New Credit Card Rules from the Fed

The Federal Reserve plans to bring their regulations in line with the Credit Card Act passed by Congress in May, seriously reining in credit card companies on their unsavory practices. With their plan taking a reader-friendly 841 pages, we’ll turn to the summary:

  • Protect consumers from unexpected increases in credit card interest rates by generally prohibiting increases in a rate during the first year after an account is opened and increases in a rate that applies to an existing credit card balance.
  • Prohibit creditors from issuing a credit card to a consumer who is under the age of 21 unless the consumer has the ability to make the required payments or obtains the signature of a parent or other cosigner with the ability to do so.
  • Require creditors to obtain a consumer’s consent before charging fees for transactions that exceed the credit limit.
  • Limit the high fees associated with subprime credit cards.
  • Ban creditors from using the “two-cycle” billing method to impose interest charges.
  • Prohibit creditors from allocating payments in ways that maximize interest charges.

A couple points of explanation:

The New York Times explains two-cycle billing as “where a creditor raises an interest rate and charges the higher rate for a customers’ previous borrowing.”

Fees on subprime cards would be capped at 25% during the first year, while the way that the card companies would be prohibited from allocating payments to maximize interest charges is that they would no longer be allowed “to apply credit card payments to balances with the lowest interest rates first.”

People are still going to get into trouble (ie debt) with credit cards, but at least the banks won’t have quite as many ways to hold people down and pile still more debt on them.

Workers Fighting Back

I’ve previously written about struggles at Stella D’oro in New York and Hyatt in Boston. In both cases, employers just decided to go after their workers, to increase profits by slashing pay and benefits. That’s not uncommon, but in both of these cases, the workers and unions fought back. So what’s going on with them now?

James Parks at the AFL-CIO blog writes that:

In July 2009, 136 Stella D’oro workers, members of the Bakery, Confectionery, Tobacco Workers and Grain Millers (BCTGM) Local 50, returned to work after an 11-month strike to maintain family-supporting wages and health care.

Yet on the day they returned, Brynwood Partners, the private equity firm that currently owns the company, announced it would shutter the plant, an action the union says is a direct retaliation against the workers.

On June 30, a National Labor Relations Board (NLRB) administrative law judge ruled that Stella D’oro refused to bargain with the union, improperly declared an impasse in negotiations and illegally refused the workers’ offer May 6 to return to work. The law judge ordered the company to reinstate the 136 workers with back pay and interest. BCTGM Local 50 then filed charges with the NLRB seeking to block the shutdown and also demanded the company reopen contract negotiations.

Help out Stella D’oro workers here.

As for the Hyatt, they’ve faced massive outrage in Massachusetts and elsewhere. At least two professional groups canceled contracts to hold events at the Hyatt or said that they planned to do so, while the Boston Taxi Drivers Association announced a taxi drivers boycott of the Hyatt unless the housekeepers were rehired.

Perhaps most surprising was Governor Patrick’s unusual response.

Last week, he wrote to Hyatt chief executive Mark S. Hoplamazian, asking him to rehire the housekeepers. After Hyatt offered them a three-month extension of their health care benefits and assistance looking for a job, Patrick rallied on the workers behalf, announcing he would direct state employees to boycott Hyatt hotels unless the workers were reinstated.

In response to all this, the Hyatt generously announced that the workers would be offered replacement jobs. With a staffing organization doing contract labor.

The workers have rejected this offer.

“We want our jobs back, nothing else,’’ said Lucine Williams, who worked at the downtown Hyatt for nearly 22 years. “We will not accept temp positions that are designed to put others out of work.’’

–snip–

Williams, who has become the main spokeswoman for the housekeepers, said they had to stand up to Hyatt. “If we let them get away with it, I think about all the other families that work at hotels,’’ she said. “It’s the principle.’’

And the Boston workers are not alone—in addition to the boycotts announced in Massachusetts, they drew support from union workers in Chicago:

About 200 union and hospitality workers were arrested yesterday afternoon in Chicago as they demonstrated their support for 98 workers who lost their jobs in Boston-area Hyatt Hotels, the Chicago Tribune reported in a story.

According to the Tribune, about 900 members of Unite Here Local 1, the union that represents hospitality workers in and around Chicago, participated in the demonstration; those arrested sat in the middle of a street as an act of civil disobedience.

Corporations aren’t going to stop trying to hurt workers until more working people fight back. All of this is what we need to see, anytime an employer tries to increase profits by harming workers.

Behind the Town Hall Mobs

Rolling Stone has a pretty astounding piece of investigative journalism on what led to the ugly protests against health care reform we saw this summer. They have a long excerpt online, but the full piece is only available in the magazine. This one you just have to go read—at least the excerpt.

