The centrality of the United States in the world financial system allows it to use that power to cut countries and people off from basic financial services. The United States has long used this power to cut off rogue states, but Trump is abusing this power and the power of the US domestic market, which could lead to a rebellion and weaken America’s power to use these tools when it more needs it.
Trump ran on China being a major threat, but his aggressive actions toward non-China countries, has strengthened China’s relationships with these countries and made China stronger compared to the US.
Trump throws around power to try to get short term gains, not realizing that long term no one trusts him or the US and this ultimately weakens US power.
“This no-risk approach is also undermining America’s ability to combat money laundering and illicit finance. Last year, American financial institutions collected about 4.7 million Suspicious Activity Reports and more than 20 million currency transaction reports, the MIT Technology Review noted. This imposes considerable costs on the private sector and creates a framework where law enforcement agents are flooded with low-value information, and as a result, cannot focus on the big issues.”
“The Senate voted 52-48..to overturn a Consumer Financial Protection Bureau rule capping the overdraft fees that banks can charge, in another blow to the beleaguered agency.
The resolution under the Congressional Review Act now heads to the House, where the Financial Services Committee approved a companion bill on a 30-19 vote earlier this month. CRAs both invalidate regulations and preclude future administrations from introducing “substantially similar” proposals.”
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“The Biden administration finalized the overdraft rule — part of its campaign against so-called junk fees — in December, to the chagrin of Republicans who had asked financial regulators to pause rulemaking after the election until the new administration was sworn in. Banks, which say the rule would limit their ability to offer overdraft coverage, fiercely opposed the regulation and sued to stop it hours after it was finalized.”
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“Under the rule crafted by former CFPB Director Rohit Chopra, banks and credit unions with more than $10 billion in assets would have three options when a consumer overdraws their account: charging $5; charging a fee that covers no more than costs or losses; or disclosing the terms of a profit-generating overdraft loan as they would with other loans.
Sen. Josh Hawley (R-Mo.), the lone Republican to vote against overturning the rule, said the regulation would “save the average working class household something like $265 a year.”
“I do not want to give big banks the ability to charge people outrageous sums of money,” Hawley said. “Under this… they can charge whatever their expenses are on an overdraft, and if that’s more than $5 per overdraft, they’re allowed to charge that, but they’re not allowed to charge anything more.”
Banks currently charge an average fee of $35 to extend overdraft services. The CFPB estimated the rule would save consumers $5 billion in fees per year.”
“Large banks will have to cap overdraft fees charged when customers try to withdraw more money than is available in their accounts, the CFPB announced Thursday. Under the new rule, which has been in development since early this year, banks will be allowed to charge no more than $5 for overdraft fees, or will have to set fees to ensure they are only covering costs and not earning a profit from them.
There are currently no limits on those fees, and the average overdraft fee is about $35, according to the CFPB. The bureau estimates that the new rule will save consumers about $5 billion annually.
But there will certainly be some unintended consequences to the change, as there are any time a price control—which is, broadly speaking, what this rule amounts to—is mandated. Rather than charging overdraft fees to cover an excessive withdrawal, banks may revert to the older practice of simply declining those transactions.
As Jon Berlau, a senior fellow at the Competitive Enterprise Institute, explained to the CFPB in 2022, the introduction of overdraft fees was originally a consumer-friendly development that was initially offered only to bank’s wealthier clients but eventually became commonplace.
Indeed, many banking customers would likely prefer paying a nominal fee versus the frustration of not being able to pay for some vital purchase. That choice might soon be taken away.”
“The Consumer Financial Protection Bureau (CFPB), calling the prices of bank overdraft protection “junk fees,” now proposes to interfere with these prices.
We’ve been down this road before. Last year, the CFPB proposed capping credit card late fees at $8 as part of President Joe Biden’s populist appeal to consumers who dislike this cost, which is obviously everyone. The problem, as I and many others explained at the time, is that late fees encourage timely payment, and their practical elimination leaves lenders unable to offset the risk of working with people who have lower credit.
The result will be fewer lines of credit available to those who need credit the most. But that’s a difficult outcome for most to see compared to the tangible benefit of lowering fees. Even consumers denied credit won’t know what or who to blame, so it’s no surprise that CFPB is expected to finalize the late fee rule any day now.
The next CFPB price control scheme would cap overdraft fees at levels as low as $3 per overdraft transaction. Commenting on this rule, Biden sounded perfectly populist: “For too long, some banks have charged exorbitant overdraft fees—sometimes $30 or more—that often hit the most vulnerable Americans the hardest, all while banks pad their bottom lines.” He added, “Banks call it a service—I call it exploitation.”
I get it. I remember the annoyance I felt when I was charged such fees. However, I reminded myself that it was the price to pay for not having one of my checks bounce or a debit card payment declined. It’s fair to wonder whether most of the people proposing these rules have ever had a checking account balance low enough to need the overdraft cushion.
In fact, overdraft protection is an optional, opt-in service that allows consumers to spend money they don’t have at the bank’s expense. Purchases are approved that would otherwise be declined for lack of funds. For low-income consumers, this service is sometimes vital. And indeed, consumers report by wide margins that they are glad it exists even though it naturally comes at a cost.
Thankfully for all of us, CFPB bureaucrats agree that banks should charge a fee. Unfortunately, they think they know best what these fees should be.”
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“Banks might go even further. Given the slim profit margins they earn on small bank accounts, it’s possible that the loss of overdraft protection revenue results in some simply abandoning the very customers—the least well off—whom interventionists claim to be protecting.”
“JPMorgan Chase bought most of the assets of First Republic Bank in a deal announced early Monday, just after the federal government seized control of the troubled regional bank.
First Republic is the second-largest bank failure in US history, following Washington Mutual which collapsed in 2008 and was also acquired by JPMorgan. It comes after the failure of Silicon Valley Bank (SVB) and Signature Bank in March, which were the third and fourth largest US banks to fail, respectively.
Like Signature Bank and Silicon Valley Bank before it, First Republic saw a mass exodus of depositors to larger institutions, who feared that the bank would not have the capital to cover huge unrealized losses on its books due to rising interest rates. If it’s a signal of a larger banking crisis, it seems to be one that’s unfolding slowly, but it’s certainly possible that more banks could fail.”
“whether SVB’s situation would have been different had these regulations remained in place is highly questionable. “You knew just by looking at this bank that it was growing at exceptionally rapid rate, which should have been a red flag to look at,” Thomas Hoenig with the Mercatus Center at George Mason University told Marketplace. “So I don’t blame it on so much on the rollback of Dodd-Frank. I blame it on the fact that the bank management didn’t understand the fact that interest rates change and they need to be managing their portfolio accordingly.”
Besides, even without the stricter rules, bank regulators still could have acted but did not. So, the idea that new regulations are needed to stop the next midsize bank collapse is suspect, to say the least.”
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“”It appears that the leading causes of the failure of Silicon Valley Bank were managers who maintained a woefully under-diversified asset sheet, and a small group of investors who sparked a panic that led depositors to withdraw money at a rate that would be unsustainable for any bank,” said Sen. Chris Coons (D–Del.) in a statement. “SVB was subject to federal and state supervision, and it’s not clear what additional regulatory requirements might have yielded a different outcome.””