Thursday, August 26, 2010

The New Obama Tax on Depositors

When United States President Barak Obama signed the new banking regulation bill passed by the liberal Democratic Congress into law recently, he essentially was imposing a tax on those who deposit their money in banks.

The federal regulations on banks limited the fees banks could impose in certain situations, which reduced the profitability of their businesses during this recession. The banks have responded by raising fees or creating new fees on all depositors, especially for those with checking accounts. With interest rates at near record lows, the new fees are causing many depositors to lose money on their checking accounts. In other words, not only are checking accounts no longer free, thanks to Obama and the Democratic Congress, but depositors must actually pay the bank for the privilege of maintaining a checking account.

A regulation is a cost of government, like a tax. When government decides exactly what fees businesses may charge, such a regulation creates costs of doing business that are passed along to customers. Thus, the price of the federal policy to protect a few favored constituents is the higher fees that all will have to pay -- the Obama tax on depositors, just as the Republicans in Congress who opposed the new federal banking regulations had predicted.

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