Institutionalized Immorality: 11 Worst Atrocities Committed by Banks in 2011

Arresting Customers for Closing Accounts, Illegally Harassing Widows Included In List

LOS ANGELES, CA - January 21, 2012 - The banking industry's bad habit of

illegally harassing widows for their deceased spouse's debt has won the top spot on the

CreditCardAssist.com list of the Worst Things Banks Did to Consumers in 2011. The

popular personal finance site declared an incident this summer where a Florida woman

was called by debt collectors constantly throughout her husband's wake to be the most

despicable banking act of the year -- but it was a close call. The article, which details

the most reprehensible actions of the financial industry in 2011, is intended to serve as

a warning to Americans planning on doing business with corporate banks in 2012.

"Despite new regulations that might lead consumers to believe that big banks are safer

than last year, the fact of the matter is that they're more at risk than ever before," says

CreditCardAssist.com founder Bill Hazelton. "The actions of the banking industry last year

were the worst that we've ever seen."

One Wall Street bank had customers arrested for trying to protest unfair policies by

closing out their accounts. Another caused a pregnant woman to miscarry by hounding

her for weeks and destroying her credit rating -- all over a check that the bank had

already cashed. Two major credit card issuers sued a small restaurant for $1.3 million

using data that they allegedly fabricated. In 2011, immorality became institutionalized in

banks across the country.

Hazelton expects continued upheaval in 2012 as more and more consumers look to

move their accounts from the large, national banking conglomerates to smaller locally-

owned credit unions. "The banking industry needs a wake-up call," he says. "Hopefully

the migration of customers will make it listen."

Bill Hazelton, founder of CreditCardAssist.com, has been advising consumers and

business owners on the perils of the credit industry since 2004. Under his guidance,

CreditCardAssist.com has grown into one of the leading credit card information resources on

the Internet and its on-site reports have been cited by the San Francisco Chronicle, the

New York Post, Yahoo! News and more.

To learn more about CreditCardAssist.com or to schedule an interview with Bill Hazelton,

please email Matt Hoff at Matt@contentfac.com. More information and the entire report

can be viewed here.

CEI Daily - Obamacare Amicus Brief, Protect IP, and Swipe Fees

Obamacare Amicus Brief

Though alarmists have long decried the effects of global warming on Greenland, the Washington Post now reports the island may actually be profiting from warmer weather.

Senior Counsel Hans Bader responds.

"The brief explains how the health care law violates the 'clear statement' rule in the Supreme Court’s Pennhurst decision by imposing vague, indefinite, open-ended additional burdens on states, including massive, unpredictable costs in the billions of dollars. Federal officials have issued over a thousand waivers of burdensome rules imposed by Obamacare, mostly to unions or other entities with political connections.  Meanwhile, HHS officials have vastly expanded the reach of other burdensome provisions of the law. For example, they have largely nullified the law’s grandfather clause, which was put into the law to keep Obama’s broken promise to let you keep your existing health insurance if you like it. They also issued a rule rewarding end-of-life counseling, even though such a provision was removed from the bill prior to passage after the so-called 'death panels' controversy."

 

 

Protect IP

Last week, a handful of senators introduced the Protect IP Act, a bill intended to combat copyright-infringing websites.

Associate Director of Technology Studies Ryan Radia compares Protect IP to last year's Combating Online Infringement and Counterfeits Act (COICA). 

"As several dozen law professors warned last year, COICA lacked procedural safeguards, was overly broad in its scope, and risked hindering free expression by triggering “false positives” rendering lawful websites inaccessible. Compared to COICA, PROTECT IP represents a more balanced approach to fighting online copyright and trademark infringement while recognizing fundamental civil liberties."

Swipe Fees

In his recent Huffington Post column, Dean Baker took the side of "big retailers" against "big banks" when he defended debit card "swipe fee" price controls.

Director of the Center for Investors and Entrepreneurs John Berlau explains how Baker got it wrong.

"In making his case, Baker was on the other side of the facts. He completely misstated the findings of the Federal Reserve in writing the rule in question, asserting that the Fed estimated that the price caps would cover costs of banks and credit unions that issue the debit cards, when in fact the Fed said explicitly said it was setting price controls below-cost. Baker was defending the Durbin Amendment from the Dodd-Frank Wall Street Reform and Consumer Protection Act, which puts price controls on the interchange fees — or 'swipe fees' as retailer critics call them — that banks and credit unions charge merchants to process debit process debit transactions. Retailers pay this fee on each card purchase and in return they get more sales and the guaranteed payment for all purchase that was lacking in the 'good old days' of bounced checks. But in implementing the Durbin Amendment, the Fed is drastically reducing this fee from an average of 44 cents to no more than 12 cents per transactions. The biggest retailers will get the biggest short-term benefits from these price controls."

CEI Daily - The Volcker Rule, Card Check, and the UAW

Volcker Rule

The Financial Stability Oversight Council yesterday recommended that regulators implement the Volcker Rule, which limits how banks can risk their capital by trading. 

Director of the Center for Investors and Entrepreneurs John Berlau explains why the Volcker rule is costly, unnecessary, and may even add risk to the financial system.

