SENATE BILL: Transactions Fairness Act (At Final Vote)

[Pyro]

I am gladdened to see that this bill has been taken up in the Atlasian Senate.
As the author of the text, feel free to direct any questioning toward myself.

From its introduction as regional legislation in the Lincoln Council, here are my opening words:

Thank you, Mr. Speaker.

This legislation, in essence, is a collection of fair-minded regulations intended to neuter the ability of unaccountable corporate financial entities to rip-off consumers and defraud their customers. These are companies that unjustly collect funds from everyday, working Atlasians through underhanded and sinister practices, as highlighted most clearly through "Dual Tracking", when a bank pretends to follow through with a loan while, at the same time, pushing foreclosure.

It is past time we take the reigns away from these fraudsters and give Lincolnites a small sense of peace of mind. Accessing your own funds should never result in a fee. Closing an account or wishing to receive paper statement should never result in a fee. Our people deserve these common sense liberties when it comes to how they are treated by the banking industry.

Mind you, this is the first stepping stone on the road to a just society, and although the measures taken in this bill shall relieve only a minor burden from the backs of working people, they are absolutely essential. For those present in this Council whom are not beholden to the pleas of billion dollar financial institutions and instead wish to return power to the hands of consumers, I urge your support.

[Pyro]

I am certainly not against restricting some of the fee charging that occurs, but I am concerned that there maybe a reduction in financial services offered in some cases if all such are eliminated in one swoop. Is there any risk of that being the case with this bill?

I do not think that would be the case, no. Financial institutions have cultivated expansive profit margins long before pushing microtransaction-like fees onto the consumer. Many of the fees listed in the bill have only come about in the past decade, to my knowledge, and exist for no legitimate cause.

Furthermore, I believe that the multi-national corporate entities most affected by the Transactions Fairness Act are extremely unlikely to allow their slice of the Atlasian economy to shrink as a result of it. The lion's share of profit in this industry is not built through ATM fees or Dual Tracking, after all.

[Pyro]

I am certainly not against restricting some of the fee charging that occurs, but I am concerned that there maybe a reduction in financial services offered in some cases if all such are eliminated in one swoop. Is there any risk of that being the case with this bill?

I do not think that would be the case, no. Financial institutions have cultivated expansive profit margins long before pushing microtransaction-like fees onto the consumer. Many of the fees listed in the bill have only come about in the past decade, to my knowledge, and exist for no legitimate cause.

Furthermore, I believe that the multi-national corporate entities most affected by the Transactions Fairness Act are extremely unlikely to allow their slice of the Atlasian economy to shrink as a result of it. The lion's share of profit in this industry is not built through ATM fees or Dual Tracking, after all.

Under the penalties section it says, "seizure of assets"? What assets? All of them, some of them? What guidelines dictate the seizure of assets as a penalty. What is the point of taking a percentage of gross income and then all of that assets if that is the case?

It's my understanding that asset forfeiture as a penalty would be handed down through a federal court, with the amount to be forfeited determined by the court itself. This penalty, as well as the 20/40% of Gross Income, is meant to deter financial entities from ignoring the guidelines set in this bill. If the consequence was merely, for example, a minor fine, I would wager that the liable parties would continue business as usual.

[Pyro]

I am certainly not against restricting some of the fee charging that occurs, but I am concerned that there maybe a reduction in financial services offered in some cases if all such are eliminated in one swoop. Is there any risk of that being the case with this bill?

I do not think that would be the case, no. Financial institutions have cultivated expansive profit margins long before pushing microtransaction-like fees onto the consumer. Many of the fees listed in the bill have only come about in the past decade, to my knowledge, and exist for no legitimate cause.

Furthermore, I believe that the multi-national corporate entities most affected by the Transactions Fairness Act are extremely unlikely to allow their slice of the Atlasian economy to shrink as a result of it. The lion's share of profit in this industry is not built through ATM fees or Dual Tracking, after all.

Under the penalties section it says, "seizure of assets"? What assets? All of them, some of them? What guidelines dictate the seizure of assets as a penalty. What is the point of taking a percentage of gross income and then all of that assets if that is the case?

It's my understanding that asset forfeiture as a penalty would be handed down through a federal court, with the amount to be forfeited determined by the court itself. This penalty, as well as the 20/40% of Gross Income, is meant to deter financial entities from ignoring the guidelines set in this bill. If the consequence was merely, for example, a minor fine, I would wager that the liable parties would continue business as usual.

That disproportionately large penalty would likely violate the no excessive fines clause of the Bill of rights. I mean, if I charge a $5 ATM fee once in violation of the law is the proposal really a fine of millions upon millions of dollars? That's very Constitutionally suspect.

These financial institutions do not charge a $5 fee once. That isn't how it works. These various fees are charged and recurred routinely to account holders, with lower-income consumers particularly susceptible. Once these fees add up, they go beyond the billion mark. The penalties are fair with this aspect in mind.

[Pyro]

I am certainly not against restricting some of the fee charging that occurs, but I am concerned that there maybe a reduction in financial services offered in some cases if all such are eliminated in one swoop. Is there any risk of that being the case with this bill?

