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Because efficiency and low-cost production are hallmarks of a competitive market, any consumer market failing to exhibit these attributes is subject to government scrutiny and possible regulation. Most existing consumer protection offered by regulations of financial institutions emphasizes financial disclosure: requiring all relevant information about the true cost of banking services to be available to customers to aid them in choosing the most appropriate financial service provider. Financial disclosures encourage consumer shopping and should lead to a more efficient, competitive market. The authors investigate three consumer abuses that may be curtailed with increased financial disclosure and regulation: (1) double interest on home equity loans, (2) excessive automated teller machine fees, and (3) potential delays in posting refunded debit card transactions. The findings of the continued existence of these abuses suggest that it is likely that prohibition of certain fees and charges is needed and that current financial disclosures are inadequate to protect consumers.

Because efficiency and low-cost production are hallmarks of a competitive market, any consumer market failing to exhibit these attributes is subject to government scrutiny and possible regulation. Most existing consumer protection offered by regulations of financial institutions emphasizes financial disclosure: requiring all relevant information about the true cost of banking services to be available to customers to aid them in choosing the most appropriate financial service provider. Financial disclosures encourage consumer shopping and should lead to a more efficient, competitive market. The authors investigate three consumer abuses that may be curtailed with increased financial disclosure and regulation: (1) double interest on home equity loans, (2) excessive automated teller machine fees, and (3) potential delays in posting refunded debit card transactions. The findings of the continued existence of these abuses suggest that it is likely that prohibition of certain fees and charges is needed and that current financial disclosures are inadequate to protect consumers.

Because efficiency and low-cost production are hallmarks of a competitive market, any consumer market failing to exhibit these attributes is subject to government scrutiny and possible regulation. Most existing consumer protection offered by regulations of financial institutions emphasizes financial disclosure: requiring all relevant information about the true cost of banking services to be available to customers to aid them in choosing the most appropriate financial service provider. Financial disclosures encourage consumer shopping and should lead to a more efficient, competitive market. The authors investigate three consumer abuses that may be curtailed with increased financial disclosure and regulation: (1) double interest on home equity loans, (2) excessive automated teller machine fees, and (3) potential delays in posting refunded debit card transactions. The findings of the continued existence of these abuses suggest that it is likely that prohibition of certain fees and charges is needed and that current financial disclosures are inadequate to protect consumers.

Recent deregulation of financial services by the Financial Services Modernization Act of 1999, also known as the Gramm-Leach-Bliley Act (GLB), places more reliance on corporate governance to oversee the actions of financial institutions. We examine whether corporate governance variables explain bank shareholder reaction to GLB passage. We find that banks with better board oversight react favorably to the GLB and banks with less effective board monitoring react less favorably to the GLB. Banks with lower leverage, lower insider ownership, less board activity, a smaller board, fewer inside directors, and less visibility respond more positively to the GLB. Results indicate investor approval of the legislative effort to increase the role of corporate governance in the banking industry and affirm the importance of effective corporate oversight among financial institutions.

Recent deregulation of financial services by the Financial Services Modernization Act of 1999, also known as the Gramm-Leach-Bliley Act (GLB), places more reliance on corporate governance to oversee the actions of financial institutions. We examine whether corporate governance variables explain bank shareholder reaction to GLB passage. We find that banks with better board oversight react favorably to the GLB and banks with less effective board monitoring react less favorably to the GLB. Banks with lower leverage, lower insider ownership, less board activity, a smaller board, fewer inside directors, and less visibility respond more positively to the GLB. Results indicate investor approval of the legislative effort to increase the role of corporate governance in the banking industry and affirm the importance of effective corporate oversight among financial institutions.

Recent deregulation of financial services by the Financial Services Modernization Act of 1999, also known as the Gramm-Leach-Bliley Act (GLB), places more reliance on corporate governance to oversee the actions of financial institutions. We examine whether corporate governance variables explain bank shareholder reaction to GLB passage. We find that banks with better board oversight react favorably to the GLB and banks with less effective board monitoring react less favorably to the GLB. Banks with lower leverage, lower insider ownership, less board activity, a smaller board, fewer inside directors, and less visibility respond more positively to the GLB. Results indicate investor approval of the legislative effort to increase the role of corporate governance in the banking industry and affirm the importance of effective corporate oversight among financial institutions.