I’ve previously published my analysis of the McCain plan, which I recommend that you read in addition to this one. Having all of the facts is important for people engaged in a discussion, and it seems that a lot of people like to discuss the economic plan of their candidate for the Presidency when very few seem to have actually researched the topic. This is evident in statements like, “Obama is going to tax us all to death!” and/or, “McCain will give the average American a tax break.” The simple fact is that neither statement is true, and no amount of flinging them around will make them true.
The first thing that one notices about the economy page of the Obama website is that the brunt of the economic plan resides on a single page, navigable by way anchored links. While website aesthetics have no real bearing on the validity of either candidate’s plan for th economy, I can say that I immediately felt a bit of relief upon noticing Obama’s design. This was due simply to the fact that having had to navigate between 9 pages (1 index page and 8 talking point pages) on the McCain site in order to complete my analysis, the simplicity of interpreting a single page seemed somehow more convenient.
This may have an impact on undecided voters as well. Most anyone in the web design business can tell you that a typical visitor only gives you a few seconds—just barely enough time for a few cursory glances and headline scanning—to convince them either to stay or to go. Because it is vital to a candidate that they actually convey a message rather than just demonstrate their prowess with html, this seems like a smart choice for the Obama camp. The Obama site is likely to convey more of their message faster. Now, let’s take a look at that message.
The economic plan page begins with a quote taken from Senator Obama in September of 2007:
“I believe that America’s free market has been the engine of America’s great progress. It’s created a prosperity that is the envy of the world. It’s led to a standard of living unmatched in history. And it has provided great rewards to the innovators and risk-takers who have made America a beacon for science, and technology, and discovery…We are all in this together. From CEOs to shareholders, from financiers to factory workers, we all have a stake in each other’s success because the more Americans prosper, the more America prospers.”
The next most impressing fact about the Obama website is that there are ten bulleted items for discussion, up two from McCain’s eight. And they aren’t just fluff, either:
Jumpstart the Economy
Provide Middle Class Americans Tax Relief
Trade
Job Creation
Support Small Business
Labor
Protect Homeownership and Crack Down on Mortgage Fraud
Address Predatory Credit Card Practices
Reform Bankruptcy Laws
Work/Family Balance
Immediately following this list, just before diving into the meat of these ten issues, is something that is conspicuously absent from the McCain economy page, and something that is typically missing from most political campaign websites—a link to a form that allows the visitor to provide feedback on the Obama policy, and to provide their own insight into the important issues of this election. Called MyPolicy, this is perhaps the smartest and most inclusive move that a politician has made in my lifetime:
“The best, most comprehensive plan for change in our country will include your ideas and your feedback. America needs a president with a mandate from the people, and everyone deserves a voice in shaping our next president’s agenda.”
Next, Obama does yet another thing that McCain did not do with his site—he lists two major problems with the current economic picture before launching into his solutions. Flat wages and rising prices, including the rising cost of college tuition, are mentioned first. Tax breaks for the wealthy are listed as the second major problem, outlining again the stance of the Obama camp that America needs to stand behind the middle class. Giving tax breaks to Americans who make over $1 Million dollars per year is indeed a problem for someone such as myself, who for the last 4 years straight has filed an average annual income of $8,000.
The first item under this category is likely to hit home with most Americans. Through the enactment (re-enactment, actually) of a windfall profits tax Obama would provide an immediate $1000 emergency energy rebate to help address the rising cost of energy in all forms during this time of economic stagnation. This tax, to be place upon oil company profits is designed to recover some of the “excessive” profit being raked in by the industry.
While one may be quick to jump into an argument over what exactly “excessive” means, it is certain that only a very small percentage of Americans can logically relate to an opposition of such a tax. Americans have been paying more for their energy than ever before, all the while oil companies have been reporting more profit than ever before. True, speculation and investment markets create a sort of buffer, or delay in gasoline pricing. But it does not require a genius to see the inequity inherent in this situation.
If my income remains flat, or that of any other American who is not taking home the 7-figure incomes of contemporary oil executives, why should we pay more for our energy? Why should the executives be paid more and more and more money while we are paid the same as always, all the while expected to simply eat the rising costs of energy? Honestly, do you think it would possible for them to take home so much money if you weren’t paying more at the pump?
There is a direct correlation, I assure you. Otherwise, we could pay pennies on the gallon for our gasoline without endangering the salaries of the big oil executives. This is a move that we’re not likely to see happen. If you’re a business person, think of this as akin to informing your customers that you’ll be raising prices on your goods and/or services simply because you feel that it would be nice to have more money. Think you’ll hold onto your clientele with a policy like that? But when it comes to oil we—the customers—have no choice. It’s not as if we can set up a refinery in our back yards, now is it?
One popular argument against a windfall profits tax is that the income tax supposedly addresses such issues by the nature of it’s scalability. If you take more home, you pay more to the government. But this does not address the ability of the oil industry to “hide” or protect profits by diverting them to proprietary assets rather than to salaries. But let’s say for a moment that every penny of profit were to go straight into salaries, thereby allowing the income tax to “do its job.” The highest of the American income tax brackets, which taxes its members at a rate of 35%, begins at the $349,700 per year level, and extends ad infinitum.
But since the low end of oil company CEO compensation sat at the $15 Million level last year, it’s pretty hard to see where a top end tax bracket of just under $350k per year would have any impact on record income. In fact, it would have none. Every last oil company executive already makes more than this, so how exactly the income tax addresses windfall profits seems to be something of a mystery.
In reality though, it’s not a mystery at all. The income tax simply does not address windfall profits whatsoever. A windfall profits tax such as the one supported by the Obama/Biden ticket would help to balance the inequities between the cost of gasoline—and other forms of energy such as natural gas production—and the salaries of executives versus those of the average American. Rather than making them even richer, Obama would divert some of that money back to Americans who will see an immediate impact on their bottom line.
The next item under the jumpstart bullet is a $50 Billion dollar plan that is designed to protect over 1 Million already existing jobs, and to ease the pain of economic stagnation at the state and local levels. $25 Billion would go into a State Growth Fund designed specifically to prevent cuts in those budgets to vital services such as health, education, and housing. It would also attempt to negate the current trend of economically harmful hikes in property taxes, tolls, and fees.
Clearly the Obama/Biden ticket “gets it” when it comes to addressing federal issues without turning Washington’s back on state issues. Such a fund would alleviate the pressure placed upon state and local governments to provide services in an environment of shrinking budgets. Just the other day Colorado Governor Bill Ritter announced a partial hiring freeze and other measures that he intends to put in place to address a $100 Million dollar budgetary shortfall in this state.
The second $25 Billion would go to a Jobs and Growth Fund intended to prevent cutbacks in road and bridge infrastructure and to fund school repair. Such a measure would allegedly save 1 Million pre-existing American jobs. While we all want to hear about the creation of jobs, which Obama does address later in his economic plan, one cannot expect such news without first having the ability to protect the jobs that are already out there.
