Banks Prepare for Fight Obama Consumer Protection Laws

June 19, 2009

President Obama has said that he would like to implement several new laws, which would make banks more cautious about who they approve for credit and mortgages, to ensure that another economic crisis does not occur. He wishes to create an independent agency, which will monitor the actions of banks and lending companies, to make sure that their practices remain fair and honest to the consumers.

However, the banks and lending companies have said that these practices will not be fair to them- they will potentially lose billions of dollars.

Banks make the majority of their money from fees accrued on credit cards and mortgage payments. They rely on the fact that many individuals and families will forget or not have sufficient funds to pay their bills at the end of the month, and the bank will get the extra money collected in fees.

If these fees are eliminated or made plainer to the borrower, the banks fear that they will lose their ability to turn a profit and stay in business. They maintain that Obama should try to find a balance between consumer protection and bankrupting the banks.