Wall Street Reform Now!

The banks love fine print and loopholes. We need to make sure the loopholes are closed and taxpayers, investors and consumer are protected by Wall Street reform. The Senate is preparing to vote on oversight of the banks and Wall Street. I just sent my Senators a quick, strong message and I hope you will to. Just go to www.DefendYourDollars.org.

This is the letter that Defend Your Dollar suggests you send to your U.S. Senators.

End “too big to fail”: In 1995, the assets of the six largest banks were equivalent to 17 percent of the US economy (GDP); now they amount to 63 percent of GDP. No wonder the mega-banks can shakedown the taxpayer with threats of economic collapse! The Brown/Kaufman amendment would finally limit the size of the biggest financial institutions so we never again have to worry that if one of them fails it will bring down the economy. Vote YES for Brown/Kaufman.
 
No loopholes for auto loans: Auto dealers who make car loans should be held to the same standards of fairness and transparency as banks. When I buy a car and the dealer helps me get a loan, I should get exactly the loan I bargained for, with no unexpected “extras” or surprise conditions.
 
 Strongly protect consumers: An independent pro-consumer watchdog must be created so when new problems with deceptive financial products are spotted, they can act quickly to stop them. Vote YES for the strongest, most independent consumer watchdog you can.
 
End “keep the fee, pass the risk”: Making bad loans was good for brokers, lenders, and Wall Street because everyone got a fee on the deal while passing the risk of nonpayment on to the next person in the chain. The Senate bill requires that every entity that securitizes loans keep a material portion of the risk. That means everyone will think twice before making a bad loan–and taxpayers won’t be cleaning up the mess.
 
If it’s not a bank, it can still tank the economy: Some of the biggest firms that threatened our economy were not banks, but other kinds of financial companies held to lower standards. This bill allows a panel of bankruptcy judges to appoint the FDIC as the receiver of important non-bank financial companies or bank holding companies when they are at risk of failing.  The FDIC can fire management, and creditors and shareholders of the failed company will bear the losses not taxpayers. 
 
End the hidden gambling: Require hedge funds to register and to disclose their trading activities, bring sunshine and oversight to the largely secretive derivatives market, and stop banks from gambling on derivatives.
 
Let states protect us: States should have the right to do more than what the Federal government says to protect residents from emerging financial schemes.

How close are you to the financial edge? Take this quiz

Thanks  to the Los Angeles Times Business section writer Kathy M. Kristof.  My score is 15 so I can gloat.

How close are you to the financial edge? To help you find out, here’s a 10-question multiple-choice quiz, developed with some guidance from the National Foundation for Consumer Credit and Clearpoint Financial Solutions.

1. The amount I have socked away in savings to handle emergencies could pay all of my living expenses for up to:

A) three months;

B) six months;

C) 8 months or more;

D) about an hour and a half, if I cut back.

2. My spouse and I fight about money:

A) frequently;

B) sometimes;

C) never;

D) through court-appointed lawyers.

3. Payments on my consumer debts — auto loans, student loans, credit cards and home equity lines of credit — amount to less than:

A) about 20% of take-home pay;

B) 15% of take-home pay;

C) 10% or less of take-home pay;

D) considerably more than 20% of my monthly paychecks.

4. When it comes to saving for retirement, I’m socking away:

A) 6% or a little less of income to get the company match;

B) 10% of my income;

C) the maximum allowed by the company plan;

D) whatever’s in the couch cushions. Seriously, who can afford to save for retirement?

5. My housing costs, including property tax (when applicable) and insurance, amount to less than:

A) 30% of my take-home pay;

B) 25% of take-home pay;

C) 20% or less of take-home pay;

D) more than 30% of take-home pay.

6. I make more than the minimum required payments on my credit cards:

A) sometimes;   

B) most of the time;

C) always — I pay off the full balance each month;

D) never. If they demand $29.37, that’s what I’m paying and not a penny more.

