Tuesday, December 22, 2009

Bailouts

American government bailouts seem to grant new life to struggling enterprises about as well as American government invasions grant democracy to an oppressed people.

Democracy, like success in free enterprise, really only means anything at all if you've fought for and earned it yourself. My Dad, rest his soul, was often caught in the same situation, as I have experienced hardship in my life, and he was tempted to just give me money to help me out. I know he felt like his Dad hardly gave him anything at all, and although that made my Dad into a disciplined and responsible person who did provide for himself and his family, I think it also made him feel more than a little bit adrift and alone. So with me, my father often seemed to take the approach of the carrot and the stick. His offer for help would come with an uncomfortable amount of oversight into how I'd gotten myself into trouble. And more often than not he could sniff out how I was the source of my own folly, chew my ass out good for it, help me just enough, and put the screws to me to pay it back.

Yet also more often than not, at some point, especially if a holiday rolled around, these debts would be forgiven. He had a knack for trying to ensure that I learned my lesson. Sometimes I did. Sometimes he would forgive me a bit too easily, and as a crafty son I would not always be honest with how I was wasting money, true. But for the most part, my Dad made sure I never felt adrift and alone, but also made sure I felt pretty damn crappy for failing to do the right thing in my spending and working priorities. And, of course, the older I get and the more reality I absorb, the more I see he was right.

I have recently had a rather bitter experience with another father, one who has erred on the other side of the coin, and kept an umbilical cord connected to his son beyond logic and reason. To my eyes, I felt this lifeline was poisoning the son's character, leaving him a person who was far more concerned with managing the PR and flow of information to ensure the perception that he COULDN'T make it on his own, because he had never been required to, and thus, eventually, because he didn't want to.

To my perception, this character poisoning spread to all endeavors. In the workplace, the son was more concerned with managing the PR and the perception that he was working, with loud proclamations of minor efforts, while failing to notice the fact that everybody saw he spent way too much time amusing himself on the internet. And this behavior spread, like fungus, to the younger and more impressionable employees, who themselves came to feel that being asked to turn away from goofing off, and focus on work, was unreasonable. I couldn't really blame them, since I am the type of manager to ensure that the same rules apply to every one, and when it came to applying rules to the son, my hands were tied. In conversation, it soon became clear that this son had no responsibility towards cleaning or maintaining his home--had somehow arranged to get someone else to do that for him. It was something he had stated with seeming pride. It is natural for one to want to feel pride about themselves.

Yet it was also clear to me that this person was unhappy, that his pride was hollow and untrue, evidenced by how he looked for good times in a bottle as often as he could. Hard work is good for the soul. The Puritans may not have known everything, but they knew that. People who are given everything, appreciate nothing.

A society will not appreciate a democracy unless they have revolted to earn it, unless they have shed their blood and made the hard choices it takes to fight for freedom. Democracy introduced is just another imposed order. Not of the people, not by the people. American foreign policy of the last half-century has held our forceful advocacy of democracy as its panacea, while doing more damage across the world to the reputation and future of democracy than any tyrannical dictator could.

A business will not find true success unless it too has made the hard choices that it takes to earn it--revolted, in essence. Look at the auto-makers in America now, as Ford, having declined bailout money, finds new avenues to ensure its future success, while GM and Chrysler struggle with only the hope of government money to forestall their rapid brand liquidations.

This will be my second Christmas without my Dad around, thanks to a 1/4 inch lump in his lung that metastasized before he even knew it was there. I miss him, yet I may have mixed feelings about some of the ways my Dad chose to teach certain lessons to me. But I will always appreciate the fact that the lessons he chose to convey were about my benefit--concerned with who I would turn out to be--and not about him being afraid that I couldn't make it without him. Cutting someone loose to make it on their own also communicates to them that you BELIEVE in their ability to make it on their own.

Failure is more instructive than success. To protect a business, or a person, from failure is to rob from them the right to grow. And in the end, really all that is accomplished is that the failure is postponed, and eventually shared among those who do not deserve it. Which will, in itself, be instructive, but a much harder lesson to learn, and a much more divisive one to digest.

Reply From Senator Udall

December 22, 2009


Dear Dana,

Thank you for contacting me with your thoughts regarding overdraft fee policy. I appreciate you taking the time to share your concerns on this issue.

