Slideshow 'Banks Are a Fed-Protected Monopoly': Comments of the Week

  • May 01 2015, 2:19pm EDT

American Banker readers share their views on the most pressing banking topics of the week. Comments are excerpted from reader response sections of articles and from our social media platforms.

Image: Fotolia

On whether other industries could deliver the frustrating customer experiences common at banks and still remain in business:

"A: No. Banks are Fed-protected monopoly." (via Twitter)

Related Article: Could Any Other Business Do This and Survive?

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On why banks make it so complicated to transfer money transfers and payments:

"The very reason banks end up with dumb … procedures like this is a direct result of fed[eral] regulators." (via Twitter)

Related Article: Could Any Other Business Do This and Survive?

On whether regulators are sincere in their public statements urging banks to avoid excessive derisking:

"The regulators are playing a disingenuous game here. In public, they're making all the right comments, stating the banks are overreacting, etc. But inside the banks, those same regulators are playing Monday morning quarterback on any and all accounts that, by the personal opinion of the examiner, have the slightest bit of risk to them and require banks to jump through ever increasing hoops to show they've done enough diligence. And even if a bank complies with those requirements, the same examiner can still come back and blame them for not taking additional action later on. It's no wonder banks continue to derisk."

Related Article: Who's to Blame for the Derisking Debacle? Weekly Wrap

On whether the lack of bank presence in Baltimore's low-income neighborhoods may have indirectly contributed to recent upheaval in the city:

"Neighborhood bank leadership is critical to community health." (via Twitter)

Related Article: Baltimore Unrest Highlights Dearth of Banks in Hardest-Hit Areas

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On other factors behind the riots in Baltimore:

"Lack of banks and other businesses in that area are not the cause, but the results of the environment and local economy they've created and perpetuate."

Related Article: Baltimore Unrest Highlights Dearth of Banks in Hardest-Hit Areas

On the news that the CFPB is fining Regions $7.5 million for allegedly charging illegal overdraft fees:

"A self-reported issue garnishes a $7.5M fine? Maybe it could have been worse, but I don't think the CFPB's actions exactly encourage self-reporting. It seems somewhat questionable to me that Regions is made an example when it has already corrected the problem, refunded the charges, and self-reported to the regulator. Is there more to the story, or have regulator fines against banks just lost all sense of reasonableness?"

Related Article: CFPB Makes an Example Out of Regions on Overdraft

On criticisms of Sen. Elizabeth Warren's calls to break up the big banks:

"It would be really wonderful if the bankers of the world looked upon any 'financial system' reforms in terms of what they would [do] for stability in the national economy rather than what it would do TO the bankers. The rest of the world lives in their national economies."

Image: photo of Warren, we have on file via Bloomberg

Related Article: Warren's Wall Street Reforms Would Just Make Banks Riskier

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On a comparison between Sen. Warren's proposal to break up the banks and the AT&T breakup of the 1980s:

"You're right, after AT&T was broken up into smaller companies, the ground was sown with salt and nothing grew afterwards, there was no innovation, etc. If only AT&T hadn't been broken up, just think of the health of the telecommunications sector today."

Related Article: Warren's Wall Street Reforms Would Just Make Banks Riskier

On an alternative way to look at lessons from the AT&T breakup:

"AT&T was broken up because it had been allowed, by government protection as a utility, to expand and stifle innovation. Once it was no longer given utility protection and had to compete, customers wonderfully benefited. Senator Warren would like to turn banks into uncompetitive utilities. Customers will suffer, just as communications customers suffered until the utility model was thrown off."

Related Article: Warren's Wall Street Reforms Would Just Make Banks Riskier

On Capital One's newly cautious attitude toward taxi-medallion lending:

"For years, the market values of taxi medallions have far exceeded their intrinsic value. Not unlike diamonds, the prices of taxi medallions have been inflated by scarcity, the belief that the supply is and will remain limited. With the rise of ride-sharing the medallion no longer confers an exclusive license to transport, and it has focused attention on the true value of a medallion. Compared to the potential earnings from operating a taxi, medallions are still overvalued."

Related Article: Why Capital One Is Undermining Its Own Taxi-Lending Business

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On reports that Google's decision to give search-engine preference to mobile-optimized websites has sent community banks scrambling to catch up:

"Mobile-optimized websites should be the norm not the exception. Bank websites have a way to go." (via Twitter)

Related Article: Bank Websites Face 'Mobilegeddon' as Google Tweaks Formula

On one potential end to the standoff between regulators and community bankers over compliance burdens:

"A short review of history will remind us that when there were no buffalo, neither were there buffalo hunters. If sufficient consolidation takes place and the number of bank charters continues to decrease, there will be fewer jobs for examiners and public calls to consolidate regulatory agencies."

Related Article: Dubious Regulators Need to See Compliance Burden for Themselves

On a proposal to allow "real-time supervision" of bank transactions:

"This seems to go against the regulators' ongoing [customer information program] objectives to have banks limit the access to this type of data to the minimum number of people possible. It would also create a backlash from customers who would be concerned about their financial privacy. … A system that would allow for 'real-time' compliance checks could easily be abused by any agency, contractor, or individual with access to it. A possible solution would be a system where the data is 'anonymized' at the source server before being seen by regulators. Then if they see a pattern of illegal activity, they can do a more thorough on-site exam and/or get court orders or subpoenas for the information. Faster regulatory compliance must be balanced against maintaining financial privacy rights."

Related Article: Uniform Recordkeeping Can Nip Banks' Misdeeds in the Bud