2010 - %3, February

More Credit Card Fee Madness

| Mon Feb. 22, 2010 1:33 PM EST

First, happy Credit CARD Act day! As I wrote last week, the second phase of the Credit Card Accountability Responsibility and Disclosure Act of 2009 goes into effect today, cracking down on unfair and predatory practices like universal default and unfair interest rate hikes. You can read more about those changes here [PDF]. Sadly, banks are trying awfully hard to pass along the cost of new regulation to their customers. In my post from last week, I told how a Citi Card customer who contacted us here at MoJo could face a $60-a-year fee for—get this—not charging enough money to her card.

James Kwak, over at Baseline Scenario, heard from a reader with a similar story on how Chase is pleading with its customers keep their overdraft service which consumers can now opt out of thanks to the new legislation. Kwak, who posted Chase's letter to its customer, wasn't surprised:

There's nothing particularly evil about this—banks will no longer be allowed to charge overdraft fees without your consent, and even I will concede that there are some people who might want this service, so now they have to ask for permission. Of course, it's a pretty hard and misleading sell: they focus primarily on the issue of funds availability (deposits may not be available immediately), and they try to frighten you with "an unexpected emergency like a highway tow." If you do get a letter like this and are not sure what it means, remember that the bank will not tell you when you are about to overdraw your account, and it will charge you $34 each time, even multiple times per day, no matter how small the overdraft.

I was interested to note that the bank doesn't even promise that it will cover your overdraft—it says only that it may cover your overdraft, at its discretion. I suppose this makes sense, since they don’t want to cover an overdraft for $100,000, but couldn’t they guarantee it up to some fixed amount? I mean, if this service is supposed to give you peace of mind, how much peace of mind do you get when the bank reserves the right not to cover your overdrafts? [emphasis mine]

For all their convenience, overdrafts can be a nasty, unfair practice; if you calculate the APR from the average overdraft fee, it's more than 10,000 percent. No matter how well Chase or any other bank cloaks the practice is corporatespeak, we're all better off now with the chance to opt out of overdraft fees.

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Credit Cards: The Good, the Bad, and the Ugly

| Mon Feb. 22, 2010 1:31 PM EST

The CARD Act takes effect today. Hooray! No more retroactive interest rate increases! Overdraft protection is opt-in! Fees have to be clearly labeled!

But the hills are alive with reports of what credit card companies are doing to make up for this. The New York Times reports that fees on international transactions are likely to go up without anyone telling you. Felix Salmon reports that banks are now pushing reward cards heavily because they have higher interchange fees. The Argus Leader in Sioux Falls (ground zero for credit card companies) reports that subprime cards now carry interest rates of 79.9%. The Washington Post reports that clever new fees are proliferating to make up for the old ones. And of course, as MoJo and a cast of thousands have reported, card companies have been busily raising rates on everyone for months in preparation for the great day.

Bottom line: don't take your eye off the ball yet. Some of the most egregious abuses are gone, but new ones are bound to spring up. If you have any good stories of your own to tell, leave 'em in comments.

Goldman Hires Bush Crony's PR Firm

| Mon Feb. 22, 2010 12:48 PM EST

Yes, billions of dollars in bailouts and bonuses, counterparty fiascos, claims to be "doing God's work," and almost singlehandedly toppling the entire economy of Greece will do quite a number on your public image. For a general public that hardly knew who Goldman Sachs was before the crisis, the name now evokes feelings of disgust and mistrust, of "fat cat" bankers stuffing the pockets in their designer suits with taxpayer dollars in the greatest heist this country's ever seen. Quite simply, Goldman has a massive PR migraine that's only getting worse.

So, the New York Post reports, the firm's fearless, Bronx-born leader, Lloyd Blankfein, did what any rightminded corporate CEO would do: He brought in some PR muscle To spruce up Goldman's image Blankfein turned to Public Strategies, a slick Texas-based firm led by Dan Bartlett, a close confidante to George W. Bush and Karl Rove. From the Post story:

Earlier this month, Goldman clients and Wall Street analysts starting filling out an exhaustive, online questionnaire seeking to pinpoint exactly what people thought of Blankfein's firm. One question wanted survey participants to compare Goldman to other Wall Street banks—and names rivals JPMorgan Chase, UBS, Bank of America, Citigroup and Barclays. Respondents were asked to fill in blanks from least favorable to most favorable.

...

"For the first 139 years it wasn't that relevant to us to explain ourselves," Blankfein told Fortune recently. "And now it became very relevant and the press did an important thing for us, they pointed out to us that that was a deficiency in our strategy, not to reveal ourselves...I'm just trying to take pains, which we should have done all along, to make sure that people understand what we do in the world."