If $50 Billion sounds like a lot of money to you, consider the $700 Billion tax dollars that Congress and the president seem all too happy to give to American banking institutions just to prevent them from having to feel the pangs of closing their doors. If they get $700 Billion to bail them out of a situation that they themselves have created, then $50 Billion for American job protection and service/infrastructure support at the state and local levels begins to seem like chicken feed. Personally, I’d like to see those two numbers flipped. $700 Billion into growth, and $50 Billion to greedy Wall Street. Actually, I’d let Wall Street fall on their asses. Call me crazy, but when a bank fails based on bad mortgages that they themselves chose to authorize, I only see one loser: The Bank. I say let the banks fail, and let American homeowners “win the lottery.” Free homes for all who bought from failed banks. But then, I am not a policy maker.
Whatever happened to the conservative axiom of pulling oneself up by their own bootstraps? After all, it is the conservative right that wants to hand over 30% of my nation’s 2007 tax revenue. Seems to me that the American financial sector has a pretty tight grip on my bootstraps, having kicked off their own footwear some time ago. In 2007 the IRS collected 2.5 Trillion dollars from taxpayers, private and corporate alike. That’s 2,500,000,000,000 if it helps you to see all the zeros. Now, pull out your calculator and do the math. $700 Billion ($700,000,000,000) divided by $2.5 Trillion equals .28, or 28% of all the money that the IRS collected in 2007 in the form of taxes. To be sure, there are other sources of federal revenue: tariffs, fines, etcetera, but 28% is a massive chunk of our tax revenue.
That’s nearly 30% of our 2007 tax dollars being spent to bail out these irresponsible executives on Wall Street. Suddenly, spending $50 Billion on job protection and economic growth seems almost inadequate, certainly not excessive by any means. State and local governments, as well as average citizens, will all benefit greatly from the Obama/Biden jumpstart plan. But their support of American families by no means ends here.
Here is where the Obama/Biden economic plan outshines, outstrips, and outperforms the McCain/Palin plan in spades. In fact, it could be said that this one item is the reason behind my analysis of both plans. I hear way too many working Americans—not executives taking home enough money to make that top 35% tax bracket, but people who truly work hard for what they have—saying that they are afraid of Obama’s tax hikes. Folks, if you’ve been told that Obama will raise your taxes, there’s a 95% chance that you’ve been lied to.
According to the Tax Policy Center, less than one percent of American taxpayers report incomes of over $160,850 annually. Actually, it comes out to .4 percent in each of the top two income brackets. Taken together, that’s still only eight-tenths of one percent of all American taxpayers. Fact: both sides will raise taxes somewhere, the difference between campaigns lies in where those hikes will fall. But because Obama’s tax hikes start at the $250,000 level, 99% of taxpayers won’t see any increase in their taxes. Now, that’s 99% by my math, but Barack Obama has stated over and again that 95% of Americans will see no tax hikes. The typical line from the McCain camp is that, “Obama will tax us to death.” Take this McCain ad for example:
An interesting ad when you consider that Obama has made it very clear that his policies are actually exactly contrary to the claims made in the ad. Read on to see what I mean. Obama intends to eliminate taxes completely for seniors making less than $50,000 per year. This will eliminate income taxes altogether for 7 million seniors, and rescind the obligation of another 27 million seniors to file at all. Increase the size of government? Obama is taking measure like eliminating the need for the federal government to process 27 million tax returns. I don’t know what that translates to in terms of man hours, but it’s got to be massive.
Then there’s Obama’s Making Work Pay tax credit, which will give American workers $500, up to $1000 per household. This would nullify the tax burden of another 10 million Americans. It truly begins to smell a bit when you hear Obama’s opposition talking about how he intends to tax us into oblivion. All it takes are five minutes on the respective candidates’ websites to see that Obama is the only one that has tax alleviation in mind for those of us in that lower 99% of the country who don’t have the money to pay higher taxes.
Obama also intends to simplify the filing process for millions of Americans and his plan for doing so is bold. He would make available the option of pre-filled tax forms, requiring only the verification and signature of the taxpayer. True, not all Americans have taxes that would lend themselves to such simplicity, but millions do:
“Experts estimate that the Obama-Biden proposal will save Americans up to 200 million total hours of work and aggravation and up to $2 billion in tax preparer fees.”
The Obama website lists 5 main points under the category of Trade:
Fight for Fair Trade
Amend the North American Free Trade Agreement
Improve Transition Assistance
End Tax Breaks for Companies that Send Jobs Overseas
Reward Companies that Support American Workers
Admittedly, the first two come across as a little vague, but then again if we’re talking international free trade law, not many of us are going to be able to read a full dossier on the approach to be taken and understand what we are reading. Suffice it for now to say that Obama and Biden intend to make adjustments to NAFTA, CAFTA, and possibly other Free Trade Agreements that they label as having been, “oversold to the American people.”
The last three items on this list of five deal mostly with supporting the American worker when the market is shining less favorably upon their industry. Obama would make retraining assistance available to Americans who are losing their jobs, before they actually see termination. Also, in order to keep good jobs right here on American soil the Obama/Biden ticket would create incentives for U.S. businesses to avoid the exportation of our national labor needs. They seem to truly understand that it is not okay to pay someone in another country less than they would pay an American simply for the purpose of improving profit margin.
“Barack Obama and Joe Biden believe that companies should not get billions of dollars in tax deductions for moving their operations overseas. Obama and Biden will also fight to ensure that public contracts are awarded to companies that are committed to American workers.”
Following the structure of the Michigan 21st Century Jobs Fund, Obama would create an Advanced Manufacturing Fund to, “…identify and invest in the most compelling advanced manufacturing strategies.” He would also double funding for the Manufacturing Extension Partnership, which has seen budget slashing under the current administration.
“This highly-successful program has engaged in more than 350,000 projects across the country and in 2006 alone, helped create and protect over 50,000 jobs. But despite this success, funding for MEP has been slashed by the Bush administration. Barack Obama and Joe Biden will double funding for the MEP so its training centers can continue to bolster the competitiveness of U.S. manufacturers.”
Under the Obama/Biden plan, $150 Billion would be invested in clean energy over the next ten years in order to bring about vital change in a multitude of green energy areas. In fact, a commitment to clean power that producers can benefit from and consumers can rely upon is another area where the Democratic ticket is pulling no punches. They make it very clear that clean energies are a priority.
Not only do they intend to invest in new technologies, but also in job training programs that will be necessary to fill the personnel needs of companies who embrace, and therefore grow within this plan for a new, greener American energy climate. The Obama/Biden website also mentions their intent to create a federal Renewable Portfolio Standard that will require 25% of U.S. energy production to originate from clean/green sources by 2025—a real, tangible goal that can actually be obtained. Also, they state that they would like to extend the Production Tax Credit for renewable energy.
But the Obama/Biden job creation package certainly doesn’t end with clean/green energy:
“Barack Obama and Joe Biden believe that it is critically important for the United States to rebuild its national transportation infrastructure – its highways, bridges, roads, ports, air, and train systems – to strengthen user safety, bolster our long-term competitiveness and ensure our economy continues to grow.”
