Unintended but Predictable Consequences

Obama and the Democrats are shocked and furious that Bank of America wants to charge customers a monthly fee for using a debit card, now that the Dodd-Frank financial services legislation reduced the fees retailers pay to banks for debit cards.

So now bank customers can pay for debit card usage directly when retailers did before. While retailers in principle should lower prices to reflect lower costs, that may not happen.

This is a terrible deal for consumers, all due to the predictable consequences of Dodd-Frank.

Was increasing consumer costs so Wal-Mart could have lower costs the change voters had in mind when they voted for Obama? No, but it is what they've gotten.

Regulators, Our Saviors

The Securities and Exchange Commission (SEC) is responsible for regulating the securities industry, including monitoring and enforcing the laws and regulations on insider trading.

So it is disturbing to learn that the SEC does not practice what it preaches.

In response to a recent insider trading scandal by two of its employees, the SEC has initiated new procedures that investment banking firms had long ago implemented to reduce the risk of insider trading.

Specifically, in response to this scandal, the SEC will prohibit its employees from trading in the stocks of companies under its investigation and will require employees to have copies of their brokerage accounts sent to the SEC.

For those who put their faith in greater power for regulators, this is one of many cautionary and disturbing tales.

Transparency Indeed

For weeks, there has been a drum beat complaining about the lack of transparency in implementing the financial bailout. These complaints have insinuated that banks are using TARP money for "inappropriate" purposes, such as making acquisitions or paying bonuses, rather than "appropriate uses" such as lending.

As one of my previous columns makes clear, this is a completely incorrect reading of the economics of the situation. But the Wall Street Journal highlights what is the genuine problem with a lack of transparency in the financial bailout: Congressmen and other politicians are pressuring regulators to direct bailout money to certain banks.

How about that. What a shock that where there is a pot of money, Congress will get their hands in the middle of it. This type of political pressure will only raise the cost of the bailout, as banks that otherwise wouldn't get funds do so.

Sounds like extensive hearings and media pressure should be brought to bear on these shenanigans. But since Barney Frank is one of those who have applied pressure to help a favored bank, don't count on hearings any time soon.