Yes, please, Lloyd—do explain to the people what exactly the purpose of a synthetic collaterized debt obligation is apart from a massive casino chip.

What You Need to Know About Obama's Health Care Plan

| Mon Feb. 22, 2010 12:42 PM EST

Republican and Democratic leaders in Congress are scheduled to meet with President Barack Obama on Thursday for a televised health care "summit" that has been billed as a last-gasp attempt to cobble together some sort of bipartisan compromise on health care reform. On Monday morning, in advance of that meeting, the White House released a package of suggested tweaks that Democrats hope will "fix" the Senate health care bill so that it can pass the House. This "tweaked" Senate bill will presumably serve as a sort of baseline for Thursday's discussion. You can expect the President to say something like, "Here's our proposal. It contains a lot of your ideas. What's your proposal?"

Republicans have bashed the president for issuing a plan before the televised summit, claiming that the meeting is a "trap." But two weeks ago, Reps. Eric Cantor (R-Va.) and John Boehner (R-Ohio) demanded that if Obama planned to offer a legislative proposal at the summit, he should post it online 72 hours beforehand. So that's what the White House has done.

You can read the administration's proposal here. Kevin has some of the most important details, and the Atlantic's Marc Ambinder has a long-ish summary, but I'm going to focus on the political implications.

Obamacare Unveiled!

| Mon Feb. 22, 2010 12:24 PM EST

President Obama unveiled his compromise healthcare plan today, and it's almost exactly what everyone expected. Here's the White House list of the "key changes" he's proposing to the Senate bill that passed last December, along with annotations:

  • Eliminating the Nebraska FMAP provision and providing significant additional Federal financing to all States for the expansion of Medicaid [i.e., the end of the "Cornhusker Kickback," essentially by making the same deal available to all states];
  • Closing the Medicare prescription drug “donut hole” coverage gap;
  • Strengthening the Senate bill’s provisions that make insurance affordable for individuals and families [i.e., higher subsidies for low-income families];
  • Strengthening the provisions to fight fraud, waste, and abuse in Medicare and Medicaid;
  • Increasing the threshold for the excise tax on the most expensive health plans from $23,000 for a family plan to $27,500 and starting it in 2018 for all plans [i.e., removing the special deal unions got on the excise tax and instead making their deal available to everyone];
  • Improving insurance protections for consumers and creating a new Health Insurance Rate Authority to provide Federal assistance and oversight to States in conducting reviews of unreasonable rate increases and other unfair practices of insurance plans [i.e., allowing HHS to prevent gigantic premium increases like the 39% rise recently announced by Anthem in California].

These are modest changes, but they ought to be enough to bring everyone back to the table. Wonks get to keep the excise tax, but it's scaled back considerably to keep unions happy. However, in order to keep it from being a "sweetheart deal," the change applies to all high-cost health plans, not just those for unions. Increased subsidies and increased federal Medicaid financing also ought to make everyone happy.

This will cost money, of course, but the White House insists that its plan will cut the deficit by $100 billion over ten years, just like the current Senate bill. How? It cuts payments to Medicare Advantage a bit more than the Senate bill, it expands the Medicare payroll tax on high-income individuals to cover investment income as well as wage income, and increases assessments on the pharmaceutical industry a bit.

(Plus, in a fascinating little aside, it rasies a bit of money by eliminating the "black liquor" tax credit loophole. See here for details on this ingenious little tax system ripoff.)

Anyway, no big surprises here. There's no public option, and Obama's plan threads the needle between the House and Senate bills pretty carefully. He's obviously hoping for a low-drama compromise that both sides can agree to pretty quickly. Next stop: the Thursday "conversation" with Republicans on C-SPAN. Should be interesting stuff, especially if the Democratic caucus gets its act together and decides to support Obama's plan without too much squawking and infighting. Stay tuned.

Schwarzenegger Slaps Romney Silly—And What That Means for the Message Wars

| Mon Feb. 22, 2010 12:09 PM EST

Mitt Romney appeared at the Conservative Political Action Conference last week and repeated the GOP mantra of the week: no new jobs have been created by President Barack Obama's stimulus legislation. This weekend Governor Arnold Schwarzenegger declared that's a lie, noting that 150,000 jobs have been added to his state's economy due to the stimulus.