A National Infrastructure Reinvestment Bank would be created under Obama’s leadership, with the directive to invest in America’s transportation infrastructure. This bank would be funded with $60 Billion over the course of ten years to accomplish that end. Though the original funding would be federal, the bank would be independent in nature, ensuring that the market has the ability to lend the proper incentives required in order for such investments to succeed. This means that the overall size of government would not be changed by the creation of this bank; improved care for our transportation infrastructure without expanding government, an excellent approach indeed. This plan is projected to create around 2 million new jobs and would create an estimated $35 Billion of new fiscal activity.
Also included under the Job Creation category are the following points:
Invest in the Sciences: A reversal of our current Administration’s policies would see the doubling of R&D funding and a return to science-based initiatives that are necessary to open the door for the creation and stimulation of tech-sector jobs. This is vital for any nation wanting to compete in the new, globalized economy.
Make the Research and Development Tax Credit Permanent: Continuation of this incentive will allow American companies to make the tough decision of investing scarce resources into long-term R&D projects. This will be key in maintaining a healthy tech-sector.
Deploy Next-Generation Broadband: Making data sharing and communications networks more available to a larger number of Americans will mean expanding digital trade, safeguarding and growing broadband technology jobs, and continue America’s march down the path of technological innovation.
Through tax relief and $250 Million in funding annually for a national network of small business incubators, particularly in disadvantaged communities, the Obama/Biden ticket would lend assistance to small businesses in their initial phases. They would work to lessen the burden of double taxation which occurs as the result of a small business owner having to pay both the employer and employee sides of the payroll tax. The $500 “Making Work Pay” tax credit would enable the reduction of this burden.
Yet another area where the Obama plan easily wins out over the McCain strategy is in the area of supporting the working and middle classes. The Democratic nominee clearly understands the vital role that Labor plays in our economy. While giving huge tax breaks to a corporation my be a great way to simulate the growth of that company, it simply has no impact on the take home wages of those workers who find themselves on the bottom and middle rungs of our American economic ladder.
Actually, this is precisely where the “Trickle Down” approach to economics fails because no matter how much money a company makes, the lowly worker can only make as much money as a 40- or 80-hour work week will allow them to make. If they are salaried the amount of additional money that they will see is linked directly to the whims of management, who would more often than not prefer to invest in either expanding the size of their markets or in compensating their executives with disproportionate levels of wealth and privilege.
This is why it is so vital for government to step in and support “the little guy” in a free-market, capitalist economy. It simply is not in a company’s fiscal interest to increase compensation of their employees, no matter how well business is going. Barack Obama has a plan for aiding the American worker.
“Obama and Biden will strengthen the ability of workers to organize unions. He will fight for passage of the Employee Free Choice Act. Obama and Biden will ensure that his labor appointees support workers’ rights and will work to ban the permanent replacement of striking workers. Obama and Biden will also increase the minimum wage and index it to inflation to ensure it rises every year.”
Here again Senator Obama’s plan is favorable for the Middle Class, an important category of homeowners to be sure. His plan would provide tax credits to 10 million homeowners, most of whom earn less than $50k per year. His STOP FRAUD Act would establish a legal definition for mortgage fraud, expand funding for federal and state law enforcement programs, create new penalties for offenders, and enable more responsive, internal regulation.
Obama and Biden would also require lenders to accurately convey the obligations of a borrower when entering into a mortgage through the implementation of what they call a Homeowner Obligation Made Explicit (HOME) score. Comparable to the APR metric, it is intended to be a simplified, standard metric for use by potential borrowers to compare loan products before buying. Buying a home can be one of the most complicated experiences in a person’s life, and Obama clearly understands that this does not have to mean that lenders will take advantage of that complexity to improve their standings.
Obama would also close a loophole in bankruptcy laws that prevent changes to the monthly payments for mortgages in cases of bankruptcy. They clearly indicate that illicit behavior within the sub-prime markets is currently “shielded” by federal law, and that they intend to change that. Predatory lending in any situation is bad, and Obama will work to reduce the impact of such illicit behavior even outside of the mortgage markets, as evidenced by the next issue on their website.
One thing about Obama’s website that I find to be highly valuable is the fact that he does not just feed you fluff text. He gives very specific ways in which he intends to accomplish very specific goals. This was a trait that I found to be altogether lacking from the McCain website. This category of his economic plan includes many of those specificities that I mention.
“Obama and Biden will establish a five-star rating system so that every consumer knows the risk involved in every credit card. They also will establish a Credit Card Bill of Rights to stop credit card companies from exploiting consumers with unfair practices.”
As a former card holder myself, I can say for certain that a five star system would have been very useful in making my selection of service providers. I have since sworn off of credit cards in all forms and refuse to open even a line of credit at a department store because of the fact that I wound up paying so much more than I had borrowed. But the credit card rating system is not the only way in which Obama would establish protections for credit consumers. He would also implement a Credit Card Bill of Rights.
This list of built-in, consumer protections would provide the following benefits to consumers:
Unilateral changes would be banned.
Interest rate increases would only be applicable to future debt, not retroactive with respect to already existing debt.
The Obama camp also plans to reform bankruptcy laws with the goal in mind to, “protect working people, ban executive bonuses for bankrupt companies, and require disclosure of all pension investments.” In the current American economic climate, these steps are incredibly important. It’s bad enough that Wall Street and corporate executives take home millions more than the average worker in salaries and benefits per year, but to allow such disparate compensation to continue even when those executives have caused the financial collapse of their business interests is pure insanity. Obama and Biden would put an end to such nonsense.
Payday loans have become an extremely unfortunate part of an increasing number of Americans lives. Not only are they a bad choice for someone who already has too little money to make ends meet, but they are a very dangerous one because they can very quickly become cumulative as Americans take out new payday loans to pay off their old ones. It is a vicious cycle that has put more than one person that I personally know on the coals, so to speak. In fact, I myself have an ongoing dilemma with a payday loan provider.
Obama would extend a 36% cap on interest charged for payday loans to all Americans. While 36% may sound high, consider the current ceiling of around 400% and you can begin to appreciate the measures that Senator Obama would like to take to protect us all from these money sapping traps. He would also encourage legitimate lenders to provide small-dollar and short term loans to responsible consumers to help drive the predatory payday lenders out of business.
Perhaps most importantly though, Obama and Biden would reverse the changes made to bankruptcy law by President Bush and his financial advisors, which have cut American consumers off from any protection they might have enjoyed from financial ruin that is directly related to a medical emergency. Bush and his team have changed laws so that when a person files bankruptcy, medical bills are not wiped away. This has meant that if the average American household were to undergo a serious, unexpected medical emergency, they could very have to watch as their ability to earn a comfortable living was destroyed, because no matter what they might do, they would be stuck with the massive medical bills of an exorbitantly overpriced health care industry.
Essentially, this reduces life in working and middle class America to a crap shoot. Will you live a happy life? Roll the dice and see if you get sick. Sorry Jack, but this is an approach to government that I simply cannot support. This is one of the biggest reasons that I feel more comfortable with the Obama economic plan; McCain simply has not built in the kinds of middle and lower class protections that Obama has. If you have any doubt that Obama is doing more to look out for you as a member of these American social classes, just read their policies for yourself. Senator McCain has put very little effort into assisting those of us who bring home 4- and 5- figure incomes as opposed to 6- and 7-figure salaries—a luxury enjoyed by less than one percent of Americans.
