A top executive at JPMorgan Chase has warned the bank’s 86 million customers that they may soon be charged fees on their currently free checking accounts. Reportedly.
Marianne Lake, CEO of JPMorgan Chase’s consumer and community banking division, blames the increased burden on Washington regulators, who are trying to impose an $8 cap on late credit card fees and a $3 cap on bank account overdrafts.
Consumer Financial Protection Bureau Passed the new limit The bill passed in March, but a coalition of banking industry groups filed a lawsuit to block it before it became law and is currently appealing the decision.
“The changes are going to be broad, comprehensive and significant,” Lake told The Wall Street Journal. “The people who will be most affected are those who are least able to afford it, and they’re going to have a much harder time getting credit.”
Lake said he expected other banks to take similar steps to make up for lost revenue once the new law goes into effect.
Some critics don’t believe that.
“Banks say they have no choice but to pass on the costs to customers, but that’s not true,” Dennis Kelleher, president of Better Markets, an economic think tank that supports the proposed banking restrictions, told The Wall Street Journal. “Once again, banks are disguising their attempt to maximize their own profits under the guise of what’s good or bad for their customers.”
However, banks are facing new rules and New capital requirementsThe bill, which would require banks to hold more reserves, could hit bank profits. Some have launched appeals, mostly in the Northern District of Texas.
Dan Gorich, a consulting partner at PricewaterhouseCoopers who advises bank clients, told The Wall Street Journal that larger banks would generally be better able to handle a decline in profits than smaller ones.
“Regulatory changes that cap fees will create opportunities for more efficient institutions,” Gerich told The Wall Street Journal.
“Large banks will be able to make up for the decline in consumer banking revenue with profits from their asset management and investment banking divisions. Smaller and regional banks will have a harder time making up for it.”
In 2010, many banks facing regulatory scrutiny after the 2008 financial crisis proposed similar changes but ultimately did not pass on the costs to consumers.
In a highly competitive industry where many accounts and services are offered free of charge, banks may be holding their own when it comes to raising prices.
“Today, most customers have easy and seamless access to retail banking,” Goreich told The Wall Street Journal. “While it may be disadvantageous to keep the service free, banks could be pushed out by other competitors who offer lower-cost services to their customers.”
