Obama administration's financial industry fees could affect customer loyalty in banking
2010-03-05
When most financial institutions work out how to prevent customer attrition, reducing or eliminating rates and charges is high on the list of strategies. However, the Congressional Budget Office has recently suggested that President Barack Obama's proposed $90 billion fee on those institutions that received bailout fundings and saw benefits will end up costing customers.

The proposal is part of Obama's pledge to get back "every single dime" given to banks in bailouts, Reuters reported. It would take effect in June, applying to financial firms with more than $50 billion in assets, and would reach $90 billion over the course of a decade

However, the CBO has claimed the Obama plan is not specific enough about how assets and liabilities will be defined, and further, that the costs would hit consumers hardest. In a letter written to Senator Charles Grassley, the CBO wrote, "the cost of the proposed fee would ultimately be borne to varying degrees by an institution's customers, employees, and investors, but the precise incidence among those groups is uncertain."

The issue is only one of many reasons banks need to be careful about customer attrition. Analysis by Mintel Comperemedia recently predicted that banks would continue to add fees and changes in the near future to deal with economic complications.

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