7. I spend less than I make:

A) unless there’s a sale;

B) except in cases when I’m investing in something long-term, like education or a car that gets me to work;

C) always;

D) when I manage to work enough overtime.

8. My finances:

A) are an occasional source of concern;

B) are largely in control;

C) are never a cause of worry;

D) give me cold sweats.

9. I have enough insurance to cover medical costs:

A) as long as they’re not catastrophic;

B) for both me and my family;

C) and I have money set aside to cover co-payments and deductibles;

D) only if I never get sick.

10. I know my net worth and:

A) though it’s not what I want it to be, I’m working on it;

B) it’s good and growing;

C) I’m the typical millionaire next door;

D) it tells me I’m insolvent.

Scoring: Give yourself 5 points for each A answer; 2 points for each B; 1 point for each C; and 10 points for each D answer. Total your points and assess your score.

76-100: Danger zone: You are in the economic red zone. Get yourself to a credit counselor pronto. If you need help finding one, go to http://www.nfcc.org or http://www.aiccca.org. Both are national credit counseling associations that allow you to find a counselor in your neighborhood by hitting the “find a counselor” buttons on their home pages.

51-75: Teetering: You may be making your payments now, but you’re on the razor’s edge of trouble. It’s time to get serious about budgeting and saving. If you can’t do it alone, get help.

26-50: Healthy and happy: You’ve got adequate savings and good habits. Keep it up and you’ll be comfortably rich in no time, if you’re not already.

0-25: Go ahead and gloat: You are in an enviable spot, likely to be able to handle any economic emergency that comes your way. But you already knew that, didn’t you?

business@latimes.com

We Speak English

These days the words “bigot” and “hate monger” are used frequently to protect the “rights” of illegal immigrants.  There are very few public figures who are concerned with the rights of those who have assimilated into America.  Construction business owner and Alabama gubernatorial candidate Tim James is an exception.  He is quoted as saying “This is Alabama. We speak English. If you want to live here, learn it.”  I agree with him.

My primary reason for supporting this opinion is that the nation cannot function in unison when we are not communicating to each other in one language.  There is a group named ProEnglish that is promoting the idea of making English the official language of the United States.  The group does not call for the banning of other languages being used but does want English to be the only language used in naturalization ceremonies, including the Oath of Citizenship.

The ProEnglish guiding principles are:

  • In a pluralistic nation such as ours, the function of government should be to foster and support the similarities that unite us, rather than institutionalize the differences that divide us.
  • Our nation’s public schools have the clear responsibility to help students who don’t know English to learn that language as quickly as possible. To do otherwise is to sentence the child to a lifetime of political and economic isolation. Quality teaching of English and America’s civic culture should be a part of every student’s curriculum. The study of foreign languages, as an academic discipline, should be strongly encouraged.
  • All candidates for U.S. citizenship should be required to demonstrate knowledge of English and an understanding of our system of government, at a level sufficient to vote in the language of our country English.
  • Naturalization ceremonies, including the Oath of Citizenship, must be conducted in English.
  • The right to use other languages must be respected.
  • I wrote about my views on October 14, 2007.  I have not read anything or heard anything that has changed my opinion.

    Wall Street Won’t Change

    The set of characters who are publicly promoting or opposing bank reform are not really interested in any financial reforms no matter what they say.  The reason is simple.  There is a significant amount of money to be made keeping things exactly the way they are today.  All of these participants have developed perfect “poker faces.”  None become emotional even when they are caught in a lie or when defending their carefully determined strategy.

    Senators Thomas Dodd (D) and Richard Shelby (R) were on last week’s Meet the Press.  Both acting very professional and directing there responses to host David Gregory, neither confronted the other even though it was apparent from their words that they have significant disagreements on what financial reform should look like.  Dodd is not running for re-election because of one major reason.  He has taken contributions from Wall Street and was the beneficiary of a specially designed loan from Country Wide Mortgage.  The progressive issue-advocacy group Americans United for Change (AUC) reports Shelby had received $5.3 million in contributions from the financial industry since 1998.  Of course both men deny these allegations.

