Debit Charges and Senate Hucksters

Dodd-Frank Bill
Dodd-Frank Bill

New Orleans The Dodd-Frank Financial Reform Act called for the Federal Reserve to put an end to the debit card surcharge padding when that retailers were paying to banks and credit card companies, usually amounting to 44 cents a transaction.  New Fed proposals would cap the amounts at 7 to 14 cents, about an 80% reduction.  Hooray!

But banks and card issuers are crying like babies at losing this opportunity to scam consumers on the swipe.  Visa lost 10% of its value on the market yesterday.  Bank of America and Wells Fargo record as much as 2.5% of their revenue from this scam, according to the Wall Street Journal.

I love this not only because it is a win for the biscuit cookers, but also given ACORN International’s Remittance Justice Campaign, this is another indication of what at least one authority – the United States Federal Reserve – believes is the actual cost-plus profit of such a transaction.  With enough indirect data, eventually we will understand real costs, not just predatory pricing strategies.

This is also a boost for citizen wealth, if it turns out right:

“A $100 transaction today, for example, means merchants currently pay banks as much as $1.30 in debit interchange fees, according to figures provided by the Nilson Report. Under the proposals, the merchant would pay no more than 12 cents, said David Balto, a fellow with the left-leaning Center for American Progress.”

Hey, let’s have that buck back!

Here’s the head scratcher though, thirteen (13) United States Senators wrote a letter to Fed Chair Bernacke complaining that the card companies and banks were getting stiffed.  I badly want to know who these 13 are, since their names probably comprise something that will be as close as we can come to a list of the Banking and Credit Senators or Anti-Consumer Senators, someone should come up with a better name.  I have to admit to having been foiled even after a half-hour of searching since I was only able to come up with 7 of the 13 names, so anyone who knows speak up:

  • Richard Shelby (R-AL) (Senate Banking Committee)
  • Mark Warner (D-VA) (home state of Capital One!) (Senate Banking)
  • Chris Coons (D-DE) (corporate registry state for many of these companies)
  • Tom Carper (D-DE) (see above)
  • David Vitter (R-LA)  (WTF?)
  • Judd Gregg (R-NH)
  • Evan Bayh (D-IN)  (looking for a goodbye present?)
Facebooktwitterredditpinterestlinkedinmail

Bank Conflicts of Interest on Foreclosures and Modifications

Arizona Advocates and Action
Arizona Advocates and Action

New Orleans My god, pinch me!  Unbelievably the august New York Times in its editorial today has bellied up to the right side of the bar in pointing out the obvious and long noted (including by me!) conflicts of interests enjoyed by banks in the foreclosure game where they often pretend to be chicken, but are usually fox.  The Times being the Times can’t quite get it all right.  They put the horns on the Federal Reserve as a sleep-at-the-switch regulator of this mischief and mess, when the Treasury Department and the Administration both deserve at least equal billing of this horror movie showing at homes all around the country.

But let’s not quibble and count our small blessings when they come:

That is a big reason that the Obama administration’s antiforeclosure effort, with its voluntary participation by banks, has fallen so short.

Here is the background. The big banks — Bank of America, JPMorgan Chase, Citibank, Wells Fargo — service most of the nation’s home mortgages for investors who own the loans. They are paid a fee by the investors and also make money from fees on delinquent loans.

Servicers are obligated to manage the loans in the best interest of the investors. That means modifying a troubled loan, if reduced payments would bring in more money over time than a foreclosure. Or foreclosing if a borrower cannot make the payments on a modified loan.

If only it worked that way in practice.

Continue reading “Bank Conflicts of Interest on Foreclosures and Modifications”

Facebooktwitterredditpinterestlinkedinmail