Experience with my new Bank of America affinity credit card has reinforced my opinion that we need stringent financial regulations. Proposed bills would add regulations and immediately assess giants like BOA to avoid putting taxpayers at risk if they fail. The financial behemoth brethren are pressuring congressional conservative policy makers to gut the regulations. They argue integrated firms offer more comprehensive financial services and shouldn’t be penalized for being big. Besides the financial crisis has already made them more responsive.

    My trivial experience convinces me BOA has improved some financial transparency, but other practices demand consumer protection. Read about my experience and you judge.

    My recent credit card statement identified the balance, minimum payment, and late payment penalty and warned that minimum payments would pay off the balance in 20 years. Paying triple the minimum would pay off in 3 years and reduce interest charges. Kudos to BOA for encouraging consumers to lower their interest charges.

Consumer credit card interest generates the largest percentage of BOA earnings. My account shows a minimum payment would cover the interest charge at 10.24 percent, but reduce the balance only $5. 

    But BOA offered me credit insurance directly contrary to its warnings. After I scheduled an online payment for my balance on the due date, an offer for Credit Protection Plus™ shined on my computer screen. A bright yellow sun and a college graduation cap were next to advertising enticements: “For whatever’s coming up in your life’s forecast. Get relief from your credit card payments during certain life events.”

    Does that mean I’d have to forecast whatever’s coming up in my certain life events to qualify for protection?

    If I qualified CPP would cancel my minimum payment. “Canceling--instead of just deferring—means we make your payments for you, to give you an important safety net.” Buying CPP protection would increase every monthly balance at a fee that I estimated would almost equal my minimum monthly payment.

    In other words if I used CPP to pay my minimum, it would cover last month’s CPP fee and pay only $1.14 in interest. Unpaid interest would increase my balance.   

    Buying CPP would avoid $39 late payment fees. But the CPP fee is only 14 cents more than the late payment. Purchasing the voluntary protection would cost slightly less than voluntarily paying the late payment fee.

    To be fair CPP offers Identify Theft Assistance and up to a $25,000 balance payment in the event of death.

This consumer safety net is offered to me by the largest consumer credit card company in the United States. The organization serves one of every two U.S. households. Last year BOA added Donald E. Powell, the former FDIC chairman, to its board at an annual compensation in excess of $200,000 per year. As chairman from 2001 to 2005 Powell demoralized regulatory staff by cutting employment despite warnings from the Office of Inspector General and the current FDIC chair that emerging risks in subprime lending and declining standards for commercial lending necessitated more trained regulatory personnel. 

    Powell’s BOA role is to improve regulatory relations. BOA’s Annual Report assured stockholders that its beefed up board would permit BOA “To take our seat at the table with policy-makers at every level and help create a financial system that supports economic growth and financial stability.” Oh joy--for the firm.

    We consumers need to write our Congressional leaders to pass stiff regulations on these giant policy-influencing firms.