Thursday, September 25, 2008

Corporate Bailout, NO!

It is not an easy task these days to sit down and endure a George Bush speech. Whenever I see his face and hear his voice, my blood always begins to boil. Such is the evil of the man, I suppose, that it is like being in the presence of someone that makes you want to take a shower afterward to cleanse the stench of this war criminal.

The thought of hearing the same man who some months back claim that it was not the government's Constitutional responsibility to give children health coverage now declare it (after a cursory ode to free markets) my duty as a taxpayer to rescue his friends on Wall Street for their inability to run their private businesses is just one more notch for why this man should be sitting in a prison cell, awaiting prosecution. Even more offensive is Secretary of Treasury Henry Paulson (himself every bit a part of the criminal culture of the business community of this country, as the ex-chief executive of Goldman Sachs) telling Congress and, by extension, myself as an American that we must bailout AIG, Bear Sterns, Fanny, and Freddie, or else it will be our fault for when the economy collapses. This is similar to a bank robber telling the clerk that if the depositors do not put more money in the bank then they will be responsible for its fall. They robbed the bank. These unconvicted felons that administer AIG, Bear Sterns, Fanny, Freedie, as well as the other corporate welfare cases ready to get in line (Wachovia, WaMu, etc.) were the ones who ran these companies into the ground with their business practices, and as such bear the command responsibility for their failure.

My inaction did not cause these institutions to underwrite bad loans and policies that they invented. I am not the one who said this about subprime loans a year ago.
"I don't see (subprime mortgage market troubles) imposing a serious problem. I think it's going to be largely contained."--Henry Paulson, April 2007

"All that said, given the fundamental factors in place that should support the demand for housing, we believe the effect of the troubles in the subprime sector on the broader housing market will likely be limited, and we do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system."--Ben Bernanke, May 2007
For the longest time, people like Greenspan, Paulson, and Bernanke told us that these markets and companies were fine, deregulation a boon, and that variable interest loans a viable way to promote home ownership. These same people lobbied on behalf of these industries to have bankruptcy laws for average Americans tightened, treating us like guilty parties when we lose our money (and most bankruptcy cases are caused by catastrophic health care costs), and yet now they sing a different tune for themselves.

"The American financial system was shaken to its core on Sunday. Lehman Brothers Holdings Inc. faced the prospect of liquidation, and Merrill Lynch & Co. agreed to be sold to Bank of America Corp"--Wall Street Journal, September 2008

This is how you can tell the economy is hurting. When people who are supposed to have money complain about how unfair it is that they no longer have money, but then expect us to support them out of a crisis that they caused.

And where are our friends from the right on this? Here is one of the whores for unregulated capital, Glenn Beck, oh, he of the hospital almost killed me, but I will not sue because I believe in free enterprise. The same Glenn Beck who thinks oil companies are a godsend, doing this country a great service by overcharging us as consumers (and raking in record profits). The same Glenn Beck who thinks it Communistic to have any form of socialized medicine, and yet he believes that forcing me to pay $700 billion for the people who write his check is the "best plan available" at the moment.

Well, I have a better plan. It is one the Chinese have when corporate malfeasance is committed. They arrest the executives, CEOs, prosecute them all, throw them in jail and, not infrequently, send them to an early departure. That would seem a fair exchange for $700 billion of my money.

How about something really radical, like taking that money and guaranteeing health care, education, and a decent standard of living for every person in this country (as all of these elements should be inherent and fundamental rights of citizenship as important as voting)? If the business community cannot run these industries without destroying them (as well as our economy), how about taking over these banks permanently and making sure the bureaucrats (without a profit motive) who run them will be held legally and criminally liable for their actions (and banning predatory loan practices, high executive pay, and making it illegal to confiscate peoples' homes during economic down times)? Now that would be socialism, to be sure, but instead of the national socialism of Republicans (who only want the state to be the armed guard for the upper 1% income tax bracket), it would be one that actually works for people who are not wealthy, white, and Republican.

And for those of you who think I am too harsh in my language, I submit this for your elucidation.

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Ex-bankers on pushing customers to rack up debt

By Deborah Feyerick
CNN Correspondent

BELFAST, Maine (CNN) -- As an account manager for credit card giant MBNA, Cate Colombo spent four years speaking to customers, answering questions about interest rates and waiving late fees.

Kathy Ellingwood did the same. She lasted only a year and a half before quitting this summer.

The women worked in different departments at the sprawling customer call center in Belfast, Maine, yet they share similar stories about aggressive selling tactics they claim they were told to use to push cash advances, sometimes getting customers to max out their credit cards.

"Every customer who calls in is a mark. It's a great big con," said Colombo, who estimates that she alone sold almost a quarter of a billion dollars in the four years she worked for MBNA before it was bought in 2005 by Bank of America.

Americans now carry $850 billion in credit card debt. Consumer groups are lobbying Congress to include better protection for credit card holders, demanding legislation to prevent what they call unjustified interest charges and deceptive practices, especially in light of the massive financial bailout now being considered.

