Red Tape Tsunami

Bank of America is planning to introduce a monthly fee for even the most basic checking accounts unless customers agree to bank online, buy more products or maintain certain balances.

This all comes after the huge consumer backlash last year when it tried to implement a five dollar per month debit card fee.

We led the outrage that forced Bank of America to reverse that decision.

So, does the nation's second largest bank just hate their customers or is there a reason for the rising costs?

Well Bank of America and others blame Dodd-Frank.

This was the bank regulation law written in the aftermath of the financial crisis.

The one that was supposed to save us from another financial crash, and keep our money safe.

But as is normally the case with red tape, it's more of a mess than a solution.

Check this out...

The original law that set up America's banking system following the Civil war was 29 pages long.

The law that created the Federal Reserve in 1913 was a whopping 32 pages.

And Glass-Steagall - the regulatory law that went into effect after the big stock market crash in 1929 - that was 37 pages.

Dodd-frank? 848 pages long!

I don't think I’m going out on a limb here when I say who in Congress read all that?!? By the way, the math was done by the magazine, The Economist.

The other problem: an official at Yale Law School Jonathan Macey says: "Laws classically provide people with rules. Dodd-Frank is not directed at people. It is an outline directed at bureaucrats and it instructs them to make still more regulations and to create more bureaucracies."

In other words, Dodd-Frank is like the mother of all regulations because it will create huge numbers of regulations.

Dodd-Frank's authors said all of these regulations and bureaucracies would be in place within 18 months. We're 18 months in; we're not done - far from it. Now, experts are saying Dodd-Frank rule writing say it could take a decade! Don't you feel safer about your money?

For starters, of the 400 rules the law calls for, only 93 have been written. That's less than a quarter.

Dodd-Frank also called for 87 studies to be conducted within these 18 months, and only 50 have been completed.

In an effort to strengthen regulation, it has put a host of regulators in charge of the same thing.

The result of this bewildering set of rules is this: Nobody knows who does what when.

That's just the over-arching problems with this law.

But Dodd-Frank isn't just governing from the margins. Its rules are so specific and expensive, everyone from hedge funds to manufacturers are forced to pay up.

The Economist points out a three-page rule written in October that has turned into a 92-page form costing hedge funds upwards of $150k for just the first year it's implemented, and another $40k every year after.

I normally don't have a lot of sympathy for hedge funds, but this is a little ridiculous, don't you think?!?

And Dodd-Frank doesn't stop at the door of financial institutions. Manufacturers will have to report to information about stuff they buy overseas to the SEC, which could cost them billions of dollars. Can you say government overreach?

And then, of course, there are the banks. The big bad villains that have single handedly ruined our economy, crushed our spirit and sucked the life out of the small business world… Oh no… sorry that's the government.

Because these banks will now have to fork over hundreds of millions of dollars annually, and they're already making you and I pay for this with all these new fees, and I’m not just talking about Bank of America.

Even supporters of this law originally are now saying we need to start over and come up with a simple plan.

I say, if simple is just too hard for anyone in Washington, let's try a law that works.

One that doesn't have loopholes big enough to drive a tractor trailer through.

Or one that doesn't make you and me - the taxpayers, the consumers - responsible for paying for it.

Is the SEC Effective?

You might have heard the news recently that the victims of Bernie Madoff would get some of their money back. The news was bittersweet - that's because those folks are only getting some of the money, just $312 million was expected to be distributed. Total losses of victims? $17 billion.

It's still tough in this country to steal $17 billion without anyone noticing - and if you're wondering where the cops were - well, that is a smart question. Truth is, the announcement about payments to victims got lots of attention - but another announcement, this one from regulators at the Securities and the Exchange Commission, got too little attention this weekend.

Four years after Madoff's arrest - the SEC said it had disciplined eight employees for failing to uncover the pyramid scheme over a 16-year period. What's notable here? Nobody lost their job. The biggest Ponzi scheme in the world operates in plain sight right under the noses of the nation's biggest securities regulators - and everybody keeps their jobs. Unbelievable!

