The P.A.

A weekly address from Patrick Adams,
President of St. Louis Community Credit Union

Well-Meaning Legislation Can Be A Zero-Sum Game

On July 27th, 2009, posted in: Uncategorized by

Here’s my opinion…Sometimes I worry that the legislative leaders of this great country may be out of touch with what’s going on around the kitchen table at Joe Six-Pack’s house. They all purport to be in touch with their constituency. Yet some best-intentioned piece of legislation makes its way from a bill to a law, and suddenly the rest of us outside the beltway respond with a collective gasp, a quizzical look (like the quirky head cock of your puppy the first time it saw you in a bathing suit), followed by some under-the-breath commentary not usually fit for mixed company. What happened?

Yes, I’m throwing a wide net here. But it has been my experience that too many of the very laws that are being passed to protect the consumer end up inadvertently putting the Average Joe in the penalty box. In other words, well-meaning laws that receive the collective blessing by our elected officials somehow become a burden to our being. I bet you’re thinking…How’s that?

Have you ever heard of the “zero-sum” game? “Zero-sum” is synonymous with “somebody’s gonna pay,” and is a tricky way for those in the business world to pass along the costs related to the new or amended law to the lowest common denominator. With all due respect to my fellow consumption minions, consider you, me and Joe Six-Pack as the lowest common denominator. True enough, we’ll “pay the freight”…in one way or another.

Worse yet, imagine the elimination of competition and consumer choice because a well-intentioned piece of legislation became such a burden that smaller institutions could not bear the cost of compliance and quietly disappear. Oh, the big behemoths would like nothing better. So is that legislation costly to the “man on the street?” You betcha!

Think for just a second. For those of you not paying close attention to media reports (who can blame you), please note that financial institutions on the brink of Armageddon just a few months ago are already posting monster profits. For-profit bankers are very smart (read: dumb like a fox). HMMMMM.

Switching gears…there are two parties that should be active in the assurance that consumers do not suffer in their financial services relationship: the consumer and the financial institution (the Feds not so much). The consumer should be smart; the financial institution should be responsible and competitive; and lastly, the government should provide oversight. Each has a role – two active, and one a little less active.

As an example, I know thousands of people who have never paid a bank fee in their entire life. Why? They’ve got good money management behaviors. Then why would they want Uncle Sam to determine what a financial institution is allowed to charge in the way of fees or rates? Well, in all fairness, some folks aren’t going to change their behavior and might need a watchful eye – so oversight is needed to some degree.

But I’ve got a better idea. Consumers should vote with their feet! Walk away from the place that’s gouging you, and find a financial institution that matches your behaviors. Don’t wait for the government to fix it…you fix it (your behaviors and your choice in financial institutions); i.e. move your account someplace else.

Remember the “zero-sum” discussion a few paragraphs back? Trust me…if the Feds start legislating fees and the like, you will pay for it in some other service at most institutions. Your savings rates will be less, your loan rates will be higher, and/or your service hours will be cut. Believe this…the business world will get back what is taken from them by government regulation…and as they say, you won’t even know what hit you.

If the government intervenes in one arena, the for-profit bank will covertly recover the costs or lost opportunity elsewhere. Yep…they’ll get you, quietly and legally. Seriously, it’s best that you make the decision (not Washington D.C.) and go elsewhere.

Be a smart consumer. Change financial institutions. St. Louis Community Credit Union might be a good choice.

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