A Call for Reform in the Finance Industry

I work in the call center of a major financial institution, and while my specific employer is mostly ethical, I think the financial marketplace has gotten so out of control it should, at this point, be call the usury marketplace.

If I ruled the world, here are some reforms I would initiate pronto:

Outlaw Payday Loan Shops.

These places are nothing more than loan sharks with store fronts and poorly paid employees. They cater to the poor and the financially illiterate: the very people who should be avoiding them like the plague but are too desperate or unknowing to do so.

Outlaw Exorbitant Bank Fees.

The bank I work for charges $36 or each and every overdraft and $8 per day additionally after the fourth day on which an account is overdrawn. I have seen people go into overdraft for less than a dollar and end up owing hundreds in fees alone. People should be responsible with their checking accounts, but many banks set people up to fail with insane deposit policies. For example, at most banks, if you deposit your paycheck on Friday after work, it will not actually be available until the following Tuesday, even if you’ve been depositing it without problem there for years.

Regulate Unsecured Credit Interest Rates

Right now, it is perfectly legal for a credit card company to increase the interest on a customer’s credit line to over 30% if that person makes a late loan payment somewhere else, even if that person has never been late on their credit card payments. Credit card companies also routinely hike rates to 30% for customers in crisis and keep them there indefinitely. More than one credit card company has been successfully sued for adding late charges and hiking interest rates on customers who pay immediately upon receiving their bill; a clear attempt to gouge customers under the banner of late payments that were never even late.

Define Responsible Lending Practices.

You wouldn’t think this would even be necessary, but the sub-prime meltdown shows that it clearly is. One of the most irritating mortgage commercials currently on TV boasts of “no hidden fees” when a single trip to www.bankrate.com shows that same company charges horrendous fees. They aren’t hidden. But if you don’t think to look for them, you won’t know, and many, many people don’t think to look for them.

Restrict the Issue of Debit Cards

I know this one is only in my dreams, but listen–Most people who get into overdraft trouble on their accounts do so because they don’t treat debit purchases like check purchases. They assume that if the money is there and the card is approved, it’s a good purchase, when actually all it means is that the money is there at that minute. You still can’t spend more than you have, and you can’t know what you have without keeping an accurate check register. Banks don’t go out of their way to tell you this, because fees are 70% of their profit. It’s really that simple.

Teach Finance in Schools.

And not just in high schools either. By the time kids get to high school, they already have a multitude of bad habits and misunderstandings regarding money, and they also are at an age where they don’t listen to adults. Starting early and enforcing good money habits in children is essential to insure they live well as adults no matter what their income or eventual career choice.

Ditch the Consumer Economy.

Yes, you heard me. We are living in a time in which even the most cautious scientists feel our carbon emissions are killing us fast. And yet the US government is still urging us to spend like maniacs and consume as much cheap Chinese crap as possible to keep our own country afloat. This is madness. Not only is it hurting us, it is hurting the world. Imagine by contrast an economy based on manufacture of renewable energy, green products, and green services. Imagine energy independence for each individual family and the freedom that would create in the working lives of ordinary people. Really, it doesn’t even take that much imagination, all it takes in commitment in public policy and private industry. We can’t afford to wait until tomorrow. Tomorrow is here now.

Down? Oh Yeah.

Yesterday the Dow fell almost 400 points in a single day, and this morning Asian markets are following suit. This economy deathwatch is becoming something of an obsession for me. So many people (me included) are not reassured by any of the false reassurances spouted by pundits. Bush’s $3 trillion proposed budget for a single year was the icing on the cake. When asked about the high figure he explained that we have to borrow money for the $600-in-every-pot stimulus package to jump start the economy. Huh?

It reminded me of a call I took once from a guy who was in trouble for depositing his own checks into his checking account to fund it. He was in trouble to the tune of about $7,000 for writing checks against his own bad checks. And he didn’t get it. I wonder if that guy was our president. Hard to say.