Finally, but certainly not least importantly, comes the ever important struggle of “Work to live, or live to work.” Obama and Biden understand that while America remains strong, she does so because of the innovation and solid work ethics of the American people. Even so, it would be unwise to allow a person’s professional responsibilities to trump their personal lives. This is particularly important for Americans who are raising families.
“Obama and Biden will double funding for after-school programs, expand the Family Medical Leave Act, provide low-income families with a refundable tax credit to help with their child-care expenses, and encourage flexible work schedules.”
The Family and Medical Lave Act would be expanded to include businesses that employ 25 or more employees, more inclusive than the current requirement of 50 or more employees. It would also be adjusted to include more instances of need. This means that it would expand to include time for employees to participate in their children’s academic activities, to address domestic violence, and even to care for elderly family members.
Additionally, Obama would create a $1.5 Billion fund to assist state governments with the adoption of paid leave systems. He would double funding to the 21st Century Learning Centers program which would provide upwards of a million American children with access to quality, after school programs, an essential tool for supporting hard working American families. He would also reform the Child and Dependent Care Tax Credit in order to provide up to a 50% refundable credit towards the cost of child care. Also on the list of items under the Work/Family Balance header are protections against caregiver discrimination and the expansion of flexible work opportunities for American workers, including within the federal government.
Barack Obama’s Record
The Obama economic plan wraps up with a list of specific examples which illustrate the Senator’s record of backing the American worker and promulgating job growth and fairness within the workplace. I found this to be a refreshing close to this section, as the McCain site pretty much left me up to my own devices when it came to researching their actual contributions to the forwarding of policies that address the issues at hand.
My Summary
Clearly, I support the Obama economic plan hands down over the McCain plan. I’ve done my best to provide an objective analysis of the two, though I am aware of the fact that I have clearly been outlining the benefits of the Obama plan over the McCain plan from the start. For this, I apologize, but the bottom line remains the same. The McCain plan looks and smells like a Trickle Down, born of Reagan himself kind of mess.
The simple fact is that for as long as we Americans work for hourly compensation, no amount of fiscal vitality is going to improve our standard of living. Our employers could quadruple their profits and we would still be limited to our 40- or 80-hours per week paycheck. It is for this reason that under the “trickle down” model of economics, the wealth reaches down only as far as the pockets of those who own the means of production. The average worker sees zero benefit from this approach.
Obama seems to truly understand the unique position that lower and middle class Americans find themselves in today. And after all, because we comprise some 99% of the population, one would think that we should demand some sort of fair compensation. But while hoots and calls of “socialism” have been tossed around with regard to the Obama plan, the majority of such opinions are wholly uninformed and designed solely to play off of your natural inclination to oppose such ideologies.
Neither Obama nor Biden have any interest in doing away with American capitalism. For, while it is rife with inequity and laden with greed, it is also many thousands of times better than the next thing going. They stand for a strong American economy, based on a strong American worker. And that is why I support them. Hopefully, that will be why you support them now as well.
Have you ever dipped your toe in the waters of an online DVD rental club? I just canceled a membership with Netflix this morning, I think. You see, I’ve modified my membership status twice previously and Netflix has both times simply ignored my requests.
Back in December my wife and I decided that Netflix just wasn’t suiting us, so I logged in and began to cancel. When you do this they offer to put a “hold” on your account instead. During this period of “hold” they claim that you will not be charged. A hold period can last for up to 90 days, which seemed to be a good deal at the time. Perhaps after 90 days we could better afford it, or so was our thinking. And this way our rental queue wouldn’t get erased in the meantime.
The first 90 days passed and we had no problems. It was what Netflix did on day 91 that caused a serious dilemma. Believe it or not we weren’t faithfully crossing off the days in our “hold” using a calendar, so we didn’t even know it when day 91 rolled around—but Netflix sure did.
Without so much as an email to warn us Netflix charged our account for a new month of membership. What’s the problem with this? Well, we did not have enough money in the account to cover it! What this meant was that we wound up paying almost $200 in overdraft fees ($35 for the overdraft and something like $7 per day—see, banks are evil too!) for a $15 membership with Netflix. In the eyes of Netflix and our bank though, this is all our problem.
The worst part was that we didn’t want the service anymore at all. Had they sent an email to ask for our permission to charge us for a new membership, we most certainly would have declined. So by this point we were $200 in the negative, but we had a bright and shiny new month of Netflix subscription, yay! (If you weren’t able to sense my sarcasm let me just point it out for you now: that ‘yay’ was sarcastic.)
So, knowing that I would have to speak with someone from Netflix to resolve this, I put the new membership back on hold to prevent any movies being sent to us. I then began to scour the Netflix site for a means of communicating with them, to no avail. That’s right, they DO NOT OFFER a way to speak to them. They have a help section, but it does not ever lead you to a phone number or even an email address. Thus, I am effectively left with no means by which to complain.
And then they went and tried to charge us this month! It’s getting ridiculous now. First they cause us to overdraft by not warning us before charging our account, a move which cost us a week’s pay in one fell swoop, and for something that we didn’t even want! Then they try to charge us for membership in the middle of a “hold” period which they claim exists for the sole purpose of preventing such charges in the first place!
You can bet that if this attempt, which they were kind enough to email me about after it was declined by the bank, costs us any money in the way of overdrafts, I’ll be seeking the recompense of my monies by way of court. We most certainly will never rent from Netflix again and will now begin an active campaign to warn potential Netflix customers of the trap that they are entering.
Netflix: You should be ashamed of yourselves. What you have done to my family is worthy of a good flogging and should land some of your middle and/or upper management in prison. It certainly would put you there if I had any sway over the courts. I am sick and tired of being cannibalized by the Capitalist, corporate world of American business. If our product producers and service providers feel that it is so important to cheat their customers, we will eventually reach a breaking point and topple them all!
They’ll feel pretty silly when I’m living out of their CEO’s office and parking my Lamborghini in his living room at home.
Anyway, there you have it. It’s as if our family name is on a list somewhere, just waiting to cause us unrest and bring mayhem into our lives. If I ever find the fellow who is holding that list I’ll tar his hands to his hips and dip his head in a vat of stomach acid!
Consider this one a social experiment that you, my dear readers, can learn from. I suppose that it will come as no surprise to most of you. It certainly wasn’t a surprise to me, but it was kind of fun to reprove the basic premise that people do not like a commotion in their bank. I know this because I caused one yesterday and, based on the looks I got from people, you’d think I was some kind of enemy to them. What they didn’t realize was that I was making my commotion to support them!
Here’s another basic premise: Banks are corrupt, power mongering, terrorist entities that exist notto protect your money, but to take it from you. I dare you to argue with me. If you make over $100, 000 per year, that invitation is not extended to you. If you own, manage, or work for a bank, again that invitation is not extended to you. You are welcome to provide your two cents, but as a bank-serving entity you are not expected to provide any sort of clarity in thought on this matter. You might do better to argue about the pros and cons of becoming a puppet for such an organization (and you may want to lean heavily towards the cons lest you become one).
