BANKING REGULATION THESE DAYS
Dear reporters and writers of the excellent article on banking regulation in today’s Washington Post:
Canada's banks are under central control and private banks are few, but include several participating local depositories called "trust" banks, with local and international branches which sell stock to their depositors and are allowed to supply checks and debit cards. The Bank of Canada, a Federal agency, is equivalent to the USA's Federal Reserve and regulates the interest rates as it loans money to the other big banks and their local and international branches, namely, The Bank of Nova Scotia, the Royal Bank of Canada, The Bank of Montreal, The National Bank and the Canadian Bank of Commerce. The present lending rate from the Bank of Canada is under 1% and the equivalent of the USA’s CD’s, earn less than 3% at this time, even with a 5 year commitment.
This system did not prevent the near collapse of these major banks and trust companies for the same reasons as in the USA: fear of unpaid loans and mortgages, despite lowering of interest rates, close to zero. Ironically, almost all fees and interest rates have risen sharply for credit cards and other services making Canadians loath to use their credit cards and the bank services as they are being nickel and dime’d to death with exorbitant credit card interest, some over 20%, and fees for simple services which used to be free, like checking accounts. Bank interest for savings has fallen to about 1% making Canadians unwilling to bank their money, altogether.
Therefore, Federal regulations have the made the banks "unfriendly" to citizens. Thus, the idea of a central, single agency for regulation is not the answer to banking woes, I believe. It seems to me that simple competition is the answer. Allowing banks to raise their rewards for saving and lower their fees for borrowing, would make one bank more attractive than the next, rather than having all banks with approximately the same fees and interest. A bank after all makes money by lending and issuing mortgages, etc. At this time, it is unattractive to get mortgage loans and business loans and the banks are restrictive rather than friendly, reducing overall the money supply and availability for homes and businesses.
Most large banks were exultant several years ago, reporting obscene profits of over 2 billion for their executives and shareholders. With the recent crunch, they whined when their profits dropped to 1 billion. They stopped lending money, raising their already unfriendly interests for credit and fees for services. I believe that mattresses, once again, became a safer place to keep ones hard earned cash. Buying small or big ticket items became uncommon, dropping the economic confidence for manufacturers and services.
This overview may be inaccurate and naive, but that's the way it looks to me as a retiree, in Canada. I'm not sure what the solutions are, but bailouts for banks and their executives seem counterproductive and only solidifies unfavourable banking services. Allowing them to go bankrupt may be a wake-up call for all banks who will have to be more friendly to their customers and not nickel and dime them out of the marbled bank lobbies, which remind one of churches and temples. The local trust companies draw more customers because they appear to be more co-operative, more sharing and more understanding of the needs of the citizens. I feel the days of the evil banker foreclosing the mortgage on the unfortunate citizen, with a frown on the citizen's face and a grin on the banker's face, are over, or should be.
Perhaps both the citizens and the banks have had their wake-up calls regarding loans and credit. Perhaps "consumerism" is no longer an acceptable attitude for both entrepreneurs or citizens. All of us need reasonable housing, transportation, food, clothing, toys, education, health care, dental care and welfare. All of us need to make a reasonable income at a satisfying job where we can participate in decisions for manufacturing and services. Unreasonable salaries and banking practices are counterproductive and destructive to the American/Canadian Dream. The bubble has burst in 2008-9 as it did in the 1930's. Enron, Lehman Brothers and Martha Stuart got their comeuppance early. The rest of us are getting ours now.
A central agency without insight and respect for the hard working, tax-burdened citizen trying to support a family in a healthy, optimistic atmosphere, would be useless, and even worse than useless, as it would tend to maintain the status quo. A little competition and a fiat against "price fixing" of interest rates and fees, might help.
Thanks in advance for allowing me to post these comments below your article at www.washingtonpost.com.
