Chase announced that they are dropping out of the FDIC’s Transaction Account Guarantee Program. This is different than the general FDIC protection for your bank account, but provides additional protection above and beyond the $250k limit of the general FDIC program. This is not a good thing. They are doing this to escape some of the regulations that come with participating in that program. (article)
As a non-fan of Chase, I can’t say I am much of a fan of JP Morgan Chase CEO Jamie Dimon, which means I am not a big fan of the recent rumors in the media that he is a possible candidate to replace Treasure Secretary Timothy Giethner. Chase customers, how would you feel having the guy ultimately responsible for all the bone-headed Chase policies being responsible for banking and foreclosure policy, among other things?
Don’t quite know what to make of JP Morgan Chase CEO Jamie Dimon’s recent comments. It sounds like he wants to be allowed to be too big, and to be allowed to fail if they screw up. Does that give ANYONE confidence?
Our friends at the Federal Reserve have issued new rules for banks that force all banks to provide overdraft protection on accounts only if the account holder has explicitly opted-in. The new rules take effect next July. Great. Haven’t regulators learned that giving banks plenty of time before a rule takes effect allows them to find ways to work around the rules before the take effect? We saw this with the new rules on credit cards that take effect in January. Most banks raised rates before the new rules take effect or converted accounts to variable rates to get around the new rules.
What a great quote from this article: “The nation’s second-largest bank [Chase] said a new law that limits unfair rate hikes and hidden fees will cost it as much as $750 million a year.” Wow, so being fair makes Chase lose money.
Clueless or malicious? Guy Strickland paid off his WaMu equity line after losing his home in a fire. By California law, early payment penalties are not allowed after a home is lost in a disaster. Chase corporate even gave him a letter waiving fee. But when he went into a local WaMu branch, they refused to waive the prepayment penalty despite the letter and the law. He took them to small claims and won. He sent the Sheriff with a court order to collect the money. They refused. It was only after a reporter started poking around that Chase corporate refunded him the money and sent an apology letter. (story)
S0me of the new rules as part of the Credit Card Act of 2009 are now in effect (8/20/09): Banks must mail statements at least 21 days before their due dates and must give you at least 45 days notice before any significant changes to rates or fees. (WSJ article)
There is no question in my mind, banks are pissed at regulators and customers for throwing a wrench into their profit making machines, and they are taking it out on us. If you’ve seen the secret history of the credit card, you know that the banking and credit card industry engineered their profit machine by setting people up to fail with things like higher credit than they deserved, monthly payments that were far too low, racheting up interest rates for any (and often no) reason, and automatic overdraft protection that generates tons of overdraft fees. Now the government has tightened regulations through the Feds new rules and the Credit Card Reform Act of 2009 which outlaws many of these practices and they are further discussing the overdraft issue, and consumers are defaulting at record rates.
Banks are pissed as the era of easy money is quickly fading into history. I recently received a notice form Bank of America that my account was switching from a fixed rate of 9.9% fo a variable rate that is also currently 9.9%. Sounds the same but this is also a trick, as the prime rate the variable rate is based on is historically low at 3.25%, meaning that my rate will average much higher over the next decade. They are doing this to me, a good customer, with perfect credit, a perfect payment history, and I use my credit cards a lot. They claim they are doing this to all their accounts.
Perhaps it is time to start paying for things with cash again. Merchants will thank you, as it saves them 3%. For businesses like a grocery store, which has net margins of about 1%, this can make a HUGE difference.
Banks need to be taught a lesson, the time of easy money and abusing customers is gone. It is time they started behaving like the revered institutions they once were again.
Legal & regulatory | admin December 23, 2009 | 
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