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Raj Date, the de facto head of the Consumer Financial Protection Bureau, weighed in on the ongoing furor over Bank of America's decision to apply a monthly fee for debit card use, saying the focus should be on transparency.
October 5 -
With M&A and the economy at a standstill, bank executives will have a hard time explaining how they can grow when they report third-quarter results.
October 5 -
In hinting that the consumer bureau should look at B of A's $5 debit card fee, Obama has solidified bankers' worst fears about the CFPB.
October 4 -
Citigroup, which last week touted its promise not to charge customers for using their debit cards, is telling some checking customers that it will start charging them $15 per month unless they maintain a balance of at least $6,000.
October 3 -
Understanding the management of Bank of America is now next to impossible. What makes them want to anger 50 plus million solid retail customers while their entire operation is in damage control? Five million customers from the bank I headed joined this group when B of A acquired it in 1992.
October 3 -
Bank of America Corp., the largest bank by assets, plans to start charging its checking customers $5 per month, or $60 annually, if they use their debit cards to make purchases. The fees will go into effect early next year.
September 29
WASHINGTON — President Obama sharply criticized the financial sector Thursday in response to questions about the
During a press conference, Obama walked back somewhat from comments he made to ABC News earlier this week when he said banks do not have an "inherent right" to a certain amount of profit, if they are mistreating their customers.
Asked if the government has a right to dictate how much profit American companies make, however, Obama backed off.
"I absolutely do not think that," the president said. "I was trying to make a broader point, which is that people have been using financial regulation as an excuse to charge consumers more."
Still, Obama maintained that the charge was unfair.
"I mean, basically the argument they've made is, 'Well, you know what? This hidden fee was prohibited, and so we'll find another fee to make up for it'," Obama said, referring to the new cap on debit interchange fees. "Now, they have that right, but it's not a good practice. It's — it's not necessarily fair to consumers."
Across town on Capitol Hill, Treasury Secretary Timothy Geithner faced similar questioning about the president's comments to ABC News from Republican Sen. Richard Shelby.
"The president does not believe that we get to determine how profitable individual financial institutions are," Geithner told Shelby.
"Markets should determine a lot of that, shouldn't they?" Shelby responded.
"They should, of course," Geithner said. "But what we do believe, though, is that you want to have a system of oversight, a system of protection, where consumers have the ability to understand what they're being charged for financial services, what they're being charged for borrowing. Part of what we're trying to do is encourage much more transparency and clarity, so that consumers will be less vulnerable to being taken advantage of."
Testifying before the House Financial Services Committee later in the day, Geithner was asked whether Obama erred in speaking out against the B of A fee. Geithner declined to answer the question, and said he would not address the fee specifically.
House Financial Services Committee Chairman Spencer Bachus said that while he did not support the fee, it was at least clear and fully disclosed.
"I don't understand how there is anything misleading about a $5 charge," Bachus said. "I'm not defending it but I think it's transparent."
During the press conference, Obama kept the pressure on the financial sector, expressing sympathy for protesters on Wall Street and elsewhere.
"I think people are frustrated and, you know, the protesters are giving voice to a more broad-based frustration about how our financial system works," Obama said.
The president then pivoted to a defense of the Dodd-Frank Act as a way to create a healthy financial system where banks compete in more transparent ways. He argued that Republicans fought against the financial reform law, and are now trying to roll back the progress that has been made.
"You've got Republican presidential candidates whose main economic policy proposal is, 'We'll get rid of the financial reforms that are designed to prevent the abuses that got us into this mess in the first place.' That does not make sense to the American people," the president said.
Responding to a follow-up question about the protests, Obama sharpened his critique of the financial sector.
"The American people understand that not everybody's been following the rules; that Wall Street is an example of that; that folks who are working hard every single day, getting up, going to the job, loyal to their companies, that that used to be the essence of the American dream," Obama said. "And these days, a lot of folks who are doing the right thing aren't rewarded, and a lot of folks who aren't doing the right thing are rewarded."
"And that's going to express itself politically in 2012 and beyond until people feel like once again we're getting back to some old- fashioned American values in which, you know, if you're a banker, then you are making your money by making prudent loans to businesses and individuals to build plants and equipment and hire workers that are creating goods and products that are building the economy and benefiting everybody."
When he was asked about why there have been so few prosecutions related to the financial crisis, Obama said that "the president can't go around saying, 'Prosecute somebody.'" That responsibility, he noted, falls to the attorney general.
Obama also offered what might be read as a defense for the lack of action by prosecutors.
"On the issue of prosecutions on Wall Street, one of the biggest problems about the collapse of Lehman and the subsequent financial crisis and the whole subprime lending fiasco is that a lot of that stuff wasn't necessarily illegal, it was just immoral or inappropriate or reckless," Obama said. "That's exactly why we needed to pass Dodd-Frank, to prohibit some of these practices."
"You know, the financial sector is very creative, and they are always looking for ways to make money. That's their job. And if there are loopholes and rules that can be bent and arbitrage to be had, they will take advantage of it."