As you know, Senator Chris Dodd introduced the FAIR Overdraft Coverage Act (S.1799). This bill would make changes to the law with regard to overdraft fees and penalties in an effort to increase transparency and consumer fairness. The FAIR Overdraft Coverage Act has been referred to the Senate Committee on Banking, Housing, and Urban Affairs for review. More recently, the Federal Reserve issued new rules that prohibit financial institutions from charging overdraft fees on automated teller machine(ATM) and one-time debit card transactions, unless the consumer consents, or opts in, to the overdraft service for those types of transactions. Under the rules, which will take effect on July 1, 2010, before opting in, the consumer must be provided with a notice that explains the financial institution's overdraft services, including the fees associated with the service and the consumer's choices.

I hate to see Coloradans who have unknowingly overdrawn funds hit with excessive fees, especially when so many hard-working Americans are already struggling to make ends meet. While I believe that all consumers have a personal responsibility to handle their own finances, I also believe there should be fairness with regard to the issue of overdrawing funds, which is why I welcome the Federal Reserve's new rules. I will continue to work with my colleagues of both parties to end abusive practices by financial institutions and level the playing field for American consumers.

Again, thank you for contacting me. In these hard economic times, please be assured that I will continue to keep the economic interests of Coloradans at the top of my policy agenda.

I will continue to listen closely to what you and other Coloradans have to say about matters before Congress, the concerns of our communities, and the issues facing Colorado and the nation. My job is not about merely supporting or opposing legislation; it is also about bridging the divide that has paralyzed our nation's politics. For more information about my positions and to learn how my office can assist you, please visit my website at www.markudall.senate.gov.


Warm Regards,

Mark Udall
United States Senator, Colorado

Wednesday, December 16, 2009

Letter to Colorado Senator Mark Udall re: Dodd’s FAIR Overdraft Coverage Act of 2009

I am writing to ask you to support Senator Dodd’s FAIR Overdraft Coverage Act of 2009. I know that many senators have removed their support from the bill because they believe the Fed's decision to require banks to offer their customers the choice to opt out of "overdraft protection" will be sufficient. I am writing to tell you it will not be, and why.

Here in Colorado I used to be a customer of Commercial Federal, which was purchased by Bank of the West. Under Commercial Federal, my debit card would be rejected if, due to some accident, I attempted to change something that could not be covered by my account. We discovered that Bank of the West had a different policy quite by horrible accident, which cost my family quite a lot of cash at a time we could least afford it.

We eventually moved our "free checking" business over to Wells Fargo, since it became clear there were no banks left that offered the simple choice of not having charges go through that could not be cleared, and since my wife's employment with Barnes & Noble allowed for free online banking.

I check my balance several times a day, track every check I write, and try very hard to manage the online payments, auto-payments, and myriad of payment sources that draw from my account to avoid this situation. Yet I would say that Wells Fargo has gathered at least $1200 in fees from my account through the last three years, at times when I could least afford it, when an auto-pay bill I had anticipated and asked not to be paid came out anyway, when times got very rough, or when I simply made a mistake.

A conversation with their customer service labeled this cost as a "feature," a "convenience," for me to enjoy. One they point-blank told me could not be removed.

So, despite my fears that the Fed's ruling would hurt Senator Dodd's bill's chances, I was happy to hear about it, and after calling their customer service to have the "overdraft protection" removed and being told I had to do it in-branch, walked right into my local Wells Fargo to ask to have my "feature" removed. I was told, again point-blank, that the Fed put no time structure on that ruling, and the soonest I could expect the option would be "sometime next year."

There is no teeth to the Fed's ruling. There is no message that what has been done to consumers struggling on the edge of hardship, fighting these new byzantine banking methods is WRONG. With 3 billion dollars a month being drained from the hardest-hit consumers at a time of economic hardship, there is no INCENTIVE for them to GET THIS CHANGE DONE.

I know there are provisions in the bill that maybe go too far. I'm not sure I agree with the limits set in number of overdraft fees that can be assigned--I have no interest in pardoning the consumers out there that simply do not want to pay attention to their accounts, as I have so strenuously, and often helplessly, over the years. Yet the requirement that an overdraft fee be commensurate with the overdraft amount is key to the whole usury aspect of this "hidden credit line" most consumers like myself have no choice but to accept with our "free checking."

Support for this bill is the only way to properly communicate the gravity and seriousness with which our representatives view unfair, usuristic "lending" practices enacted on the working class families of our state and country at times in their life when they are most struggling.

36 billion dollars per year / 12 months = 3 billion dollars per month / 30 days = 100 million dollars per day that these institutions are draining from those who are already in financial trouble. They have every reason to delay. Do you have enough of a reason to push them to stop? I hope this letter will help provide one more for you.