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Monday, January 17, 2011

JPMorgan: US law 'pushed customers out' of banks

Is the government, in its attempt to limit bank fees for merchants who accept Visa and MasterCard debit cards, inadvertently making basic banking services too expensive for many US consumers?

Here's what JPMorgan boss Jamie Dimon said, re the Durbin amendment (Sen. Dick Durbin, D-Ill. wrote it into last year's bank reform law) in his quarterly conference call last week:  (thanks to Len DeProspo at Janney for the link):

"Part of what happened in Durbin was this... false premise... that retailers pay zero for cash, and zero for checks... The fact is, cash cost retailers... They’ve got to process it, handle it, move it, ensure it; bank it. They need registers... Checks cost... for the same basic reasons...

"This debit [card] thing had enormous benefit for consumers, even for retailers. It was faster." But debit cards, and accounts for people without a lot of deposits, aren't profitable anymore, with the new fee limits, Dimon says.  "The consumer has got to pay," if the merchant doesn't.

So how are the banks going to make consumer banking pay in the future? "We don’t exactly know. We’re going to test a whole bunch of things... We might just charge for checking.You might charge for debit. You might just have higher deposit balances... The general banking customer base may be pushed out of the banking system."

http://articles.philly.com/2011-01-16/business/27031937_1_albert-c-barnes-state-grants-art-museum/2
Posted by Joseph N. DiStefano @ 12:05 PM  Permalink | 7 comments
Comments   
  • 0 like this / 0 don't   •   Posted 12:19 PM, 01/17/2011
    This is unbelievably confusing.
    — CCcomment
  • 0 like this / 0 don't   •   Posted 12:30 PM, 01/17/2011
    No, it's pretty simple. Dazzle them with bull s***, and pick their pockets. Not confusing at all.
    — CiceroSpuriousDeodatus
  • 0 like this / 0 don't   •   Posted 12:48 PM, 01/17/2011
    Another example of government thinking they know best. Why can't all senators and congressman be like Sen. Casey, a do nothing?
    — junethe4th
  • 0 like this / 0 don't   •   Posted 1:02 PM, 01/17/2011
    JP Morgan crying the blues? Please spare me the bull. If the majority of Americans only knew what this bank and others have already done to enslave them they would have buried this bank a long, long time ago.
    — QGee
  • 0 like this / 0 don't   •   Posted 1:22 PM, 01/17/2011
    Yeah, I'm with QGee on this. While big banks deserve their say, I think we should view their arguments with much caution. Remember, their interest is not in protecting the public or preserving the economy, it's to make as much money as possible in the short run.
    — CCcomment
  • 0 like this / 0 don't   •   Posted 3:51 PM, 01/17/2011
    Dimon is correct. These things cost and perhaps they'll just shift those costs to the consumer. But just as people shop for the best price on groceries, gas, etc. smart consumers will shop for the best bank deal. Certainly, Chase will make money by those who don't know better or don't care, but most fees are avoidable, with a bit of homework.
    — phillygwm
  • 0 like this / 0 don't   •   Posted 6:38 PM, 01/18/2011
    Are they saying that the limits on credit card fees means they lose money or are they saying that the profits on credit cards were paying the costs of basic banking services? How about the price of each service paying the cost of that service plus a profit? Credit card cosst were hidden from consumers. They can't hide fees on basic banking services. That's the real problem. How about cutting internal costs to maintain margins? The party is over. You can no longer rip the public off to fund the lavish lifestyle of your executives. Maybe you can offshore your executive management team to places like India. They'll gladly do their jobs for a fraction of the cost. You used to work at Neiman Marcus. Now you work at Walmart. Complain to someone who gives a rat's....never mind.
    — MikeP


7 comments
About Joseph N. DiStefano
Joseph N. DiStefano writes this blog to feed his PhillyDeals column in the Philadelphia Inquirer. Joe has been a member of Bloomberg LP’s New York Finance Team, wrote the book “Comcasted,” taught writing at St. Joseph’s University, and studied economics and history at Penn. Reach Joe at 215-854-5194 and JoeD@phillynews.com
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