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July 19, 2010
Mid July saw BP’s runaway oil well in the Gulf finally capped, but with clear warnings that the mounting drill pipe pressure poses new challenges, the Dodd-Frank Act (2,500 pages of financial reform) that was recently passed in the senate also poses some new challenges – reading it first, and then implementing it!
The legislation requires regulators to write hundreds of new rules and conduct numerous studies which could itself launch a new job creation program and help lower unemployment, at least in DC.
The 2Q10 earnings season arrived with some banks reporting higher earnings mostly due to revenues from higher credit card fees and revised downward estimates on problem mortgage loans.
Major Banks are estimating that this new legislation will reduce its future earnings by 11%. One bank, Bank of America, has even started using a five letter acronym “GUEST” for G ’genuine welcome’, U ‘undivided attention’, E ‘empowered’, S solutions and T for ‘thank you’. Is this the new regulatory climate which apparently requires treating customers differently as it seeks to pass thru new fees to offset the loss in revenue?