New Regulations Raise Costs For Unbanked and Banking Customers

Posted on Wed, Mar 07, 2012

Americans are unable to ignore the new bank regulations and restrictions being imposed on financial institutions, as well as the higher fees that have largely resulted from the new legislation. And while more oversight and transparency may work to consumers' advantages, it may come at a higher price tag.

Several reports reveal that fee income has become the bedrock many large institutions are relying upon to replace profits lost to new regulations. In addition, a recent analysis conducted by the Federal Deposit Insurance Corporation shows that the roughly 9 million unbanked households who have no checking or savings accounts are being forced to turn to prepaid debit cards, payday loans, check cashing services and other alternative banking products, each riddled with their own fees and usage charges.

As more Americans either bear the burden of growing fees or turn away from traditional banking products altogether, negative long-term consequences may be the result, according to analyst Meredith Whitney. Both bank customers and unbanked consumers may face higher transaction costs and have trouble improving their household savings, Whitney explains.

In a recent Wall Street Journal Op-Ed piece, Whitney explained that higher fees, shrinking credit access and the new overdraft program compliance rules being considered by the Consumer Financial Protection Bureau may potentially add a heavier financial burden on both banked and unbanked Americans.

Tags: Banking Regulations and Legislation, Overdraft