Wildhawk

Banks Don't Intentionally Overcharge Credit Card Customers… Or Do They?

Finally a breath of much-needed pragmatic realism in Seeking Alpha commentary! Mark, thank you for posting this entertaining commentary on your personal situation (your wife sounds like a pretty sharp lady, by the way).

What drives me nuts about so much of the commentary on both this site and the broader media is that government is automatically assumed to be incompetent and the free market (such as it is, which it ISN'T in American banking) is automatically assumed to be supremely omniscient in finding the perfect solution to everyone's problems.

What most commentators fail to realize, and which you've alluded to here, is that large banks in the US do not operate as part of a free market- they are oligopolies, which are antithetical to free market capitalism. They receive innumerable competitive advantages (e.g. the near-free borrowing from the Fed window; government guarantees of their debt, etc.) that bank alternatives like money market funds and peer-to-peer lending (e.g. Prosper) institutions do not have. In addition to the transparent advantages, they also clearly have the less transparent advantage of enormous influence in Washington, which has shown a propensity to do whatever big banks ask them to do, regardless of consequences. This, my friends, is not a free market, but crony capitalism where the oligopoly has all the advantage over the consumer. This is a classic situation where government MUST step in to break up the oligopoly and restore balance to the relationship between banks and consumers where none currently exists. It's precisely why anti-trust and consumer protection laws were enacted.