Consumer Rights Watch

The Justice Department and Zimbabwe

2008-07-29T07:00:00.001-05:00

Click (here) for a copy of the 130+ page report about the shenanigans at the U.S. Department of Justice over the past few years, which was released yesterday. It outlines the illegal, political hiring practices, and the really good attorneys whose careers were ruined.

I know that the relationship between this report and Zimbabwe may not be readily apparent, but to me the connection is clear.

In 1998, I had the opportunity to live in Zimbabwe for the summer between my first and second years of law school. I clerked for the Attorney General of Zimbabwe and traveled around the country, South Africa, and the southern border of Zambia. I was studying potential land reform programs, particularly how you can redistribute land to the majority population without melting down the economy.

At that time, Zimbabwe was on the brink. President Mugabe was cracking down on opposition political parties, inflation was beginning, and there had been a food riot in downtown Harare about a month before I arrived. To make a long story short, my ideas about land reform didn't catch on. Instead, Mugabe just seized the land and gave it to his cronies.

But, what I came away with from my time there, in a broader sense, visiting the courts, traveling, talking with people, was the fragility of democracy and justice.

Systems of government work when people feel connected to them, and when they trust them. It is not enough that justice be blind, people must believe that justice truly is blind to race, tribe, and circumstance. When a judge or government issues an order, people may not agree with it, but they have to believe that they had a fair opportunity to be heard. Otherwise, the loss of faith allows the system to spiral into chaos. As people lose faith in the system, the entrenched politicians begin to use their power to maintain it, which spirals the system even further down.

When I read stories about the Justice Department's hiring practices and other abuses of power, I think of Zimbabwe. I think of perception. And, I think of the spiral that undermines systems of governance. The loss of faith and confidence in our institutions is the slow, silent danger that is rarely talked about, but every once in awhile you feel it...even here, thousands of miles away from Zimbabwe.

An Alternative Stimulus?

2008-07-28T07:00:00.000-05:00

Alan S. Blinder, a professor of economics and public affairs at Princeton and former vice chairman of the Federal Reserve, had an interesting editorial in the New York Times, which suggests that the government pay to take old polluting cars off of the streets. It helps the environment. Although a generalization, it also targets lower income individuals that are not driving fuel-efficient, less-polluting vehicles. And, it gives money to people who will likely use it to buy a new car or otherwise stimulate our sagging economy.

(Click here for the article)

Mmmmmmmm...Dairy Delights....

2008-07-27T14:48:00.000-05:00

Bush: "Wall Street Got Drunk"

2008-07-24T07:00:00.001-05:00

Here's a video of President Bush's sophisticated analysis of the mortgage crisis. In sum, "Wall Street Got Drunk." The President, however, fails to mention that it was Federal Reserve Chairman Alan Greenspan and the "regulators" at the OCC that were serving the liquor.

(Click here for the story and video via the Huffington Post)

"Insurance Company Rules" Commercial

2008-07-23T07:00:00.000-05:00

Twin Cities Fails To Be Most Walkable...

2008-07-22T07:00:00.002-05:00

The website, www.Walkscore.com just released its list of the top 10 most walkable cities in America, and (drum roll) neither Minneapolis nor Saint Paul are on the list. Why is that? That was sort of a rhetorical question. I know why we aren't on the list---our cities are not walkable. But why can't we change that?

Here are my top five things that the twin cities can do to make this list:

5. Make somebody accountable. We have full-time city employees who are designated to bring in new businesses, inspect buildings, manage park and rec centers, but often walk-ability and bike-ability are made the responsibility of someone who has a myriad of other responsibilities. And then, if there is a person working on this full-time, they often do not have the skills (urban planning, architecture, design) or the power to implement their ideas. They are jettisoned to a task force of community members and asked to write reports. That isn't how it is going to get done.

4. Change the sidewalks. Identify the areas that need to be more walkable and make wider sidewalks. Big sidewalks mean that there will likely be cafes and coffee shops, and they will also encourage more window shopping and strolls in shopping districts.

3. Redefine transportation success. Successful transit engineers often define success as how fast you can get from point A to point B. If you want people to walk, the things that will encourage walking often mean that cars will have to slow down. And, we have to be okay with that.

2. Keep it clean and safe. Clutter, dirt, garbage, pollution, etc. mean that people will cede our public spaces and ultimately make them less safe. If you want people to walk, the walk has to be pretty, meaning pocket parks, planters, and full-time sanitation workers keeping it all spruced-up.

1. Public transit, public transit, public transit. If you want people to walk and embrace a walk-culture rather than a car-culture, they need to be able to ditch the second car. A healthy and well-maintained public transit system is the lynch-pin.