So here’s the skinny, as they they say. This year our taxes were all seized. Our stimulus package was also seized. These fiscal seizures were the end result of some federal debt that I had leftover from my Navy days. A good chunk of it was money that I owed to the Military Star Card program (a department store card for military stores like the Exchange or the PX and BX). I’m not disputing the debt. I owed that money and for five years now have not had the means to pay it off. Having children now made my wife and I eligible for a sizable tax return for the first time ever, which was immediately grabbed up and redirected toward my debt.
But because we have two children, we really needed that tax return money. So we filed an injured spouse form for my wife because the money had been both of ours and the debt to which it had been applied was mine from before our marriage. After several months the IRS finally began reversing portions of that money. We received a $1500 check from the Treasury as part of that reversal. When it came in the mail my wife was working, so I went to deposit the check into her (read: our) account. Because my name is not on the account (another result of past debts) I can only deposit checks into that account via an ATM.
I’ve done this dozens of times before. All of my paychecks are deposited in this way, so we know that it works. But apparently there are different rules for a Treasury check. After depositing the check into her account the receipt showed that we had a total balance which included that check and an available balance which did not. This was to be expected as it is the standard process for an ATM deposit, a few days are always required for processing. We were fine with that.
By the end of the week all of the money was showing as available. That is to say that the check was deposited into our account, having cleared all of the check-depositing hurdles in the American banking system, and was sitting there available as our money. We were delighted. We haven’t had a balance of more than $100 that didn’t go directly to rent since well before our marriage so this was a refreshing change. We were looking forward to paying bills, shopping for groceries, and yes perhaps buying the kids a toy or two.
But our plans for that money are irrelevant. It was our money. It was sitting in our account. But lo and behold, by the time Saturday rolled around, the money was gone. That’s right, it had vanished. At first we thought to ourselves that there must have been a computer error or something. I’ve written before about how careful you have to be with the balances your bank shows you. None are actually your balance at any given moment, a fact that the banks benefit from greatly once you err and overdraft.
My wife called the bank and they informed her that the deposit had been reversed because we didn’t meet all of the requirements for depositing the check, which included us both having to be present with photo IDs. Now, my wife is like most Americans in that once the bank told her this she quickly moved from confused to complacent. It’s as if she thinks that the banks are her friends who are only there to look out for her. “What’s that you say? Everything is as it should be? Okay, great!”
Only I’m not cut from that tree. I brought up the fact that the money had already been fully available and she tried to mention this to the telephone banker but all they could tell her was that “They mailed it back to you.” And this, people, is one of my biggest pet peeves when dealing with a business entity. No matter who you talk to within the company you will almost always hear them referring to the institution for which they work in the third person. “They did this. They did that.” Well, I’ve got news for you: You are they!
Wrap your mind around that one! As a bank teller no, you may not be personally responsible for my problem. But when I call US Bank to talk to US Bank about something that US Bank has done to me, I don’t wanna hear US Bank employees telling me about how someone else did it. There is no they. If my problem is with US Bank, and you work for US Bank and are unfortunate enough that I walk into your office angry, you had better take some ownership and use words like we and our.
Correct Example:
“We are sorry Mr. Kolenc, but our policy states that you both must be present. Can we help you now?”
Incorrect Example:
“I don’t know what happened. They must have decided that you did something wrong when you deposited it. They probably sent it back.
Here’s why the second example is plain wrong from my point of view as I am speaking with you. First of all, I didn’t come into the bank to talk to you, Mrs. Microthoughts. I came in here to talk to US Bank, unless of course you personally took my money, in which case we need to step outside. Second, don’t ever tell me that you don’t know because that immediately tells me that you have zero ability to help me. If you really don’t know, get someone who does. And finally, when you are explaining what has happened, whether hard fact or flimsy theory, never ever use words like probably.
If I walk out of the bank with statements floating around in my head like “I don’t know” and “they probably,” then not only have you wasted my time trying to solve a real problem but you’ve also enraged me. Trust me, regardless of how entertaining it might be to see me get angry and explode, it is not something that you want to bring upon yourself. Sometimes I think that companies train their employees to do these things in order to add an extra layer of veiling to their company’s internal workings. The less we as customers know, and the less that we might discover, the better for them and the more that they can get away with.
Back to my commotion. My wife and I entered the downtown branch of her bank because that was where I made the deposit. The second we walked through the doors I noticed a large (very tall and very much not in shape) man talking to one of the tellers. He made eye contact with me as we entered, waiting for me to diverge my eyes. I was not in the mood for testosterone driven stupidity so I fixed my glare at him until he turned back around to his teller. Based on the arrogance that he displayed in those moments, combined with the way he was dressed — business dress, but the cheap stuff — I figure he was either a cop or a low to middle manager with some meaningless corporate void.
This was not a victory mind you. He hadn’t been belittled, only strengthened in his resolve to keep an eye on me. Ask a man in your life and he’ll tell you about this. Simply looking away is not necessarily capitulating, particularly if you’re dealing with an intelligent person. But either way, the guy moved his gaze away from me which was all that I cared about at that moment. I needed to stay focused on the issue at hand, not getting my thoughts diluted by some over sized piece of shit with an authority complex towards complete strangers.
As luck would have it he was still standing at his window when we were motioned over to the window next to him. My wife began to explain our problem, immediately forgetting to include pertinent details. The fact that the money had been available in our account was a huge deal because whoever my wife had spoken to on the phone claimed that the ATM people (a 3rd party company no less because the banks can’t even take the responsibility of running their own, on-site ATMs) still had our check and that the bank had never seen it. But this was not possible because the money had been available. I don’t know about you and your bank, but I’ve never heard of a bank making money available in a customer account before clearing the check to which it is attached. They don’t mind taking money out of your account without cause, but they would never put money in without cause.
So I spoke up and made sure that all of the details were given. Without giving them all of the information we had, we could never expect an accurate response. I wasn’t looking for the best guess based on the cumulative knowledge of the US Bank employees who were present that day, I was looking for my fucking money. And I made a point of saying so. But all the teller could do was to say that “they” had mailed it back. She was completely oblivious to the implications of my point about the money having been made available. She just kept saying that she didn’t have it and that “They” mailed it back. (Banks must be fans of Gary Larson.)
So I got louder, and people began to notice that I was angry. My wife even discharged my name in a low and guttural attempt to silence me. I noticed via my peripheral vision that the Jolly Giant next to me was now looking at me again. In my mind I pictured exactly how I would drop him to the floor if he tried to intercede. He just kept watching like an excited villager on Witch Burning day. I was ranting about something to the effect of the following:
“They? Who is they? Everybody keeps saying, ‘It’s not us, not our fault. We can’t help you. Meanwhile my wife and I are missing fifteen-hundred dollars! Where is our money? We need to know where our money is right now.”
It didn’t take long before a supervisor came by to ask the perpetually ridiculous question of whether or not everything was all right? We explained the situation to her and she quickly agreed with me that if the money had been available, then the Bank had indeed gotten the check. The money would not be available if it were still sitting at the ATM company. Now, don’t mistake my fervor for closed mindedness. I quickly thanked the supervisor for admitting that. I then apologized to the clerk, by name no less, for raising my voice to her. I reassured her that I wasn’t angry with her but that she was the Bank representative that I was given to deal with and that my problem was with the bank. (I kept my but then again to myself. She had been way too happy to feed me that line of useless rubbish about “their” corporate policy.)
