Monday, October 31, 2011

Free market triumph

Happy All Saints Eve
How do you like your bank fees?  Hidden or clearly stated?

Congress passed a law to “protect consumers” by banning credit card companies and banks from charging merchants a fee for each transaction.

Banks complied, and merchants pocketed the difference, saving the consumer nothing.

Next, Bank of America did the honest thing and announced a flat $5 per month fee for cardholders to make up for the revenue congress took from them.

Result: Consumer is $5 per month poorer and store owners are marginally richer. Thank you Dick Durban and Congress!

Now comes Chase, Citigroup and others saying they will not charge cardholders a fee, giving consumers a clear choice. Unlike government action, the free marketplace gives consumers more choices, as merchants compete for our dollars.

Thanks to the free market, a customer can now choose to do business with a bank that explicitly charges her the fee, or she can go with the bank that hides if from her.

Daily News Corner

18 comments:

LD Jackson said...

Yeah, that's a really clear choice. Like you said, thank you Dick Durbin.

conservativesonfire said...

Free markets work every time. imagine that!

Always On Watch said...

I'll certainly be looking for a bank that doesn't charge fees.

Now, what I'd really like is a bank that pays decent interest rates to savers. And the fed does control these interest rates, which hit those on fixed incomes particularly hard. For the ailing elderly, this will mean that, once the ailing elderly go to the nursing home and end up on Medicaid (as most do), Medicaid will become unsustainable. First, of course, the CNA's will be getting even lower wages. Already, some 80% of those in nursing homes are on Medicaid -- even if they entered the nursing home with a bundle of cash. and were self-pay for however long that money lasted (Medicare does not pay for longterm care).

Typically, the monthly fee for a nursing home is upwards of $16,000 a year.

Think of your own nest egg: how long will it last if the worst happens and you end up in a nursing home? Typically, it is the ailing elderly in nursing home. But now always! Victims of car accidents also show up, and many of those victims are in their youth.

Now, if interest rates for savers were decent, folks who enter in a nursing home could certainly be self-pay for a longer period of time, thus relieving Medicaid and the taxpayers of the burden for longterm care.

Pardon my diverting a bit from the topic of Silverfiddle's post. But the matters are related.

Silverfiddle said...

AOW: No apologies necessary. I share your outrage at what the fed id doing, and they're doing it deliberately.

You, me, savers and people on fixed income are paying a silent tax. Via the Fed's ultra-low interest rates, like rats and termites they are silently eating away at our life savings, our paychecks, our pension checks and our spending power.

It is immoral.

Ducky's here said...

The law caps swipe fees on debit cards. It has nothing to do with credit cards and completely eliminates nothing.


AOW, what is your money doing in CD's.You can put it in stable telecom,utility and REIT stocks that are paying anywhere from 5.5% to 14%.

Ducky's here said...

Silverfiddle, why would you want to raise interest rates and suck liquidity out of the system at a time when spending is low?

The right seems to want things both ways. Have your cake and eat it too? Come on, stop whining.

Silverfiddle said...

See Ducky, this is the road we go down when we build institutions and indulge in the fantasy that they are superior to the free market.

Statist hero Dick Turban sticks his finger in here, and something pops out equally over there. Time wasted, nothing solved.

Your whole question about "want interest rates" is specious and point out the folly of monetarism. A group of educated idiots foolish enough to believe they can drive the market end up driving it into the ground.

Prices, interest rates, runs and slow sales are all market signals that the hubristic men behind the curtain have snuffed.

I see you've bought into the system, lock stock and barrel.

As long as you've got your fancy investment instruments that do good when the rich oligarchs screw the rest of us, right?

Ducky's here said...

Yes, Silverfiddle, I have admitted that I'm sufficiently perverse to want the Randoids to realize they ain't going to be the winners. And they will learn it the hard way every time, unfortunately.

There is no indication they want to form any political movement that is going to confront corporatism. I can't have sympathy for folks who talk seriously about Herman Cain or Rick Perry... or Barrack Obummer for that matter.

bunkerville said...

And of course, we know what awaits us after the election. Inflation, which is the cruelest tax of all.

Z said...

I'll take mine clearly stated, thanks. I haven't heard anything from my bank, so maybe something's being hidden!?