We showed the house to two renters last weekend but neither rented it. Both balked at the prospect of filling out an application and having a credit check. That’s just not good. I have to make some hard decisions about that house. I have no idea what to do with it, and it is bleeding us dry. The prospects of it selling in 2008 are worse than the prospects of it selling in 2007. I bought it for $39,900 and comparable homes in that area are now on the market for $5,000-$8,000 and not selling.

I have so much to do at home here, I don’t even want to go in to work. I have work on top of work on top of work. I am seriously considering bankruptcy, even though I am not behind on the payments (yet). Discharging that debit and the attendant costs of maintaining the home would add $1500 a month to our income. It would simplify our lives. It would enable me to write instead of listen to angry people on the phone all day. It would trash my credit, but lately I’ve been thinking, it’s not so much whether my credit will end up trashed; it’s how my credit will be trashed. Will it be a long slow painful trashing? Or can it be a quick, painful trashing that frees up lots of cash?

Decisions, decisions. That’s the great thing about living in America these days though: We have so many choices!

Between Supers

Last night was the Super Bowl and tomorrow is Super Tuesday, and I am still working at the bank, watching my choices shrink. When I started there, I was most impressed by all the opportunities that existed to move out of the call center after a year. I planned to put in my year and move to something I liked better. But since then, the banks have been grappling with the sub-prime mess and tons of people have been laid off. So the opportunities have gotten dramatically fewer, and I feel stuck and unsure about the job.

I don’t like the job. I’m clear on that. But I can’t just bail with nothing to catch my fall into unemployment. I bid on a lot of freelance work this weekend, and if I get enough of it, I might just take a deep breath and take the leap. I haven’t heard back from either of our prospective renters, which is not a good sign, and my realtor is complaining about the house looking empty and sad. Well, duh. It’s been sitting empty for almost a year. Of course it looks empty. It is empty. If someone could sell the house it would be full.

I don’t blame her or hold her responsible for the lousy market, but it is getting so aggravating. I can’t just keep fussing over this vacant house and pouring money into it to no avail. I may have to be more aggressive in my attempts to rent it out.

Meanwhile,  I’m still listening to angry people on the bank’s 800 line. I feel so stuck.

Microsoft versus Google

No, it’s not a Japanese monster movie, it’s the latest thing to cheer up the stock market. Microsoft is trying to purchase Yahoo because Google is leaving them in the dust with lots of innovative online software and gadgets that make boxed software a lot less appealing. So Microsoft is belatedly trying to compete. I’m betting on Google, but we’ll see how it all unfolds. At least it has taken the collective financial mind off of its own impending doom.

That’s bad for my blog though. Now what am I going to brood about? Actually I think there’s plenty of stuff left, but for the time being, happy days are here again on Wall Street. The CEO of MBIA or Ambac, I can’t remember which one, came out publicly and said something to the effect of, “Oh for crissakes you big babies everything is just fine,” and that was enough to make the market rally.  Apparently all you have to do these days to change reality is say something happy. I am not going to drink this Kool-aide though. I may just have to whine about something else for awhile.

Yesterday I talked for a long time with an 87 year old woman with lots of money, TONS of money, who was very upset about a $2 recurring fee on her bank statement. I did what I could to get it permanently removed, and I listened to her for way longer than I am supposed to without getting in trouble.  Old people are interesting though, and lots of them are anything but stupid. Yet they go to the bank and get patted on the head and blown off by bank employees one quarter their age. They are treated like annoying small children. I think that is screwed up, totally.

Anyway, at one point this woman said, “Is there something you really want to do? Because if there is, do it now, don’t wait another minute. You’ll be 87 too before you know it, and maybe your health will be bad and you won’t be able to do it, or maybe you’ll die right after you retire like my husband did, and you won’t get to do it. So do it now.”

I don’t know why this got to me but it did. Every day I sit at work thinking, “I don’t want to be doing this all day long.” Every day. I’m trying hard to create something better for myself and I’m trying to do what I want to do in my life now, not later. But the largest part of my day, the survival part, is listening to very unhappy people across the country though a headset, and often I feel really conflicted about it. But opportunities are  scarce in Michigan right now, and I tell myself every morning, well, at least I do cheer them up most of the time.  That is worth something. Still, when this woman gave her withering advice I felt a chill go through me. And it wasn’t just from the snowstorm outside.

