Costs and benefits of monetary reform legislation

Over the past few years, Congress has passed a slew of monetary reform laws. The CARD Act, for instance, was passed along with some other bills to get financial institutions and other financial service businesses to be just a little fairer in their dealings with customers. The effects have been as meant in some ways, but there will be consequences.

Legislation on credit card reform looked at

There was a random poll of people with charge cards by the Consumer Financial Protection Bureau. MSN states that this was done to see what impact the Charge card Accountability Responsibility and Disclosure Act had. The Bureau found the charge card law was really working. The CARD Act caused a decrease in the number of individuals that reported an increase in rates of interest. It went down to 2 percent from the 15 percent before the act was in place. About 57 percent of respondents said the law benefits them in one way or another.

Banks answer back

The rules that are passed into law will not help large banks the majority of the time. They have to discover other ways to make money and get around it. The free checking that most banks used to offer has disappeared with the financial reform. Free checking has disappeared at large financial institutions such as Bank of America, JP Morgan Chase and Wells Fargo. CNN reports that there was a cap of $50 to $100 in debit transactions that may be initiated at large financial institutions. An "interchange fee" is charged by the financial institution to complete any kind of transaction with debit cards. A 12 cent cap is something the Fed is considering on this. Right now, 44 cents is the average. Somehow financial institutions would have to make up that loss if that were to take place. Right now the interchange fees make large financial institutions billions of dollars.

Not listening to much from credit unions

All of the rage from large banks has left some financial institutions out. The credit unions have not said much. The new regulation on banking and credit doesn't impact credit unions very much. This is because they aren't there to keep a big paycheck going for CEOs and shareholders; they’re there to service the consumer. Credit unions are nonprofit organizations with less risk than banks. That means the rates of interest on automobile loans, unsecured loans and charge cards are all very low comparatively.

Articles cited

MSN

money.msn.com/credit-cards/has-credit-card-reform-worked-creditcardscom.aspx

CNN

money.cnn.com/2011/03/10/pf/debit_cards_limit/index.htm