This makes sense
January 11, 2010 | Wall Street Journal, federal legislation, industry | Comments (0)President of the Federal Reserve Bank of Atlanta says this in today’s Wall Street Journal:
Dennis Lockhart, president of the Federal Reserve Bank of Atlanta, said that it was likely that an oversight group would be formed to better identify how links in the financial markets can fuel a crisis.
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Mr. Lockhart said he remains against the idea of creating a new consumer-protection agency. He also said that he expected to see steps on aiding Fannie Mae and Freddie Mac in the coming months.
Charging more for high-risk borrowers
January 2, 2010 | Wall Street Journal, best practices, federal legislation, industry | Comments (0)The Wall Street Journal weighs in on the costs–and politics–of a high interest credit card.
Latest on the CFPA
December 11, 2009 | Wall Street Journal, federal legislation, industry | Comments (1)From today’s Wall Street Journal:
House Democrats agreed to allow a vote on a proposal to replace a consumer-protection agency with a council of existing federal regulators.
The proposal, being offered by Rep. Walt Minnick (D., Idaho) as an amendment to sprawling financial-overhaul legislation being debated in the lower chamber, would effectively block the creation of a watchdog that advocates, including the Obama White House, contend is essential for reining in financial-industry abuses.
Meanwhile, a deal struck between House Democratic leaders and business-friendly members of their caucus late Wednesday would scale back language allowing states to issue tougher consumer protections than the proposed consumer agency. he financial industry was fiercely opposed to the bill’s original language, which they said would make it costly for national banks to operate.
CFPA summary
October 23, 2009 | Wall Street Journal, federal legislation, industry | Comments (0)The Wall Street Journal’s coverage is always worth reading:
Lawmakers made several significant changes to the White House’s original proposal during a week of debate, particularly in response to lobbying from business groups. For example, they voted overwhelmingly to exempt automobile dealerships from any scrutiny by the new agency, a major win for dealerships that rake in high fees from auto financing. That change may not make it into the final version of the legislation.
The agency would be charged with policing consumer financial products and practices, such as mortgages, credit cards, and overdraft fees, regardless of whether they are offered by banks, finance companies, or most any other type of firm. Democrats have argued that a lack of consumer protection helped fuel the financial crisis, pointing to the defaults on subprime mortgages that nearly toppled Wall Street.
New ODP legislation
October 19, 2009 | Wall Street Journal, alternatives, industry | Comments (3)From the Wall Street Journal:
Five U.S. Senate Democrats, including Senate Banking Committee Chairman Christopher Dodd, D-Conn., on Monday introduced legislation that would put sharp restrictions on the fees bank can charge customers. Customers would have to opt-in to overdraft protection, and banks would be limited on the size and frequency of the fees they charge.
“Banks should not be trying to bolster their profits at the expense of their customers,” Dodd said in a statement.
Intensity
October 9, 2009 | Wall Street Journal, federal legislation, industry | Comments (0)Wall Street Journal’s take on President Obama’s event today:
President Barack Obama will step up his push for a financial regulatory overhaul Friday, with a call for the public to rally behind his proposed Consumer Financial Protection Agency
The agency, a key plank in Obama’s proposed regulatory revamp, has come under fire from Republicans and the banking sector, which says it would crimp the flow of credit to consumers and limit the creation of new products. But Obama and top Democrats on Capitol Hill say the agency would help avoid a relapse of the financial crisis and safeguard consumers from some of the practices that contributed to the meltdown.
An administration official said Wednesday that Obama will defend the proposal at a White House event Friday and press lawmakers to pass the reform package by the end of the year. He will be joined by Treasury Secretary Tim Geithner, and meet with four people the White House says have been hurt by outdated financial regulations.
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Chamber targets CFPA
September 8, 2009 | Wall Street Journal, federal legislation, industry | Comments (0)As the Wall Street Journal reports, the Chamber of Commerce is running an ad campaign against the proposed new agency:
The Chamber’s goal is twofold: move the spotlight off the unpopular commercial banks and mortgage lenders that are the target of the legislation and muster a roster of more sympathetic opponents.
“We want to go beyond the usual suspects to show how overreaching this is,” said Amanda Engstrom, a senior vice president at the Chamber who created the lobbying and advertising campaign.
The lobbying push comes as Congress returns to work after a monthlong recess. While most attention on Capitol Hill will be on health care, lawmakers on the financial-services panels will continue to forge ahead on legislation in response to the financial collapse. Rep. Barney Frank (D., Mass.), the chairman of the House Financial Services Committee, plans to begin olding votes on his panel’s parts of the legislation, including the consumer agency, later this month.
Loan sharks thrive in U.K.
September 1, 2009 | Wall Street Journal, alternatives, industry | Comments (0)As bank credit dries up, desperate people go to illegal lenders. The Pundit guesses that states that don’t have payday lenders have an inordinate amount of illegal lending. From the Wall Street Journal story today:
In a recent report, the U.K. think tank New Local Government Network said it expects the number of people with debts to loan sharks to jump to more than 200,000 in Britain this year, from an estimated 165,000 in 2006. A confluence of indebtedness, poverty and the diminished availability of regulated subprime credit are creating the conditions in which many are borrowing “from nefarious sources,” the report says.
Loan sharks, so named because of their predatory behavior, are seeing a boost from the U.S. to Malaysia, where police launched a recent blitz against so-called au Lang gangs. “During a time like this, predatory informal lenders have the advantage,” said Brian Gurski, who helps educate local communities on basic business practices at LaGuardia Community College in New York.
The answer is well regulated store-front lending.
True APR?
August 10, 2009 | Wall Street Journal, alternatives, industry | Comments (0)This Wall Street Journal blogger makes the point that true consumer protection would include counting fees and other bank charges as part of the APR:
….But there is an additional question: will these changes in lending conditions be reflected in the disclosed Annual Percentage Rate (APR)? Historically, the rules around the APR – overseen by the Federal Reserve – have not forced lenders to include all charges in this calculation. Why is this OK? It’s not OK. This would be like cereal manufacturers including only some ingredients on their labels. Or makers of children’s toys not telling you that some dangerous chemicals are involved. Why has this been allowed to happen? Essentially, because nobody watches out for the consumer of financial products.
We didn’t know they were “low”
July 31, 2009 | Wall Street Journal, alternatives, industry | Comments (0)This Wall Street Journal headline caught my eye: In Banks Profit Push, “Era of Low Fees is Over”. From the story:
“All depositories are trying to raise any little fee, whether on loans, deposits or transaction accounts,” said Mike Moebs, founder of Moebs Services Inc., which collects data on fees from nearly every U.S. bank and credit union. “The era of low fees is over.”
The upward trend reflects pressure on bank executives nationwide to turn in profits — or at least minimize losses — as loans to homeowners and businesses turn sour.