I do not think that would be the case, no. Financial institutions have cultivated expansive profit margins long before pushing microtransaction-like fees onto the consumer. Many of the fees listed in the bill have only come about in the past decade, to my knowledge, and exist for no legitimate cause.

Furthermore, I believe that the multi-national corporate entities most affected by the Transactions Fairness Act are extremely unlikely to allow their slice of the Atlasian economy to shrink as a result of it. The lion's share of profit in this industry is not built through ATM fees or Dual Tracking, after all.

Under the penalties section it says, "seizure of assets"? What assets? All of them, some of them? What guidelines dictate the seizure of assets as a penalty. What is the point of taking a percentage of gross income and then all of that assets if that is the case?

It's my understanding that asset forfeiture as a penalty would be handed down through a federal court, with the amount to be forfeited determined by the court itself. This penalty, as well as the 20/40% of Gross Income, is meant to deter financial entities from ignoring the guidelines set in this bill. If the consequence was merely, for example, a minor fine, I would wager that the liable parties would continue business as usual.

That disproportionately large penalty would likely violate the no excessive fines clause of the Bill of rights. I mean, if I charge a $5 ATM fee once in violation of the law is the proposal really a fine of millions upon millions of dollars? That's very Constitutionally suspect.

These financial institutions do not charge a $5 fee once. That isn't how it works. These various fees are charged and recurred routinely to account holders, with lower-income consumers particularly susceptible. Once these fees add up, they go beyond the billion mark. The penalties are fair with this aspect in mind.

I mean in that case even if the fine was just $100 per violation plus disgorgement of the fees the cost in legal defense alone would be enough to stop the practice. Multi million dollar fines per violation is clearly excessive. If they do it 5 x are you really saying 100% of gross profits of the entire bank be stolen? If they do it 6 x what then?

No, that is not how Sec. III would function. The penalty is not compounded for further violations.
Once more, this is meant to be an intimidating deterrent.
I have my doubts that anything less would be effective for corporate entities of this size.

I am very much concerned about expanding asset forfeiture. If anything we should be getting rid of that across the board. The situation with the guy that lost his hummer ($42,000) over a few hundred in drugs, comes to mind. It was the Timbs Case or something like that.

The penalty does not deal with individuals, it deals with corporations.
Asset forfeiture is a suitable punishment for blatant disregard of consumer protection law.

[Pyro]

Of anything, you've made the point that the language should be changed to reprimand/seize assets of  the executives of these banking institutions directly.

[Pyro]

Is that suppose to be annual gross income?

It's the same thing. Business Gross Income is annually calculated.

Also why can't an institution have a fee for opening an account?

There are many banks or credit unions one can choose when they want to start. You aren't forced to choose one.

I've already answered this question in the Lincoln thread.

I am not sure I support this. I really don't like the government telling banks what they can charge for. I say let banks make their mind up on that.

Without any regulation, there is nothing in place to prevent financial institutions from nickel-and-diming working families. We need to, at the very least, provide these basic boundaries to protect consumers.

Also why is there a grace period for credit cards required when there already is a 28-30 day grace period for most banks?

In order to set a minimum standard.

[Pyro]

I’m not sure if any of you are aware of this, but if you lower the revenue for banks, they will engage in behaviors to re-coup this money. Ideally, that would be investments increasing, but, realistically, without some sort of interest freeze, perhaps a limited freeze that phases this in, banking institutions will almost certainly raise interest rates on loans, mortgages, et cetera.

I wouldn't be opposed to adding a provision for an interest freeze should the Senate find this a necessary precaution. Though I would argue that the changes in this bill would boost consumer confidence and overall interest in investing in institutions and may lead to a greater number of account holders, thus far offsetting any losses.

Furthermore, the current language seems to exclude credit unions from these rules - is that intentional? Because if so, the likely interest hike above will send consumers moving, probably on a larger scale than you might think, to the credit unions instead of banks.

Credit unions were not specifically targeted in the writing of the bill.

To me, it makes far more sense to designate banking institutions based on fees, in at least three categories, so people can clearly see what average price of fees they have compared to other banks and, if further explored, specifically what fees.

I fundamentally disagree, what else can I say?

Also, Section II 2-6(or however you designate it) is highly flawed. It allows any homeowner with a mortgage, at any time, to stop payments and then refuse to allow it to be foreclosed.

It is my understanding that the consequences of failing to abide by a mortgage agreement are outlined sufficiently in such a contract - and the homeowner would have presumably signed this, thus granting authorization. Sec II 2-6 only comes into effect in the case that the above condition is not met.

For example, if a homeowner has agreed to a specific payment plan and the bank decides to abruptly end or change the plan (like, moving from an income-driven arrangement to a flat per-month fee), the law as-is holds no provision, as I understand it, which would prevent an immediate foreclosure should the bank so desire. With Sec II 2-6 implemented, the homeowner may have a case that the foreclosure is not warranted as the abrupt change was not authorized.