Always On Watch said...

Duck,
I got badly burned in a telecommunications investment on the stock market. The company went belly up! The investment was rated as "extremely safe" when I made that investment.

BTW, I'm speaking of an investment that I made some years ago, well before the present economic turmoil.

I don't put all my eggs in one basket, BTW.

Scott said...

"You picks your chooses and you pays the price."...I don't know where I heard that but it fits...Goes for a student loan as well as banking fees.

Finntann said...

It's amazing, debit cards haven't been around all that long and suddenly they are a basic necessity and a right.

It is a service, market dictates price. Either the merchant or the consumer pays. Banks charging too much? Well if you have a better business model have at it.

Wow, bankers don't get nearly the attention muslims do, eh?

Cheers!

Jersey McJones said...

Silver,

You should read this: http://financialedge.investopedia.com/financial-edge/0711/The-Truth-About-Credit-Card-Swipe-Fees.aspx#axzz1cPbiXgdo

When I first moved down to rather sleepy part of Florida, I was looking at different businesses to get into. One of the fist was the card swipe business.

What happened was the first day I was officially living down here, I went out to a local diner for breakfast. I had no cash on me. When it came time to pay the bill, I pulled out my card and guess what? They didn't take it.

I had to run out to an ATM to get the cash to pay the bill.

I asked them why they didn't accept the cards, and they said the fees were basically flat, and they're typical receipts were relatively low.

(Yet another argument for progressive taxation)

Just the same, I decide to look into the card-swipe business... and guess what? It is a regressive, anti-small-business, fee scam.

I declined. I'm not a scumbag.

When the cap was placed last month, merchants were only able to see a few more cents on their transactions. Meanwhile, the banks, who now thanks to conservative scumbags can profiteer from just about every transaction in life, raised their transaction rates for probable twice the profit.

And you guys, you conservatives, who pretend to understand business, cry foul for the fucking banks!

Idiots.

JMJ

Finntann said...

Why Jersey, is the liberal answer to everything 'more government'? You can't afford the one you have.

As I've said before, we owned a small business. We paid a flat fee on debit cards and a percentage on credit. It wasn't excessive and the costs were distributed across our menu. Have the prices risen since then? Undoubtedly.

You think the banks are gouging you? Any idea how much it cost me to pour you a soda or a beer versus what the market rate is? I can tell you this, it's pennies. I sold 7 cents worth of beer for $3.50.

Any idea what a liquor license costs? There are 1410 liquor licenses available in the state of New Mexico where we operated our business. One in Las Cruces went for $600,000, one in Santa Fe went for 450,00. State wide the average was $258,000 and the last one (that I know of) that sold in the town we operated in was over $300,00 back in 2008.

http://www.rld.state.nm.us/agd/pdfs/ipra/recent%20liquor%20license%20purchase%20prices.pdf

Believe me, the credit/debit swipe fees were the least of my worries.

Despite the massive profit margins, overhead is a killer.

Ask yourself, while the bank may be charging $5 a month for you to use your debit card what is it costing them to operate the network and even better what is it costing them in labor hours and program costs to meet all those government regulations you are so fond of?

98ZJUSMC said...

LD Jackson said...
Yeah, that's a really clear choice. Like you said, thank you Dick Durbin.


On behalf on the sane part of Illinois:

We're sorry. If we could get rid of him, we would.

98ZJUSMC said...

Typically, the monthly fee for a nursing home is upwards of $16,000 a year.

Jeez AOW, I had to read that twice. No wonder people get heart attacks. $1300.00 +/month isn't too unreasonable. My SO is an LPN at a managed care facility. There is a lot that goes on behind the scene that the family doesn't see up front. My parents finally put my grandmother in a home after caring for her, at home, for almost 20 years. It opened their eyes.

Anonymous said...

I have bad news for everybody:

Nursing homes that any decent middle-class person might feel comfortable putting their aged relatives into today now cost in the neighborhood of six-thousand to seven-thousand dollars a MONTH.

Round-the-clock in-home health care can cost upwards of four to five-thousand dollars a WEEK.

I know whereof I speak, because I have had vast personal experience coping with the problem.

~ FreeThinke