Commercial Analysis

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These commercials exploit the public’s understandable but misdirected indignation towards the petty and detail-obsessed behavior of major banks. Many people call their behavior “predatory.”

Why do so many banks (and many other types of financial institutions for that matter) have to engage in such practices? Why do they charge extra fee for simple services, levy exhorbinant penalties, and make the terms of their contracts so difficult to understand? Ally Bank would have you believe that it’s because of the fundamentally evil, greedy souls of their larger, more established competitors. Imagine that, a capitalist insitution, engaging in the patently capitalist action of trying to lure new customers, doing so by attacking the source of capitalism (self-interest).

The actual reason why banks do what they do is that the financial industry is one of the most highly-regulated and highly-taxed industries in the country. These burdens add majors costs to their operations, while doing nothing to change the revenue requirements of profitablity. So banks are left with a choice: incur the emotional wrath of the public, the legal wrath of the government, or avoid both and put themselves on a financial path towards bankruptcy. They have chosen what they believe to be the lesser of the evils.

Ally Bank, because it is currently the “little guy”, is not subject to the burdens that it’s larger competitors are, so they are free to deal with their customers in a more personalized, understanding, and even forgiving manner. That’s fine – it’s not Ally’s fault that the government persecutes large financial institutions – but the least they could do is to not add fuel to the fires of distortion by attacking the victims. And to employ children in the proces, no less? Is there no honor left amongst the ranks of those who call themselves capitalists?

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Written by commercialanalysis

December 6, 2009 at 8:41 pm

Posted in Finance

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