Today we are traveling 70 miles to my Indiana house to show it to prospective renters. The stakes are high—A good paying renter would subtract over $700 in monthly bills from our budget and keep the house from being vandalized while it sits empty. A bad renter though will not pay and vandalize the house while living in it. I just can’t wait on my realtor anymore though. I know she is doing what she can but she knows and I know (and she knows I know) that my house is not going anywhere no matter what price we put on it. So I have to at least try to deal with it myself.

I’ll keep my fingers crossed. This month I want to make more on my writing than last month. That is my goal. More every month than the last until I can leave the bank or go half-time there just to keep the health care.  I am so tired of feeling like I am held hostage in a cubicle for health insurance. Every time I try to use the insurance it costs a fortune anyway and the care sucks. I am starting to question the whole thing.

Better Than TV

Watching Wall Street is better than TV lately. Yesterday, Bernanke went for the big cut, taking prime down another half a percent. For about 20 minutes Wall Street was happy. The Dow shot up 140 points. Then came the word that Ambac and MBIA, the two largest bond insurers backing the crappy subprime investment vehicles all the major banks bought, were both being downgraded and stood to lose about 24 billion more dollars. So twenty minutes of happiness evaporated and the Dow went red again.

What is weird is how scary all this is economically, and how scared people on Wall Street are not. Okay, they’re nervous. But, think about it. The companies that INSURE BANKS are in trouble. To say this not good is the understatement of the century. What’s more, the Fed has pretty much used up its ammunition with this latest rate cut, and even that one could backfire with an unwelcome spurt of inflation come summer or even sooner.

I work for a bank. So, you know, I have a stake in this. But it’s also fascinating to me. It’s like watching a train wreck, or someone about to jump off a bridge or tall building. I want to look away, I feel like for the sake of decency and my positive opinion of myself I SHOULD look away, but I just can’t look away.

On a brighter note, I made $200 yesterday on a series of articles I wrote, some people want to rent the house we can’t sell, I’m getting over a $1000 back on my taxes even without the stimulus plan, and next month my car is paid off. Another winter storm is due tonight, so I’ll be stocking up on canned goods after work, and milk.

I can hardly wait until the market opens in NY. Who needs soap operas when we have this?

Panic or another rate cut Wednesday

Here in Michigan it is 7 degrees outside with fifty-mile-per-hour winds and six inches of snow with another six coming. Do I want to venture out to the call center? I do not. And yet, I do like eating regularly and living indoors, so I will bundle up and go listen to people complain for eight hours so the bank will pay me.

Wall Street was happy yesterday, anticipating another rate cut announcement from the Fed later today. Good for Wall Street. The Fed has a tough decision though. Another rate cut could send inflation skyrocketing. No additional rate cut could send Wall Street plummeting. (Again.) I have noticed lately that as I watch the Dow go up and down and up and down, part of me wants it to go down a lot. Like, a couple thousand points. Why would I want this? I’m not sure myself. I think it has to do with my own anger at these guys for getting us into this mess with irresponsible lending practices and deceptive (and possibly outright illegal) investment strategies. A shorter way to put it is G-R-E-E-D.

I want to see these guys pay. Even if it means I pay too.

The thing is, I’m already paying. I have a master’s degree and a lifetime of professional experience and I work for $11 an hour in a call center. It could be worse. I could work nowhere. But when I see guys hauling in seven figure salaries to screw the rest of us, I get a tad bit peeved. Meanwhile, my 401K is losing 6%. I can’t seem to shuffle it in any way that keeps it from bleeding money.

Today UBS announced a 14 billion dollar write down. How can these banks and major financial institutions keep losing money like this and survive? I don’t get it. Meanwhile, back at Maggie’s Farm, we are supposed to double our sales goals and booked accounts. I mean, come on… Interest rates on CDs just fell to 3% and some decimal points, and that is our best rate if you lock the money up for four years. That’s a hard sell. Especially in this economy. We are supposed to push home equity lines but I feel this is a terrible product and no one should get one, and it’s hard to sell something you find despicable and dangerous.

