Banking Changes Continue In Washington DC

Although many people were concerned about how well the new administration was going to be able to handle foreign affairs, almost no one seemed to remember that Abe Lincoln professed that he had no experience in foreign affairs and was therefore confident that if he hired the right people, they would get the job done.


Although many people were concerned about how well the new administration was going to be able to handle foreign affairs, almost no one seemed to remember that Abe Lincoln professed that he had no experience in foreign affairs and was therefore confident that if he hired the right people, they would get the job done.

So although the current President knows quite a bit about banking changes that his administration would like to see enacted, they are largely to this point working on supporting the key players like Banking Committee Chair, Senator Mike Crapo. So far, the results have been promising on both sides of the aisle.

Here are some of the more recent planned changes that are happening in Washington DC:

Financial institutions get some relief from direct lawsuits:

One of the more difficult things for consumers to deal with individually, according to Mike Crapo, is the disconnect between being able to sue a bank and actually collecting. At this time, it is said that most consumers get pennies on the dollar when the arbitration process tends to create much more direct wealth for victims when it is put to use.

The banking committee in the Senate therefore supported the recent passage of a measure that will create a world where class-action lawsuits against financial institutions go away. Replacing that as a process will be arbitration.

Small banks will no longer face automatic scrutiny:

Another point of contention for those that work in regions where the key financial players are not that large has been that while very small banks receive the benefit of the doubt, regional banks are hit with the same level of scrutiny as the nation's largest banks. This past month, that argument held sway with both Democrats and Republicans on the banking committee. A deal was reached whereby instead of using $50 billion dollars as the limit for extra automatic scrutiny from regulators, a new $250 billion dollar limit will be the floor that the government starts at.

Financial services companies may be allowed to work with banks:

One thing that big banks have long wanted is to have access to financial services markets that are unregulated. Over the past few decades there have therefore been some areas where they have been allowed to enter. Other areas, they are not. Recently, however, a debate over whether or not payday loan companies that are providing loans and check cashing should be able to partner closely with big banks led to a proposal to allow this federally.

The financial services committee is scheduled to vote on it as early as this week. Conceptually, the idea is that just as with GMAC, payday loan companies that want to expand their markets significantly can work with a large lender in order to secure the funds necessary to pass on to a growing market of consumers.

Most of the current criticism comes from state level regulators that have built systems that keep the banks and payday loan companies separate. Some proponents are known to believe that with large banks backing payday loan companies legally, there should be a market that contains a wider range of loan types, giving consumers some relief from the normally high interest rates because the overall process will cost the payday loan company less.

As the year winds down, there are several banking changes going on in Washington DC that can either enhance or change the landscape in your local community for years to come. Most of the changes that have been enacted so far seem to favor trusting large financials to create a better environment. If they are able to perform well for their communities over the next few years, the current efforts should be applauded.[right-post]
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