|
|
Press Release |
Contact: |
|
|
|
WASHINGTON The new wave of banking mergers is moving the nation toward a system of bigger and fewer financial giants, promoting a two-tier fee scheme where wealthier depositors get first class treatment and regular consumers are likely to get short-changed with higher fees and declining service, according to Mary Griffin, an attorney at Consumers Union.
"With massive consolidation and rising fees in today's banking industry, it has been troubling for consumers to find the nation's banking regulators asleep at the switch," Griffin told a hearing of the House Banking Committee Wednesday which was examining the impact of the merger activity. "We hope that the merger activity on Wall Street provides Congress with the needed wake-up call to step into this void and provide consumers a shield against banking rip-offs."
Congress should adopt strong anti-rip off protections on retail sales activities and put a premium on protecting the privacy of consumers, before they signal any support for this massive financial services consolidation, according to Griffin. Consumers are chilly to the prospect of an upsurge in telemarketing and junk mail that may follow these mergers, as financial executives vying for bigger profits crave the "cross marketing" potential of using databases of their one time rivals to farm for more business.
The possibility of shady sales practices being unleashed is also of concern to consumers. Fundamental changes are needed to shield consumers from being compromised by a system that rewards sales volume over consumers' interests in proper disclosure of the risk and commissions or fees associated with the transaction. Those seeking loans should also not be subject to unsolicited sales pitches for other products until the loan has been made, according to Consumers Union.
Griffin believes the Citicorp/Travelers merger in particular takes the public into un-chartered and dangerous territory because current laws and regulations are not up to the challenge. The banking mergers should be a wake-up call that spurs congressional intervention to overhaul the banking laws in a way that gives consumers their fair share of the benefits coupled with appropriate safeguards. Without action, Griffin warned the consequence of these mergers will be that most consumers will get nickel and dimed while wealthy individuals and commercial interests draw the lion's share of the benefits.
