191 replies to this topic

[Mike]

From one end to another.

US Politics, play on.

[Todd Gross]

Limbaugh stepped over a line when he started with personal insults and it's coming to bite him in the ass.

Student called 'slut' by Limbaugh dismisses apology

The Georgetown University law student labeled a "slut" by conservative radio host Rush Limbaugh says his apology changes nothing and that Americans have to decide whether to support companies that continue to advertise on his program.


"I don't think that a statement like this issued, saying that his choice of words was not the best, changes anything, and especially when that statement is issued when he's under significant pressure from his sponsors who have begun to pull their support," Sandra Fluke told ABC’s "The View” on Monday.

The 30-year-old Fluke said she hasn't heard from Limbaugh since he issued a written apology late Saturday. But she says his comments about her testimony before members of Congress have been so personal, she'd rather not have him call. Fluke recently testified to Democratic members of Congress in support of a requirement that health care companies, even those connected to religious organizations, provide coverage for contraception.

More in the link.

[Johnny Henning]

Sandra Fluke's testimony is actually pretty interesting. Really, I doubt Rush or any critic read it since it really discusses how this ban on coverage has unintended medical consequences outside pregnancy concerns:
http://abcnews.go.co...d%20hearing.pdf

[Jim Ohara]

I understand why she didn't want to accept the apology, but I'm not sure if it was the wisest course. She's just giving more life to the story. What does Rush do now - apologize more or attack her for never being happy?

I wanted to follow up on Johnnys post from the last thread:

Now, in normal or good economic times, the reforms you cite would help a little, but really only for people with good wages who are averagely intelligent with their finances. Again, the reforms really are not designed to protect the "prime target" for the card company - people with low wages, new to the job market and don't have a lot of experience handling their finances who then use the cards unwisely and fall into the very conscious trap the companies set for them.

I'm not sure what should do here. Set age limits on who can get a credit card? Buy the debt from the credit card company and offer a lower interest rate? Ban offering credit cards for people earning under $20k a year?

It feels like some folks will run up credit card debt, like some folks can't handle their drink or some folks have sex without protection. You can't really regulate the human race all that closely can you? And is offering credit cards to college students much different from beer advertising at sports events?

[Rory Abel]

I understand why she didn't want to accept the apology, but I'm not sure if it was the wisest course. She's just giving more life to the story. What does Rush do now - apologize more or attack her for never being happy?

She doesn't want him to do anything. She wants more advertizers to drop out.

[Johnny Henning]

I'm not sure what should do here. Set age limits on who can get a credit card? Buy the debt from the credit card company and offer a lower interest rate? Ban offering credit cards for people earning under $20k a year?


t feels like some folks will run up credit card debt, like some folks can't handle their drink or some folks have sex without protection. You can't really regulate the human race all that closely can you? And is offering credit cards to college students much different from beer advertising at sports events?

And people also said that the worse economic crisis we've lived through was due to "some folks" taking mortgages they couldn't afford. Again, this isn't a small problem. It's not just "some" people that the companies are targeting to make obscene profits - it's just that it is a problem that affects the lower income and poor far more than the rest of us - which, to my point, is the segment of the society that should be getting the most protection, but, due to the same mindset you have, they are always ignored when it comes to really reforming the system. "It's their fault, so screw them" is the attitude, but we reserve judgment for the companies who are counting on this behavior and encouraging it. No amount of reform is going to change the fact that credit cards and payday loan companies count on irresponsible behavior for their profits. Encouraging that behavior might be good for the larger economy, actually, but I really don't want to prosper on the backs of the poor.

Those suggestions aren't bad, actually, but you're looking for simple solutions for a complex problem and the many many innovative ways companies come up with the screw low income and poor people -- so, regulation needs to be as complex as the system it regulates. Primarily, yes, a lot of people receiving credit cards are actually getting them because the card companies expect them to behave irresponsibly. They are new to jobs, new to credit cards or they are facing unexpected hardships and aren't aware of what they are getting into until it is too late. They certainly should not be getting these cards under the terms they have now, and they and the companies certainly should have to show that they are very aware of all the terms and exactly how the company plans to screw them.

Those are the people who need to be protected and, primarily, my point is that you think most individuals have equal opportunities to prosper in a good economy, but the people at the bottom of the economy are actually and always facing a system designed to eat away at any chance of prosperity, and much of that is due to an regulatory environment that skews protections to those who least need or deserve it.

