Bailout or power grab?

I've been swimming 2-3 times per week, trying to get back in shape. I love exercising but it doesn't happen unless I have an easy to maintain routine and for the moment I've found it. Lunchtime lap swim at the community pool. It takes me about an hour to go, swim and come back and I love swimming, I grew up swimming. One of the other joys is listening to NPR there and on the way back, even though I plan to someday ride my bike (it's about two miles). I was thinking last week about what an exciting time we're living in. For better or worse, this is truly an exciting millennium so far. It's easy to get dismayed by the widening gap in ideology, lifestyle and economic status between Americans, but at the same time, these are the conditions from which great change can come.

Every day, driving to the pool, there's someone on the radio talking about the current economic situation. Every single person has a different piece of the puzzle. There is honest-to-god debate going on. The war in Iraq has been reduced, over the years, to a couple of soundbites and a position of either being for the war, okay with torture and willing to forgo civil liberties or being against the war, not okay with torture and unwilling to forgo civil liberties. But this current crisis is fresh and this time people and are not falling for the alarm bells and just handing over the keys to the store. This morning in the New York Times, there was a graphic of the Dow falling and a headline about yet another big bank consolidation. Then, this afternoon, the Dow falls even more and is blamed on the house not passing the bailout bill.

Now I understand that the banks want this to sound confusing so that we don't really understand what's happening. It's funny because I've been watching episodes of Hercule Poirot (from BBC) every day since landing at my mom's house and I now figure out the mysteries in the first few minutes. Let's look at the facts the way Poirot would:
1) The current disaster was predicted by many people over the last several years which means that the stage was being set for a certain disaster and we can only assume, either intentionally set or intentionally not averted.
2) Several big banks fail because of years of high-risk practices that have made many people in the industry very wealthy, leaving homeowners and taxpayers, high and dry.
3) The former CEO of one of the failed banks works with the Federal Reserve (a central bank created with precisely this kind of situation in mind) to devise a plan in which the federal government bails out these failed banks. They predict a massive collapse if that does not happen.
4) Nothing is done to help or protect homeowners that are losing their homes.
4) Republicans vote against the bill and the stock market crashes at precisely that moment.

There are a couple of things about this situation that are very suspicious. Hercule Poirot, a fictional character, could himself arrive from the 1930's and ask these questions:

First, if the current disaster was predicted, why was nothing done about it? The Republicans favor deregulation and do not support government run businesses. This explains why they are voting against the bail out bill and it explains why no regulations were put in place. Their policy is to allow business to operate in a free market which means if a business fails - and that includes banks - it is not the government's job to bail them out. Poirot might speculate that nothing was done to allow certain people to get very rich. In his world, almost all crime is motivated by money.

Second, the fact that it is big banks failing – banks that indulged in risky practices – instead of an overall economic collapse seems to indicate that in fact the economy is not failing, it is just these banks that are failing. But what has their demise produced? A massive consolidation of banks, increasing their financial power. The bail out plan would further empower these banks by wiping out their bad debt and giving them a superior advantage over all the other banks that acted responsibly. And who devised this plan? The former CEO of one of these failed banks. Poirot would definitely be interviewing Henry Paulson right now.

Third, the government already bailed out several institutions, promising each time that it would stop the bleeding, but it didn't. So what are the chances that Wall Street would hang on, even performing well last week and wait until this day to crash, perfectly coinciding with the rejection of the bill? It would be easy to wonder if perhaps there are people who can pull strings to make things happen, kind of like how the gas prices rise and fall to perfectly coincide with certain political movements in this country. And if that is the case, then who is to say that this entire event isn't the product of certain strings being pulled so that it will happen this way? We all know that Bush's Iraq invasion was planned and on the table shortly after he took office. He only needed an inciting incident to put the plan in place. Couldn't it be argued that this collapse is merely an inciting incident to allow a massive consolidation of power by the banking industry?

Someone commented on the article about the Citigroup acquisition that bigger, fewer banks would be easier to regulate. Is that why it was so easy to regulate them to avoid this disaster? Let me repeat a story of how I was robbed by Bank of America. Although only $1,300, it perfectly illustrates how powerless the "little man" becomes against a big bank. In a nutshell, the money was taken from my account and BofA claimed no responsibility for it, nor did they show any interest in figuring out how it was stolen. I relentlessly campaigned to get it back and eventually did, immediately moving my account to a small credit union. In the end, it really isn't about regulation, it's about power. These banks are already incredibly powerful and have more power over our money than we do. A friend of mine wrote a very interesting blog post looking at the situation not from an economic standpoint but for what it is really is, a power grab. What do you think?

Ex-cons are the only movers you can trust

I had a conversation with one of my neighbors that I'd never had a chance to talk to before. He's always sitting outside in the sun and I knew his name is Keith, he's a writer and has lots of tattoos. I didn't know that he had just gone through a divorce, lost his parents, and is from Manhattan. I got to see his apartment and it's decorated like a male version of mine. A big comfortable couch and furniture from the 30's, which matches the 1939 building. He asked me if I had arranged for movers yet and when I said I hadn't he recommended a company.