So problem solved, right? Wrong! Now the supervisor was telling us that it was the 800 Number people who made the mistake. The money had never actually made it to the bank, so we would need to call the 800 number to lodge a complaint. Of course! We were still playing that famous corporate game, Pass the Buck! I had somehow overlooked this fact. The 800 Number people are located in another state, so if we don’t like what they have to say, tough shit. This is their way of trying to disconnect my anger and resentment from any tangible iteration of their organization. The 800 Number is abstract, intangible. I don’t know the person on the other end of the phone from my next door neighbor. What brilliant posturing on the part of the Bank.
But they will not prevail. If my money does not return to my possession very quickly I will be forced to do the thing that I do best: Write. I will write letters to Bank managers, executives, even the CEO if there is one. If that goes nowhere, I’ll write letters to local, state, and federal governments, both here and at US Bank headquarters. I’ll write the fucking President if it gets my fucking money back. People, hear me:
I DO NOT GO AWAY!
Or, if you prefer a more poetic statement, try this one on for size:
It is with regret that I must post yet another critical post about the American banking system. Our banks have become corrupt, power hungry hegemonies that are able to cause as much or more terror in American lives than Al Qaeda has ever been able to. Witness the latest attempt on the part of my wife’s bank (because I don’t have a bank account) to rob us of our money, the money we have placed in their hands on good faith and believing that they would be honorable with its handling.
This year the IRS seized all of our tax return, nearly $5000. Then, they seized most of our share of the stimulus package, roughly another $900. Then, several months after we filed a complaint, they returned just over $1000 to us by way of check, even though we had signed up for direct deposit. The minute I had that check in my hand I went to the ATM to deposit it. When my wife is at work I have to do it this way because I don’t have an account of my own. I deposited my wife’s check and our tax check at the same time and for the first time ever we had over $2000 dollars in our account at one time!
That was, until the bank reversed our deposit. Despite the fact that my wife was given an available balance that included both checks, which meant that both had been approved and made available, we now have less than what we need to pay rent with in our account. The bank gave no warning, and made no attempt to contact us. We began to buy groceries and sundries that we hadn’t been able to buy in a long time, only to find out that we had been eating into our rent, despite having had over $2000 in our account the night before.
Why did this happen? Because the bank knows that an account like ours that normally hovers around $0 is going to begin a spending trend when money suddenly appears in the account. By taking the money out and not telling us, they can sit back and watch us overdraft like madmen. Then, when they freeze the account for having a HUGE negative balance, they can return the money to our account, minus their cut in “fees.” It’s a racket, I’m telling you this from experience. The banks do whatever they can to steal your money. You’d be better off putting your money in a jar and burying it, no joke.
Shame on all American Banks! Shame on the American Government for allowing such an environment to exist.
Let’s play pretend. I’m going to be a rich philanthropist, heretofore to be referred to as the Banker, and all of you — my dear readers — will be my customers. That is at least, you will be. First I should choose a name for my bank. How about the First Honest Bank of America?
Great. So now you have entered First Honest Bank, heretofore to be referred to as FHB, with some curiosity because you’ve heard things about my bank that, quite frankly, sound a bit odd to you. You approach the counter which is, amazingly, not preceded by a massive line of angry and impatient customers. You take note of how quickly you are standing face to face with a teller.
“Is it true that you charge a membership fee?” This was one of those odd bits you heard about FHB that made you so curios about us in the first place.
“Yes, Sir/Ma’am, it is true. We do charge a $100 annual membership fee.” Our tellers are professional, honest, and never beat around the bush.
“But, why would I pay you a membership fee if I can get free banking from another institution? Even if I have to maintain a minimum balance, the money remains mine. Why would anyone willingly pay you for services that they can receive for free elsewhere?”
At this point the teller would begin to explain all of the benefits associated with joining FHB and paying the annual membership fee. She would explain that at FHB we specifically set out to be the opposite of what you have come to expect from your banking institution. “In fact,” she explains, “you might call us the ‘anti-bank’ because we aim at the ultimate dissolution of Banking as it stands in the 21st Century.”
Rather than outlining the FHB system with a lengthy monologue full of legal mumbo-jumbo, she walks you through the banking process with our bank. “At FHB we believe that American banking institutions have the power to make or break our nation, all the way from the national level on down to the smallest of local communities. The lending and fiscal handling policies of a bank have direct and immediate impact upon whatever community might depend on it.
“As a form of a bank ourselves, we appreciate and respect the power that comes along with retaining you and all of our peers as clients. After all we sell a service, not a product, and because of that we are here to serve you. If at any time you feel that FHB isn’t serving you , it is our policy to fix the problem. We do not exist to sponge up a percentage of our members’ funds. Quite the contrary, we exist to provide a means for the safe and efficient management of your money. And that is the fundamental difference between FHB and our competition. We do not see the funds deposited into your account as being our money.
“Can I ask you a question Sir/Ma’am?”
You are a bit shocked to hear a bank talking to you the way that our teller is talking to you, but at this point you’re still not convinced that it isn’t all just a new finish on an old sales routine. “Um, sure.”
“Have you ever paid your bank money for having insufficient funds in your account to cover a transaction that you have made?”
You hesitate to answer because it sounds like we might be profiling you and you’re certain that if you admit to having over drafted you will be disqualified from membership at FHB. “Um. Not recently…”
“I apologize if that question seemed a bit personal. I only ask it to make a point. Did you know that American banks earned $55 Billion this year just from fees such as non-sufficient funds fees?”
“No, I didn’t know that. Fifty-five Billion dollars?” The teller has struck a chord with you. “I’m not surprised, to tell you the truth, although it does seem a bit unfair. I mean, I just found out the other day that when I check my account balance online I’m not actually seeing a real figure! I have to click on the amount listed in order to see my actual current balance. Does that seem a bit underhanded to you?”
“It certainly does, and for a good reason too — because it is. Don’t think for one second that this is an accident or even the unfortunate result of all the parts of a complex system coming together to form the “best we can do” sort of banking system. Those fees don’t keep your bank in business, you do. Those fees just serve to make them wealthier and more powerful.
“Here is another example for you that I’m sure you can relate to.” The teller is starting to seem like a new friend. She really seems passionate about her job, this isn’t just a nine to five for her. “Why do you suppose it is that when you use your debit card to make a purchase at say, the grocery store, the clerk has to run the card and then wait for “the system” to authorize your purchase?”
“Well, to verify that my account has sufficient funds, right? I mean, they don’t want to approve a sale if I’m already in the negative.” As you say this you begin to see what the teller is getting at.
“It certainly would seem that both the teller and the bank would have a vested interest in verifying that you have the spending power to make the purchase that you are attempting. Now, if it were a credit card that would be another matter because purchases made on credit are made with all parties being aware of what they are — a short term, interest bearing loan. But when you try to buy diapers and formula with your debit card, it’s because you are under the assumption that you have enough money in your account to buy those items. Would you agree?”
