Friday, February 27, 2009

* When the cards are stacked against you - Capital One just sent me a “Dear Stephen” notice informing me that outstanding credit card balances can now be charged a 24% interest rate and that they have first rights to my testicles. Some credit card companies are charging up to 32% interest on outstanding balances. I pay my credit card balances in full so fortunately, I do not to need to pay their exorbitant interest rates, rates that should be illegal in any sane and reasonable society. When such loan rates are charged outside of the hallowed banking industry the loaner is generally associated with the word “mob.” The question is, “How much longer are we as a nation going to stand for such usurious and abusive acts by the financial industry?” The financial crisis that embroils our nation is part and parcel of this under-regulated, unconstrained and free-wheeling industry. Left unchecked, the greed of the financial industry damaged all of us. The greed was so great and so widespread that ironically, it has even led to its own destruction.

What has taken place in the financial world reminds me of a rare disease that inflicted the brother of someone I know. He has a disease known as Prader-Willi syndrome. One aspect of this disease is that it does not allow an individual to feel full when eating and results in eating binges. “Parents of children with the syndrome often have to lock the kitchen cabinets and refrigerator to restrict the child's access to food.” Perhaps we can characterize what has inflicted the financial community as the Prader-Willie Sutton Syndrome.

How did the financial deterioration of our nation occur? Can you say “special interests?” The Wizards of Wall Street hired sophisticated influencers of congress (lobbyists) to convince OUR representatives to enact laws and regulations that benefitted only the interests of the financial industry. An example of this special interest inter-marriage with elected officials is the likes of former Senator Phil Gramm. It was Gramm who spearheaded much of the legislation that contributed to the easing of restrictions on the financial industry and that subsequently contributed to the financial crisis we face today. When Gramm left “public service” he took very lucrative jobs lobbying for members of the financial industry. One such interest he represented was Swiss bank USB, up to its Swiss cheese in deceptive practices. In a settlement last week with the U.S. Justice Department USB agreed “to pay a fine of $780 million and to disclose about 250 names of U.S. clients it said had committed tax fraud.” USB also agreed to provide information about 19,000 other accounts held by U.S. citizens. Gramm is not an exception to how special interests corrupt the fiduciary responsibility of elected officials. They fund their political campaigns, hire family and friends and further reward such officials with lucrative positions when they leave congress. It is especially prevalent in the fields of banking, energy, telecommunications, insurance and defense. It has proven especially damaging to the country.

The financial crisis in America was no accident. It was an accident waiting to happen. The core had been rotting for some time and eventually the structure had to collapse. Both Democrat and Republican politicians are culpable. They allowed themselves to be bought like prostitutes who hawk their wares on street corners. I offer an apology to prostitutes for associating them with politicians who too often exhibit less veracity and integrity in plying their trade than hookers. I expect that we will see reforms since they usually follow crises that reach critical mass. A call for reform has already begun. European Union leaders have met and called for sweeping financial regulations. German Chancellor Angela Merkel said at this meeting of Europe’s largest economies, "All financial markets, products and participants including hedge funds and other private pools of capital which may pose a systematic risk must be subjected to appropriate oversight or regulation." The U.S will soon follow - as it did after other financial debacles like the Market Crash of 1929 and the savings and loan failures in the 1980s.

Some say that “it is the way government works” and “politicians are always in the pockets of the privileged.” I will accept the reality that the privileged will have more influence than the working stiffs but one cannot accept the overabundance of influence they exerted over our government representatives for the last two decades. If we as a nation accept such a reality, a reality that plagues third world countries, we deserve no better. And let us not totally excuse ourselves. To be a member of a democracy, by its nature, requires responsibility on the part of citizens. We keep re-electing too many leeches. Perhaps we are too busy with our Blackberries, DVDs, Hi-Def wide screens, Blu-Rays, Ipods and Face Books to pay attention. As the ability to communicate has increased, our communication seems to have decreased. It would certainly make for an interesting sociological analysis to graph the ability to communicate with actual communication. How prescient is Verizon’s long-standing tagline to their commercials, “Can you hear me now?”

While on the subject of credit card companies it is worth noting that their possible failure could be the next financial disaster facing the American economy. One of the best articles I have read on the subject was penned this week by Arianna Huffington at the Huffington Post.

Late last year congress passed a weak credit card reform bill that does not even go into effect until the middle of 2010. Once again congress offers us too little too late. Consumers Union is providing a petition to congress urging them to pass credit card reform legislation NOW. At the site one can click on the tab Take Action to sign the petition.

* Obama Watch ~ transparency - Contrary to conservative opinion a very pro-active program is needed to reverse the economic downturn crippling our country. Despite virtual unanimity among Republican congressmen who oppose the legislation, coupled with their usual plethora of untruths, the legislation has passed and we await its influence. I have followed the comments by a large number of economists who feel the American Recovery and Reinvestment Act takes us in the right direction. Regardless if one is pro or con relative to the legislation, the public will know what is happening. And unlike the machinations of the previous administration, the stimulus bill is open to public view. Details can be found at The oversight will be spearheaded by a former Secret Service agent and recent Inspector General of the Department of the Interior who exposed mismanagement, non-management and illegal activities at Interior during the Bush administration. Earl Devaney will be chairman of the new Recovery Act Transparency and Accountability Board. Vice President Joe Biden also will be given a role coordinating oversight of stimulus spending. Such actions can only enhance a democracy that in recent times has exhibited more pomp than circumstance.

* Reining in the Pentagon ~ a formidable foe – We have seen much written recently about the billions of dollars the Pentagon spends on weapons and systems that only benefit the defense industry and their lobbyists, not U.S. security. Congress is finally holding hearings on the tremendous cost to and waste of America’s over-extended financial resources. is providing a petition to congress urging the elimination of such unnecessary bloating of the federal budget. Already an army of well-funded defense lobbyists and defense contractors are descending on Washington to ensure their cash cow is not endangered. It is time that our votes and voices be cast against the power of the greenbacks that have been shaping the conversation.

"The moneychangers have fled from their high seats in the temple of our civilization." Franklin D. Roosevelt, from his 1933 inauguration speech


Sue Katz said...

While I could criticize (and have) a variety of Obama's choices and decisions - from the left, of course - his commitment to transparency that you mention goes a long way towards building trust. His use of "new media" - no longer quite so new - promises an unprecedented level of access to governmental programs and results.

Stephen, I was surprised at Joe Biden's rather adorable if clueless reference to the "number" (ie url) of the site - and I was convinced you'd have something clever to say about it. Nu?

Ruth Z Deming said...

I say let's kick the credit card companies while they're down, they deserve it! 32 percent interest? I vote w/YOU Stephen in capping the limit they charge their debtors.

And, yes, how bout Obama being as transparent w/his economic reforms as his predecessor was down & dirty. is infectiously optimistic.