Bank CEO thinks journalist salaries are 'outrageous'

Here is the thing. I predict that as a result of Dodd-Frank -- unless it gets overturned, which is a distinct possibility due to the necessity (not because of Democratic / Republic bickering), since the effects are now being seen -- you will see the large, full-service banks mostly abandoning branch banking. Or, if they can get past the PR problem they got smacked with as a result of their reaction to Dodd-Frank, you will see companies like Bank of America, for example, offering only accounts that are loaded with up front fees. No more free checking. Truthfully, though, the PR headache of making people see why that is necessary doesn't seem to be worth it to them, which is why they are treading gingerly and seem to be heading away from emphasizing that business, and seem to be making plans to abandon it. It just isn't worth their effort, when they are hampered by all kinds of outside influences in their ability to make the business profitable.

The true test of whether what you deem acceptable revenue sources can make a viable business under all of those regulations, will be if they don't abandon whole neighborhoods, or if others step in to fill what will be an obvious void as branches disappear from lower class and middle class neighborhoods.

I don't see that happening, because with an environment in which lending has slowed down to a crawl, and regulations that take away possible revenue sources that could possibly make it a viable business, the business looks like a dog -- at least from what I am seeing from companies like BoA and Chase.

Which leadsus back to the lesson about what happens when populist rhetoric about "screwing us over" leads to populist-driven regulations (Dodd-Frank), which get enacted without foresight for their consequences and then have the effect of hampering businesses ability to operate profitably within a segment (in this case, branch banking).

Chase, at least has stated publicly, that it isn't worth being involved in branch banking under those regulations. BofA can't figure out a way to make it work.

So congrats. They're not screwing people over anymore, using your measure. They just don't want to be in the business. I'll wait to see if anyone else fills that void, given the restraints on operating. That would prove what I am sayingw rong. I'm dubious. Which is why I ultimately think Dodd Frank will be repealed--by necessity, not because of political wrangling.

 

Dixie,

Dodd Frank applies to community banks, as well as large banks, and in some ways it hits them harder. In particular, the Durbin Amendment is hitting community banks, even though paradoxically the amendment tried to exclude them.

It put arbitrary government-created price limits on the electronic interchange fees--the money banks charge merchants every time someone swipes a debit card or credit card to make a purchase.

The amendment exempts community banks from the fee limit (which is 7 cents per swipe, and technically covers the cost to banks, but then leaves the banks on the hook for costs incurred as a result of fraud -- when they have to freeze accounts and reissue cards, they are not allowed to charge for it and they can't add those costs, which are significant, into the swipe fees anymore).

The problem with trying to exempt community banks from that forced price ceiling is that they compete with the larger banks. So now they are in the position of either meeting the artificially low price-fixed fee imposed by the government or losing their ability to market debit and credit cards. If their price per swipe is higher than the rest of the market (and it has to be for them to profit), merchants don't want to deal with them.

In a recent survey by the Independent Community Bankers Association, 93 percent of community banks said they are facing being forced to charge customers for debit card and checking services that had previously been free.

That is due to the government interference, and it is just beginning to play its way out, because Dodd Frank is still being put into place.

 

Here is a letter the Independent Community Bankers Association wrote to Congress.

It is a PDF, so you may or may not want to open it: Independent Community Bankers Association: http://www.icba.org/files/ICBASites/PDFs/ltr121911.pdf

It reads:

Here is the WSJ article he references. It's worth reading rather than skipping. It's a good lesson on the consequences (which they call "unintended," but were easily predicted and WERE predicted by people) of government price fixing and interference in private transactions.
And it demonstrates how it has started a chain reaction that means higher prices for consumers.

http://online.wSportsJournalists.com/article/SB10001424052970204319004577084613307585768.html

 

More than half of that $42 million was from options on grants that were made in previous years, so it was really compensation from past years that he took in 2010.

His total compensation in 2010 was actually $20.8 million.

Again, a great salary, if you can get it.

For what it is worth, JP Morgan profited $17.4 billion in 2010. It made it the fifth most profitable company in the world.