“Well, yeah. A buyer knows going in that there are obvious differences between credit and debit. Because a debit transaction goes straight to your bank account, you know in advance that you need sufficient funds to cover your purchase.”
“Exactly. So why is it that even though the store clerk swipes your card, presumably to protect himself (read: his employer), and the bank sends back an authorization approving the transaction, people are still charged massive fees when funds come up short? The bank had every opportunity to verify and approve your transaction, did they not? After all, that’s why the clerk swiped your card in the first place. Except that it isn’t why the card was swiped. It’s not the reason at all.
“When a store clerk swipes your card, and while you wait for approval from your banking institution on your debit transaction, the bank only checks and confirms that you exist as a customer. Your balance is not being checked and therefore your interests are not being protected. The bank then has knowingly and willingly — some might argue quite merrily — placed you in a vicarious position. You absolutely must keep tabs on your balance at all times because neither the bank nor the merchant will do so for you.
“Think about it, despite the fact that both the bank and the merchant rely on you as one of their customers, they both stand to profit from every NSF (non-sufficient funds) to come their way. The same is true with bounced checks, though checks are becoming less and less consequential in our economy. If you bounce a check or overdraft with a debit transaction, the Merchant still gets “their money” because the bank pays them when you overdraft, even when you don’t have the funds to cover the payment, indeed that is the source of the over draft to begin with. In the case of a bounced check they actually recoup more than they would have had you not bounced your check because they tack on huge “recovery fees” to your original transaction balance.”
“I’m starting to see how quickly it adds up to that fifty-five billion figure.” You are feeling mildly ill now from thinking about the true nature of your relationships with your past financial institutions. How many thousands of dollars have I handed them over the years in fees? What’s my share of that $55 Billion?
“The bank won’t lose money either because they can simply freeze your account and prevent you from doing any banking at all until you’ve paid their fees and interest. Because remember, not only are you paying a fee that they have created for you by authorizing a bad transaction, but you’re paying interest on their capitalization of what they will always paint as the error of an irresponsible client. Let me ask you another question. Are you irresponsible Sir/Ma’am?”
“No, I’d like to think that I’m quite responsible actually. I suppose that if you looked up my past banking histories you’d find imperfections though. I mean, nobody’s perfect, right?” You are feeling pretty frustrated by this point. Here you are being told all the things that are wrong about banking — by another bank no less.
“You are exactly right. But you would not be alone. In fact, very few people can honestly claim to be so responsible with their money that they have never written a check for more than they had or never purchased something with a debit card that led to an NSF fee with their bank. But at FHB we see something fundamentally wrong with a system that sets the client up for failure from the very start.
“When you use FHB’s methods of payment you will never be allowed to make a purchase for which you do not have adequate money. If you have $25.25 in your account and you try to purchase something for $25.26, you will politely be told that your account cannot cover your purchase. True, you will not go home with the item you had intended to purchase, unless you choose to buy it with cash or credit instead. Does the thought of being turned down for a grocery purchase over one measly penny sound like an inconvenience to you Sir/Ma’am?”
“Well, yeah, it does. I mean, if I need formula for my baby and I can’t get it because I’m short a penny, I’d probably be a bit upset. That seems pretty inconvenient to me. Don’t you agree?” Aha! You think to yourself that you’re going to catch our friendly teller in a sales pitch now. She can’t possibly deny that this would be inconvenient.
“I think I would agree with you. It would be inconvenient, though only mildly more inconvenient than asking the person in line behind you for a penny. It’s certainly much more convenient than finding out a week later that that one penny was going to cost you $35.00 plus $7.00 a day until you repay that $35.00. And all of that because you were short by a single penny. Would you agree that avoiding the 4,000%-plus jump from one cent to over $40 would, in the long run, be decidedly less inconvenient?
“Did you say four-thousand percent? Wait…point-oh-one to forty…move the decimal point…um, are you sure?”
“Sure I’m sure. Point zero one times four-thousand equals forty. Would you ever willingly take out a loan with 4,000% interest? I don’t think anybody would. And this is why the banks in this country take the decision regarding this matter out of your hands. They have intentionally set you up within a system that will enable them to skim money from you, and all of their under informed customers, essentially forever and with no limit that they themselves do not set. Every time you spend money you are playing roulette with your bank. And as is true with a Casino, the house always wins.
Not being a fool, you see now what the teller is telling you, and you like it. “So FHB looks out for me, right? Is that what you’re getting at? You won’t place me in a position to fail, thereby allowing you to place fees and fines upon me by which you profit. And since you won’t authorize a bad transaction, you won’t let me do it to myself either. I see where you’re coming from and I think I even understand the annual fee. If you’re not collecting money from fines and fees, you need a revenue source of some kind to pay the bills. I think that’s all pretty clear. But let me ask you a question now.” Another one of those odd rumors that you heard about my bank has popped up in the back of your mind.
“Absolutely. At FHB we promise to answer all questions honestly and directly.”
“Is it true that you don’t do loans? I mean, what good is a bank that protects your credit by protecting your bank account if you can’t then take out a loan?” This seems like a pretty serious issue to you. Why build up a perfect banking history if it won’t enable you to borrow money?
“It is true that we don’t give out loans, but it is not true that you cannot secure a loan as a member of our bank.”
“Wait, this sounds like double-speak. First you say you don’t do loans, then you say that I can get a loan from your bank anyway.”
“Yes, and yes. You see, with traditional banking practices a bank uses the money in your account to dole out loans to its members as it sees fit. The bank has ultimate and final control over exactly how much money is loaned out to whom and for what. By placing themselves in this seat, they have taken on the title and responsibilities of God, essentially. They actually decide the quality of your life. If you apply for a loan, they have every “right” to deny you access to their funds. This means that they get to choose whether or not you get a new car or a really nice wedding ring for that someone special. They control the spigot to the fountain of your quality of life. Do you follow?”
“Yeah, and so far I agree with what you’re saying.” The ’so far’ was an indication to our teller that you still haven’t gotten an answer to your question. She takes the hint and moves forward with her point.
“At FHB we don’t pretend to be in any better position to decide the future of your life than say, you and your peers. We recognize the fact that borrowed money has to come from somewhere, and when a person joins a bank they understand that part of that money comes from them. So, if it’s in the interest of every member of a bank to make decisions regarding money to be lent out, why shouldn’t it be the members who get to choose?”
“So you’re saying that you’re going to let the other members of your bank decide for or against my loan? Won’t that then become seriously political? I mean, that still leaves someone else in charge of my future, doesn’t it?”
“Yes and no. You see, it’s not quite as direct as asking your peers for a yay or neigh. That probably would become very political. But at FHB we want to employ a system that will best serve the needs of all parties involved while allowing each individual within the equation to retain as much control over their money as possible. In order to achieve this, we employ a three step process that allows borrowers and lenders to declare how much they are willing to lend (and thereby earn a small return by way of interest on money lent) and how much they need to borrow, independently of each other. Then, only once needs and limits have been declared, members are paired up by category.