Now, the problem is that when it becomes too hard to get a credit card, those on the next level down are open to even more predators who are basically unregulated or at least not regulated in a sense that protects their customers.

http://www.thedailyb...et-stiffed.html

It’s expensive being poor. And with the misery index high and unemployment persistently high, that’s good news for those in the poverty business. The working poor have become Big Business—with the invention of the payday loan, rent to own, and a long list of diabolically clever ideas that entrepreneurs have devised to get hundreds-of-millions rich off those with thin wallets.

Basically, if we're going to allow these companies to operate, as I point out above, the first thing we should do is to force them to be completely open about the downsides their businesses have set up for the customers they supposedly "serve." Just like making tobacco companies print cancer warnings, we can and should force those profiting from poverty and financial insecurity to make it clear how much of a disadvantage their practices can put their customers in.

Then we really need to reform credit ratings so that they better reflect the individual's financial health and ability to pay back debt without becoming enslaved to it. Right now, we KNOW that companies are operating based on the expectation that their customers will behave irresponsibly and we KNOW they are taking advantage of customers with low incomes and in more desperate situations. There is no honest way to claim "individual responsibility" justifies allowing this system to continue, and the reforms proposed do nothing to disincentive the exploitative behavior of the companies nor to encourage more responsible behavior on the part of the disadvantaged.

With a clearer understanding of an individual's real creditworthiness, it would be harder for those at risk to get loans that would put them even deeper in the hole and for those looking for these marks to offer them the worst deals possible without raising red flags.

[Jim Ohara]

Now, the problem is that when it becomes too hard to get a credit card, those on the next level down are open to even more predators who are basically unregulated or at least not regulated in a sense that protects their customers.

That's it exactly. If you say you can't get a credit card if you're a) under 25, b) earn less than $30k or c) have only had a job for six months you're just making things harder for the poor, not easier. Credit cards are actually very useful things - they let you repair your heater if it fails so your house doesn't freeze in the winter, it lets you rent a car, it lets you stay in a hotel and so on. It's hard to get by on just cash in America. The alternative is the pay-up-front cash cards, but they're not always accepted and have their own fee system (starting with having to pay to activate them).

Your assumption is that the poor fall for credit card abuse the most. That's not necessarily the case. The highest rate of credit card bankruptcy is between 35 and 44 years of age. 92% don't pay late fees - they pay on time. There's a huge amount of facts on credit cards here: link. I'm not saying credit cards are a force for good, I just think the case against them is being overstated. Having access to quick free credit is a great thing for most people. They'd be hosed otherwise. And credit cards work for most of the people who have them. Just like mortgages and other necessities of modern America.

[Johnny Henning]

However, my original post didn't focus on credit cards. You're the one who wanted to go that direction. Free checking was actually the first point I brought up. My point is that credit card debt is just one element of many, many disadvantages that have a disproportionately high drag on people at lower incomes, facing harder times, approaching or already below the poverty line and that the reforms you cite really don't do anything to improve the system. It's not that they fall for it "the most" but that it hurts them far more, and the regulatory environment doesn't help. It's not the level playing field you suggest as far as individual opportunity.

Really, credit card reform is the only regulatory change that has come out of this and even then it hasn't changed much other than maybe push the poor toward even more disadvantaged means of borrowing and managing their incomes that even the people pushing regulatory reform have utterly ignored.

The point I'm making is that the reality of poverty and social stasis in this country does involve regulatory systems that routinely ignore how profits are made by basically screwing poor people. By taking advantage of people who should be the first ones protected even in a capitalist system. As far as regulation, the people who need the most attention and protection are the poor and they are routinely ignored.

When you look at what is actually going on and how they are picked at, then you look at the regulation and regulatory reform proposed AND THEN you look at what regulators actually do when companies break or try to get around even the lax regulations that are already in place, it's hard to see that the system isn't simply harder for those in the bottom third and growing of our economy, but is actively and very viciously designed to take advantage of their disadvantages.

To get back to the original point, it baffles me that Obama hasn't been more vocal and direct when pushing reform on this end. Certainly, all these companies have strong lobbies, and definitely funds to donate to various campaigns and political interests, so maybe politically, it's just not worth the heat. However, he certainly pushed real reform in 2009, but since then it's fizzled. Maybe after he's reelected...

