Beating Back the New Gilded Age
Advocates Call on Biden to Rein-in Big Banks, Stop Monopolies
Consumer advocates and those of use who support democracy over oligarchy are expressing some optimism that the Biden Administration is showing shades of FDR in early policy pronouncements on banking, monopolies, and other issues.
Here’s a bit of a roundup on what’s happening and what to watch:
Anyone paying attention to the behavior of groups like Wells Fargo and JPMorgan Chase knows that the big banks are going with gusto — taking every opportunity to extract dollars from consumers while building the dominoes that may soon cause another catastrophe. And, why not? After all, the banks were bailed out, executives saw bonuses, and profits are soaring.
There were over 10,000 more commercial banks in the U.S. in 1984 than at the end of 2020, a loss driven predominantly by acquisitions. During that same period, the Justice Department has not challenged a single bank merger, and the Federal Reserve approved ninety-five percent of merger applications in 2018, setting a new record. Now, experts predict there will be a new wave of bank mergers and acquisitions as the economy recovers from the COVID-19 pandemic.
MORE on how to rein-in the banking industry>
The action or potential action on banking comes even as mainstream banks are pushing into the predatory lending business:
Kendall Bank in Kansas City, Missouri is promoting a loan product through a lender called “Helix.” The Helix website explains:
Loan amounts range from $200 to $4,000 with a repayment term up to 24 months. Annual Percentage Rates range from 36% to 499%.
Umm, that’s a pretty expensive bank loan. In fact, if your short-term borrowing “needs” mean you need a 499% interest rate loan, you are quite likely to have additional borrowing needs in the near future.
That the loans are offered through a mainstream bank raises questions about a possible “rent-a-bank” scheme. In any case, it’s a bad product that will have a negative impact on consumers already facing difficult financial situations.
MORE on predatory payday lenders>
On the plus side, Congress took action to overturn a Trump-era rule protecting payday predators - the measure was supported and signed by President Biden:
“Americans deserve consumer protections that work for them — not for special interests and predatory payday lenders. Today’s action to strike down the Trump ‘Rent-A-Bank’ rule will help prevent predatory lenders from ripping off consumers and charging loan-shark rates under deceptive terms. I vowed to use every tool at our disposal to reverse the damage done by the Trump Administration in instating this rule. Today, we’ve delivered on that promise,” said Senator Van Hollen, a member of the U.S. Senate Committee on Banking, Housing, and Urban Affairs..
Photo by Katherine Hanlon on Unsplash