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New Financial Regs Will Force Low-Income Americans Out Of Traditional Banks - by : Liz Moyer is a Senior Writer at Forbes

jeudi 15 juillet 2010 par William Toussaint

New financial regulations will force low- and moderate-income Americans out of the traditional banking system, according to a panel of banking analysts at a gathering of more than 600 Wall Streeters on Thursday just hours before the Senate was expected to approve the financial regulation overhaul bill. That will likely mean open season for check cashing and payday lending outlets.

Free checking has quickly become a thing of the past as banks deal with new rules on deposit and transaction fees. That is already putting pressure on consumers who can’t afford to maintain minimum deposit levels to avoid fees. In addition, banks are shifting their focus away from lending to people with less than stellar credit, another fallout of the financial crisis and the pending regulations.

Wells Fargo, for example, recently announced it would shut down its independent lending offices and merge that business back into its branch operations, cutting 3,800 jobs in the process. Citigroup is also selling off or unwinding billions in consumer loan portfolios and shifting its mortgage focus to the highest end of the consumer market. JPMorgan Chase’s chief executive James Dimon, announcing second-quarter profits Thursday, said the bank’s consumer lending results were unacceptable and did not make satisfactory returns for the capital devoted to the business.

Financial regulation was supposed to clean up the banking system and level the playing field for consumers trying to access capital. The banking analysts on Thursday said once lawmakers realize the unintended consequences of the bill on consumer lending, they will likely introduce all sorts of regulatory relief regulations. Such is the circle of life in Washington.

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