Sincerely,
Izzy Sommers, MD (ret.) Welland, Canada
canadizzy wrote:
Dear reporters and writers of the excellent article on banking regulation in today’s Washington Post:
Canada's banks are under central control and private banks are few, but include several participating local depositories called "trust" banks, with local and international branches which sell stock to their depositors and are allowed to supply checks and debit cards. The Bank of Canada, a Federal agency, is equivalent to the USA's Federal Reserve and regulates the interest rates as it loans money to the other big banks and their local and international branches, namely, The Bank of Nova Scotia, the Royal Bank of Canada, The Bank of Montreal, The National Bank and the Canadian Bank of Commerce. The present lending rate from the Bank of Canada is under 1% and the equivalent of the USA’s CD’s, earn less than 3% at this time, even with a 5 year commitment.
This system did not prevent the near collapse of these major banks and trust companies for the same reasons as in the USA: fear of unpaid loans and mortgages, despite lowering of interest rates, close to zero. Ironically, almost all fees and interest rates have risen sharply for credit cards and other services making Canadians loath to use their credit cards and the bank services as they are being nickel and dime’d to death with exorbitant credit card interest, some over 20%, and fees for simple services which used to be free, like checking accounts. Bank interest for savings has fallen to about 1% making Canadians unwilling to bank their money, altogether.
Therefore, Federal regulations have the made the banks "unfriendly" to citizens. Thus, the idea of a central, single agency for regulation is not the answer to banking woes, I believe. It seems to me that simple competition is the answer. Allowing banks to raise their rewards for saving and lower their fees for borrowing, would make one bank more attractive than the next, rather than having all banks with approximately the same fees and interest. A bank after all makes money by lending and issuing mortgages, etc. At this time, it is unattractive to get mortgage loans and business loans and the banks are restrictive rather than friendly, reducing overall the money supply and availability for homes and businesses.
Most large banks were exultant several years ago, reporting obscene profits of over 2 billion for their executives and shareholders. With the recent crunch, they whined when their profits dropped to 1 billion. They stopped lending money, raising their already unfriendly interests for credit and fees for services. I believe that mattresses, once again, became a safer place to keep ones hard earned cash. Buying small or big ticket items became uncommon, dropping the economic confidence for manufacturers and services.
This overview may be inaccurate and naive, but that's the way it looks to me as a retiree, in Canada. I'm not sure what the solutions are, but bailouts for banks and their executives seem counterproductive and only solidifies unfavourable banking services. Allowing them to go bankrupt may be a wake-up call for all banks who will have to be more friendly to their customers and not nickel and dime them out of the marbled bank lobbies, which remind one of churches and temples. The local trust companies draw more customers because they appear to be more co-operative, more sharing and more understanding of the needs of the citizens. I feel the days of the evil banker foreclosing the mortgage on the unfortunate citizen, with a frown on the citizen's face and a grin on the banker's face, are over, or should be.
Perhaps both the citizens and the banks have had their wake-up calls regarding loans and credit. Perhaps "consumerism" is no longer an acceptable attitude for both entrepreneurs or citizens. All of us need reasonable housing, transportation, food, clothing, toys, education, health care, dental care and welfare. All of us need to make a reasonable income at a satisfying job where we can participate in decisions for manufacturing and services. Unreasonable salaries and banking practices are counterproductive and destructive to the American/Canadian Dream. The bubble has burst in 2008-9 as it did in the 1930's. Enron, Lehman Brothers and Martha Stuart got their comeuppance early. The rest of us are getting ours now.
A central agency without insight and respect for the hard working, tax-burdened citizen trying to support a family in a healthy, optimistic atmosphere, would be useless, and even worse than useless, as it would tend to maintain the status quo. A little competition and a fiat against "price fixing" of interest rates and fees, might help.
Thanks in advance for allowing me to post these comments below your article at www.washingtonpost.com.
Sincerely,
Izzy Sommers, MD, (retired,) Welland, Canada
5/28/2009 7:10:50 AM
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washingtonpost.com > Business > Business Policy
Your Comments On...
U.S. Weighs Single Agency to Regulate Banking Industry
Senior administration officials are considering the creation of a single agency to regulate the banking industry, replacing a patchwork of agencies that failed to prevent banks from falling into the worst financial crisis since the Great Depression, sources said.
