The American Bankers Association, the largest trade organization of financial firms, formally opposed the Dodd-Frank Wall Street reform bill today, not on the grounds that it constrains Wall Street profits or places too many restrictions on their core business. They make some nods to new regulations that will, in their eyes, “limit the ability of banks, particularly smaller institutions, to extend credit,” but that’s not their main concern. Nope, they don’t like it because it protects too many consumers from getting ripped off.
The banks cited two specific elements of reform that were the most objectionable. First among them was swipe fee reform, legislation that reduces what banks and credit card companies can charge retailers for the use of credit card machines. “This amendment, which had nothing to do with financial regulatory restructuring, has been falsely presented as benefitting [sic] consumers. In reality, the beneficiaries of this provision are the retailers, who extract great benefits from debit cards, such as reduced personnel and fraud costs, but will no longer have to pay to support these benefits,” the bankers write.
Secondly, the banks were offended at the creation of a Consumer Financial Protection Bureau, arguing that it would lead to increased litigation and decreased credit availability.
Bankers essentially wanted to keep ripping off retailers by charging them exorbitant fees to move money from one account to another. And they wanted to keep ripping off consumers with confusing credit card and mortgage statements, bad contracts, and the like, making their profits off how much they can trick people without them knowing it. This is the essence of the banking industry in the 21st century, committed to almost literally stealing candy from babies as a means of sustaining their businesses.
The Dodd-Frank bill isn’t good enough to prevent financial crises, does nothing to fundamentally restructure the outsized role of finance in the economy, and should have gone further in reducing risk. If there’s one area where it arguably did succeed, it’s in protecting consumers (even there it’s a mixed bag, as auto dealers are exempt from CFPA rules, and the Office of the Comptroller of the Currency can still pre-empt state consumer protection laws if they extend beyond federal rules). That’s the part the bankers don’t like. They figure they can get around the other rules, but they don’t want to be barred from screwing their customers.