[Mike]

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[Jim Ohara]

You were discussing the predatory nature of corporations on the poor - I couldn't think of many other than credit cards. I'm trying to pin you down on specifics, because you keep saying stuff like 'look at what regulators do' without mentioning what they're doing and how it's impacting things. Even with ARM's people now have the chance to refinance their house and lock in that low interest rate. The foreclosures are most often due to unemployment - a far different beast and not really about just the poor being picked on (companies lay off when revenues go down or workers are replaced with more efficient solutions - it's part of any economic system).

The only other options to help out the poor are to increase minimum wages or government benefits. One will drive up the price for most everything we buy, the other will cost more in taxes. When there's already a trillion that needs to be covered. It feels like it's not corporations who are screwing the poor, it's the American people - it's the whole of society, including the poor themselves. People want more services and lower taxes. They want cheap standards of living and immediate availability of all kinds of food and drink. They elect politicians who promise to do exactly what they want, and then we wonder why things are the way they are? It's too convenient to lay blame on a few rich corporate bastards secretly screwing the rest of us. It's simply not the case though - this is the society Americans created.

And sure hardship hurts the poor the most - they have the least amount of cushion. If I'm earning $2000 a month and I have a bill for $150 it's a huge chunk of my cash. If I earn $10,000 a month and have a $150 bill it's less of a bother. But we can't live in a world where everyone earns $10k a month.

[Johnny Henning]

I've posted some pretty straightforward links, but it's not exactly news that the poor face a lot of unregulated fees that the rest of us don't and regulation only gets stronger the farther up you go on the economic strata even though the higher you are, the less protection you need (and going even higher, the more oversight is called for). I call it strata rather than ladder since the latter implies you can climb it.

There are 20 million or so Americans who don't have bank accounts because they can't maintain the minimums the banks require. So, what do you do with your paycheck when you can't just deposit it into a bank? You have to find someplace to cash it.

So, what's the regulation on check cashing fees? Well, depends on what state you are in and one in three have no cap on what a casher can charge. You could end up paying 5% of your check just turning it into money.

Then you look at the payday lenders. Now this is an industry that is only going to find more customers in our economy, but right now you're looking at around 10 million customers yearly. They end up paying $6-700 each in fees for the loans and that can work out to an interest rate of around 400%. Here is a detailed examination of Missouri payday loan industry: http://stlouis.bbb.o...port09color.pdf

Important look at the ability of legislation to affect or encourage this:

The two bills introduced in this session of the Missouri Legislature, while forbidding renewals, would still allow an APR of 390% on a two-week loan. Payday loan companies have ceased operations in states that have enacted strict regulations on payday lending, including placing a 36% or less APR cap on interest and fees.

390% APR with new regulation.

Again, we see a state by state approach for what is a national problem that could end up with a de facto 10% tax on the livelihoods of the people who can least afford. Now, a few months ago, you were hailing Obama for a payroll tax cut that would add at most 2% to paychecks, but when the poor are losing 10% to check cashing and payday loans, does this really seem out of the bounds of regulation to you? Note, the payroll tax cut comes out of our Social Security fund while regulating check cashing and payday loans would put more money in workers' pockets while not taking it from our future financial security.

Now it is no surprise that payday loans and rent-to-own businesses began so closely tied since they both operate along the same lines. In this case, of course, a credit card would be a lot smarter, but in the end, rent-to-own buyers often end up paying several hundred dollars more for an item than if they just set money aside each month and bought it outright. However, that sort of behavior just is not good for the economy that needs a lot of consumers purchasing every month whether they can afford it or not.

Now, of course, there are a lot of subprime options for credit cards, but those come with a $50 annual fee (which is almost absurd considering how much more they make just from the APR) and monthly fees on certain likely carried balances.

Then there are all sorts of businesses that seem designed to screw the poor because obviously they don't know how to handle their money. If you live in a poor neighborhood, tax preparation companies will actually charge more than in neighborhoods where people make more money. Obviously, we already talked about how selection and prices of items from groceries to clothes are actually worse in poorer neighborhoods. Some of that cannot be helped, like you say, but when your tax preparer decides to start working the payday loan scam on your tax refund, I think it is time regulation stopped congratulating these companies on their innovation and started seeing to it that the poor aren't just treated like easy marks in every possible transaction
http://motherjones.c...ticipation-loan

Sure, most of us are probably not in this 20 or 30 million or so pool of people, but I don't think that the companies operating in these sectors are innately different from the financial industry that serves the middle class. If we can't really rely on regulators to be concerned in these areas, I don't think we can expect them to care much about our welfare, but at the same time, I'm less concerned about myself than with this large swath of people who are unfortunate enough to have to deal with these industries and as a result are kept in that position.