Schwarzenegger showed how off-the-rails the Rs have gotten lately. But for some reason the Republicans believe they can get away with—and benefit from—peddling false information. Why is that? My pal Micah Sifry at TechPresident.com asked media critic Jay Rosen and me for our thoughts. We both focused on the mainstream media's reliance on he said/she said reporting that doesn't fully evaluate the content of competing claims. (Rosen also recently explored that notion in a blog post of his own.) But Sifry added another dimension:

The internet is a neutral tool, and yes, it does make it easier to spread messages—true ones as well as false ones. But here's what has changed: in 2008, the Obama campaign had a huge, motivated, networked, self-organizing (to some degree) base that was using the internet every day to fight the information wars. They had an active corps of super-volunteers focused on doing "rapid response" to media bias and falsehoods. And they had a well-constructed web operation centered on a special site called "FighttheSmears.com" that was tuned, via search, to capture the attention of random web-surfers wondering whether Obama was a Muslim, or born in America, and get them credible information....

I hate to sound like a broken record, but given that we live in a networked age where people are bombarded with competing information claims 24-7, the notion that you can just hope people will find the truth on their own isn't enough. You have to organize constantly to defend the truth. And thus [cue broken record], the failure of the Obama campaign to properly plan to keep their 13 million member grassroots movement going full steam surfaces again as a key piece of the "meta-story" of the last year and a half of political struggle. When you have a movement, media narratives shift. (Hello, Tea Party!). Without one, the narratives shift too. The other way.

The White House—or anyone else—cannot count on establishment journalists to get out the complete truth and be effective referees, given these reporters' self-imposed rules. (Ever see a story in a major newspaper that began, "Sen. Whoever lied today, when he claimed..."?) It must exert its own muscle—not just by sending out press releases but by mobilizing millions. Here's the Sifry principle: if you want to counter bad information, you not only need truth on your side but clicks, and people make clicks.

You can follow David Corn's postings and media appearances via Twitter.

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Coal State Dems Question EPA Climate Regs

| Mon Feb. 22, 2010 11:44 AM EST

The revolt against the Environmental Protection Agency's efforts to limit greenhouse gas emissions intensified on Friday, as eight coal-state Democratic senators sent a letter to administrator Lisa Jackson detailing "serious economic and energy security concerns" with potential regulations.

"Ill-timed or imprudent regulation" of emissions "may squander critical opportunities for our nation, impeding the investment necessary to create jobs and position our nation to develop its own clean energy," wrote the group, which was led by Jay Rockefeller (W.Va.) and joined by Max Baucus (Mont.), Mark Begich (Alaska), Sherrod Brown (Ohio), Robert Byrd (W.Va.), Robert Casey (Penn.), Claire McCaskill (Mo.) and Carl Levin (Mich.). 

The senators stopped short of endorsing a plan offered by Republican Lisa Murkowski and backed by several Democrats that would block the EPA's regulation of carbon dioxide. But they outlined a series of questions making clear that when it comes to Murkowski's measure, their votes are still in play. Among their concerns were whether Congress would be able to review the EPA's carbon regulations and how the agency would assess the "direct and indirect cost implications" of its new rules. The group also asked what impact Murkowski's measure would have on the EPA's ability to regulate and on the agency's broader work monitoring the impacts of climate change.

Murkowski's measure already has 40 cosponsors, including Democrats Blanche Lincoln (Ark.), Ben Nelson (Neb.) and Mary Landrieu (La.). Jim Webb (Va.) has also expressed support for the measure, which requires only 51 votes to pass. Murkowski's bill is expected to go to a vote next month. If it passes, both the House and President Barack Obama would likely reject it. But it would deal yet another political blow to Senate Democrats' wider climate agenda.

Treasury Secretaries Back Volcker Rule

| Mon Feb. 22, 2010 11:23 AM EST

Five former Treasury Secretaries, from Democratic and Republican administrations alike, voiced their support for the "Volcker Rule" on Sunday in a joint letter to the Wall Street Journal. The secretaries—Michael Blumenthal, Paul O'Neill, George Shultz, Nicholas Brady, and John Snow—said the rule, which would separate banks' riskier trading operations like hedge funds from their more staid commercial banking duties—wrote that "Banks benefiting from public support by means of access to the Federal Reserve and FDIC insurance should not engage in essentially speculative activity unrelated to essential bank services."

The former secretaries' support adds momentum behind the proposed regulation, offered by former Federal Reserve chairman and Obama ally Paul Volcker, going into a week when the Senate, led by banking committee chair Sen. Chris Dodd (D-CT), plans to unveil its version of comprehensive financial reform. (The House's version of financial reform, passed in December, gives the Treasury and the president the power to divest assets from banks if necessary.) Broadly speaking, the Volcker Rule is supported by Congressional Democrats involved in financial reform as well as many finance experts. Despite the massive amounts of speculation that fueled the economic meltdown, large financial institutions generally say they're more than capable of policing their own risky trading operations, and don't see the need to split those hedge funds and private equity funds from their rest of their company. We'll see sometime this week whether Dodd and Sen. Bob Corker (R-TN), Dodd's latest partner in financial-reform talks, decide to include the Volcker Rule in their plans.