First I have to say that selecting a moving company is one of the most confusing and difficult commercial endeavors I've had to navigate. It's like the industry is still in the 1970's and run by the mob. I was at an apartments site and used a little widget to request quotes from movers. I got responses from no less than ten companies. They emailed and many called and either called or emailed me every day since. Their quotes range from $895 to $1,895 for the same move! Their contracts are confusing and bizarre and I really didn't know what to do.

To complicate matters, I don't have a place to move the stuff into yet and the longer my things are in the Santa Monica apartment, the greater the chance I'll end up paying yet another unoccupied month of rent. So I've looked into pods and storage and movers and U-Hauls and day laborers. There are a myriad of choices, all of which are difficult to decipher which combination will end up costing the least. Talking to my mom about it, she said it reminded her of Bank of America (whom she said she's heard is run by the mob). She works for the government and they have a deal with BofA to handle all of their corporate accounts. But when my mom's purse was stolen on a business trip, Bank of America was the only credit card that wouldn't take off the charges incurred by the thieves. My mom got a ding on her credit report for three years and has refused to use them (corporate or otherwise) since. I have my own horror story about BofA and wasn't looking forward to experiencing what moving companies are doing to people.

A regular Joe got mad and got even by starting MovingScam.com to educate other people, watchdog the industry and inspire people to take action. It's an excellent site and the story is fantastic. He got charged three times the initial rate, waited six weeks to get his damaged belongings, some of which were missing, and spend countless hours on the phone dealing with these thugs. Three years later the ringleader was actual convicted of extortion and money laundering. Which explains why this guy went through the trouble to find out exactly how the industry is regulated (or more accurately, not regulated.) He writes, in regards to the common practice of holding belongings hostage in order to charge up to double the "guaranteed rate": Believe it or not, a mover's "punishment" for stealing from you is to give back what he stole, and that's only if he gets caught and someone forces him to give it back which is no small undertaking in itself.

I know what it's like to be that mad. I spent three months trying to get my money back from Bank of America. The frustration of being victimized by a business legitimized by the government is incomparable. So when I started hearing horror stories about movers - they take forever, you pay more than they say, they break things, they lose things - I really wasn't sure what to do. Then, my neighbor recommended Delancey Street Moving company. He said he'd done three cross-country moves, two were horrible experiences but the one with Delancey was great. He said "you wouldn't believe the care these guys took with my things."

I looked them up online and discovered that it's a Bay Area based non-profit that helps ex-cons (and the like) learn skills, get sober and do whatever else it takes to "graduate" into society. The foundation's website says that The Delancey Street Moving Company is the largest independent moving company in Northern California. "Known for its swift and superb service, the moving company is so popular that they do virtually no advertising, relying on word of mouth." Certainly a refreshing change from the hard sell of these other companies wanting to provide me a quote and get me to sign on the dotted line.

Virtual theft is very real

A friend of mine recently deposited a check for some editing work. The check cleared and he paid his bills. Then, the check bounced and he racked up some $400 in overdraft charges. Several days after his account was overdrawn, the bank was still allowing him to make purchases. When he got on the phone with them, he was irate. Why, he asked, would they allow that? Why can't they let him know? The answer was "we don't do that."

The answer should have been "because we make a lot of money that way." A new report shows that banks make an average of 217% on in-store purchases with a debit card that overdrafts.

"What banks are calling 'bounce protection' is starting to look more like a 'protection racket,'" said Eric Halperin, director of the Center for Responsible Lending's Washington office and a co-author of the report.

Sounds like racketeering to me. A couple of years ago, unknown persons accessed my bank account via non-bank ATMs and withdrew $1,300. These withdrawals occurred twice per day for three days in a row, $200-$300 per withdrawal. Even when my account was overdrawn, the bank kept paying out. By the time I discovered the fraudulent activity, I was $700 in the hole and had racked up hundreds of dollars in fees. I found a blog post detailing a similar experience but you can Google "Bank of America" fraud and find countless similar stories.

I was told by a representative that "this happens all the time" and read an article on MSN about mass ATM fraud but the bank insisted that I must have been frivolous with my PIN number and someone I knew stole the money from me. I was robbed and the bank was trying to extort even more from me. After six months of diligent calling and letter-writing, I got my money back and all the fees refunded. I immediately took my money out of Bank of America and put it into a smaller credit union.

This is what I learned about how to protect myself. Protect your credit cards. ALWAYS use your debit card as credit card by choosing "credit" when you make purchases. NEVER enter your PIN number anywhere except a bank ATM machine. Don't get cash back at the grocery store. (It's ridiculous, I know. Why would we be given the convenience if it wasn't safe?) ALWAYS shred documents with your personal information: Social Security number, driver's license number, birth date. Protect your Social Security number. Use CASH.

Rep. Carolyn Maloney (D-NY) is expected to re-introduce a bill that requires banks to report the overdraft APR to consumers, get their written consent to put them on "bounce protection" programs and give them overdraft warnings at the ATM. If you've been coerced into paying exorbitant overdraft fees, call or write your representatives and tell them to support this bill.