To go back to the original link, check out the story of the Household Finance Corporation.

This was a company that embodied the worst spirit of predatorial lending in the subprime home loan market. They were outright defrauding their borrowers.

But, then, something changed. When Eisman started taking a good look at the way these financial instruments actually worked, he realized there was something very, very disconcerting going on. While many of the mortgages were being provided with no initial down-payment and a 2-year flat interest rate, these interest rates subsequently spiked up in the years to follow — and, what’s worse, the banks who were making these deals deliberately misled their customers about this. “It was blatant fraud,” said Eisman. “They were tricking their customers.” As Lewis writes:

'Eisman was genuinely shocked. “It never entered my mind that this could possibly happen,” he said. “This [the Household Finance Corporation] wasn’t just another company — this was the biggest company by far making subprime loans. And it was engaged in just blatant fraud. They should have taken the CEO out and hung him up by the fucking testicles. Instead they sold the company and the CEO made a hundred million dollars. And I thought, Whoa! That one didn’t end the way it should have.”'

So, where were the regulators? The states stepped in, but this settlement hardly stopped what was going on.

wiki

In October 2002, Household International settled for $486 million charges of predatory lending by attorneys general in 46 U.S. states.

On November 14, 2002, HSBC announced the acquisition of Household International Inc for a total value of $15,294.06 million.

It's still around - wiki says it is the second largest consumer finance company in the United States. Regulators just don't seem to care as long as companies make a profit. Now, sure, these businesses do provide services that people, even poor people, need, but my point is that the disadvantaged always seem to end up paying more and never advancing primarily because regulation either ignores them or is stacked against them.

Obama talked about this a couple years ago, so he certainly felt that it was something he could address. I agree, all these industries should certainly fall under consumer protection oversight, and I still think they would be profitable. Just they would not be as profitable on the backs of the working poor.

Of course, none of this matters to Mitt Romney: http://www.nytimes.c...-concerned.html

If you’re an American down on your luck, Mitt Romney has a message for you: He doesn’t feel your pain. Earlier this week, Mr. Romney told a startled CNN interviewer, “I’m not concerned about the very poor. We have a safety net there.”

This is funny though:

...First of all, just a few days ago, Mr. Romney was denying that the very programs he now says take care of the poor actually provide any significant help. On Jan. 22, he asserted that safety-net programs — yes, he specifically used that term — have “massive overhead,” and that because of the cost of a huge bureaucracy “very little of the money that’s actually needed by those that really need help, those that can’t care for themselves, actually reaches them.”

This claim, like much of what Mr. Romney says, was completely false: U.S. poverty programs have nothing like as much bureaucracy and overhead as, say, private health insurance companies. As the Center on Budget and Policy Priorities has documented, between 90 percent and 99 percent of the dollars allocated to safety-net programs do, in fact, reach the beneficiaries. But the dishonesty of his initial claim aside, how could a candidate declare that safety-net programs do no good and declare only 10 days later that those programs take such good care of the poor that he feels no concern for their welfare?...

Seriously, how can such blatant, evil liars like Romney and Santorum really be competing for the office of President? It's kinda disgusting. I mean, it's really a race to the bottom at this point.

[Arjan Dirkse]

Seriously, how can such blatant, evil liars like Romney and Santorum really be competing for the office of President? It's kinda disgusting. I mean, it's really a race to the bottom at this point.

Evil politicians? Who has ever heard of such a thing!

Re-read Marcus Aurelius, dude.

[Ogul]

At the end of the day though if you take out money on a credit card that you can't pay back where does personal responsibility come in?

Why do personal responsibility and institutional responsibility have to be mutally exclusive? If a drug user buys drugs off a dealer, can't you hold both of them responsible? If a person takes out a credit card balance that they can't afford, sure, they should suffer some measure of punishment for that, but there's also a lack of education about basic finance, and many people out there are not equipped to handle that level of economic freedom. IF you allow them to charge more money than they have, they will do so without fully grasping that at some point the trainride will end. I think there needs to be more education on basic household finances (we got almost none when I was in school), and the various terms of credit cards and loans need to be writen in perfectly clear, plain English, as in "if you do this, this is what will happen. . ."

