One of the problems when Congress acts is that they often do not look at the unintended consequences.  In the rush to do something to regulate the banks who help create our current financial mess, they are proposing regulations that will adversely affect financial institutions that had nothing to do with the meltdown.  A prime example is USAA.  USAA is an organization that is open to members of the military and their children.  It provides banking, insurance and a host of other services.  It is consistently rated among the best run financial companies.  Unfortunately, the current financial reform bill will interfere with that.  The following is an email I received from USAA earlier this week.

Dear Mr. Bateman:

Rarely in our 87-year history have we turned to USAA members to weigh in with elected representatives on an issue of great importance. But, we are now.

The U.S. Senate currently is considering legislation (S.3217) that would impose new rules on the nation's financial services industry, including USAA.

As the leading provider of financial services to America's military community, USAA supports financial services reform.

However, the current Senate bill would disproportionally impact USAA because we are a unique and fully integrated association. USAA is not like the banks and other companies that helped bring down our economy, and we never took a penny of TARP funds. We do not engage in the harmful practices this legislation seeks to resolve.

If unchanged, the bill would:

• Prevent USAA from managing the association's portfolio as we have for the past 87 years.
• Jeopardize our ability to continue offering many of our competitive products.
• Limit our ability to return money to our members. Last year, USAA returned $1.2 billion to our members in the form of distributions, dividends, and bank rebates and rewards.*

So, we are asking all USAA members and employees to urge their U.S. senators to amend a portion of the bill, known as the "Volcker Rule," to eliminate its effect on a company like USAA. Please know that this legislation does not impact individual member's investments.

Regardless of the outcome of the legislation, USAA will remain a unique and enduring association that's all about you — the military and their families.

Please take action on this matter by immediately contacting your U.S. senator. You may click here to access a special website that will enable you to quickly send an e-mail message to your senator.

Thank you for your help and support,

Josue (Joe) Robles Jr.
Major General, USA (Ret.)
President and CEO


One of the problems with passing laws in response to problems is that they often penalize those who are trying to play by the rules and are ignored by those who are not.  One thing that the government ought to try is going after firms under current rules or carefully drafting rules to apply to the misbehavior rather than penalizing the companies that play it straight.