-
By Binyamin Appelbaum and Zachary A. Goldfarb
Canada's banks are under central control and private banks are few, but include several participating local depositories called "trust" banks, with local and international branches which sell stock to their depositors and are allowed to supply checks and debit cards. The Bank of Canada, a Federal agency, is equivalent to the USA's Federal Reserve and regulates the interest rates as it loans money to the other big banks and their local and international branches, namely, The Bank of Nova Scotia, the Royal Bank of Canada, The Bank of Montreal, The National Bank and the Canadian Bank of Commerce. The present lending rate from the Bank of Canada is under 1% and the equivalent of the USA’s CD’s, earn less than 3% at this time, even with a 5 year commitment.
This system did not prevent the near collapse of these major banks and trust companies for the same reasons as in the USA: fear of unpaid loans and mortgages, despite lowering of interest rates, close to zero. Ironically, almost all fees and interest rates have risen sharply for credit cards and other services making Canadians loath to use their credit cards and the bank services as they are being nickel and dime’d to death with exorbitant credit card interest, some over 20%, and fees for simple services which used to be free, like checking accounts. Bank interest for savings has fallen to about 1% making Canadians unwilling to bank their money, altogether.
Therefore, Federal regulations have the made the banks "unfriendly" to citizens. Thus, the idea of a central, single agency for regulation is not the answer to banking woes, I believe. It seems to me that simple competition is the answer. Allowing banks to raise their rewards for saving and lower their fees for borrowing, would make one bank more attractive than the next, rather than having all banks with approximately the same fees and interest. A bank after all makes money by lending and issuing mortgages, etc. At this time, it is unattractive to get mortgage loans and business loans and the banks are restrictive rather than friendly, reducing overall the money supply and availability for homes and businesses.
Most large banks were exultant several years ago, reporting obscene profits of over 2 billion for their executives and shareholders. With the recent crunch, they whined when their profits dropped to 1 billion. They stopped lending money, raising their already unfriendly interests for credit and fees for services. I believe that mattresses, once again, became a safer place to keep ones hard earned cash. Buying small or big ticket items became uncommon, dropping the economic confidence for manufacturers and services.
This overview may be inaccurate and naive, but that's the way it looks to me as a retiree, in Canada. I'm not sure what the solutions are, but bailouts for banks and their executives seem counterproductive and only solidifies unfavourable banking services. Allowing them to go bankrupt may be a wake-up call for all banks who will have to be more friendly to their customers and not nickel and dime them out of the marbled bank lobbies, which remind one of churches and temples. The local trust companies draw more customers because they appear to be more co-operative, more sharing and more understanding of the needs of the citizens. I feel the days of the evil banker foreclosing the mortgage on the unfortunate citizen, with a frown on the citizen's face and a grin on the banker's face, are over, or should be.
Perhaps both the citizens and the banks have had their wake-up calls regarding loans and credit. Perhaps "consumerism" is no longer an acceptable attitude for both entrepreneurs or citizens. All of us need reasonable housing, transportation, food, clothing, toys, education, health care, dental care and welfare. All of us need to make a reasonable income at a satisfying job where we can participate in decisions for manufacturing and services. Unreasonable salaries and banking practices are counterproductive and destructive to the American/Canadian Dream. The bubble has burst in 2008-9 as it did in the 1930's. Enron, Lehman Brothers and Martha Stuart got their comeuppance early. The rest of us are getting ours now.
A central agency without insight and respect for the hard working, tax-burdened citizen trying to support a family in a healthy, optimistic atmosphere, would be useless, and even worse than useless, as it would tend to maintain the status quo. A little competition and a fiat against "price fixing" of interest rates and fees, might help.
Thanks in advance for allowing me to post these comments below your article at www.washingtonpost.com.
Sincerely,
Izzy Sommers, MD (ret.) Welland, Canada
canadizzy wrote:
Dear reporters and writers of the excellent article on banking regulation in today’s Washington Post:
Canada's banks are under central control and private banks are few, but include several participating local depositories called "trust" banks, with local and international branches which sell stock to their depositors and are allowed to supply checks and debit cards. The Bank of Canada, a Federal agency, is equivalent to the USA's Federal Reserve and regulates the interest rates as it loans money to the other big banks and their local and international branches, namely, The Bank of Nova Scotia, the Royal Bank of Canada, The Bank of Montreal, The National Bank and the Canadian Bank of Commerce. The present lending rate from the Bank of Canada is under 1% and the equivalent of the USA’s CD’s, earn less than 3% at this time, even with a 5 year commitment.