Consumer Debt: The High Cost of Cheap Credit

2008-07-21T07:00:00.000-05:00

The New York Times has an unbelievably good (well, okay, not so unbelievable...but it's really good) series on consumer debt this week. So, I thought I would provide some fair use highlights, and encourage you to check it out. (click here for the story)

Here's a quote about the growing amount of personal debt and the so-called benefits of cheap credit:

Lenders have found new ways to squeeze more profit from borrowers. Though prevailing interest rates have fallen to the low single digits in recent years, for example, the rates that credit card issuers routinely charge even borrowers with good credit records have risen, to 19.1 percent last year from 17.7 percent in 2005 — a difference that adds billions of dollars in interest charges annually to credit card bills.
Average late fees rose to $35 in 2007 from less than $13 in 1994, and fees charged when customers exceed their credit limits more than doubled to $26 a month from $11, according to CardWeb, an online publisher of information on payment and credit cards.
Mortgage lenders similarly added or raised fees associated with borrowing to buy a home — like $75 e-mail charges, $100 document preparation costs and $70 courier fees — bringing the average to $700 a mortgage, according to the Department of Housing and Urban Development. These “junk fees” have risen 50 percent in recent years, said Michael A. Kratzer, president of FeeDisclosure.com, a Web site intended to help consumers reduce fees on mortgages.

(click here for Part One)

The Merrill Lynch Death Watch Begins...

2008-07-19T07:00:00.000-05:00

What is the over-under on the odds that Merrill Lynch survives 2008. My prediction is that they close or they are sold (aka bailed out) by the end of the year. (click here for the story)

Here is an excerpt:

The brokerage firm's second-quarter loss of $4.65 billion, or $4.95 a share, was one of the worst in Merrill's history and more than twice as steep as the loss for which analysts had been bracing. Already clobbered by subprime-related write-downs of more than $30 billion in the previous three quarters ended in March, Merrill took an additional $9.7 billion hit in the second quarter, which caused the bulk of the company's net loss.

Countrywide Settles Destroyed Check Lawsuit

2008-07-18T07:00:00.000-05:00

The New York Times reports that Countrywide has settled a lawsuit that alleged it destroyed $500,000 checks that the company claimed were late.

(click here for the story)

IndyMac Under Investigation By FBI

2008-07-17T06:00:00.001-05:00

More on IndyMac (click here for full story):

The FBI is investigating failed bank IndyMac Bancorp Inc. for possible fraud, an official said Wednesday of the government's latest target following the collapse of the nation's subprime mortgage market.
It was not immediately clear how long the FBI's probe of the bank has been ongoing - or whether it was opened before last Friday's takeover of IndyMac by the Federal Deposit Insurance Corp.
The investigation appears to be is focused on the company and not individuals who ran it, a law enforcement official told The Associated Press. The official spoke on the condition of anonymity because he was not authorized to speak publicly about the investigation.

Bush Bribery Video

2008-07-16T21:21:00.002-05:00

I was listening to the Minnesota Independent senate candidates on MPR this afternoon while driving to a lunch meeting, and they were asked whether they believed the system was corrupted. (Gary Eichten used a far more colorful Ventura quote, but that was the question). Dean Barkley quoted the dictionary definition of bribery, and then stated that that is what we have in Washington DC right now. (click here for the audio)

As if to illustrate Barkley's point, here's a big story in Europe that is not being covered at all in the United States. A meeting with Condoleeza Rice and Dick Cheney going for a couple hundred thousand dollars. (click here for the story) I remember that Al Gore's use of a telephone in the White House dominated the news for days on end. There was much hand ringing over his use of a government telephone, and, yet, here is this...a simple quid pro quo and nothing is said.

Watch the Think Progress video yourself and decide whether it fits this definition of bribery (click here):

1 : money or favor given or promised in order to influence the judgment or conduct of a person in a position of trust

2 : something that serves to induce or influence

Fannie and Freddie Belly Flop

2008-07-15T07:00:00.000-05:00

"Too big to fail," is a mantra that I have read over and over, again, as it relates to Fannie Mae and Freddie Mac. Not only is it a ridiculous concept, but it is down-right dangerous. The US PIRG blog has a good post about the future of Fannie and Freddie (click here). But here is an excerpt:

Chuck Lewis, founder of the investigative reporting think tank, the Center for Public Integrity, said that in all their years of analyzing the strategies and contributions of powerful special interests, Fannie was the only one that not only hired the former Members and the former hill staffers, but "also hired their spouses and children" and as Creswell notes, "their friends." Fannie wanted blanket coverage of the political universe, and it could afford to pay for it.