Conservatives were quick to insist that the near-riot — the first of many town-hall mobs that would dominate the headlines in August — was completely spontaneous. The protesters didn’t show up “because of some organized group,” Rick Scott, the head of Conservatives for Patients’ Rights, told reporters. “They’re mad about the stimulus bill, the bailout, the economy. Now they see that their health care is about to be taken over by the government.”

In fact, Scott’s own group had played an integral role in mobilizing the protesters. According to internal documents obtained by Rolling Stone, Conservatives for Patients’ Rights had been working closely for weeks as a “coalition partner” with three other right-wing groups in a plot to unleash irate mobs at town-hall meetings just like Doggett’s. Far from representing a spontaneous upwelling of populist rage, the protests were tightly orchestrated from the top down by corporate-funded front groups as well as top lobbyists for the health care industry. Call it the return of the Karl Rove playbook: The effort to mobilize the angriest fringe of the Republican base was guided by a conservative dream team that included the same GOP henchmen who Swift-boated John Kerry in 2004, smeared John McCain in 2000, wrote the script for Republican obstructionism on global warming, and harpooned the health care reform effort led by Hillary Clinton in 1993.

“The insurance industry is up to the same dirty tricks, using the same devious PR practices it has used for many years, to kill reform,” says Wendell Potter, who stepped down last year as chief of corporate communications for health insurance giant CIGNA. “I’m certain that people showing up at these town halls feel that they’re there on their own — but they don’t realize they’re being incited, ultimately, by the insurance industry and the other special interests.”

Behind the scenes, top Republicans — including House Minority Whip Eric Cantor, Minority Leader John Boehner and the chairman of the GOP’s Senate steering committee, Jim DeMint — worked hand-in-glove with the organizers of the town brawls. Their goal was not only to block health care reform but to bankrupt President Obama’s political capital before he could move on to other key items on his agenda, including curbing climate change and expanding labor rights. As DeMint told an August teleconference of nearly 20,000 town-hall activists, “If we can stop him on this, the administration won’t be able to go on to cap and trade, card check and the other things they want to do.”

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Interesting Things Around the Internet

  • I defy you to read this story and not conclude that our health care system is entirely broken. This family has health insurance. But they’ve lost their house to medical bills, they’ve cashed out their life insurance policies, relatives have helped all they can, and they continue to drown in debt. Now, the mother has decided to give up the fight for the small amount of vision she has and go entirely blind in order to devote the money for her treatments to care for her daughters who have the same condition.
  • Facebook vs. MySpace.
  • Remember Betsy McCaughey? You may have seen her being destroyed by Jon Stewart on the Daily Show, or been exposed to her falsehood-riddled fearmongering in another venue. Well, back in 1994 she played a role in killing President Clinton’s attempt at health care reform, publishing an article called “No Exit” that misrepresented the proposed reforms. It now turns out it also dramatically misrepresented its own genesis. See, the article didn’t mention anywhere what we know now, which is that a tobacco lobbyist had significant input on the article.
  • A local union president links opposition to health care reform and opposition to unions in “Health care and the ‘I’ve got mine’ crowd”:

    The mind-set seems to be that if someone — even someone less fortunate — “gets” something, then I “lose” something. For example, proposals to cover the uninsured are routinely characterized as help for “freeloaders.” Freeloaders? At some point that would be just about all of us. Our current system makes health insurance hard to get and easy to lose.

    I see the same “me, me, me” outlook in the propaganda and money poured into preventing workers from forming unions. Sure I “get” the employer argument that unions raise labor costs, so it’s natural for employers to resist. I don’t accept the argument, but I understand where it is coming from. But I suspect that there is something much deeper and more worrisome at work.

    Unions, after all, stand for looking out for one another. The very idea of a union is a version of yes, I am my brother and my sister’s keeper. An injury to one is an injury to all, is one of our core principles.

  • Not like what we need is more fast food, but…fast food menu options that aren’t actually on the menu.

Helping Kids Get to College

Last week, Mitchell Hirsch wrote about the Student Aid and Fiscal Responsibility Act passing the House. One of the key things SAFRA does is to make it easier for families to apply for financial aid by simplifying the Free Application for Federal Student Aid, or FAFSA, form.

That sounds less flashy than increasing Pell Grants to $5,500, but it turns out it’s really important. (Those of you who have had to fill out this insanely-difficult form may be nodding your heads here.) How important? Turns out, it can be the difference between going to college and not, for more than a few students.

Researchers recently took nearly 17,000 low and moderate income families and divided them into three groups. One third of the families got no help. One third received information about their eligibility for aid, based on their tax returns. A final group not only got the eligibility information, but had their tax information imported into FAFSA, so that instead of taking 12 hours to fill out, it took 10 minutes.

The most pronounced effects were on high school seniors who received both types of help. Thirty percent more of them enrolled in college, 33 percent more won federal aid, and 39 percent more submitted FAFSAs than those in the control group, who did not get the assistance.

