Arlington, VA — Misunderstandings about key financial policies and practices often lead to ill-advised regulations that harm consumers through reduced transparency, limited choices, and inflated prices. A new report by Nate Scherer at the American Consumer Institute examines three pervasive financial myths that continue to shape policymaking and outlines their unintended consequences.
Read the full report here.
The report challenges the belief that regulating “junk fees” benefits consumers, arguing that these fees promote transparency and discourage risky behavior, and that banning them could have negative market consequences. It also critiques the Durbin Amendment, which, despite claims of success, led to the elimination of free services and rewards, warning that similar regulations on credit cards could produce the same harmful effects. Finally, the report refutes criticisms of the Federal Home Loan Bank (FHLB), highlighting its role in supporting small banks, being self-sufficient, and effectively advancing community and housing development without burdening taxpayers.
Key Takeaways:
- Regulating Junk Fees: Banning or limiting these fees could reduce market transparency and increase costs for consumers.
- Durbin Amendment Consequences: Expanding similar policies to credit cards would hurt consumers by eliminating benefits like rewards programs.
- The Truth About FHLB: Contrary to criticism, the FHLB supports small banks, operates without taxpayer funds, and fulfills its mission of housing and community development.
To avoid harmful consequences, policymakers are urged to base regulations on sound economic analysis rather than flawed assumptions. For more details on these myths and their impacts, read the full report by visiting The American Consumer Institute’s website.
Read the full report here.
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