I should be handing out soup or something. I am so poorly suited to this job, I swear. I can’t believe they haven’t canned me yet. I am learning about affiliate marketing and other boring things a person needs to know to make money writing online. The thing is, it’s working for me. This gives me hope, and I need that, because if I have to face working on that phone for 11 more years I will go bats, I really will.

Well, time to fire up the car. I hope it starts.

Doom on Monday

Really, I don’t have tons to say in the way of doom today. I actually have some good news for a change. Good news bit number one is that I asked for a half-time schedule at the call center and in March I will likely be able to cut back to 4 hours during the day. This will free me up to spend more time writing, which brings me to good news bit number two: I actually made money writing in January, enough that I will have to declare it on my tax returns for 2008. This pleases me, since I am so so so sick of call center work. I wouldn’t say making money as a writer is easy by any stretch of the imagination, but now I know it is possible, and that’s all I really need to know. If it’s possible I can just keep hammering at it until I ‘get it’. So far, that strategy is working.

On the down side, Asian markets tanked overnight again. So it will be interesting to see what happens on Wall Street today. Bernanke can’t throw 3/4 of a % at this fire every time it relights itself. Honestly, I’m more than a little concerned about it all—Last night on the History Channel there was a show about peak oil that listed six signs that peak oil is upon us and the end of civilization as we know it is near, and three of them have already happened since the show was filmed.

So far this winter on our little house we’ve fed our furnace $1200 worth of fuel oil. We have a small house that is insulated well and is tighter than a drum. I’m going to have to figure something else out here, but what?

SuperFed

The Fed saved the day yesterday. I woke up fully expecting a rerun of the 1920s with brokers and investors jumping off bridges and buildings while anxious depositors lined up at the banks to withdraw all their money. On cue, the stock market plunged over 400 points the minute it opened, but then, Bernanke announced a 3/4% rate cut on the money banks lend to each other, and the market was able to hyperventilate its way through another day, ending only 180 points down instead of several thousand.

I just have one question: What will the Fed do for an encore?

Seriously, what is the plan here? There isn’t one. It’s nice that Bernanke stayed up all night chewing his nails and finally came up with another rate cut, and its beyond nice that that rate cut stalled a market free-fall that would very likely have rivaled the one that kicked off the Great Depression, but does it make me a total curmudgeon to ask, okay, now what?

Bank of America posted a 95% loss for its fourth quarter yesterday. Citigroup is by no means out of the woods. Countrywide tanked only to be gobbled up by another loser. The bank I work for, a smallish bank, posted a fourth quarter loss of close to 300 million as compared to an 800 million fourth quarter profit last year. Unemployment is increasing, middle class jobs are a thing of the past, our industrial base is pretty much gone, and GM is packing it all up so they can sell cheap crap in China instead of here.

What we need I think is not another rate cut, not an $800 check for everybody that pays taxes to be delivered a year from now, not more denial from the fiscal pundits about how basically strong the US economy is—what we need is a vision for the future. A plan. What role will the US play in the 21st century and how can we segue from this mess to whatever we decide that role will be? So far, all we are doing is reacting, putting one small fire after another, and now the fires are getting bigger and bigger.

We need somebody smart in the White House, instead of the embarrassing chimp who lives there now. It was painful to watch him hanging with the Saudis, begging for a break, and then getting told, maybe, but probably not. In other words, piss off George. That was painful to watch even for a rabid anti-Bushie like me.

We also need a Congress that accomplishes things. We need good jobs, fast. Good jobs would definitely help the economy turn around. The unemployment rate only tells half the story. Studies have shown that middle income people who are laid off end up taking much lower paid jobs when they do get work. They go from 40 to 60K salaries down to ten or eleven bucks an hour. We can’t buy flat screen TVs and I-pods and outrageously marked-up clothing from China and Nepal on that kind of money. This fact is becoming obvious even to Republicans.

So, what next? I’ll be watching for any clue. And praying.