 

The Oath Keepers

| Mon Feb. 22, 2010 9:00 AM EST

Paranoid right wingers who think Barack Obama is hatching plans to round them up into internment camps are old news. Even paranoid right wingers with guns are barely worth a second glance these days. But how about paranoid right wingers with guns and uniforms? Meet the Oath Keepers, the hottest new patriot group in the country. Justine Sharrock spent months getting to know them:

Founded last April by Yale-educated lawyer and ex-Ron Paul aide Stewart Rhodes, the group has established itself as a hub in the sprawling anti-Obama movement that includes Tea Partiers, Birthers, and 912ers. Glenn Beck, Lou Dobbs, and Pat Buchanan have all sung its praises, and in December, a grassroots summit it helped organize drew such prominent guests as representatives Phil Gingrey and Paul Broun, both Georgia Republicans.

There are scores of patriot groups, but what makes Oath Keepers unique is that its core membership consists of men and women in uniform, including soldiers, police, and veterans. At regular ceremonies in every state, members reaffirm their official oaths of service, pledging to protect the Constitution — but then they go a step further, vowing to disobey "unconstitutional" orders from what they view as an increasingly tyrannical government.

....On a clear September evening, I found myself in suite 610 at the Texas Station casino in North Las Vegas mingling with two dozen Oath Keepers state leaders, directors, and hardcore devotees....Oath Keepers is officially nonpartisan, in part to make it easier for active-duty soldiers to participate, but its rightward bent is undeniable, and liberals are viewed with suspicion. At lunch, when I questioned my tablemates about the Obama-Hitler comparisons I'd heard at the conference, I got a step-by-step tutorial on how the president's socialized medicine agenda would beget a Nazi-style regime.

I learned that bringing guns to Tea Party protests was a reminder of our constitutional rights, was introduced to the notion that the founding fathers modeled their governing documents on the Bible, and debated whether being Muslim meant an inability to believe in and abide by — and thus be protected by — the Constitution. I was schooled on the treachery of the Federal Reserve and why America needs a gold standard, and at dinner one night, Nighta Davis, national organizer for the National 912 Project, explained how abortion-rights advocates are part of a eugenics program targeting Christians. I also met Lt. Commander Guy Cunningham, a retired Navy officer and Oath Keeper who in 1994 took it upon himself to survey personnel at the 29 Palms Marine Corps base about their willingness to accept domestic missions and serve with foreign troops. A quarter of the Marines he polled said that they would be willing to fire on Americans who refused to disarm in the face of a federal order — a finding routinely cited by militia and patriot groups worried about excessive government powers.

Are these guys for real, or are they all hat and no cattle? I'm still not sure. But you should read the story and decide for yourself.

O'Reilly: Oath Keepers Invite Anarchy

| Mon Feb. 22, 2010 8:05 AM EST

What happens when Tea Party-minded soldiers and police—largely Obama-hating, Communist-fearing, Glenn Beck-listening white men with weapons and combat training—are encouraged to take matters into their own hands?

In our upcoming March/April issue, Justine Sharrock spends quality time with the Oath Keepers, one of the "patriot" movement's fastest-growing promoters of revolutionary angst and conspiratorial rhetoric.

Here's Sharrock's capsule description:

There are scores of patriot groups, but what makes Oath Keepers unique is that its core membership consists of men and women in uniform, including soldiers, police, and veterans. At regular ceremonies in every state, members reaffirm their official oaths of service, pledging to protect the Constitution—but then they go a step further, vowing to disobey "unconstitutional" orders from what they view as an increasingly tyrannical government.

Last Thursday, following a New York Times story about the increasingly violent atmosphere at Tea Party rallies, Oath Keepers founder Stewart Rhodes appeared on The O'Reilly Factor to counter criticism from the Southern Poverty Law Center. In the segment, Rhodes portrays Oath Keepers as little more than a bunch of average Americans trying to hold on to their constitutional rights. But his host isn't buying it. After Rhodes explains his goal of inspiring soldiers and police to disobey unconstitutional orders, O'Reilly responds, "if it's a matter of interpretation, you could have anarchy easily." Watch the clip below:

O'Reilly got this one right. In her profile, Sharrock also hangs out with Lee Pray, an alienated active duty soldier who identifies with the group and takes its fearful rhetoric at face value (like the assertion that our rogue federal government will find some pretext to declare martial law and start rounding up citizens into camps). That guys like Pray are stockpiling weapons in preparation for such an eventuality is proof enough that soldiers shouldn't be drawing their own constitutional lines in the sand. (Unlike Rhodes, his foot soldiers are not constitutional lawyers.)