    Henry Paulson, Secretary of the Treasury in the Bush administration is a former CEO of Goldman Sachs.  He saw that his ex employer was protected but Lehman Brothers, a Goldman Sachs competitor, was allowed to go bankrupt.  Coincidence?  Not likely!

    Alan Greenspan, the most famous chairman of the Federal Reserve, previously served as a corporate director for Aluminum Company of America (Alcoa); Automatic Data Processing, Inc.; Capital Cities/ABC, Inc.; General Foods, Inc.; J.P. Morgan & Co., Inc.; Morgan Guaranty Trust Company of New York; Mobil Corporation; and The Pittston Company.  He was appointed to that most important job by President Ronald Reagan.  In mid-January 2008, hedge fund Paulson & Co. hired Greenspan as an adviser on economic issues and monetary policy.  Paulson & Co. is the company that has been implicated in the Goldman Sachs case of allegations related to bets against mortgage derivatives which earned the firm billions of dollars last year and is now front page news.

    John Paulson (founder and head of Paulson & Co.), age 54, a Harvard MBA whose personal wealth is estimated at $12 billion by Forbes magazine, is at the heart of the government’s fraud case against Goldman, Sachs & Co.  Newsweek magazine describes how he went from obscurity to “place alongside George Soros and Warren Buffett as an oracle of investing.”    

    Ben Bernanke appears to be one of the few in government that has not been tainted by Wall Street.  However, his behavior is unchanged from that of Alan Greenspan.  Perhaps he has been infected too.

    If you believe this cast of players will change their ways or the way Wall Street functions then you are in a dream world.

    The president wins on the appearance front.  Nothing will really change.

    A Plan to Stop the Employment of Illegal Aliens

    Actually this plan might be considered an invasion of privacy by some people but unless there is a better idea it will have to be implemented.  My wife and I both have passports.  To obtain those documents we supplied her birth certificate and my naturalization certificate.  Our pictures and birth dates appear on the documents.  Our Drivers licenses also have our thumb prints.  I do not consider this an invasion of privacy.   Securing the Mexican border is not a doable action.  The border is too long to guard and tunnels can be dug beneath.  Tunneling has already been discovered near San Ysidro (southern end of San Diego).  This article explaining the process appeared in the Wall Street Journal.

    March 27, 2010

    Lawmakers working to craft a new comprehensive immigration bill are proposing a new national biometric ID card that would be required of all U.S. workers. WSJ’s Laura Meckler explains the proposal and the objections from privacy advocates.

    Under the potentially controversial plan still taking shape in the Senate, all legal U.S. workers, including citizens and immigrants, would be issued an ID card with embedded information, such as fingerprints, to tie the card to the worker.

    The ID card plan is one of several steps advocates of an immigration overhaul are taking to address concerns that have defeated similar bills in the past.

    The uphill effort to pass a bill is being led by Sens. Chuck Schumer (D., N.Y.) and Lindsey Graham (R., S.C.), who plan to meet with President Barack Obama as soon as this week to update him on their work. An administration official said the White House had no position on the biometric card.

    “It’s the nub of solving the immigration dilemma politically speaking,” Mr. Schumer said in an interview. The card, he said, would directly answer concerns that after legislation is signed, another wave of illegal immigrants would arrive. “If you say they can’t get a job when they come here, you’ll stop it.”

    The biggest objections to the biometric cards may come from privacy advocates, who fear they would become de facto national ID cards that enable the government to track citizens.

    “It is fundamentally a massive invasion of people’s privacy,” said Chris Calabrese, legislative counsel for the American Civil Liberties Union. “We’re not only talking about fingerprinting every American, treating ordinary Americans like criminals in order to work. We’re also talking about a card that would quickly spread from work to voting to travel to pretty much every aspect of American life that requires identification.”

    Mr. Graham says he respects those concerns but disagrees. “We’ve all got Social Security cards,” he said. “They’re just easily tampered with. Make them tamper-proof. That’s all I’m saying.”