But frankly, it's not the first time that the SEC has missed a big fish. Allen Stanford, the Texas-based financier ran a Ponzi scheme for 12 years before the agency halted the fraud, potentially costing investors more than a billion dollars. That according to an agency watchdog's report.

In both cases, the SEC was given tips but couldn't translate the tips into a successful prosecution. Then there are the companies that commit violations. When the SEC manages to find one of those, the form of punishment is usually a few bucks and a vow to never do that bad thing again.

The New York Times recently conducted an analysis of the "punishments" handed down by the SEC over the past 15 years. At least 51 cases involved Wall Street firms breaking a law they had agreed never to break again!

Last month, Citigroup had to fork over $285 million to settle charges it defrauded customers -- they had to promise to never do it again - but guess what - that was them doing it again!

Citigroup had already agreed not to violate that exact antifraud statute in 2010, 2006, 2005, and 2000! Bank of America has promised not to violate that law four times since 2005, they made the same promises four times regarding a separate law. In fact, the list of repeat offenders goes on and on and on. A Wall Street who's who if you will. AIG, Credit Suisse, Goldman Sachs, JP Morgan Chase, Morgan Stanley, Raymond James, UBS, Wells Fargo, etc.

So obviously this practice is not deterring the bad behavior - so why do they do it?

The SEC told the Times the "never-do-it-again promises" were a much cheaper form of punishment than taking big banks to court. Especially if they lose! And as if that wasn't bad enough, another problem plaguing the SEC? They don't actually make the company admit their mistakes or wrong-doings!

So Citigroup or Bank of America can simply shell out a few million dollars. And never have to face what they did wrong. The public is never the wiser. This is outrageous.

Don't forget this was the agency whose workers spent more time surfing porn then looking out for the consumer! If the SEC doesn't have the ability to actually catch warning signs or enforce the law - maybe it's time to streamline this process.

The Justice Department can throw these crooks behind bars - that sounds good to me!

Leaving Your Bank? Do Your Homework First

We've focused a lot on this show on Bank of America's new $60-a-year debit card fee. But they are certainly not alone in raking up the costs for consumers. And the worst part? Higher bank fees are here to stay.

New rules have curtailed various kinds of traditional fees - such as overdraft and late fees - so banks are being forced to create brand spanking new charges.

In addition to Bank of America, Citigroup will charge $20 a month starting in December to some customers who don't keep a balance of $15,000 dollars or more.

Wells Fargo and JP Morgan Chase are testing three dollar monthly debit card fees in a handful of states. SunTrust started a $5 monthly debit card fee back in June.

Regions Financial kicked off a $4 fee this month.

These fees have become a hot-bed of anger and frustration among consumers - especially those camped out downtown Manhattan.

And for many - they could be enough to push customers to go through the hassle of switching banks.

A new survey by Research Intelligence Group says about a third of consumers will leave their bank if debit card fees are put in place.

And it's not just lip service - the weekend after Bank of America announced their new fees - the nation's largest credit union saw new account openings skyrocket more than 20% percent.

But as I said - switching banks can be a hassle - especially if you have direct deposit, online bill payments or you do a lot of business directly with your bank.

USA Today outlined some things to consider before making the switch.

For starters - you can save a lot of money if you go to an online bank.

Some of these banks have the lowest checking costs - and some even have high interest rates and will re-imburse you for using another banks ATM. Not ideal for those who use a lot of checks - something to keep in mind there.

Now those ATM fees are a major concern for those thinking of switching to a credit union or a small bank!

So do some research - find out if they have agreements - as many do - with larger ATM networks rr see if they waive such fees.

Also - just because you hear a headline about bank fees - don't automatically run to your local branch and close everything!

Some fees may not apply to you - such as if you use direct deposit - or meet a minimum balance - or pay online.

So again, I can't stress this enough - before leaving your bank - do your homework.

But don't be afraid to move your money around if there's something out there better for you and your family.

A Big Problem Our Country's Facing

On today's show, I'm talking a lot about how it seems we've all lost confidence. One piece of evidence: Individual investors have pulled out of the stock market in record numbers. Stung by the crash after Lehman's bust, many of us just don't trust the stock market to help us with our most important goals - saving for retirement and our kids' education.