"The Volcker rule is based on the faulty premise that a financial institution making a loan — any loan — is somehow inherently more dangerous than investing or trading. It was that premise that led to the enactment of Glass-Steagall in the Depression that separated “commercial” from investment banking. [...] Due to unnecessary restriction and uncertainty that will still linger, Congress should repeal the misguided Volcker rule and move on to the Dodd-Frank “financial reforms” glaring omission — the behemoths Fannie Mae and Freddie Mac, which were at the center of the crisis."

Card Check The National Labor Relations Board is suing several states whose constitutions forbid card check. Research Associate Trey Kovacs says the case is an example of Big Labor's overreach. "Unions do not believe employees should have free choice. Unions demand access to employees and that management revoke the right of who they employ and private property rights. They believe it is discrimination if employers choose to let non-profit groups, American Red Cross or Girl Scouts, on to their property and not union officials whose goal is to defame and damage the company. Card check is a process which takes away freedoms of American workers and they have voted against it, now we should let that vote count."

UAW

The United Auto Workers union is going to attack companies that don't facilitate their organizing efforts by labeling those companies "human rights violators."

Policy Analyst Ivan Osorio points out that to unionize transnational companies, the UAW will have to reach out to international bodies and foreign governments.

"[UAW President Bob King] recently acknowledged that the UAW is in trouble. Speaking to an audience of 1,000 union members at a Washington political action conference, he said, 'If we don’t organize these transnationals, I don’t think there’s a long term future for the UAW — I really don’t.' With those kind of stakes, it would be surprising for the UAW not to take some drastic action. The upshot of all this is that we could end up seeing the UAW ask international bodies composed of foreign governments — including some undemocratic ones — for help in unionizing American workers. Stranger things have happened."



CEI Daily - The Durbin Amendment, Bag Searches, and McDonald's

The Durbin Amendment

Yesterday, in implementing the Durbin Amendment to the Dodd-Frank banking law, the Federal Reserve set price controls for interchange fees that retailers pay to debit card issuers at no more than 12 cents per transaction.

Director of the Center for Investors and Entrepreneurs John Berlau explains why these price controls are a "gift to retailers" but a "lump of coal for consumers, community banks, and credit unions."

"Unless Congress acts to delay or repeal the Durbin Amendment, consumers, community banks, and credit unions will be getting a large lump of coal in their stockings by next December as the expenses of running an efficient payment card system are shifted almost entirely onto their shoulders. Consumers have already seen the costs of this rule through the loss of free checking as a result of banks’ anticipation of an estimated 60 to 80 percent loss of revenue from merchant fees. Moreover, the price controls and other provisions of the Durbin Amendment will like reduce investment and innovation to counter emerging hacking and security threats to the payment system."

Bag Searches The WMATA has announced they will begin randomly searching bags on the D.C. metro. Research Associate Brian McGraw argues that the searches are not a rational response to supposed threats. "Everyone wants our transportation systems to be safe. But safety must also be balanced with respecting the privacy of citizens, and not wasting money on things that do not make us safer. Sometimes, our safety overlords do things that utilize scarce resources (including taxpayer dollars!) that seem mind-bogglingly dumb."

McDonald's

The Center for Science in the Public Interest is suing McDonald's.

Senior Counsel Hans Bader talks about the plaintiff's argument.

"Why is the plaintiff in the suit against McDonald’s suing? She claims that '[b]ecause of McDonald’s marketing, her daughter has frequently pestered her into purchasing Happy Meals, thereby spending money on a product she would not otherwise have purchased,' and that 'when she said no, her kids became disagreeable' and 'pouted.'  If that’s a basis for suing, then, as Walter Olson notes, 'McDonald’s isn’t the only company that should worry.'"

 



CEI Daily - Mortgage Foreclosures, Stimulus Mistakes, and Geithner

Mortgage Foreclosures

Some argue that delaying mortgage foreclosures will stabilize housing prices.

Research Associate Alex Schibuola says that the foreclosures, even if delayed, will dramatically lower housing prices.

"We know that [the foreclosures] are coming eventually. Therefore in, say a year, we expect prices will decrease once the foreclosure process is re-initiated because those houses then show up on the market. [...] If sellers expect that prices will fall in the future, they will want to sell at today’s relatively higher prices. As a result more people start selling now which increases today’s supply and this brings down today’s prices. This will continue until future prices are equated with today’s prices. Why? Because if expected future prices are low relative to today’s prices more people would like to sell to capture the relatively higher selling prices of today.

Stimulus Mistakes Stimulus money went to prisoners and dead people. Senior Counsel Hans Bader says that even when stimulus money went to law-abiding living citizens, it wasted taxpayer dollars. "The stimulus also contained giveaways to wealthy trial lawyers, who are some of the biggest donors to liberal politicians.  It expanded welfare and largely repealed welfare reform.  It has paid for abandoned bridges to nowhere and unnecessary government buildings in cities with rapidly shrinking populations."

Geithner

The Washington Times argues that if Timothy Geithner were in the private sector, he'd be fired already.

Warren Brookes Fellow Kathryn Ciano explains why Tim Geithner is an expert in expanding government but a failure at expanding business.

"For a business to hire a new employee, that company’s bottom line must benefit from the hire. If it costs $20,000 to hire a new employee, the business will only hire if it anticipates earning $20,001. If the bottom line cannot support the cost of a new worker, she simply will not be hired. Funds alone cannot generate jobs. As with any financial interaction, money is only as good as the probability of your being able to use it. When dollar hopefuls are very uncertain about their ability to use money in the future, they save it. Businesses are not like government; they are risk averse."