chokehold, killing jobs, raising fees, engendering unprofitable accounts — gee, thanks, Consumer Financial Protection Bureau!

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Going after financial institutions because of false advertising or outright deceit is one thing; pursuing cases against them because their customers supposedly can’t understand the fine print is another — and frankly, I don’t trust the right-away-wrong CFPB to distinguish which is which. Do these regulators understand that there are costs associated these transactions and services that must be paid for, and that by persecuting the banks, the price of these regulatory enforcements is inevitably going to passed on to the consumer in one way or another? Go after the credit-card lenders if you will, but understand that you’re inevitably making everybody poorer. The AP reports:

Discover Bank will pay millions in fees to settle accusations by regulators that it pressured credit card customers to buy costly add-on services like payment protection and credit monitoring.

Discover, the sixth-biggest U.S. credit card issuer, will pay a $14 million fine and refund $200 million directly to more than 3.5 million customers, federal authorities said Monday.

The company’s call-center workers enrolled customers in the programs without their consent, misled them about the benefits and left customers thinking the products were free, regulators said.

The action was brought by the new Consumer Financial Protection Bureau and the Federal Deposit Insurance Corp. Discover said this summer that it expected an enforcement action about add-on products.

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Ed Morrissey 10:00 PM | November 21, 2024
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