$800 and a Chicken in Every Pot

As I write this, the federal government is working on a fast boost for the failing economy that will probably include a tax rebate of around $800 for anyone who makes under $80,000 per year, which is pretty much almost everyone. The pundits are predicting everything from a bit of continued bearishness in the stock market, all the way up to a crash in the coming weeks that rivals the dark times of the Great Depression. One thing seems to be a point of agreement, even by the Bush administration: The quick fix will only be temporary, and it might not work at all.

I’ll take the $800. In fact, I wish I had it today, because I have to buy heating oil again Monday, even though we just bought oil in December. The price is increasing about 10% every time I call, and right now it is 9 degrees outside here. Together my partner and I bring home about $65,000 a year, which is above average, and ought to be enough, but it isn’t, even though we live modestly. We are falling farther and farther into debt. Every time a health care issue arises, even though we are both insured at our respective jobs, we are looking at thousands of dollars in bills, even after the insurance pays. We still have $640 left to pay on an 8 hour emergency room visit back in October that ran about $4500 after insurance.

I have a house in another city I can’t sell that has been on the market almost a year without one single person looking at it. The cost of maintaining it is about $650 a month, and no one lives in it. All along the block in the formerly decent working class neighborhood where it is located are foreclosed, abandoned properties, some of them boarded up. I just dropped the price down to the bone and I do not expect that to help one bit nor does my real estate agent. We can’t find a rental agent who will take it. Every day I consider just giving up on paying for it, but that’s a big step. I have no idea what to do next. What is coming next though, is a rash of delinquent credit card debt that is already starting to hit Citigroup and American Express. At least that will take the focus off the crappy real estate situation for awhile.

Here’s the thing: Nobody knows what to do next. I think the government’s attempt to stimulate spending will be welcomed by individuals, but on a larger scale, I think it will freak out financial institutions and Wall Street, both of which have been desperately looking for any ray of positive news for months now. The bad news just keeps on coming. When ‘W’ even admits things look bad, that’s a sign things are, well, truly frighteningly bad. Just last night, GM announced it will be offering buyouts to ALL its remaining hourly workers in the US if they will leave by April of 08. That’s 40,000+ jobs that will never come back. GM says its market is in China now, it can’t compete here.

So I sit here on a Saturday morning contemplating my future and trying to stay philosophical and upbeat. Hey, I do have a chicken in the freezer… and I might be getting $800!

A River in Egypt

Yesterday the Dow plunged another 300 points, taking it to a loss in first few weeks of this year of about 8%, and yet, Benjamin Bernanke still insists we are not in a recession and Nancy Pelosi thinks that consumer confidence can be refreshed by giving middle and lower class Americans a $600 tax rebate. Technically we are not in recession, Bernanke is right. A recession is defined as two consecutive quarters of negative growth. So that has not yet happened. Yet it is clear that the economy is tanking and tanking fast. 2008 is all of two and a half weeks old, the market has plunged 8% already, the biggest brokerage firm in the US just reported a $10 billion loss in its fourth quarter, the largest loss in its 57 year history, unemployment is rising, factory production has plummeted unexpectedly, and people have stopped being consumers and have started being scared.

I don’t think $600 is going to restore confidence in the economy. Don’t get my wrong, I’ll take it in a heartbeat, but it won’t do much to convince me that happy days are here again. If anything, the government’s alarm and sense of urgency in regard to the financial health of the nation only serves to confirm the worst fears of everyone.  I don’t see how we can avoid going through a very, very hard couple of years now.

Yesterday, I overheard my boss at the bank saying that the press has created this recession panic by talking about it all the time. I think that irresponsible banks and brokerage houses created this crisis through irresponsible lending practices. But I didn’t say that. I mean, we are basically IN a recession, now, and I live in Michigan. I think I’d best not honk off my boss. In fact, I deleted a rather scathing blog article about my job just recently, after I remembered how much I like to live indoors in the winter and eat regular meals. It’s smile and nod time, and I’d better get in that mode and stay there. I don’t know if I’m Amos or Andy but shuffle I will if it will pay the bills.

I’ve been working on increasing my freelance income though, and so far, it’s going well. Doesn’t hurt to have several irons in the fire. Even if we aren’t in a you-know-what yet.