Obama: Reforming Bankruptcy Laws

2008-07-14T07:00:00.001-05:00

Obama offerred two new targeted bankruptcy reforms that hold a lot of popular appeal and they will also put Senator McCain in an awkward position. First, Obama proposes a new, streamlined procedure for military families to declare bankruptcy. As we, as a country, have shifted our reliance on the "permanent, standing" military, and have weighed heavily on reserve units, the financial toll on our national guardsmen and guardswomen have been horrible. Efforts to increase pay and scholarships have been blocked or opposed by the White House and Senator McCain. The new Obama proposal, again, raises the question about who really supports our troops. The second proposal relates to helping elderly couples who are in bankruptcy keep their homes.

(click here for the story)

Both proposals are a great beginning, but I think they should apply to all families. I think going down a path that separates different kinds of debtors into "good" or "bad," can be dangerous. Why should a family who has their jobs shipped to Mexico have a tougher time declaring bankruptcy? To a certain extent, it plays into the stereotype that anybody who declares bankruptcy is a deadbeat. Bankruptcy is not a sin or immoral. Abuses are over-reported and isolated. One of the greatest characteristics of our country has been the ability of individuals to try, fail, and then reinvent themselves. Bankruptcy is a key element in making that a possibility.

As the owner of multiple failed and bankrupt businesses, I think that is something that even our president could agree with.

Reich: Consumer Led Recession

2008-07-11T06:00:00.000-05:00

Here's an excerpt from one of my new featured blogs (see the list to the left) from former Labor Secretary Robert Reich. If you haven't read his memoir Locked in the Cabinet, it is one of the better Washington D.C. diaries. It's quirky, insightful, and pretty darn funny.

Here is the excerpt:

Consumers have no money left. This is the first consumer-led recession in over twenty years. Consumer-led recessions are worse than the normal kind, where the Fed has overshot by raising interest rates too high or corporations have pulled back their spending. Consumer-led recessions are deeper and longer, which makes the case for major infrastructure spending.

(Click here for full post)

The value of infrastructure spending advocated in Reich's blog post is right on. Infrastructure spending versus tax rebates is one that can be debated, but the fact is that infrastructure spending cycles through a local economy multiple times whereas tax rebates go from the taxpayer to either the bank (to pay off loans/credit cards) or a retail store. It's unlikely major retailers are going to create high-paying jobs because people buy a little bit more stuff with their rebate checks.

A better investment is to allow the infrastructure investment employ higher paid engineers, architects, and union construction workers, and then allow those folks to use the money to buy equipment and supplies, and then finally it goes to the banks and retail stores. I just think you get a bigger bang for the infrastructure investment.

Saint Paul Bike Classic Early Registration

2008-07-10T06:00:00.000-05:00

Only a few more days left to get the early registration discount for the Saint Paul Bike Classic. This is a great way to raise some money for the Neighborhod Energy Connection, and bike around beautiful Saint Paul.

The tour takes you down Summit Avenue and then along River Road, and then over to Mounds Park, Phalen, Como, and then back. Just when you get tired (and this is, by the way, not a race), there is a pit-stop with food and music.

Click here for the online registration.

A silver lining?

2008-07-09T06:00:00.000-05:00

Although our war against forced, mandatory arbitration has been a struggle, the Wall Street Journal is reporting that consumer class actions are being allowed to proceed. Specifically, class action bans are being bounced by state courts.

(click here for the post)

While this may be true, there still remains a large movement to vilify people and their attorneys who simply want their day in court and assert their rights. I'm not saying there aren't a few bad apples out there, but what's wrong with holding people accountable? According to this Wall Street Journal article, state courts are increasingly saying, "Nothing wrong with that."

Chrysler $2.99 Gas Offer Is Bad Deal

2008-07-08T06:00:00.000-05:00

If it sounds too good to be true, it probably is. NBC's Red Tape Chronicles takes a closer look at the $2.99 gas offer as well as the credit card and other promotional junk flying our way in light of higher gas prices.

Here's the rub: You should read the fine print, and, in the case of Chrysler---take the rebate or the financing option over the gas offer.

(click here for the full Red Tape post)

Video: Economic Incompetence

2008-07-07T06:00:00.001-05:00

This video via the Washington Post is both hilarious and incredibly sad. (click) When you are the top economist for the Bush Administration's Treasury Department and can only summon the following:

Does the economy need another stimulus package?

"I-it seems, you know, it seems like that's, that's enough, uh, enough."

What might trigger another round of economic stimulus?

"I don't, I guess I don't have an answer, I mean, you know, beyond saying we look at all the data and, um -- so, my usual line."

We got trouble. See it for yourself.