Colombo and Ellingwood said that within seconds of a customer's call, they would have his or her entire credit history on screen, and they were trained what to say to sell people money. Video Ex-bank employees spill secrets »

"I would say 90 percent of the time, people were pragmatic. They would say, 'I don't need $100,000,' and we would find a way to convince them they needed the money," Ellingwood recalled.

She said they would look for trigger words like, "I'm in financial difficulty" or "I can't make my payments." Colombo said other triggers were, "I have to send my son to college. My car is not running. I'm moving."

Colombo said some people even asked about getting a $50,000 cash advance -- usually at zero percent interest -- for a down payment on a house. And although that's illegal, the former employees say they were trained to get around it by saying, "I cannot give you money to use as a down-payment on a home. However, what I can do is, I can deposit some money into your checking account, and once it's there, the funds are there, it's yours to do with what you please."

Bank of America told CNN, "Only customers in good standing and with good payment history are able to access cash up to available credit line."

But Colombo and Ellingwood say they were told to sell hard to everyone. Once the customer agreed, they say, they would speed through intricate disclosure notices. Among the details, how a zero-percent or low interest rate could convert to as much as 28 percent if a payment was even a day late.

"You're basically looking at people who need the money most, who may not be able to afford it," Ellingwood said.

Colombo remembers having a conversation with one man in his 90s.

"He had all this available credit, maybe $100,000. I have my manager screaming, 'Colombo, you need to sell. You need to sell. You need to sell,' " she said.

Bank of America calls its terms "clear and transparent." But credit card lending practices have now gotten the attention of Congress. Consumer groups support a bill to curb what they call predatory lending.

The American Banking Association opposes it, saying, "Consumers have benefited from a competitive marketplace that allows for pricing based upon risk."

Americans for Fairness in Lending, which put CNN in touch with Colombo and Ellingwood, wants deceptive credit card practices included in the financial bailout legislation that is now before Congress.

Its director, Jim Campen, said, "We haven't identified any illegal practices. What we've seen are practices that are highly unethical. It's extraordinarily common."

The two women say their conversations were monitored, and the more they sold, the bigger their salaries.

"If you didn't do it, you got yanked off the phone," Colombo said.

She said a manager once yelled, "You let your team down. You let the bank down. You let the stockholders down!"

Bank of America said it does not talk about individual cases but calls the allegations by the former employees "incorrect."

Spokeswoman Betty Reiss said, "Our call center associates are focused on serving customer financial needs and responding to questions about their accounts."

But Colombo said her performance reviews -- which she provided to CNN -- tell a slightly different story about selling tactics. In one, she is told by supervisors to be more aggressive: "You cannot sell what you don't offer." Another reads, "Understand the importance of selling at the highest possible rate."

CNN asked whether the customer call center in Belfast was perhaps operating independently; both women shook their heads and described an environment in which call centers across the country would compete with one another.

"I worked four 10-hour shifts. The goal was to make $25,000 an hour, which is $250,000 a day, which is $4 million a month," Colombo said.

Although Colombo does not know whether the practices were widely known at Bank of America headquarters in Delaware, she said this about her immediate managers: "Everyone on that level knew what we were doing. We were being told to do what we did."

Do the women feel guilty about what they did?

"Yes, without question," Colombo said.

"Absolutely," Ellingwood added.

Americans for Fairness in Lending said it wants the Senate to ensure that consumers are protected from what it describes as the deceptive practices of many of the same financial institutions likely to benefit from the $700 billion bailout.

The Credit Card Bill of Rights passed the House this week. But it's opposed by the banking industry and the White House, which said it would lead to less access to credit and higher interest rates for consumers.

For its part, Bank of America would not talk about individual cases or provide a copy of the disclosures that its accounts managers read to customers over the phone. It also refused to answer questions about training procedures for account managers at call centers across the U.S.

However, the spokeswoman said the bank "has nothing to gain by extending credit to people who do not have the ability to pay back."

http://www.cnn.com/2008/LIVING/personal/09/25/money.pushers/index.html
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4 comments:

White Trash Academic said...

I haven't been able to read anything about this as I am afraid I might hurl. I agree, prosecute them! Wall Street is more important than children's health care?

White Trash Academic said...

I haven't been able to read anything about this as I am afraid I might hurl. I agree, prosecute them! Wall Street is more important than children's health care?

TA said...

It angers me every time I think of it. It is a giveaway to criminals, pure and simple. I never thought I would see the day when I would agree with the libertarians, but on this issue I do, even if for different reasons (as I am sure they care about as much about children's health care as the average Republican). In Japan, until recent times, it was not infrequent for some executives (like their military forebears) that oversaw companies who failed and went into bankruptcy would commit hari kari. Maybe we need to import this practice, along with Japan's corporate executive compensation system (which ties all pay and compensation to company performance [meaning the CEO of Home Depot cannot receive a quarter of a billion dollar buyout after halving the company's stock)].

Sator Arepo said...

Tax. The. Rich.

That is all,
SA