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New regs boosting credit unions?

By Claes Bell, CFA · Bankrate.com
Wednesday, August 28, 2013
Posted: 6 pm ET

Banks have long complained that a host of new regulations enacted in the last few years, including the Dodd-Frank financial reform law's Durbin Amendment, are forcing them to raise fees on customers and eliminate free checking.

Indeed, since the passage of the law, according to data from Bankrate's Checking Survey, 65 percent of checking accounts were free in 2010, when Dodd-Frank became law. By 2012, that number had fallen to 39 percent.

But at least one group is benefiting from those laws -- credit unions with assets less than $10 billion. Credit unions that slide in under that threshold are exempt from many of the provisions of Dodd-Frank, including oversight by the Consumer Financial Protection Bureau.

A report out this month from Aite Group in Boston suggests those credit unions are taking advantage of banks' "fee-ing frenzy" to poach their customers.

In a survey of credit union executives, 70 percent said they'd increased the number of checking accounts they provide compared to 2011, when the Durbin Amendment, which cut the "swipe fees" that merchants pay banks, was enacted. In addition, 82 percent said they'd seen growth in debit card accounts, with just 1 percent of respondents saying they'd lost debit card accounts in that time period.

Still, banks don't seem to be hurting too badly. The Federal Deposit Insurance Corp.'s most recent quarterly report shows bank profits hitting an all-time high in the first quarter of this year, and only 8.4 percent of banks reported negative earnings.

What do you think? Are credit unions getting a leg up on banks because of fees?

Follow me on Twitter: @ClaesBell.

Senior banking reporter Claes Bell is a co-author of "Future Millionaires' Guidebook," an e-book written by Bankrate editors and reporters. It's available at all the major e-book retailers

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