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NEWS ARTICLE
January 6, 2010
Los Angeles Times, "Banks take revenge for new consumer rules"
Happy new year. Now pay up. That's the message from our friends in the banking industry, who are introducing all sorts of fees and changes as a slew of regulations take effect designed to make financial heavyweights friendlier to customers. From costlier checking accounts to higher credit card fees, banks are scrambling to find ways to compensate for as much as $50 billion in annual revenue that could be lost because of the tougher rules and requirements.
"This isn't about a money grab," said Scott Talbott, senior vice president for government affairs at the Financial Services Roundtable, an industry group. "This is about covering operating costs and risks related to transactions." For instance, he said,z banks will now be required to disclose contract terms more clearly and to notify customers in advance of changes to credit card terms. "That means they'll have to send out more letters, which has a cost," Talbott observed. And because banks will no longer be able to jack up people's credit card rates willy-nilly, he said, that will expose issuers to more risk, thus creating more costs.
That's one way of looking at it. Another is that banks are cheesed because lawmakers are showing some uncharacteristic backbone when it comes to consumer protection, and they're turning the screws because, well, they can. Never mind that just about all the big guys in the banking world are still on their feet primarily because taxpayers stepped in with billions of dollars in bailout cash. That's ancient history. Now it's all about making up for the money that used to spill into bankers' pockets from arbitrary rate increases and practices such as automatically signing people up for overdraft protection -- and then nailing them with fees whenever a transaction went over the limit.
Read the full article on the Los Angeles Times website.
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