Government Help for Consumers is Very Expensive

It is not that I dislike being right, but there are times that it pains me to go back and look at pessimistic predictions I made that ended up coming true.  And so far, the things I said about the behemoth FinReg bill have been uncomfortably spot on.  I’d like to start with my little claim that the idiotic measure of telling banks what they could and could not charge for debit fees and overdraft fees was going to backfire.  Now, it is entirely possible that this specific data is not totally updated or not universal across all regions, but note the following brand new charges from retail banks as broadcast this weekend on television media:

$5 monthly fee at Wells Fargo if there is not a $1,500 minimum

$25 annual fee for having a debit card at a plethora of banks

JP Morgan (Chase) is imposing a monthly fee unless a $500 balance is maintained

Increase at Bank of the West from $3 to $5 for monthly business savings account fees

If a customer does not their ATM at Bank of America or use their web-banking there will be a new $8.95 fee per month.

Banks offering free checking accounts went from 76% to 65% since the passing of FIN-REG

So here we go.  A 15% reduction in banks offering free checking accounts in just six months.  And where is the outrage?  Where are the politicians highlighting the unintended consequences?  Where are the good economists saying “I told you so”, and where are the bad economists saying, “Geez, I change my mind”.  Politicians are not held accountable to the actual real-life consequences of the policies they implement.  They are judged by whether or not it looked like they “did something”.  In this case, they did.  They forced banks to find a slightly different way to make the exact same profits.  And they inconvenienced and burdened the customers they claim to be serving. 

Here is my next prediction, and I will make it bolder than the last: You ain’t seen nuthin’ yet!  We’re just getting started.