This system did not prevent the near collapse of these major banks and trust companies for the same reasons as in the USA: fear of unpaid loans and mortgages, despite lowering of interest rates, close to zero. Ironically, almost all fees and interest rates have risen sharply for credit cards and other services making Canadians loath to use their credit cards and the bank services as they are being nickel and dime’d to death with exorbitant credit card interest, some over 20%, and fees for simple services which used to be free, like checking accounts. Bank interest for savings has fallen to about 1% making Canadians unwilling to bank their money, altogether.
Therefore, Federal regulations have the made the banks "unfriendly" to citizens. Thus, the idea of a central, single agency for regulation is not the answer to banking woes, I believe. It seems to me that simple competition is the answer. Allowing banks to raise their rewards for saving and lower their fees for borrowing, would make one bank more attractive than the next, rather than having all banks with approximately the same fees and interest. A bank after all makes money by lending and issuing mortgages, etc. At this time, it is unattractive to get mortgage loans and business loans and the banks are restrictive rather than friendly, reducing overall the money supply and availability for homes and businesses.
Most large banks were exultant several years ago, reporting obscene profits of over 2 billion for their executives and shareholders. With the recent crunch, they whined when their profits dropped to 1 billion. They stopped lending money, raising their already unfriendly interests for credit and fees for services. I believe that mattresses, once again, became a safer place to keep ones hard earned cash. Buying small or big ticket items became uncommon, dropping the economic confidence for manufacturers and services.
This overview may be inaccurate and naive, but that's the way it looks to me as a retiree, in Canada. I'm not sure what the solutions are, but bailouts for banks and their executives seem counterproductive and only solidifies unfavourable banking services. Allowing them to go bankrupt may be a wake-up call for all banks who will have to be more friendly to their customers and not nickel and dime them out of the marbled bank lobbies, which remind one of churches and temples. The local trust companies draw more customers because they appear to be more co-operative, more sharing and more understanding of the needs of the citizens. I feel the days of the evil banker foreclosing the mortgage on the unfortunate citizen, with a frown on the citizen's face and a grin on the banker's face, are over, or should be.
Perhaps both the citizens and the banks have had their wake-up calls regarding loans and credit. Perhaps "consumerism" is no longer an acceptable attitude for both entrepreneurs or citizens. All of us need reasonable housing, transportation, food, clothing, toys, education, health care, dental care and welfare. All of us need to make a reasonable income at a satisfying job where we can participate in decisions for manufacturing and services. Unreasonable salaries and banking practices are counterproductive and destructive to the American/Canadian Dream. The bubble has burst in 2008-9 as it did in the 1930's. Enron, Lehman Brothers and Martha Stuart got their comeuppance early. The rest of us are getting ours now.
A central agency without insight and respect for the hard working, tax-burdened citizen trying to support a family in a healthy, optimistic atmosphere, would be useless, and even worse than useless, as it would tend to maintain the status quo. A little competition and a fiat against "price fixing" of interest rates and fees, might help.
Thanks in advance for allowing me to post these comments below your article at www.washingtonpost.com.
Sincerely,
Izzy Sommers, MD, (retired,) Welland, Canada
5/28/2009 7:10:50 AM
Recommended (1) Report Abuse Discussion Policy
TODAY'S NEWSPAPER
Subscribe | PostPoints
washingtonpost.com > Business > Business Policy
Your Comments On...
U.S. Weighs Single Agency to Regulate Banking Industry
Senior administration officials are considering the creation of a single agency to regulate the banking industry, replacing a patchwork of agencies that failed to prevent banks from falling into the worst financial crisis since the Great Depression, sources said.
-
By Binyamin Appelbaum and Zachary A. Goldfarb
posted by izzy sommers at 5:17 AM
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