Federal Reserve

What Happens When the Fed Raises Interest Rates

The New York Times commissioned a Rube Goldberg device to demonstrate what the Fed hopes will happen when it raises interest rates—as it is expected to do today—and how precarious that strategy can be. Embedding is disabled, so you will have to click here to see the video.

Half of the U.S. Has Little or No Savings

In the Federal Reserve’s “Report on the Economic Well-Being of U.S. Households in 2014” (pdf):

Forty-seven percent of respondents say they either could not cover an emergency expense costing $400, or would cover it by selling something or borrowing money.

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Banks Winning the Fight to Keep Credit Card Fees High

The Fed decided to expand the CARD Act’s limit on fees charged to credit card holders during the first year of an account to include fees charged before the account was opened, and the banks used to halt enforcement by the Consumer Financial Protection Bureau. And so far, the banks are winning.

As Consumer Law & Policy Blog’s Brian Wolfman points out, “This decision may be the first addressing the validity of a rule enforced by the CFPB. No doubt there will be many more, as the banks try to extricate themselves from as many CFPB regs as possible.”

Right of Rescission may be Rescinded by the Federal Reserve

Rescission is the right to undo a fraudulent loan—usually a mortgage. The bank gives back the interest and fees, the borrower pays back what remains of the original amount of the loan—and keeps the house—and everybody pretends the loan never happened. Bringing a claim of rescission also terminates a bank’s right to foreclose.

Rescission is a powerful tool in the fight against fraud, and a powerful incentive for banks to avoid it.

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Find Your Credit Card Contract

Under last year’s Credit CARD Act, credit card companies must post copies of their credit card agreements online at the Federal Reserve. This means that if you do want to see a copy of the agreement—say, before you sign up for a new credit card—you can find it online.

Credit Card Contract Collection | Consumer Law & Policy Blog

TCF Bank To Curb Overdraft Fees

Jumping ahead of proposed federal legislation, TCF Bank is attempting to curb its own overdraft fees, starting early next year.

Under the current system, customers can get hammered with multiple overdraft fees in the same day once their balance drops below zero. If a customer is unaware their balance is in the red, they could rack up an overdraft fee for every purchase that day.

Under TCF’s new proposal, the overdraft fee would be a once-per-day charge, ranging from $10 to $25 (TCF has not decided on the rate yet)

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Does July of 2010 seem a long way off to anyone else? (AFFIL Week)

On December 18, the Federal Reserve Board released new regulations for credit card issuers.  The substance of the regulations is great – in some ways it’s even stronger than what was proposed (more on this below).  But the ridiculous problem with the Fed’s announcement is that, for some reason, the rules won’t go into effect until July 1, 2010.  That’s eighteen months from when the regs came out in December.

Eighteen months is a long time!  In eighteen months people can get into and out of all sorts of shenanigans, financial, and otherwise.  And given the direction the economy is heading, doesn’t it seem like now would be a better moment to enact these long-overdue consumer protections, and keep more money in consumers’ hands?

Of course, banks do need some amount of time to conform their procedures to the new rules.  But this really shouldn’t take longer than three months.  After all, the industry is miraculously efficient when adopting new procedures that they stand to profit from.  Why on earth do they need eighteen months in this case?

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FEDS: BANKS MUST STOP MISBEHAVING … IN 2010

“The Federal Reserve Board on Tuesday alerted the public to instances of questionable solicitations directed at consumers. These solicitations promise consumers access to personal loans through a nonexistent Federal Reserve lending program.” The Fed does not make loans, folks. Press Release, November 4, 2008 | The Federal Reserve

Bailouts galore: Fed takes over AIG

It’s official, the U.S. taxpayer is now buying bad debt by the billion. The Fed just decided to give insurance giant AIG an $85 billion loan to keep it solvent. Can governments declare bankruptcy?

U.S. Plans Rescue of AIG to Halt Crisis; Central Banks Inject Cash as Credit Dries Up | Wall Street Journal