Diesel Fuel Skyrocketing

2008-07-06T10:41:00.002-05:00

Wondering why food and everything else is on the increase? Check out these charts from the Department of Energy related to the real cost of Diesel. (click) It's a very tough time for our independent truckers out there. These guys work hard, and the diesel costs is a direct decrease in their take home pay.

There's also tough news in these charts related to home heating oil and projections of regular gasoline.

Krugman has a pretty good post about the diesel (click)

Overruling The United States Supreme Court

2008-07-04T06:00:00.000-05:00

There have been a string of terrible United States Supreme Court rulings recently as they relate to consumers. So in honor of independence day, how about we demonstrate the magic of the three branches of government and overrule the most activist court in the land.

Public Citizen has an excellent post (click here) about HR 6381, the Medical Device Safety Act of 2008. It is a bill introduced in the U.S. House of Representatives by Reps. Henry Waxman (D-Calif.) and Frank Pallone (D-N.J.) that would overrule the high court’s decision in Riegel v. Medtronic. In that case, the court found that Medtronic could not be held liable for one of its balloon catheters that burst during an operation because the catheter had been approved by the Food and Drug Administration.

Time to urge our Senators and Congresspeople to represent the people, particularly those that are injured.

Economy At "Tipping Point"

2008-07-03T06:00:00.001-05:00

Calculated Risk has a good post and summary about a new report from the Central Bank for all of the Central Banks. In summary: we are at a tipping point. Which, if the Central Bank for all Central Banks is saying that, it means we reached the tipping point and tipped about six months ago.

Here is the link.

Blacklist of Minnesota Organizations

2008-07-02T17:20:00.002-05:00

The Minnesota Independent has an article about a recent inspector general report on the hiring practices of the Department of Justice under the Bush administration. Sadly, a young attorney's affiliation or past employment at a half dozen Minnesota organizations would result in an otherwise qualified candidate being "deselected" for employment. (click here for the story)

The organizations are the Minnesota Advocates for Human Rights (now Advocates for Human Rights), Minnesota Justice Foundation, Immigrant Law Center of Minnesota, and the Minnesota Center for Environmental Advocacy.

In the story there is also a brief discussion about why an environmental group would be on the list. I think the answer is that the Bush administration did not just want to exclude people with different political beliefs, they wanted to protect corporations that seek to pollute the air, dirty our water, and cut down our trees. It isn't political. It's about money and power.

What is equally sad is that this story is not on the front page of any of our major newspapers or in the mainstream, corporate-owned media.

Center for Responsible Lending: IndyMac Was A Place of "Insanity"

2008-07-02T06:00:00.000-05:00

The Center for Responsible Lending released a great report on the business practices of IndyMac. Click here for the report.

Here is a great quote from the press release:

In interviews and court documents, 19 former employees describe an atmosphere where the drive to close loans ruled even when IndyMac's own risk experts recommended against approvals. Most of the ex-employees who provided information for this report were mortgage underwriters who were supposed to be making sure borrowers could afford the deals. They say their efforts to do their jobs were hamstrung by higher-ups.

"I would reject a loan and the insanity would begin," one former underwriter told CRL. "It would go to upper management and the next thing you know it's going to closing. . . . I'm like, 'What the Sam Hill? There's nothing in there to support this loan.' "

Wachovia Stops Being Stupid...

2008-07-01T06:00:00.001-05:00

In a bold move, over a year since everybody (and I mean everybody) came out and said these things are dumb and a recipe for disaster, Wachovia announced that it is discontinuing it's negatively amortizing loans. Negatively amortizing means that each month you make a payment your principal balance actually goes up. The beauty of negatively amortizing loans for Wachovia was that they got to pretend that these people are "homeowners," when in fact they are just renters transitioning into renters with really bad credit or bankruptcy.

(Click here for the story)

Mr. Stagflation meet Mr. Debt

2008-06-30T19:54:00.002-05:00

Nouriel Roubini has a good post related to the deadly mix occurring in our economy right now---1970s stagflation and a little 2001 credit/debt. (click here for the full post) Predicting a year and a half of major pain.

Here is an excerpt:

It now appears that the U.S. and global economy is facing the worst of the shocks that led to the U.S./Global recessions of 1974-75 and 1980-82 (stagflationary shocks from oil prices) together with the shocks (asset/credit bubbles gone bust) that led to the recessions of 1990-91 and 2001. The combined mix of the worst shocks that led to the last four U.S. and global recessions (1974-75, 1980-82, 1990-91, 2001) is thus quite deadly and therefore one of the reasons why this will not be a short and shallow recession (V-shaped and lasting only 6 months) in the U.S. but rather a longer, uglier and deeper one (U-shaped and lasting 12 to 18 months).