Daily Deposit 3.8.2023

GM. This is the Daily Deposit. The newsletter that helps bankers get better, not worse, everyday

Going harder than Bonnie Thunders at the WFTDA Championships. The Lebron James of Women's Flat Track Derby Association Championships…

Today in Banking

Coinbase moving into Asset Management biz

Rising rates could cut bank profits: longer-term maturity assets acquired at lower interest rates are now worth less

Fed Reserve Chair Powell says there is “more work to do” as inflation runs higher than expected

Bankers view BaaS as a crucial opportunity for revenue growth.

Banking 101

Regulation Double D

Regulation DD, also known as the Truth in Savings Act (TISA), is a federal regulation from 1993 that governs the disclosures that banks must provide to consumers when offering deposit accounts. Double D forces transparency from banks to consumers. The purpose of Reg DD is to ensure that consumers have access to accurate and uniform information about deposit accounts, enabling them to make informed decisions about where to save their money. Personally, I would like to know if you're planning on fleecing me…

So what's good and what's bad?

Pros of Reg DD in banking

1. Transparency: Reg DD requires banks to provide customers with detailed information about the terms and conditions of deposit accounts, including interest rates, fees, and penalties. This information is presented in a standardized format, which promotes transparency and helps consumers make more informed decisions about where to save their money. Anyone else bounce around high-yield savings accounts to maximize return on cash?

2. Protection: Reg DD also includes provisions that protect consumers from misleading advertising and unfair or deceptive practices by banks. For example, banks are required to disclose the annual percentage yield (APY) on deposit accounts and cannot use misleading terms like “free” or “no fees” if there are in fact fees associated with the account. These protections help ensure that consumers are not taken advantage of by unscrupulous banks, unlike Kyle from South Park. Seriously, check out Season 15 Episode 1, HUMANCENTiPAD.

3. Consumer empowerment: By providing consumers with the information they need to make informed decisions about where to save their money, Reg DD empowers consumers to take control of their financial lives. Consumers who are armed with knowledge are better equipped to choose the account that best meets their needs and to negotiate with their bank for better terms and conditions.

Cons of Reg DD in banking

1. Complexity: While Reg DD is designed to promote transparency, the information provided to consumers can be complex and difficult to understand. The standard format for presenting information on deposit accounts includes a large amount of technical jargon, and this is just overwhelming. Consumers won't fully understand the terms and conditions of their account, which could lead to unexpected fees or penalties.

2. Compliance costs: Banks are required to comply with a number of provisions under Reg DD, including providing disclosures in a standardized format and updating those disclosures as needed. Compliance with these requirements can be time-consuming and costly for banks, particularly smaller institutions with limited resources. These costs could ultimately be passed on to consumers in the form of higher fees or lower interest rates.

3. Limited scope: Reg DD only applies to deposit accounts, which means that consumers may not receive the same level of transparency and protection when dealing with other financial products, such as loans or credit cards. This limited scope could lead to confusion among consumers who assume that the protections provided by Reg DD apply across the board.

In conclusion, while Reg DD has its advantages in promoting transparency, protection, and consumer empowerment, it also comes with some drawbacks, such as complexity, compliance costs, and limited scope. As with any regulation, it is important to weigh the benefits against the costs and consider whether there are alternative approaches that could achieve similar goals with fewer downsides.

LULZ

reply with a Cold Stone bowl score… did you:

a) like it

b) love it

c) gotta have it