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Comment by nickpsecurity | Hacker News Reader

The article seems to overlook the main obstacle: the banking cartel. The big bankers in the U.S. are among its most powerful lobbyists. The current system benefits them plenty. They like it the way it is. They'll sure push to streamline red tape where possible but a near-zero barrier to entry would eat into their profits.

So, they'll continue paying politicians to ensure the status quo and collecting all kinds of fees/interest. Changing the situation will require Congress or courts to go in a different direction. That usually doesn't happen if big, banks' profits are concerned. The voters pushed against the banks in 2008 and the banks (mostly Goldman) won. I'm not getting my hopes up on this.

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It's rather the excess of regulation due to anti-bank sentiment that creates these barriers to entry. Banks are rather calling for less regulations, and when they got it their way in the 90s, it is what happened.

But it is true that the excess of regulation is reenforcing the position of the incumbents. Banks have to staff full time employees just to read the amount of draft regulations and consultation papers published every day. A start up stands no chance in that environment.

I don't think these are the regulations that I read about banks trying to have removed.

They fight the regulations that eat into their profits and back those that help them. During that same time in 90's, they fought for stronger regulations on credit unions and still do. The also push against the alternative, local currencies because it's less money in their control. Their best ones, though, are in court where they push for low security of ACH and for liability to be on consumer when banks screw up.

Fighting entrenched bankers is one of the hardest uphill battles one can get into. Not so smart.

It is not a binary "banks always want less regulation". Banks, like other entrenched interests, will be for or against regulations, depending on if they advance their interests or not.

You see this in every industry. The energy industry hates environmental regulations, but they like more regulations when it serves to diminish the viability of alternatives like solar.

Seems like another example of "Baptists and bootleggers" [0]. Well-intentioned people trying to protect citizens from financial malfeasance support the same regulations that the big financial players use to keep competition out of the market.

[0]: https://en.wikipedia.org/wiki/Bootleggers_and_Baptists

Call me cynical, but I think most of the legislation introduced is driven by lobbyists from the start anyway.

General public may have the illusion that these regulations are in the interest of citizens, because of clever wording and names used, etc. The "Freedom Act" is SO not about freedom, it is almost funny.

EDIT: I am not cynical - this is a well recognized practice (thanks to cfreeman for his post below):

https://en.wikipedia.org/wiki/Regulatory_capture

"So, they'll continue paying politicians to ensure the status quo and collecting all kinds of fees/interest."

I'm waiting for a politician to really go after the banks on this his very issue. Yes, we have other problems, but capping/eliminating fees would get my attention.

There's only one Elisabeth Warren, and the Bankers are making her out to be out of touch with the way the system works? Could anyone imagine if the government let the banks suffocate in 2008? Sure Jamie Diamond's bank would have magically survived--according to that ego?

The innovative competition that would have arose from the ashes might have been interesting? We will never know. Why do I feel these banks are in conclusion with fees?

There is little wrong with fees, let alone interest. Considering how many banks and credit unions exist there is little excuse for not finding one that provides the services you want with a fee structure you accept. Credit unions usually provide the best value and membership rules are very flexible.

Regulation on any industry cost that industry money. It also does not help when your in an industry which gets investigated for not providing services to many who cost you money to serve.

The only concerns I have with fees is that they need to be always out front so that the customer is not caught unawares.

> Considering how many banks and credit unions exist there is little excuse for not finding one that provides the services you want with a fee structure you accept.

While it'd be great if that were true, it's by no means guaranteed. We have a choice in wireless carrier here in the US but still most folks aren't terribly pleased with theirs.

Just because there are a lot of players it does not follow that you'll find one you like. There can be many players but other forces which prevent what you want from existing at all. Government regulations, "generally accepted practices", uncreative management, etc.

>> Could anyone imagine if the government let the banks suffocate in 2008?

I've heard from multiple sources that Iceland let their banks fail, and they're actually doing better than most now.

http://www.washingtonsblog.com/2011/11/key-lesson-from-icela...

Thanks, I've bookmarked that link. It's actually very interesting, and I'm surprised is hasn't been more widely discussed, or used as an example.

Another link (from that article) straight from the IMF, with some more info: http://www.imf.org/external/pubs/ft/survey/so/2011/Surveyart...

That's very different; Iceland's total debt was tiny (compared) as it is a very small island (Iceland's debt was perhaps 1/12 the size of the debt held by Lehman Brothers). Very annoying if you had money stored in Iceland, but otherwise not a huge problem.

The US letting its banks fail would possibly have brought down the entire economy, leading to a far, far more severe crisis. That's what the parent is speculating about.

Iceland did a combination of things. They put dirty politicians in jail, got better ones in office, seized the banking system, re-focused it on stable growth rather than greed, and knocked out fraudulent debts with laws. The U.S. could've done quite a bit of that. We could've even pitted Wall St's geniuses against each other by talking the companies and then offering financial incentives to those that help ensure bailout dollars only go to right place.

And so on and so forth. Instead, here's hundreds of billions, don't tell us what you do with it, and criminal immunity. Some kind of "democracy" the U.S. is these days...

these fraudulent debts would be those UK pensioners and UK local government who had savings with the Icelandic banks.

Possible. I was talking about the debt on the side of Icelandic bankers working with dirty politicians to make their banks money and take people's homes with predatory practices. The same crap they did over here.

Sorry to hear it if people in UK got caught up in the mess.

The main problem here is the fact that states can regulate banking instead of having one license you need 52.

But that would require a huge reform of the USA's political system which is never going to happen.

That is a significant problem. However, the corruption problem remains on top of the list. Just look at the description of the New York system. That's a racket and worse than many I've read about. Didn't happen accidentally.

So, you have the corruption-driven blockades at federal and state-levels along with the natural regulation that will exist at either level. Quite a pain to deal with.

Now that's a conspiracy theory.

Or just another example of https://en.wikipedia.org/wiki/Regulatory_capture.

Do you realize "conspiracy theory" doesn't mean "false"?

Just like the NSA spying on US citizens, right?

Oh, don't believe me that banks pay off politicians. Look at their own records:

http://www.opensecrets.org/lobby/clientsum.php?id=D000000090

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