Credit card companies don't actually want to lend money to people who can't pay it - they have to write off huge amounts of debt every year -

Yes, but neither do they have any interest in lending money to people who pay off their bills in full every month. What they want is to reach a balance in which their customer is running in a constant state of debt, constantly paying interest on their debt, but just barely within what they can technically afford to maintain. A drug dealer doesn't want his customers to OD, he just wants them addicted enough to keep coming back for more.

It feels like some folks will run up credit card debt, like some folks can't handle their drink or some folks have sex without protection. You can't really regulate the human race all that closely can you? And is offering credit cards to college students much different from beer advertising at sports events?

Don't even get started on the way the alcohol industry promotes itself.

That's it exactly. If you say you can't get a credit card if you're a) under 25, b) earn less than $30k or c) have only had a job for six months you're just making things harder for the poor, not easier. Credit cards are actually very useful things - they let you repair your heater if it fails so your house doesn't freeze in the winter, it lets you rent a car, it lets you stay in a hotel and so on. It's hard to get by on just cash in America. The alternative is the pay-up-front cash cards, but they're not always accepted and have their own fee system (starting with having to pay to activate them).

An idea occurs to me, hardship loans. Don't give poor people credit cards that they can spend on whatever they want, but do give them access to a loan program in which they can apply for small loans to pay for important stuff, like broken cars or heaters or whatever they need. These loans would be managed by the banks, but encentivized by the government, say that to receive various tax benefits or other government perks they would need to provide this service. Anyways, these would be low interest loans, but only for necessities, not for "fun stuff." The customer would apply for it, and the bank would write out the check to who it goes to (the car repair shop or whatever). Since they would be for small amounts and backed by the government, the processing would be a lot quicker than a standard loan, 24 hours or less.

[Johnny Henning]

Evil politicians? Who has ever heard of such a thing!

Re-read Marcus Aurelius, dude.

But they didn't have the Internet and fact checkers in the Roman Empire. Today, it takes two clicks to see the BS spouted by candidates is BS.

Seriously, as much as I can rant on Obama, it still baffles me that anyone would prefer Romney, Paul, Gingrich or Santorum.

Of course, if you think he's a secret Muslim communist Indonesian revolutionary who wants to replace US democracy with Sharia Marxism, I suppose anything's possible.

An idea occurs to me, hardship loans. Don't give poor people credit cards that they can spend on whatever they want, but do give them access to a loan program in which they can apply for small loans to pay for important stuff, like broken cars or heaters or whatever they need. These loans would be managed by the banks, but encentivized by the government, say that to receive various tax benefits or other government perks they would need to provide this service. Anyways, these would be low interest loans, but only for necessities, not for "fun stuff." The customer would apply for it, and the bank would write out the check to who it goes to (the car repair shop or whatever). Since they would be for small amounts and backed by the government, the processing would be a lot quicker than a standard loan, 24 hours or less.

Honestly, I think the subprime mortgage philosophy would have been great IF it had been stringently and properly regulated. Like Eisman originally believed, there are subprime borrowers who certainly could have benefited from and paid off the loans on time responsibly. The problem came in when the demand rose for these MBS products that bundled the loans. Thus the incentive was to craft loans to attract more borrowers beyond what would be appropriate or possible to continue allowing the bundling and the deceptive ratings practices as well as the improperly or entirely unregulated marketing of credit default insurance on those MBS disasters in the making. Of course, this created an artificial demand that pumped up housing prices leaving many good borrowers stuck with mortgages that were not worth it. They could pay it, but the house price no longer justified it.

That's sort of what I'm talking about here. Apply the sort of thinking that should've been a part of subprime lending a decade ago to the borrowing and lending behavior of these institutions that broadly affect working poor people and the lower middle class. Regulate the borrowing so that it is still a profitable business, but one that actually serves rather than exploits its most at risk customers and gives them opportunities they need rather than pins them in place. To sum up, the subprime mortgage industry should've been very successful but not as outrageously successful as it became - which of course was due to the bubble pressures regulators should've seen while everyone thought they were making mad money.

Not just in hardship cases, but in daily life. Check cashing, for example. The government could work with banks on special check cashing accounts or programs at no cost or a minimal fee. Payday and Rent to Own businesses are just out of control and, again, government regulation doesn't have to put them out of business.

