WSJ headlines and questions for March 2 2011

WSJ headlines and questions for March 2 2011 - Bernanke...

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WSJ headlines and questions March 2, 2011. WSJ Headline February 19-20. Checking Isn’t Free At More Branches. The nation’s largest banks, including Bank of America and J.P. Morgan Chase, are testing how much their customers are willing to pay for check-account services that used to be free. The tests include an account that charges a $3 monthly fee for debit cards. Other tests are setting monthly fees of $6 - $9 per month for bare-bones checking accounts. The new fees can typically be waived if the customer meets certain criteria, presumably minimum balances, so the brunt of the fees will be paid by the poorest customers. The pilot tests are a response to the prospective loss of billions of dollars in fees that banks charge on debit card transactions to merchants. The Federal Reserve proposed in December limiting the merchant transaction fee to 12 cents, down from an average of 44 cents. This is scheduled to go into effect in July. This capping of merchant fees is part of the Dodd-Frank bill, which passed last summer.
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Unformatted text preview: Bernanke, Bair, and others testified that the regulation will hurt small banks. Small banks have said that they expect to charge higher checking account fees as well. WSJ Headline March 1. Checking Will Stay Free, Says PNC Bank. PNC, the 6 th largest bank with $183 billion in assets and 2,470 branches, announced that it would not go with the trend of charging for checking in response to the loss in revenue from debit card transactions fees. However, it said it would respond with getting rid of other customer perks, like debit-card rewards, and ATM fee reimbursements for using non-PNC ATMs. Questions: 1. Why did Congress put the Federal Reserve in the business of setting retail prices for bank services? Did the fees have anything to do with the recent financial crisis that the Dodd Frank bill was supposed to address? 2. Do you think that they realized that the banks would react by raising fees elsewhere? Should they have realized it? 3. Is the regulation a good idea or bad idea?...
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This note was uploaded on 07/02/2011 for the course FINA 465 taught by Professor Berger during the Spring '11 term at South Carolina.

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