FS Edge

A byproduct of changes to Regulation E is the future of the checking account.  Will the industry abandon free checking and return to the more traditional banking practices of charging account maintenance fees?  While the full impact remains to be seen, customers are sharing their views on a fee-based world.

According to a survey administered by MoneyRates.com, 49% of respondents said “avoiding monthly maintenance fees” was the most important factor in choosing a checking account.  Responding to a recent New York Times article, “Would You Pay for  a Checking Account?,” customers state “No, I won’t pay for a checking account” and “should [my bank] try charging me I’ll shop around until I find the last bank offering free checking.” Banks therefore find themselves in a delicate situation with huge implications. So… what now? Read More »

I was speaking with a friend the other day about the proposed financial regulations here in the U.S., including the creation of a Consumer Financial Protection Agency.  Industry opposition to the CFPA brought to mind an incident in high school.

A monitor was hired to patrol the student parking lot before first period and again during lunch hour.  Her job?  To make sure the kids who gathered there didn’t smoke.  The plan caused the kind of uproar you might expect from rebellious teenagers, with the president of the student council likening the monitor to Orwell’s Big Brother.  When council representatives met with the principal to complain (assuring him that of course they didn’t smoke), he asked them, “So what are you worried about, if you’re not doing anything wrong?”  The controversy was quickly forgotten and the monitor became a regular fixture, winning everyone over (the non-smokers, anyway) by handing out free candy on Halloween and Saint Valentine’s Day.

The moral of the story?  Forward-thinking banks and credit unions already cast their relationships with customers and members as a fair and transparent exchange of value; they’re not worried about the creation of an agency meant to clamp down on practices they’ve shunned anyway.  As Bloomberg’s Susan Antilla wrote in her column on January 25, “Among [the CFPA’s] goals, which in some sections read like a treatise against loan-sharking, are to truthfully explain costs, benefits and risks of financial products to consumers and to do it all in plain English.”  In short: that is nothing earth-shattering, nothing that will change the way reputable institutions already do business.

Read More »

Last Friday the House passed its version of financial regulation reform. What struck me most about the debate was how the final package differed from the original proposals put forth by the House Financial Services Committee. On December 3, I attended a briefing with Congressmen and Financial Services Committee members Brad Miller (D-NC) and Ed Perlmutter (D-CO), who spoke briefly on the status of the bills and their expectations for the full House debate.

Here’s what I see as the key differences between Committee expectations – as expressed by Congressmen Miller and Perlmutter – and the final package, as well as what the House experience bodes for the Senate process:

Read More »