The Washington Post reports that a new report from the Government Accounting Office (GAO), the investigative arm of the US Congress, says that “late fees for credit card payments have jumped, but card issuers have done a poor job of explaining their policies on fees and penalties to consumers.” The Post reports that the GAO recommends “that the Federal Reserve should revise rules on credit card disclosures to require that they more clearly emphasize penalty fees and rates and what triggers them.”
"Millions of Americans depend on credit cards to pay their bills and buy essentials like groceries or gas. Unfair or confusing credit card practices take advantage of working families," Sen. Carl Levin (D-Michigan), tells the Post. "This report shines a needed spotlight on excessive credit card fees, unfair interest rates and inadequate disclosure practices that ought to be stopped.”
Meanwhile, Bloomberg News reports that in an October 10 letter to the federal Deposit Insurance Corporation (FDIC), Wal-Mart “defended its application to open a bank in Utah for processing credit-card transactions, saying it would ‘pose no unusual risks or problems’ to the financial system.”
Wal-Mart applied for permission to open an industrial bank back in 2005, saying that it would use the bank only to reduce its own credit and debit card transaction fees. It has been opposed by commercial and community banks that have claimed that such permission would presage a broader push into financial services that would undermine the stability of the US financial system.
The FDIC put a hold on all new applications in July 2006, saying it needed more time to evaluate all the evidence and comments it has received.
"Millions of Americans depend on credit cards to pay their bills and buy essentials like groceries or gas. Unfair or confusing credit card practices take advantage of working families," Sen. Carl Levin (D-Michigan), tells the Post. "This report shines a needed spotlight on excessive credit card fees, unfair interest rates and inadequate disclosure practices that ought to be stopped.”
Meanwhile, Bloomberg News reports that in an October 10 letter to the federal Deposit Insurance Corporation (FDIC), Wal-Mart “defended its application to open a bank in Utah for processing credit-card transactions, saying it would ‘pose no unusual risks or problems’ to the financial system.”
Wal-Mart applied for permission to open an industrial bank back in 2005, saying that it would use the bank only to reduce its own credit and debit card transaction fees. It has been opposed by commercial and community banks that have claimed that such permission would presage a broader push into financial services that would undermine the stability of the US financial system.
The FDIC put a hold on all new applications in July 2006, saying it needed more time to evaluate all the evidence and comments it has received.
- KC's View:
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Damn right Wal-Mart’s owning a bank would undermine the current status quo – because the retailer would eventually challenge other banks and financial services companies with products and services that consumers would find compelling and affordable. That won’t hurt the US financial system…and we find it laughable that anyone would argue that Wal-Mart would want to damage the very system that has rewarded it so handsomely.
We’ve said it before and we’ll say it again. Banks deserve no more protection that supermarkets or discount stores have received; let them compete the same way everyone else has had to. Their fear of competition is the best reason in the world to grant Wal-Mart permission to have a bank. And the GAO report suggests as yet additional evidence that the system needs better and broader competition, the kind that Wal-Mart inevitably would provide.
