Dimon: Good Times AheadWhile some investors fear the eventual end of monetary easing by the Federal Reserve and higher interest rates, JPMorgan Chase ( JPM)CEO James Dimon on Tuesday said the firm was well-positioned for a significant rise in earnings . Speaking at the Morgan Stanley Financials Conference in New York, Dimon said if the market yield on the 10-year U.S Treasury bonds were to rise by 100 basis points, the bank would make an additional $2 billion, "all else being equal."
Revisiting OverdraftsThe Consumer Financial Protection Bureau early on Tuesday released a report on bank and credit union checking account overdraft fees "that raises concerns about whether the overdraft costs on consumer checking accounts can be anticipated and avoided." CFPB director Richard Cordray said in a statement that "consumers need to be able to anticipate and avoid unnecessary fees on their checking accounts. But we are concerned that overdraft programs at some banks may be increasing consumer costs." Banks were forced to offer overdraft protection for debit card purchases and ATM withdrawals only to customers opting-in for the service, during 2010. According to the CFPB's study, "consumers who opt in for overdraft coverage end up with more costs and more involuntary account closures." That is no surprise, since those consumers are overdrawing their accounts and agreeing to pay significant fees. The overdrafts, in effect, become loans, and some bank customers are slow to bring their account balances to positive levels, or never do so, in which case the lender writes off the loan, after making efforts to collect. "If banks are unable to make money available under this system because the CFPB mandates that they lose money on overdrafts, then the household loses access to this method of funding," wrote Rafferty Capital Markets analyst Richard Bove in a note to clients on Tuesday. "The household must then turn to payday lenders to obtain the needed money. The explicit interest rate here is very high. Thus, the CFPB wants to stop the payday lenders from functioning." Bove went on to take his viewpoint to its obvious and colorful conclusion: "Assuming the CFPB is successful in meeting its goals it will curtail overdrafts at the big banks and shut down payday lenders. The question is then where will the household get the money it needs to meet short-term obligations. The answer, of course, is through illegal lending operations aka the Mafia."