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Posts Tagged ‘usury’

How Much Are You Paying for That Fund?

Posted by Larry Doyle on July 26th, 2010 6:30 AM |

A few weeks back, I chastised a local financial commentator, Julie Jason, for her condescending demeanor toward Madoff investors. This week, I am happy to praise Ms. Jason for her intuitive nature and exploratory work on mutual fund fees and expenses.

All too often we hear asset managers touting their performance and investment expertise. I have hardly ever heard an asset manager addressing the fees and expenses charged for their so-called management expertise. To this end, I tip my hat to Julie Jason for highlighting this critically important topic in writing, Helping Figure Out the Fees:

You may have heard that mutual fund 12b-1 fees, part of the operating expenses of a fund, will be eliminated, which would imply that mutual fund shareholders could benefit from lower costs. Lower costs should mean higher performance.

Don’t be so hasty! Wall Street does not merely allow fees to walk out the door. (more…)

Banks Build Better Mousetrap

Posted by Larry Doyle on July 9th, 2009 7:54 AM |

Is there truly any reason to trust financial institutions these days?

Developments within the credit card space have exposed the true colors of these institutions . . . not that there was ever any doubt. Recall how consumer outrage at rapidly rising interest rates on credit cards pressured Washington to rein in the usurious business practices of the financial industry.

New legislation was badly needed as banks clearly utilized abusive business practices. The Wall Street Journal highlighted these developments in writing on May 21st, Credit-Card Fees Curbed:

“Credit cards are a tremendously valuable and useful tool for consumers, providing them with relief during critical moments,” said Senate Banking Committee Chairman Christopher Dodd. “This is a very important industry….We just want it to work better.”

The legislation marked a major defeat for the credit-card industry, as lawmakers complained that consumers are being hit with tricks and traps on their cards.

Well, while the legislators were in the front room having the photo ops, the bankers were in the back room building a new and better mousetrap, at least from their perspective.

The Los Angeles Times sheds light on how Credit Card Firms Try End Run Around New Federal Rules:

Banks are quietly changing the terms of millions of credit card accounts as they brace for a tough new law that will limit rate hikes.

The law would restrict interest rate increases unless a credit card has a variable rate. So at least two major lenders are switching their cards with fixed rates to — you guessed it — variable rates.

“It’s completely unfair,” said Linda Sherry, a spokeswoman for Consumer Action. “It’s an end run around the intent of the new law.”

That law is the Credit Card Accountability, Responsibility and Disclosure Act, which President Obama affixed with his signature in May. Its various provisions will be phased in between next month and February.

Who are these two major lenders? Bank of America and JP Morgan Chase. Given the size of their operations, watch every other credit card issuer set the same trap. (more…)

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