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"Price fixing at its worst," JPMorgan Chase (JPM) CEO Jamie Dimon says of debit-card interchange...
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Wednesday, March 30, 2011, 1:36 PM ET"Price fixing at its worst," JPMorgan Chase (JPM) CEO Jamie Dimon says of debit-card interchange fee limits set for later this year. The "middle of the night" change - which could slash the $12B/year in fees that banks get by 84% - "penalizes us for having debit cards." A delay campaign may be bearing fruit as the Fed is behind schedule on the caps.
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Yet many of them currently charge fees as a % of each transactions.
If these rules take effect, they can still charge for the services, just not insanely so.
> obtain the best deal, under the current system.
That is overly simplified and effectively untrue.
Yes, the merchant can move from one bank to another, but all the big banks charge more or less the same, and all the smaller banks, that may offer slightly lower fees, don't have the market share to do much good for the merchant.
You see, the market HAS determined the level of fees, and for the most part, it's highway robbery on what has become a simple commodity service.
Much like phone and cable companies, regulation may guard against "monopolies", but it does nothing to prevent duopolies (or tri-opolies, hex-opolies, etc), where a small number of industry leaders can effectively control prices by mirroring each others' moves -- they each make more by cooperatively raising prices than they would make by individually competing.
Ironically, it's kind of a corporation's union, if you think about it. You /do/ hate unions, right?
Competition is great for consumers -- when it actually exists in a practical way.
That and as far as "middle of the night" escapades, how about when Congress passed CFMA, giving these same too big to fail banks an exemption from any form of regulation on CDS. In broad daylight CFMA should be repealed and CDS regulated as insurance.
Plus all those files that JPM, BAC et al have been refusing to show until they are forced to in court, the records of the mortgages they packaged into MBS, they could use a little exposure to broad daylight too.
Another friend told me their attempt in Arizona was pretty much met with, "we are not issuing any charters at this time, not under any circumstances." This was before the melt down in 2007.
Paypal operates the way it does (i.e. without a bank status) for exactly this reason. More startups are coming, and they are going squarely after these incumbent businesses that refuse to innovate and provide reasonable service. I root for all the startups and innovation, but it takes time, as the old businesses have built moats.
> real advise on what you are signing
Most financial advisers, lawyers, accountants, and of course lenders, realtors, and brokers, ALL gave the "advice" that everyone should take out what we now all realize were stupid loans.
The problem came from the top down, not from the bottom up.
It was as if most doctors suddenly telling their patients to eat a cupful of sugar and a cupful of fat with every meal. If most doctors said it, most people would do it.
Fortunately, we have malpractice laws for the medical industry.
We're still waiting on such laws (and enforcement) for the financial industry.
That's why this Nation is going thru the crappers....
> consequences?
Borrowers are actually the only ones facing ANY consequences.
Your corporate bank buddies got all their bills paid by the government (well, the taxpayers), and got extra large personal bonuses too -- all for fucking up the whole economy. How's THAT for "responsibility"?
Tell you what Joey boy, the people will stop asking for the government to help them get a fair shake, just as soon as the government stops waiting on corporations hand and foot, turning down their beds, fluffing their pillows, and tucking them in at night like the whiny little babies they are.
My guess is that you don't know any startup founders, and are not aware of early stage businesses currently being built. These businesses will utilize technology to innovate and provide good service.
I'm not a fan of the government stepping in, but I've seen too many financially focused startups hit a brick wall when trying to deal with all the regulations these big banks DO support. So, innovate or get out of the way, but don't give me that shit about free market because the US gov (FDIC, FTC, SEC, USPTO etc.) has been blocking innovation to protect these fat, greedy, old businesses that no longer possess a technological advantage (just lobbyists).
Visa and AMEX _just now_ launched a competitor to Paypal. FFS!
Could it be because the Network Built to move the electronic transactions around is owned by the big banks? And maybe just maybe they have monopolistic pricing power that Dimon would prefer to control. Can't blame him for that but a monopoly should also be subject to anti-trust.
So as a consumer who to you trust to give you a square deal?
A regulated monopoly or un-regulated monopoly?
Of course they could just sell the network to the Fed.
Like you said who knows where it will go but somehow I think the SIM idea will gain traction....
I want to see how RIMM does it.
I agree a lot of people who are complaining had a hand in creating the situation, but to pretend it's all the government and irresponsible consumers faults is as ridiculous as claiming it's all the banks fault.
Obviously, that's why you don't want to realize the truth.
Did you know that less than a third of sub-prime mortgages were driven by CRA -- the rest were the banks making crappy loans of their own free will, competing with each other to see who could make the most crappy loans, er, I'm sorry, the most profits. Coincidentally, did you know that every developed nation in the world experienced the exact same housing and financial crisis as the US? And they had no Dodd or Frank to blame.
Yes, the government told some banks to give loans to some people who probably shouldn't have gotten them.
But the government, general failure that it is, never told anyone to dream up disasters waiting to happen like interest-only ARMs, nor to market those disasters to low-income borrowers. Ever look at the sub-prime default rate on 30-year fixed mortgages? It's not as bad as you think. But the default rate on ARMs is astronomical for both prime and subprime loans alike.
Nor did the government ever tell anyone to package up mortgages such that the originating lenders no longer had any incentive to maintain healthy loan portfolios: they were going to sell the hot potatoes off to Wall Street before the ink was dry anyway, so they stopped caring.
The government also never told anyone to leverage those hot potatoes to the hilt, turning a linear problem into an exponential one. Or was their a CDO bill that I missed? Or a CDS ammendment that never made the news? Didn't think so.
> do you really believe the banks got together and agreed to relax
> the guidelines and start writing bad loans
Not in such an organized fashion, but they saw that there was money to be made in sub-prime, especially if they could pass the hot potato. So off they went, and went, and went, and went, and went.....
Yes, the government deserves some blame, as do borrowers -- but Wall Street deserves more.
Thanks for playing, better luck next time.