Bank of America Prepares for a $10 Billion Hit Thanks to Financial Reform

Friday, July 16, 2010 , 4 Comments

Financial reform rules!


Bank of America took more than a few analysts and investors by surprise on its earnings call Friday by disclosing that the pending financial regulatory overhaul may cost the firm $10 billion or more.

Among the hits that the recently passed legislation promises are a drop in interchange fees, or the payments banks receive from credit card transactions, of as much as $2.3 billion.

Bank of America also says it expects to lose about $7 billion to $10 billion in goodwill for its global credit card service unit in the third quarter next year.

I'm reluctant to make any snarky comments like "They deserved it" or "Good, I hope it costs them another $100 billion" because in the end, it comes out of the consumer's pocket, not the bank's and the poor little consumer just can't take another hit.

Jr Deputy Accountant

Some say he’s half man half fish, others say he’s more of a seventy/thirty split. Either way he’s a fishy bastard.


W.C. Varones said...

Actually, I think banks were raping consumers and retailers in the ass with excessive credit card fees. This just stops that, and I think it's entirely a good thing.

Not sure if this made it into the final bill, but early language allowed retailers to give cash discounts, which should be their right in the first place. Dirty banksters had used their political connections to ban retailers from cash discounts, encouraging excessive use of high-fee credit cards.

Let me make my position clear since I was being lazy on this post... you're right, they were raping the consumer (and the retailer). But here's the thing: what's to stop them from finding a new creative way to continue doing what they were doing?

I guarantee you BofA won't be hurting once they find the loophole.

Then again we don't use credit cards in San Francisco so I am not really in a position to discuss much of any of this. But we DO have a law on the books, I believe, that makes credit card minimums (which are usually $10 and you can get around it if you are cool with the merchant and almost always pay in cash) illegal. Stupid.

And you and I know Congress enough to know that not only is there a loophole, there are probably dozens of them and most are large enough to drive a truck through.

Whompppp whompppppp

elf2006real said...

What do you mean you don't use credit cards and cash only in San Fran?

Tell me more, I'm may be a window into the future.