Investors pulled nearly $75 billion from stock mutual funds in the past four months. That tops the $72.8 billion pulled five months after the collapse of Lehman Brothers back in 2008. This lack of confidence is happening in corporate board rooms as well. CEOs are hoarding cash -- unsure where to invest.

U.S. companies sat on a whopping $1.2 trillion in cash and short-term liquid investments at the end of 2010, according to Moody's. That put debt-to-cash ratios at a five-year low. At one point this summer, Apple had more cash on its books than the U.S. Treasury Department. And, it's all because of a lack of confidence.

When you don't know what's going to happen to your taxes, or to the rules governing your business -- it's tough to commit to anything at all.

In the political arena, we see the same. Faced with gridlock and a nothing-can-get-done attitude, some opt to play to their constituencies only and to ignore the broader problems plaguing our country. Others just play both ends against the middle.

Senator Dick Durbin (D-Ill.) slammed Bank of America for raising debit card fees. But, it was his amendment to Dodd-Frank that made it happen. The most common analysis of our problems as a country often comes down to money as a nation. We have a $14 trillion deficit. Social security, we are told, is a Ponzi scheme. Medicare and Medicaid running on fumes.

Also, American families struggle. They earned one tenths of a percent less in August. It's the first decline in nearly two years. Middle income families now earn what they did back in 1997.

Look, we could overcome these problems and fight back, if we had strong leadership - strong leadership in both the public and the private sector.

A galvanizing force would propel us up and out of this funk. Remember, our country still claims the biggest economy in the world. And, the biggest economy in the world runs on just 5% of the globe's population. We can turn around.

I'm Fed Up with Bank of America!

Nothing and no one has me more fired up today than Bank of America.

The nation's largest bank is going to start charging all of its customers that use debit cards - a $5 monthly fee that kicks in early next year.

The bank says they have no choice - that "the economics of offering a debit card have changed."

They say without the fee they just can't make ends meet - all because of the Dodd-Frank law. Of course, the "swipe fees" amendment goes into effect on Saturday.

It caps the fees banks can charge retailers for processing debit cards from 44 cents to 21 cents per transaction. Well guess what... that's not our problem!

Banks across the country have been testing this fee for months -- you may have already seen it. But Bank of America is the biggest bank to take this national.

Wells Fargo and J.P. Morgan have been testing fees in certain regions for months now.

And starting in November SunTrust will institute the same $5 fee for its debit-card customers.

Boy do these banks know where to hit us the hardest. Americans - like you and me - love our debit cards. According to CreditCards.com, between Visa and MasterCard there are around 520 million debit cards in the U.S. That's nearly 200 million more cards than people!

And last year alone - debit cards were swiped nearly 37 billion times - with purchases totaling nearly one and a half trillion dollars!

But I have my limits! Remember when the bank would give you a toaster to open a checking account? Maybe you don't - but believe me, they used to. And, it wasn't just banks. Freebies used to abound - free air-miles or a t-shirt for opening a credit card account.

It really used to seem like companies wanted our business - not just for today's transaction, but for a lifetime. What a difference from today - that five dollar fee may not seem like a lot - but it's the principle of the thing. I just don't buy it!

At least one bank has it right: Citigroup says it will not impose debit card fees - it says such charges would be... "a huge source of irritation" for our customers. At least somebody gets it.

This is a Mortgage Solution?

Finally. Some honesty on an issue that most bank executives won't talk about. Bank of America Chief Executive Brian Moynihan said yesterday at a meeting with analysts in New York that the administration's push to get banks to forgive billions in troubled mortgages is unfair to borrowers who've been paying their mortgages. The White House along with 50 state attorney generals are pushing for a multi-billion dollar settlement with banks in the wake of foreclosure abuses by lenders. The problem with the solution proposed by government officials, according to Moynihan, is that it would take away any incentive for homeowners who have jobs to pay their mortgage. After all, why pay if banks are ponying up dough for people who don't? Such a scenario would only delay the recovery in housing. And, goodness knows, we've been waiting too long for that already.