My main point is that social mobility in this country is carrying a lot of dead weight precisely because regulators are leaving the most vulnerable unprotected and a lot of people have fallen and are falling into that position with this recession. It is definitely something the President and Congress can and should address with regulatory legislation, and certainly it will not feel like a recovery unless it is addressed after the election.

[garjones]

Seriously, how can such blatant, evil liars like Romney and Santorum really be competing for the office of President? It's kinda disgusting. I mean, it's really a race to the bottom at this point.

I think that's a lot of the issue. I do get where Jim is coming from but I do see the arguments for the right heading in that direction. Trump slags off China but says he'll keep using their labour until the US can compete on price. They'll compete by having staff wear adult diapers and live 4 to a dorm that's smaller than a prison cell. Meanwhile China is trying to create a middle class. It's the fastest path to swapping places.

[Arjan Dirkse]

But they didn't have the Internet and fact checkers in the Roman Empire. Today, it takes two clicks to see the BS spouted by candidates is BS.

You can find all sorts of opinions on the net. Personally I use godlikeproductions.com as my fact checker.

It's all a matter of "who do you believe"...,at this point politicians will use every lie they think they can get away with to try to damage their opponents, and they justify it by saying to themselves defeating the opponent is all that matters. All sides are guilty of this. And it's been that way for a long time.

[Jim Ohara]

You raise alot of good points Johnny, when I arrived at the states I was stunned to see banks wanted a minimum balance (there's no such thing in the UK). But it got me wondering why in a free market country in America there are no banks that offer accounts that are really free. I guess it's because those customers with only a couple of hundred bucks in the bank actually cost money, and how does a company exist with customers they don't make any money on. That means you either need to force banks to take on these customers (ala sick people having to get health insurance), or you need to create a government bank. Not so sure a state run bank would fly that well in the states.

But then I googled and found there's loads of banks that have accounts with no minimum balance or no fees. Almost all major banks have offer accounts like that, in part because they know the 'don't have a big balance' folks are normally just going through a phase of life, and they want to keep lifelong customers. Then I saw the banks that actually pay you to open one of these accounts and I got really confused. I suspect some of the 10 million who don't have an account might a) be illegal b) didn't try too hard to find a bank or c) like to keep things in the cash market for some reason.

And Ogul, Visa make 2% on every transaction made on a card. It's another myth that they only want people who are going to carry a debt. 50% of credit card holders pay the full balance every month - because they know they'll pay fees otherwise. They simply want to make all transactions happen on plastic instead of cash so they can get their transaction rate.

[Ogul]

And Ogul, Visa make 2% on every transaction made on a card. It's another myth that they only want people who are going to carry a debt. 50% of credit card holders pay the full balance every month - because they know they'll pay fees otherwise. They simply want to make all transactions happen on plastic instead of cash so they can get their transaction rate.

Don't they make the same transaction fees on debit cards too? Also, don't most Visa cards come through a bank? Where does the bank make money on it? Do they get a cut of that 2%, of do they add their own cut on top of the 2%, or is their interest from the balance on the account? And if the 2% transaction fee was plenty for Visa, then why do so many cards also carry annual fees and stuff?

See, it's this sort of stuff that's a bit opaque to the average citizen, and should be made more clear.

You raise alot of good points Johnny, when I arrived at the states I was stunned to see banks wanted a minimum balance (there's no such thing in the UK). But it got me wondering why in a free market country in America there are no banks that offer accounts that are really free. I guess it's because those customers with only a couple of hundred bucks in the bank actually cost money, and how does a company exist with customers they don't make any money on. That means you either need to force banks to take on these customers (ala sick people having to get health insurance), or you need to create a government bank. Not so sure a state run bank would fly that well in the states.

I have an account that I set up a decade or so ago that was free on the basis that it was direct deposit only. I'm not sure if it's still free because of that, or because I maintain a balance, but they haven't charged me anything so whatever's going on seems to be working.

[Johnny Henning]

But then I googled and found there's loads of banks that have accounts with no minimum balance or no fees. Almost all major banks have offer accounts like that, in part because they know the 'don't have a big balance' folks are normally just going through a phase of life, and they want to keep lifelong customers. Then I saw the banks that actually pay you to open one of these accounts and I got really confused. I suspect some of the 10 million who don't have an account might a) be illegal b) didn't try too hard to find a bank or c) like to keep things in the cash market for some reason.