    U.S. employers now have the option of using an online system called E-Verify to check whether potential employees are in the U.S. legally. Many Republicans have pressed to make the system mandatory. But others, including Mr. Schumer, complain that the existing system is ineffective.

    Last year, White House aides said they expected to push immigration legislation in 2010. But with health care and unemployment dominating his attention, the president has given little indication the issue is a priority.

    Rather, Mr. Obama has said he wanted to see bipartisan support in Congress first. So far, Mr. Graham is the only Republican to voice interest publicly, and he wants at least one other GOP co-sponsor to launch the effort.

    An immigration overhaul has long proven a complicated political task. The Latino community is pressing for action and will be angry if it is put off again. But many Americans oppose any measure that resembles amnesty for people who came here illegally.

    Under the legislation envisioned by Messrs. Graham and Schumer, the estimated 10.8 million people living illegally in the U.S. would be offered a path to citizenship, though they would have to register, pay taxes, pay a fine and wait in line. A guest-worker program would let a set number of new foreigners come to the U.S. legally to work.

    Most European countries require citizens and foreigners to carry ID cards. The U.K. had been a holdout, but in the early 2000s it considered national cards as a way to stop identify fraud, protect against terrorism and help stop illegal foreign workers. Amid worries about the cost and complaints that the cards infringe on personal privacy, the government said it would make them voluntary for British citizens. They are required for foreign workers and students, and so far about 130,000 cards have been issued.

    Mr. Schumer first suggested a biometric-based employer-verification system last summer. Since then, the idea has gained currency and is now a centerpiece of the legislation being developed, aides said.

    A person familiar with the legislative planning said the biometric data would likely be either fingerprints or a scan of the veins in the top of the hand. It would be required of all workers, including teenagers, but would be phased in, with current workers needing to obtain the card only when they next changed jobs, the person said.

    The card requirement also would be phased in among employers, beginning with industries that typically rely on illegal-immigrant labor.

    The U.S. Chamber of Commerce doesn’t have a position on the proposal, but it is concerned that employers would find it expensive and complicated to properly check the biometrics.

    Mr. Schumer said employers would be able to buy a scanner to check the IDs for as much as $800. Small employers, he said, could take their applicants to a government office to like the Department of Motor Vehicles and have their hands scanned there.

    —Alistair MacDonald contributed to this article.

    Write to Laura Meckler at laura.meckler@wsj.com

    Sending Illegal Aliens Home

    The Arizona legislature sent the Republican governor, Jan Brewer, legislation making it a crime under state law to be in the country illegally.  She signed the law today.  It also requires local police officers to question people about their immigration status if there is reason to suspect they are illegal immigrants; allows lawsuits against government agencies that hinder enforcement of immigration laws; and makes it illegal to hire illegal immigrants for day labor or knowingly transport them.  Sanctuary cities are outlawed in the legislation.

    Three problems immediately come to mind.

    1. Illegal aliens living in Arizona will not call the police after a burglary or other criminal offense because they will fear being arrested.  Special Order 40 in Los Angeles was issued specifically to stop police from arresting suspected illegal aliens when dealing with crime issues.

    2. This law could result in everyone wearing an arm band to identify their status similar to Nazi Germany banding Jews and other “undesirables”.

    3. There will be racial profiling.  Anyone with a Hispanic/Latino surname, physical characteristics common to Mexicans, or an accent will be stopped and questioned.

    I have to respect those Arizonans for having the courage of their convictions.  Has anyone seen this data regarding crime in Arizona that was compiled by someone in Michigan?  When the car washes have no employees and the care givers have all left will they still demand the imposition of this law?  If the law conforms to all Federal law it will not be overturned.

    Despite the down sides, forcing illegal aliens back to their home countries is a good thing.  Most illegal aliens probably won’t go back to their native countries.  My question is how do you identify illegal aliens from Canada, eh? 

    The Republican Party will pay a price for this law.

    Here are two links that are worthy of considering from the Arizona Republic and from Freewheel Burning.