“For instance, let’s say you’re a member who has enough in their account to consider loaning out. Let’s use a small figure for our example, say $5,000. As a member of FHB your funds are not used for lending by default. You must opt in at a specific amount. Because you have $5,000 in your account, and you have decided to make all of it available for lending (which you only do because you decide to monetize your existing assets by earning interest on the money you offer for lending), we make a note that you would like to make your funds available to our lending pool.
“Now, you don’t just say ‘Here’s five grand, hand it out to the next guy who asks for it.’ If we worked our loans like that we certainly wouldn’t be looking out for the interests of our members. When you earmark your funds for lending, we ask you to weight the contribution in several categories. These categories represent the different types of loans that we make available.” She hands you a piece of paper with a list of the categories on it.
Primary Needs - a loan of this type is given as more of a donation than a loan. Though the lender hopes to recover the money as they would with another type of loan, it is expressly understood that repaying the loan is optional. Lenders in this category would qualify for a federal tax break minus any money recovered. (New legislation may be necessary.) A Primary Needs loan is aimed at satisfying specific human needs, such as sustenance and shelter. These loans may only be applied to rent, utilities, groceries, etc. Interest is extremely low on this type of loan, around 2%.
Personal QOL - a Personal QOL loan is one that is aimed at the immediate improvement of QOL (quality of living) for a borrower. This would include money borrowed for buying vanity items such as a dress clothes or making aesthetic renovations to your living quarters. The intent of a Personal loan is to allow the borrower to directly impact their quality of living. Interest on this type of loan is higher than it is with other types because this loan is not intended to provide for a direct human need. Interest would be roughly 7% on a Personal QOL loan.
Transportation - a Transportation loan is one given to either an individual borrower for improvement of their access to modes of transportation or to an organization for the overall improvement of public transportation, as decided by the third step in the FHB loan process, Member Voting. A borrower can request such a loan to buy everything from a bicycle to a new car, but applying is not a guarantee of securing a loan. Because transportation is critical to a free and unhindered life, it is seen by our bank as being more critical than a Personal QOL, and therefore the interest is lower at around 5%.
Housing QOL Improvement - a Housing Improvement loan is for those borrowers who wish to improve their QOL in terms of their living quarters. Families looking for their first home would certainly qualify for this type of loan, as would many others. A distinction is made between this type of loan and a Primary Needs loan in that a Housing QOL Improvement loan is aimed at upgrading one’s living quarters whereas a Primary Needs loan is aimed at retaining one’s living quarters.
Institutional Improvement - an Institutional Improvement loan is money lent to the FHB members on the whole, by way of network maintenance and improvement, to include expansion of ATM locations and the opening of new branch locations. As an incentive to fund the growth and maintenance of our bank, we offer the largest return on this type of loan, or 15%.
“Do you understand everything that you have read on the card?” The teller is clearly checking to see if you’re still on the same page, and hasn’t once made you feel as though you were in a rush. You like this fact.
“I think so. As a borrower I can apply for a certain type of loan. As a lender I can weight my funds toward a certain category that represents the type of loans I want to be made available to my fellow members. Because both the pledge of funds for lending and the request for a loan are executed separately, underhanded politics can be avoided, is that right?” The teller nods her head and you continue before she dives back into the details. “So tell me more about the third step.” You want the teller to know that you’re interested now.
“Absolutely. The third step is an anonymous, ‘all-hands’ vote by bank members. Each member has one vote per loan request. Funds made available for lending are pooled into a gross budget for each category as determined by the given weight of the pledge. Every week at a predetermined time new loan requests are put to a vote. Voting closes at midnight and those members who have not yet voted automatically wave their right to vote on loan requests for that week. This way we ensure the largest possible level of member participation with respect to lending decisions, while eliminating any politicking that could empower special interest groups formed within the larger body of bank membership.
“Once a category budget has been depleted, no further loans are given until new pledges of great enough value to bring a loan request to vote have been collected. This way we ensure that irresponsible lending, as well as irresponsible borrowing, are kept to a minimum, and that all transactions remain highly visible to all members of the bank at all times. What do you think so far?” The smile on the tellers face is just short of smug, but how can you blame her? She does seem to have her thumb on the realities of banking. But you have a few more questions for her.
“Okay, how does the voting work, because I think I still see a chance for personal politics to play into the equation.”
“Great question.” The teller is such a sweet and accommodating young lady! “When a loan request is put to vote it is sanitized, meaning that all information that could identify the borrower is removed. Only data is shown to enable our voting members to decide for or against a request that is relevant to the decision itself. For instance, if a member is requesting money for a new car, relevant data about his current vehicle would be listed. This would include year, make, model, miles, and so on. It would also indicate their approximate annual income in order to limit abuse of the system by those who can already afford to provide for themselves without the aid of a loan.”
“I like the sound of that. So it’s completely anonymous then?” You’re quite intrigued by this point.
“We make it as anonymous as possible while providing the relevant data needed by our voting members in order to make an informed decision about the allocation of lent funds. In this way we hope to ensure that decisions are made based primarily upon need and availability of funds, not on things such as race, creed, or otherwise.”
“Okay.” You’ve got more questions again, you curious little bugger. “Here’s a handful of questions and then you can just give me all the answers at once. First, if I am approved to borrow money from the bank, who do I make payments to, FHB or the members who provided the funds that I borrowed against? Second, if I make my money available for lending, does that mean it is taken out of my account? Finally, what happens if a borrower defaults on a loan — who takes the wash on that loss?”
“All quite excellent questions Sir/Ma’am. Payments are made by the borrower to the bank. When a member pledges money for a loan, only one third of the pledged amount is removed from their account. That money is then used to secure the total amount of the loan from a Federal lending institution. (Again, new legislation may be necessary.) As payments are collected by FHB, they are routed directly to the lender until their balance is returned to the pre-pledge balance. After the initial one third of the loan is back in the hands of the lender loan payments are divided between paying down the primary on the federal loan, which is granted at very low or no interest. Finally, dividends are paid to FHB and to the lender at the prescribed interest rate for the category type of the loan.
“On a Transportation loan for example, the 5% interest collected from the borrower would be allocated with 1% going to the bank and the remaining 4% going to the lender. Now, to address your final point about liability for a defaulted loan. That low to no interest federal loan will have come from the General Operating Fund of our federal budget. This means that gains and losses had by banks across the country will directly benefit as well as directly harm the members of each bank and their corresponding communities, at all levels of government. This includes local, state, and federal communities. Because of this, the national banking system will be far more self-regulatory and, hopefully, more responsive to the needs and wants of the nation. Spending will be limited to what money is actually available.”
You don’t say anything because you’re thinking the whole thing over.
“This is very interesting. It’s a lot to swallow at one time though. What if I joined, paid the annual fee, and then decided to cancel my membership?”
“We would refund whatever you had paid of the fee, and we would pay to set you up with one of our competitors. Now, let me ask one final question of you. Knowing that we look out for your interests and protect your money, thereby protecting you, and knowing how our loan system works democratically — would you join First Honest Bank of America?”
And I ask you, dear readers, would you join FHB? I know I would. Any insight is welcome, as is criticism.