That's a good point, depending on availability of banks in these areas, there are probably people who should have bank accounts. The reason most don't is that they don't feel they have enough money to have an account, and if you have to spend all your money from paycheck to paycheck - and still come up short, then how could you maintain an account, really? Certainly, most of them do not presently fit into that "phase of life" category - at least not unless we as a society help get them through this phase.

Naturally, another solution to this is to educate these people on getting into bank accounts. Again, something the government can do working with the banking industry - not something that is outside the hands of the President and/or congress. A lot of these people are used to the more usurious methods of lending when there are credit union and banking options available. Also, as I pointed out, considering how not free "free checking" actually can be, if I didn't have a lot of money at any particular time, I'd be concerned how the bank is going to screw me for the little I do have, but I am already familiar with the screwing the Payday Loans give me to the point I don't think I'm getting screwed.

And, of course, banks change their rules fairly often - so an account that is free or has no minimum today, might not be the same a year or two from now. Now, you make good points about credit cards; they are not loan sharks, but they aren't necessarily great lenders either. I mean, if 50% only pay off, then what does that mean about the other HALF of their customers in this country? Also, when you concentrate at the lower income levels certainly credit card debt becomes more a part of the burden of being poor even if you are not officially in poverty.l

And I think it is important to remember that the people being affected by this are often minorities, African-Americans, Native Americans, Hispanics, unmarried women and single parents. People who have traditionally been taken advantage of through our long history. These economic issues are directly entwined with the social issues plaguing us over and over every year.

Earlier today, I heard a great TED speech by Bryan Stevenson on injustice, and he made a great point (out of many), when he spoke in Germany about the incarceration of innocent men on death row, an academic there stood up and replied that this concerned her greatly because their country could never have the death penalty due to their history. This made him stand back and think, "how would we respond if Germany had the death penalty today and a disproportionate number of people on its death row were Jewish?"

Then he pointed out that in the Southern States where lynching was a common practice up until the 1960's, they do have the death penalty and a disproportionate number of blacks are on death row - the majority of death row inmates are black in many of these states. In some of these same states, the practice of permanent disenfranchisement of felons has led to the greatest number of African Americans who do not have the right to vote since before the passage of the Voting Rights Act of 1965.

Today, the same groups of people, including poor whites but having a far greater effect on minority communities, who were subject to exploitative acts such as sharecropping and company stores in the past two centuries are today the most likely targets of these new "alternative" or "subprime" lending practices - and it amounts basically to a transfer of massive economic value away from these individuals and by extension their communities as well.

So, again, it is not simply something that can be viewed on the individual level, but it is definitely a social and by necessity political problem, but, from my perspective on it, addressing the regulatory concerns, business practices and economic confusion the poor and working lower class face will have a far more beneficial effect than any sort of direct affirmative action program would have.

Though I do think practices such as Payday Loans and certain check cashing franchises are actually detrimental and should be regulated out of business, I actually support closely regulated and fair subprime lending - which is practiced by several credit unions though not available on the same scale. Saying a Payday Loan has a 400% APR gets attention, but really these are loans for a week or two, so an APR is not what you judge it by. Instead, the practice should be fairly set by regulators and industry working together so that people who need it can get the loan without becoming enslaved to the loan payments. When it happens with the sort of regularity we see today, it seems obvious to me that this is the place where oversight is needed most. But, also obviously, that is not really the focus of the reforms we're getting in response to the recent crisis.

Here, I do have to recognize Obama because when he was proposing reform, he certainly included much of what I cite in the discussion, but congress has either removed or watered it down because, really, it's not politically attractive to voters and the groups who need the protection naturally don't have strong, unified or wealthy lobbyists arguing their interests.

[David Meadows]

Then you look at the payday lenders. Now this is an industry that is only going to find more customers in our economy, but right now you're looking at around 10 million customers yearly. They end up paying $6-700 each in fees for the loans and that can work out to an interest rate of around 400%. Here is a detailed examination of Missouri payday loan industry: http://stlouis.bbb.o...port09color.pdf

Important look at the ability of legislation to affect or encourage this:


390% APR with new regulation.

In the UK, the APR is ten times that. I am not kidding, these people advertise on primetime TV and by law they have to state the APR and I have seen > 3000%. It's mind-boggling. But the thing is, people are still paying it -- they must be, or the loansharkscredit company wouldn't be affording primetime TV adverts.

Some people are so desperate they will do anything, it seems.