The Consumer Financial Protection Bureau (CFPB) may push people to the Mafia by restricting certain products offered by banks, the Wall Street Journal’s MoneyBeat blog reported.
The CFPB, which the 2010 Dodd-Frank financial reform act created, is examining overdraft services at banks. Bank analyst Dick Bove is concerned that restrictions on the service could cut off a source of money for some and drive them to the Mafia’s own banking services.
Bove, the often-unique analyst, argues in a new research note that the CFPB’s examination of overdraft fees published Tuesday, coupled with its pressure on payday lenders will force low-income Americans into an even seedier version of "shadow banking system": the Mafia.
Overdraft services, which typically come with a fee, can offer a source of quick credit to those who need it.
Bove argues that if that source of funding isn’t available, consumers will turn to a more unsavory source of cash.
"If banks are unable to make money available under this system because the CFPB mandates that they lose money on overdrafts, then the household loses access to this method of funding," he wrote in a note. "The question is then where will the household get the money it needs to meet short-term obligations. The answer, of course, is through illegal lending operations aka the Mafia."