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I wonder why people think regulations don't cost them?
Scratch pad
Feb 17, 2010 9:15 AM — Scott Jagow
The banks are busy calculating how much financial regulation will cost them — I mean, you. Today, JP Morgan came out with a 184-page report that claims proposed changes to regulation will lead to a 33% increase in the price of all banking services.
The report says return on equity (ROE) for global banks would fall from 13.3% to 5.4% if all the US and European regulation proposals become law. More from the Financial Times:
Do banks need a 13.3% return on equity for shareholders? Is that some kind of magic number? Well, no — but I’m assuming that figure comes from looking back at ROE during the banks’ healthier days. See bank ROE for this decade by quarter. Between 2000 and 2007, ROE consistently ranged between 12-15%. Since late 2007, commercial bank ROEs have ranged from -9% at the depth of the financial crisis to about 7%.The issue then is the extent to which banks can pass on the `cost’ of the regulatory hit to their customers. By JPM’s estimates, pricing on financial products would have to go up by 33 per cent for the bank sector ROE to get back to 13.3 per cent.
I’m sure the banks would like to get back to the good ole’ days. We’ll have more on ROE tonight on Marketplace.
If the ROE doesn’t scare Congress, JP Morgan hopes this will:
“The ulative impact of all the proposed regulation suggests that there is a real risk that we may move from a system that was under regulated to one that is over regulated and that could cause a significant increase in lending costs and a negative impact on the economy.”
In other words: Stop what you’re doing at once. You will destroy the global economy. Hey, we should know. We have a particular talent in doing just that.
But on one of the 184 pages of this report, JP Morgan says no more Too Big To Fail:
Sounds like a call for regulation to me.“We believe big banks should be allowed to fail. We think stability in the financial system should be addressed by ensuring deposit insurance systems are stable and well funded, and by tackling directly the risks presented by the interconnectivity and potential contagion of the modern global banking system.”
I wonder why people think regulations don't cost them?
For about the same reason that people like you don't realize you are paying for healthcare for the uninsured right now.
I wonder why people think deregulation doesn't cost them.
I wonder why people think Wall St deregulation, Banskters' Great Depression, predatory lenders, payday lenders, credit card issuers/rapists, etc, etc don't cost them?
The financial sector is extorting the country in the face of proposed regulation is ing criminal.
don't with Rockefeller
So they had a better ROE figure than friggin Wal*Mart in 2007 and that's not good enough?
*sigh*
I wonder why people stupidly deal with banks when credit unions offer far superior rates and fee structures.
(...belongs to a credit union)
+100
These scare tactics by the big banks and investment companies make me see red. How dare they suggest that the deregulation they exploited to the tune of gazillions of dollars in their own pockets didn't cost the American taxpayer and the American investor and the European investor and the Asian investor and all the other investors globally more than they have ever lost before, or could lose in the face of re-regulation. Crap!
And for Americans who take the knee jerk reaction that says " don't people know that regulations cost them money?"...have you forgotten how much the failure of deregulation cost all of us since 2007? I'll tell you how much it cost me...it cost me over 30% of my investment portfolio. So don't try to tell me that regulations are gonna cost me money. They cannot POSSIBLY cost more money than I have already lost at the altar of financial deregulation.
I will not live long enough to recoup my losses. But having said that, I'm not really hurting, because I was lucky enough to start from a point that I could sustain some losses. The people who have taken it on the chin are those who lost all, or virtually all, of their investments, watched the banks be bailed out by a Republican president and Republican Treasury Secretary, then watched them return to profitability within a year by borrowing money at zero interest from taxpayers and refusing to lend it out to small businesses and homeowners because they could get more 'profit' by putting it in virtually guaranteed returns and then give themselves monstrous bonuses in the ultimate ' You' gesture to everybody else in America.
Now, these same assholes have the unitigated gall to claim that they are going to be 'victimized' by oversight. If they were so worried about their investors as they now claim to be, they would never have over-leveraged themselves by a factor of 40 to one in order to develop and buy into derivatives of crap-based debt assets that they didn't understand and didn't care that they didn't understand.
These people are indefensible!
Thank you, random guy.
Brazen, isn't it?
It just might work.
I'm afraid you're right. We seem to have most gutless wonders in the world representing us in the U.S. congress, and now, thanks to the SCOTUS, the banks can spend themselves into oblivion paying for ads against whoever in Congress doesn't carry their water on this issue. What's more, they will expense all those advertising dollars and cry that they have no profits because of the 'cost' of regulation!!!
Maybe Marcus has been right all along.
Attention Attention
This just in.
The consumer will pay for the populist class war regulation and taxes.
more lies told by the banks to scare us away. Like has been mentioned, banks already cost us money. they've stolen 99 cents out of every dollar since the inception of the federal reserve.
How can you possible derive that from my statements?
It's your own prejudice and closed mind making you believe that.
It depends on the type of regulations. Generally regulations cost consumers more. In this case, it's a cost that will be passed on to the consumers.
Good question. Never been happy with a bank, but I do like my Credit Union.
This.
I think if the banks jack their rates to try to re-attain bubble rates of return, they'll fail in even greater numbers. Higher rates of return ALWAYS carry higher risks, whether it's the popping of the bubble du jour or the mass exodus of your customer base.
Yes it's meant to scare us away, but no, it is absolutely not a lie. Any costs will be passed along.
You know what? If everyone pulled their money out of the big banks that behaved recklessly for their own greed -- that is Wells Fargo, Citibank, Bank of America, etc -- all at once, THAT would send a powerful message.
I bank with a local community bank that didn't make any high risk housing loans and provides a lot of loans to support small business owners in my community. They don't charge me any fees and they provide whatever the going rate for interest is. It's time we as consumers dump the big bank assholes once and for all.
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