Management indicated during a fourth-quarter conference call that Citi will lose anywhere from $400 million to $600 million in net pre-tax revenue as a result of the CARD Act. It's unclear whether the government will crack the whip again for Citi's planned credit-card fees, which customers have been informed about via mass mailings.
Capital One had also been using some less-than-savory tactics, until a bank regulator recently took notice. Capital One had been charging some customers an annual fee, despite the fact that they had already closed their accounts years ago. Capital One attributed the post-mortem fees to a system glitch, and agreed to reimburse customers a total of $775,000, as part of an agreement with the Office of the Comptroller of the Currency.
JPMorgan Chase's Jamie Dimon has been a vocal critic of much of the consumer-protection legislation, asserting that it will increase costs for banks while reducing revenue, and not helping consumers all that much. Since banks will continue on their profit-driven mission, the changes will eventually make all consumers pay more, rather than targeting the ones who are bad at managing their money. Dimon has a point, but it's one that has largely fallen on deaf ears.
"The effects of the CARD Act coupled with the overall attitude in Washington regarding consumer protection will likely continue to reduce industry revenues and profits over the next several years," Credit Suisse analyst Moshe Orenbuch said in a recent note to clients.As a result, JPMorgan has been aggressive in pursuing new customers and expanding banking relationships with existing ones, until there is more clarity on where new fees can acceptably land. The bank estimates it will lose $500 million to $750 million in annual revenue as a result of the CARD Act legislation until then.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV