NDP MP writes law to ban ATM fees

[SVMc]

I do think it is insulting when someone rather than post an argument, thought, counter-argument or any type of reasonable response resorts to using unsubstantiated phrases like "unadulterated crap" in a two line post to what people including myself have chose to actually debate about.

But that's okay I'll console myself by knowing you were so unable to answer my points with any sort of reason or even an ounce of ability that instead of answering you needed to resort to trying to diminish me and the argument I presented. After all, if my argument was so flawed that someone of your astounding intellect could blow it out of the water with brilliance and eloquence you would have done so at least one page ago (probably four).

For anyone who does want to have a debate on this subject I will repost my last argument. I will assume that since TenPenny thinks so little of my credibility and my argument and does not care about if I agree with him/her or not that s/he will feel no need to respond to further waste his/her time by telling me again how little s/he things of me and will not bother repeating the exercise yet again. Or perhaps actually respond to the points.

At least we can finally get an acknowledgement that banking is a heavily regulated industry. Just for clarifications sake I will reiterate that it is heavily regulated by the government.

Now I realize that saying that someone else's argument is "unadulterated crap" may be easier than actually leveling support for your own argument, but I'll persist anyways.

First off I agree that if we had a banking system that was not heavily regulated by the government, to the point that the barriers of entry for new competition are so steep that no new competition is being generated and if we had choice then it would be within the market mechanisms for me as a consumer to go out and shop for my choice. Ideally in a market economy system where a consumer need was not being met another competitor would open up and fill that consumer need.

However, the banking industry is so heavily regulated by the government that there is no new real competition. The only alternatives that people have even been able to come close to referencing are ING which does not offer day-to-day chequing services and PC which has no actual branches and cannot offer the portfolio of services of other banks.

The Bank of Canada reaches the following conclusion:

Quote:

A goal of policy-makers is to facilitate a banking system that best promotes economic efficiency and stability. The traditional perception is that there is a clear trade-off between these two goals. A review of the theoretical and empirical literature, however, suggests otherwise.

There is a growing consensus in the literature that the traditional approach of equating few banks or concentration with market power is not enough. Concentration is not in itself a sufficient indicator of competitive behaviour. Other important factors are involved, such as less-severe entry restrictions, the presence of foreign banks, few restrictions on the activities that banks can perform, well-developed financial systems, the effect of branch networks, and the effect and use of technological advancements. Because it requires an understanding of these various factors, an assessment of contestability in the banking sector can be very difficult and is likely to be specific to a particular country at a particular time.

Working Paper 2004-24 / Document de travail 2004-24, Competition in Banking:: A Review of the Literature by Carol Ann Northcott

In short arguing that there is a concentration of bank branches does not equal market competition, and that even the banks think there isn't enough competition.

For reference, Canada has a total of 44 banks (at the time of the above paper) and the three largest banks have 54% of the market share (we have 5 large banks), the UK has 186 banks with the three largest banks having 34% of the market share, and the US has 717 banks with the three largest banks having 15% of the market share.

So, if we can establish that competition is a problem in the Canadian Banking industry as in there is a significant lack of competition, and competition is the cornerstone of market economies, and that one of the primary reasons that there is a lack of competition in Canadian Banking is barriers to entry which are largely regulated by the Government of Canada. We can then conclude that the Government of Canada has created a banking system with very little competition available for the consumer to shop.

In other words, we are fast running out of ability to shop around for a better deal.

In a situation where the consumer has no choice then the consumer is at the mercy of the (in this case) oligopoly. The merchant no longer needs to meet the needs of the consumer because there is no competition for the consumer to go to.

Which leaves the consumer no option but to ask the government to intervene in a situation that the government significantly helped to create in the first place.

Again, no one is saying that the consumer should not have to pay for service. The argument is that where there is a significant portion of consumers that feel that they are being fleeced by a government sanctioned oligopoly then it is even poorer consumer choice not to go to the government and demand action.