Posted by
KsReaganite on Monday, November 30, 2009 8:17:28 PM
There is understandable anger at big banks raking in loads of money when the average American is mired in economic uncertainty. The instinctive reaction, perhaps tinged with a liberal dose of vengefulness, is to impose more regulations to keep banks honest. Most of these regulations fall into one of three categories:
- unnecessary, i.e. requiring checking account statements to have square sized grids on the bottom of the last page to display overdraft fees
- counterproductive, i.e., making overdraft privilege very difficult for debit card transactions which will result in two (from bank and merchant) overdraft fees to customers, not to mention the embarrassment
- designed to create more jobs for bureaucrats, i.e., the proposed legislation to create a fourth financial regulatory agency, notwithstanding the three we already pay for
A better solution would have been helping banks police themselves for standards of service and ethical conduct. Why not a White House conference pulling in all the major banking CEOs who can set up an industry-wide authority (like a banker’s Better Business Bureau) which sets standards, grades service, sanctions bad behavior, and publishes all this so that the public can make more informed decisions? Those banks that score well on these measurements could be rewarded with more access to government contracts while those who come up short will have an incentive to do better to compete for the same largesse, without costing an additional cent in public money. Together as partners, rather than as adversaries, can the government and banks be better stewards of the consumers’ shaken confidence.