By Marianne Bickle
Robert C. Gallagher said “Change is inevitable – except from a vending machine.” And so too change is coming from the banking industry. Bank of America’s announcement last week of the $5.00 monthly charge for debit cards users drew outrage from consumers. The media jumped on the story with vigor. The bank is being examined under a microscope by a bevy of news analysts.
You may be wondering why I, as retailer, would write on BofA. This topic fascinates me because as a retailer I have have long understood that once you offer a product or service for free to customers, the process of raising prices can be a very loud and painful experience.
Based on recent news media, I’m not sure consumers remember that they have choices. I am always amazed when people complain about a product or service and then say they can’t live without the stated service. Let me clarify – - I don’t mean health care; I mean everyday product and services (e.g., fashion clothing, cosmetics or banking services). Everyone has choices. We all have the right to say “Yes I chose to purchase this product or service” or “No take business and its services to the curb and dump it.”
Let’s examine several scenarios – - a “what if” game if you wish.
Scenario 1: The banks could back down from public pressure. BoA apologizes for any miscommunication and the debit cards may be used without a fee. Reality 1: This will never, ever happen. BoA has carefully considered all scenarios. Some consumers may switch banks. In actuality more banks will probably follow with the monthly fees. Large banks are strong, tough and run a tight ship. Top executives don’t make a decision and public announcement without carefully analyzing all scenarios. I just included this as an option because it is possible, but not probable. Read more
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"It takes your enemy and your friend, working together, to hurt you to the heart: the one to slander you and the other to get the news to you". Mark Twain (1835-1910)
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USEFUL LINKS Business Articles - Business Dictionary - Economics Dictionary - Encyclopedia - Free Dictionaries - Health Corner: A to Z - Post a Free Ad - Classifieds - Mortgage & Loans Calculators - Country Currency Finder - Small Business Ideas - Business & Finance Tips - Business Links - Events Calendar - Post an Event - New York State Quiz - G8 Countries/World Maps The Federal Reserve System (also known as the Federal Reserve, and informally as the Fed) is the central banking system of the United States. It was created in 1913 with the enactment of the Federal Reserve Act, and was largely a response to a series of financial panics, particularly a severe panic in 1907. Over time, the roles and responsibilities of the Federal Reserve System have expanded and its structure has evolved. Events such as the Great Depression were major factors leading to changes in the system.[5] Its duties today, according to official Federal Reserve documentation, are to conduct the nation's monetary policy, supervise and regulate banking institutions, maintain the stability of the financial system and provide financial services to depository institutions, the U.S. government, and foreign official institutions. The Federal Reserve System's structure is composed of the presidentially appointed Board of Governors (or Federal Reserve Board), the Federal Open Market Committee (FOMC), twelve regional Federal Reserve Banks located in major cities throughout the nation, numerous other private U.S. member banks and various advisory councils. This division of responsibilities of the central bank falls into several separate and independent parts, some private and some public. The result is a structure that is considered unique among central banks. It is also unusual in that an entity (the U.S. Department of the Treasury) outside of the central bank creates the currency used. According to the board of governors of the Federal Reserve, "It is not 'owned' by anyone and is 'not a private, profit-making institution'. Instead, it is an independent entity within the government, having both public purposes and private aspects." The U.S. Government does not own shares in the Federal Reserve System or any of its component banks, but the Government does receive all of the system's annual profits after a statutory dividend of 6% on member banks' capital investment is paid and an account surplus is maintained. The government also exercises some control over the Federal Reserve by appointing and setting the salaries of the system's highest-level employees. The Federal Reserve transferred a record amount of $45 billion to the U.S. Treasury in 2009. Purpose The primary motivation for creating the Federal Reserve System was to address banking panics. Other purposes are stated in the Federal Reserve Act, such as "to furnish an elastic currency, to afford means of rediscounting commercial Read more... |
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