Banking Economics and The Federal Government (It's Called Capitalism, People!)

If your bank has started charging you fees, don't be angry at your bank. They are just responding to the federal government legislating how they are allowed to make money. A bank is like any other business: it has to be profitable to STAY in business. A bank has to buy supplies; they have to make payroll; they have to pay the light bill; and they have to pay taxes. Interest rates are low, which is great if you want to borrow, but it cuts into a bank's profit margin.

Now I know there have been some dirty dog institutions out there, but why is a bank being profitable wrong? Would you buy stock in a department store chain, or manufacturer, or any other business if it weren't successful?? I am not against all the new legislation, because there have been abuses. But if you write a bad check, why shouldn't you pay a fee?? Especially if the bank floats the funds to cover you. We all make mistakes, but some folks abuse the privilege.

You can look for more fees to come. The Durbin Interchange Amendment (proposed legislation) will slice at the profitability of check card income. Merchants pay fees so they can accept Visa, Mastercard, etc. A portion of that income goes to the bank that issued the card. You get the safety and convenience of a cashless card, and the merchant is able to service more customers. This proposed law will limit what banks are allowed to earn. Now, if merchants have to pay less to accept your card, do you think WalMart or Home Depot or the gas station will pass that savings onto you?? I DON'T THINK SO. Your free check card may be a thing of the past.

The current administration has already excluded private lenders from subsidized student loans. (This nugget was attached to the Obama healthcare bill.) This sounds great--as a student--until you realize how many jobs were lost in the private sector. And how student loan rates will rise from 3.4 to 6.8 in 2012. And how much more of our lives "Uncle Fed" now controls. Our government continues to encroach on our lives. It is now a bloated, bankrupt system. There is no such thing as too big to fail.