Wednesday, October 5, 2011
Not the Function of the Consumer Financial Protection Bureau
A CNBC news article on October 4, 2011 reported that in response to Bank of America announcing a five dollar per month fee on debit cards, the President said the following:
“This is exactly why we need this Consumer Finance Protection Bureau that we set up that is ready to go," Obama said. "This is exactly why we need somebody who's sole job it is to prevent this kind of stuff from happening. ... You can stop it because if you say to the banks, ‘You don't have some inherent right just to – you know, get a certain amount of profit. If your customers – are being mistreated. That you have to treat them fairly and transparently.”
In previous posts I have supported the need for a consumer protection agency. However, now the President has it exactly wrong. What the President enunciated should never be the purpose of the Consumer Financial Protection Bureau (CFPB). The CFPB should not micromanage bank fees. The CFPB should only make sure that all fees are clearly stated and customers should be able to know in advance what the fees will be. The five dollar per month fee on debit cards was stated extremely clearly by Bank of America – there was no attempt to fool or defraud customers. Customers are free to take their banking business elsewhere, and perhaps free market competition will lead Bank of America to rescind the fee – or perhaps not. This is not the concern of the government.
The federal government should not be micromanaging businesses, only making sure that the rules of the road are clear to all. Unfortunately, in this instance President Obama appears to be attempting to live up to the images of him that the Republicans paint.