In their current email newsletter, Zions Bank had an article complaining about the new regulations that would come with Obama's Consumer Financial Protection Agency. And asked for comments.
Below was my reply.
Hey Guys at Zions Bank,
Yes, the banking industry is subject to a lot of regulations. Yet despite the 6,000 pages of regulations, the banking industry managed to spectacularly shoot itself in both feet, which by itself wouldn’t be important, except that it threatened to take the whole economy down with it. To prevent that from happening, there was a stimulus package (which I support), and that stimulus package cost money, taxpayer’s money, meaning my money. My money was used to keep the banking industry afloat. I figure in a round about way that gives me a say in what needs to be done.
Like a teenager who, while drinking, crashed the family car and now the family (read:the parents) must buy a new car, the parents will also set rules to help prevent the new car from being totaled again.
So too must there be new rules to prevent the banking industry from crashing the economy. Because apparently the banking industry's legion of MBAs,PH.D.s and CPAs were unable to see that Neg-Am loans for all and selling loans as quickly as they are originated were horrible ideas. So, with regret, the people, by way of the government are going to have to do that for you. So yes, we will be dictating what products you can sell and you are going to deal with that because you have proven that you can't do it yourself, and hey there is still plenty of profit to be had in the banking industry.
Zion Direct and organizations like Prosper.com, Lending Club proves that there is plenty of room for innovation in the banking industry.
The Consumer Financial Protection Agency use the same principle that banks like to promote. Consolidation. It’s a one stop shop.
No more confusing crossing jurisdictions, no more questions as to whether a financial instrument is regulated by Agency A or Agency B or somehow slipped through the cracks and so caused havoc (like the imfamous Credit Default Swaps that brought down AIG and cost me yet more money). Now it’s all simple, there’s one agency that covers credit cards, banking products and other financial instruments, so bankers, hedge funds, investment companies and others will find it harder to do something stupid.
Now if Zion bank didn’t offer any of ‘those’ toxic mortgages, then I don't see what there is to worry about. Unfortunately, I don’t think it’s wise to put together laws that say everyone but Zion Bank is to be regulated in this way. Good laws don’t work that way, they establish a standard that applies equally to everyone.
So yes, you’re going to be regulated more, and I suggest you find a way to like it. Because I spent a bunch of hard earned money cleaning up the banking industry's mess, and I’ll be dammed, if it’s going to happen the same way again.