The heat can bring out the worst in us. And this week’s news from the midpoint of a swelteringly hot summer, if it had a common thread, it was finger-pointing. Blame was tossed around like a hot potato this week — so much it’s astonishing any work actually got done. But some good things happened, too, beneath all the shouting, and we’ll get into that as well. But first: the blame game.
The biggest news in finance this week was that Sandy Weill, the creator of the megabank, got on CNBC’s Squawk Box and advanced an argument that deposit banks and investment banks ought to be kept separate — for the good of the taxpayers. In essence, he called for a return to Glass-Steagall — a decades-old law that Weill himself lobbied to have repealed in the 90’s. The irony wasn’t lost on anyone, but Weill found a way around that. He said that what worked for him then doesn’t work anymore. Well isn’t that convenient?
And in the staggeringly arcane world of interchange, the aftermath of a proposed anti-trust class action suit against Visa and MasterCard is showing just how confusing the marketplace for swipe fees is: no one can seem to agree on who pays for them. Like how people with brain damage have helped neuroscientists understand how the brian works, seeing the interchange system at its breaking point is finally giving us a window into its complex mechanics. Walmart and Target spoke out against the settlement, arguing that the settlement does nothing to fundamentally change the anti-competitive nature of Visa and MasterCard’s business practices and shields the two companies from future litigation. On the other side, the Electronic Payments Coalition argue that, well, these class action suits are difficult and there simply aren’t enough angry merchants to dissolve the deal anyway. Kroger, the nation’s largest supermarket chain supports the deal, and it thinks that by imposing a surcharge on customers using credit — part of the settlement — it will be able to reduce credit card usage, thereby putting pressure on the companies to lower fees, and then it may lower the surcharges.
It’s all rather confusing.
But there was some unambiguously good news for consumers this week, too. Bank of America, though it is reducing the size of its ATM network, announced that it will finally be rolling out its mobile deposit feature. Between July 25 and Sept. 18, the app feature will be rolled out on different devices, starting with the iPad and ending with the Android tablet. The bank will also be making some of its cards EMV-compliant for easier spending abroad. We also got the news that Discover just introduced new benefits for its cardholders: extended product warranties and purchase protections, as well as an easy way to use cash back rewards online. And for the Disney-obsessed consumer — or for someone with lots of children of a certain age — Chase introduced a Disney rewards debit card. Rewards debit cards are a rare breed post-Durbin, but the Disney card offers a possible path forward: brands that offer discounts on their own goods to consumers, instead of interchange-funded rewards.
This week was an interesting one for the super-rich, too (well, which week isn’t?). As the FDIC ends the unlimited cash insurance on non-issue bearing accounts it had been offering post-2008, the wealthy will have to scramble to get their money into new accounts, lest they risk losing cash to a bank collapse. But don’t worry about the wealthy — they’ll figure something out. It also came out this week that there are some $21 trillion stashed in overseas accounts, away from the prying eyes of the governments that might be entitled to a substantial portion of that money in taxes. Being wealthy is a very good way to stay wealthy.
For those of you who aren’t, we have some advice. We gave you five tips on how to get cheaper health care before 2014 — when much of the Affordable Care Act goes into effect. We also warned you about five foods that might get more expensive thanks to the effects of the drought in the Midwest. And, finally, we learned about pay-as-you drive auto insurance: an eco- and wallet-friendly alternative to traditional auto insurance.
Join us next week for more old-fashioned blame-heaping.Related