    The Tea Party Just Wants To Save Money!

    If H1N1 had become a pandemic and there was no vaccine would you understand that the government was just trying to save money?  Aid for an earthquake in California or a Hurricane like Katrina, sorry we need to save money!  Besides it’s none of our business says Uncle Sam.

    Tea Party groups have two major arguments with the Federal government.  First, the Federal debt is so high that it will leave a burden for generations to come.  Many say that our grandchildren will be faced with the problem.  Second, the Federal government is intruding in our lives at an unacceptable level.  Government is trying to control our lives.  The control that government is trying to impose is far beyond what the Constitution allows.  I am not clear which is of greater concern.  While I agree with the concern, I am not convinced that most people understand the consequence of a reduced role for government.

    I decided to list some of the many projects and departments that have been adopted by the Federal government.  Which ones would we really be willing to forego?

    -The Interstate highway system was built with a combination of money from the Federal government and individual state governments.  Funds continue to be made available to maintain and upgrade that system.  The highways are not only for private passenger cars but are used by the trucking industry.  Here in Los Angeles the Long Beach Freeway is a primary route for moving goods from the ports to distribution centers.  Los Angeles/Long Beach ports are the largest in the nation.

    -Social Security, Medicare, and Medicaid are the three most expensive and most used Federal programs.  I have not met a single person who is willing to surrender their benefits including the wealthy and the Republicans who bad mouth those programs.

    -The Food and Drug Administration is a popular target of those wanting more attention to detail.  FDA officials were roundly criticized for not enforcing health standards at the Peanut Corporation of America in Georgia.  The slaughter of sick cattle and the occurrence of salmonella poisoning has brought complaints about the FDA’s lack of enforcement.  When drugs are not approved in a timely manner we attack the FDA but if a drug was approved that has caused death or injury we say that it’s the fault of FDA procedures.

    -The Securities and Exchange Commission (SEC) is the much maligned department that we want to ensure that the financial industry is not cheating investors.  It’s done a poor job but what if there was no agency? There wasn’t one before 1934.  The main reason for the creation of the SEC was to regulate the stock market and prevent corporate abuses relating to the offering and sale of securities and corporate reporting.           

    -The FAA (Federal Aviation Agency) is respected around the world.

    – The National Highway Traffic Safety Administration (NHTSA) just fined Toyota $16 million.  The agency appears to be under manned.

     – U.S. Immigration and Customs Enforcement (ICE) is the largest investigative agency in the U.S. Department of Homeland Security (DHS).

    – The FBI recently arrested Najibullah Zazi, 24, a Colorado airport shuttle driver who has admitted receiving weapons training from al-Qaida, played a direct role in an alleged terror plot, according to court documents released Sunday. Authorities have said they don’t know the timing or location of any planned attack.

    So which agencies are you willing to close to save money?

    Return to Glass-Steagall

    The Glass-Steagall Banking Act of 1933 forced commercial and investment banks to separate. Commercial banks were not allowed to underwrite the sales of stocks and bonds, while investment banks could not take in deposits from customers.  The law remained in place for half a century before it was repealed in 1999 through the Financial Services Modernisation Act, again better known by the names of the politicians who promoted the legislation – Gramm, Leach and Bliley.

    What we need is a return to Glass-Steagall.  I have not heard one government spokesperson say that the new proposed law will bring back Glass-Steagall.  Apparently I am not alone.  David Champion  writing in the on-line Harvard Business Review,   “But the evidence we have so far doesn’t really support the contention that this is Glass-Steagall redux. Nowhere have I seen a statement that banks will not be able to take positions in traded equities or equity derivatives or to do underwriting in equities, currencies, commodities, interest rates, or credit. The only businesses that they are clearly being precluded from are private equity and sponsoring hedge funds.”    

    So while President Obama talks about his new financial regulations there is no indication that the new law will prevent another panic and another bank bail out.  The proposed new laws do not go far enough to control banking misbehavior.