Academic journal article ABA Banking Journal

Double Whammy

Academic journal article ABA Banking Journal

Double Whammy

Article excerpt

The marketplace shows no mercy. It can't--it doesn't work that way. That fact is often lost on policymakers as they deliberate laws, rules, regs, advisories, and sundry other means to make people and organizations do what they think ought to be done. That attitude has become critical for two reasons: 1. government involvement in business is at a modern high and rising, and 2. the speed of change in business has rarely been greater.

Banking sits at the epicenter of this conundrum and suffers from it because government overreaction to the financial crisis is hindering banks' ability to respond to marketplace changes.

What can be done? Two things.

The first is to continue to push back forcefully--more forcefully-against the regulatory onslaught-especially the unnecessary or poorly thought-out new rules stemming from the Dodd-Frank Act. The tough loss in the Senate over the Durbin Amendment should be a rallying point for doing whatever it takes to delay or roll back bad public policies. (See related story in Bank Notes, p. 10.)

The second point is equally important, but can easily be forgotten in the prolonged wrestling match with Washington. It is the need to stay on top of the business changes mentioned above. The transformation occurring in how individuals and businesses communicate and transact using mobile/online technology, for example, may have greater risks for banks--and certainly greater potential-in the long term than even the painful loss of debit card interchange and overdraft income. …

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