Young adults already out of high school benefited from the help as well. Twenty percent more of them enrolled in college, nearly three times as many completed the FAFSA, and 20 percent more won financial aid.

Among young people who had completed some college, 58 percent more of those who got both types of help from H&R Block submitted the federal financial-aid forms, and 13 percent more got financial aid than their counterparts who didn’t have the assistance. Their likelihood of getting financial aid was only marginally higher, though, and their chances of re-enrolling in college were no higher.

They got help filling out a form—and they were 30% more likely to go to college. That is an astounding result, and another angle on why the Student Aid and Fiscal Responsibility Act is so very important.

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Crossing Our Fingers for Retirement

Our 401(k)’s are one of the economic risks the vast majority of us live with—but don’t hear much about. Robyn Blumner writes in the St. Petersburg Times that the modern retirement plan is to cross your fingers.

In the United States, Social Security provides the average worker with only 45 percent of their preretirement income, while in Denmark workers can retire with 91 percent of their prior salary.

Americans were supposed to make up the difference through employer-sponsored pension plans. That is, until employers shook off that obligation by exploiting a tax vehicle for retirement savings—the 401(k)—that was intended to encourage employees to put money aside for retirement, not upend employer pensions.

With only about 12 percent of workers between 30 and 39 now enrolled in a defined-benefit pension plan, according to the Center for Retirement Research at Boston College, employers are off the hook. They can unilaterally reduce or even eliminate 401(k) contributions.

You cross your fingers you earn enough to save some towards retirement. You cross your fingers your employer contributes even a little. You cross your fingers the market doesn’t crash.

When do you run out of fingers to cross?

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Extremists: The Chamber of Commerce

As I wrote last week, the Chamber of Commerce pretends to represent small business as a screen for really representing the largest corporations. Now, yet another energy company leaving the Chamber shows how false its claims about the economic effects of a cap-and-trade program are.

The Chamber wants us to believe be afraid that cap-and-trade would kill the economy. But the very companies that make their money on energy are calling foul.

The latest exit from the Chamber isn’t just any energy company, either. It’s the largest electric utility in the country: Exelon.

Exelon’s CEO said:

The carbon-based free lunch is over. But while we can’t fix our climate problems for free, the price signal sent through a cap-and-trade system will drive low-carbon investments in the most inexpensive and efficient way possible. Putting a price on carbon is essential, because it will force us to do the cheapest things, like energy efficiency, first.

That is not some dirty f’ing hippie. That is a businessman speaking the language of capitalism. And he’s saying that, as ThinkProgress summarizes, “the Chamber’s multi-million-dollar campaign against clean energy legislation is incompatible with Exelon’s commitment to climate change leadership.”

Extremists. Extremists on clean energy, and extremists on workers’ rights.

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A Public Service Announcement

Protect Insurance Companies PSA from Will Ferrell

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Interesting Things Around the Internet

  • Read of the week: Nomi Prins and Chris Hayes explain the bank bailouts in language you can understand—even if you can’t understand the decision-making that went into it.
  • Baltimore public schools are embracing Meatless Mondays, more local produce, and more in-house meal preparation. It’s healthier, better for the environment, and in the long term it will save the city money.
  • From Bread for the City: Revealing the Invisible People
  • From the Working In These Times blog: Maintenance workers fight for lost wages in Chicago
  • The New York Times takes a close look at the medical malpractice system, going beyond the politicized question of whether malpractice lawsuits are a significant cause of rising health care costs to see if the system is working for patients—both healthwise and financially.
  • Oh, good. Sen. Kent Conrad, who’s been a prominent voice on health care reform (and the obstruction thereof), compared the American system to those in several other countries—and in so doing, revealed he has no clue what those other countries’ systems are.
  • Did I mention that the read of the week is Nomi Prins and Chris Hayes on the bank bailouts?

Male Senatorial Health Care Logic: “I don’t need maternity care”

Via ThinkProgress:

[Sen. Jon Kyl (R-AZ)]: I don’t need maternity care, and so requiring that to be in my insurance policy is something that I don’t need and will make the policy more expensive.

[Sen. Debbie Stabenow (D-MI)]: If I could just interject once with my colleague — I think your mom probably did. (LAUGHTER)

KYL: Over 60 years ago my mom did. (LAUGHTER) You notice I wasn’t too specific with regard to that.

Sen. Kyl is right. He has not and never will require maternity care. What’s not right is that he was using that logic to attempt to legislate that the federal government could not tell insurance companies that they had to cover maternity care, or any other specific condition. In other words, Kyl wants health care reform to leave insurance companies free to say “sure, you can buy this affordable coverage. Of course, it doesn’t include maternity, cancer, heart attack, stroke, or being hit by a bus.”

That is exactly the way to legislate. Senators should just pass bills that will offer protection against things they personally might someday face, and say “screw everyone else. If they want the government to do anything for them, they should’ve been born more like me.”

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