Economic Stories of Relevance in Today's World -- November 13, 2011

For Bank Of America, Debit Fees Extend To Unemployment Benefits - Huffington Post - Janell Ross | Nov 10, 2011 - CORDOVA, S.C.-- Shawana Busby does not seem like the sort of customer who would be at the center of a major bank's business plan. Out of work for much of the last three years, she depends upon a $264-a-week unemployment check from the state of South Carolina. But the state has contracted with Bank of America to administer its unemployment benefits, and Busby has frequently found herself incurring bank fees to get her money.          To withdraw her benefits, Busby, 33, uses a Bank of America prepaid debit card on which the state deposits her funds. She could visit a Bank of America ATM free of charge. But this small community in the state's rural center, her hometown, does not have a Bank of America branch. Neither do the surrounding towns where she drops off her kids at school and attends church.          She could drive north to Columbia, the state capital, and use a Bank of America ATM there. But that entails a 50 mile drive, cutting into her gas budget. So Busby visits the ATMs in her area and begrudgingly accepts the fees, which reach as high as five dollars per transaction. She estimates that she has paid at least $350 in fees to tap her unemployment benefits.          "It really boggles my mind," she said. "This bank is taking little bits of money out of thousands of pockets, including mine."          Bank of America recently aborted plans to charge ordinary banking customers $5 a month to use their debit cards in the face of national outrage. But the bank has quietly continued to mine another source of fees: jobless people who depend upon the bank's prepaid debit cards to tap their benefits. Bank of America and other financial firms -- including U.S. Bank, Wells Fargo and JP Morgan Chase -- have secured contracts to provide access to public benefits in 41 states. These contracts typically allow banks to collect unlimited fees from merchants and consumers.          In short, the same banks whose speculation delivered a financial crisis that has destroyed millions of jobs have figured out how to turn widespread unemployment into a profit center: The larger the number of people who are out of work and dependent upon the state for sustenance, the greater the potential gains through administering their benefits.          "It's absolutely ridiculous," said Sue Berkowitz, director of the South Carolina Appleseed Legal Justice Center, a Columbia nonprofit that represents low-income people facing foreclosure, food insecurity and other problems. "It should not cost you any more to use a debit card than if they had issued you a check."         For the state, handing Bank of America responsibility for unemployment benefits secured cost savings, said Berkowitz, but they have come at vulnerable people's expense.          "When it comes to ordinary people getting the benefits they have earned, the benefits they need, they don't seem to spend a lot of time worrying," she said.          Bank of America asserts that its prepaid debit cards are a good deal for everyone -- from state taxpayers to people drawing unemployment benefits.          "We have provided prepaid card programs to government agencies for many years," said Jefferson George, a Bank of America spokesman based at the company's Charlotte headquarters. "Clients value the cost savings and increased efficiency and individuals appreciate the ability to receive their benefits payments more quickly and securely."              South Carolina officials say their state's current arrangement with Bank of America, launched in July 2010, has proven a good value for taxpayers. The South Carolina Department of Employment and Workforce, which oversees unemployment benefits, expects to save as much $5 million in check printing and mailing costs annually through its contract with Bank of America, said an agency spokeswoman, Adrienne Fairwell. She said the state was also attracted to the debit cards as a means of helping jobless people who do not have bank accounts avoid the fees they must pay to cash checks. Roughly one tenth of all South Carolina households -- about 182,000 families -- did not have a bank account as of last fall, according to a recent Pew Research Center report. But some banking experts say the relevant cost savings are accruing to the banks themselves. New federal regulations cap what banks can collect from merchants when consumers swipe ordinary debit cards at store cash registers. The new swipe fee limits will cut Bank of America's revenues by $2 billion this year, according to Richard Bove, an analyst who follows Bank of America for Connecticut-based brokerage and research service Rochdale Securities. "Most banks are aiming to recoup 30 to 50 percent through other methods," which include prepaid card fees, said Nancy Bush, an analyst with NAB Research, LLC, a a New Jersey-based investment consulting company, who monitors Bank of America.          Those limits do not apply to most prepaid debit cards, making them particularly attractive to banks, say experts. Prepaid cards are still a small business for banks, but the sector is quickly growing, experts say. South Carolina now distributes half of all unemployment benefits using Bank of America prepaid debit cards, according to the state department of employment and workforce, with most of the other half delivered through direct deposit.          Neither the state nor Bank of America would disclose the details of their contractual arrangement. A bank spokesman termed the deal "confidential." When The Huffington Post asked the state for for the details of the contract, the spokeswoman required the submission of a formal Freedom of Information Act request. Yet one week after that request was lodged, the state has not provided the contract terms. But The Herald, a Rock Hill, S.C. newspaper, reported in 2009 that South Carolina pays the bank a 3 cent fee for each transfer it facilitates on a prepaid debit card. The bank collects the same fees from the state for handling direct deposit of unemployment benefits, a state spokesperson said. Banking experts say the real money lies in the fees the bank collects for a range of services. When the state first contracted with Bank of America, the list of potential fees the bank was allowed to collect included a $1.50 charge when a customer visited a bank ATM or teller more than once per week, a $1.50 charge for use of an out-of-network ATM, a $1.50 charge for speaking to a customer service operator more than once per month, and 50 cents for entering the wrong PIN number at an ATM more than four times or requesting more funds from an ATM than remained on the card......


Americans' Ability to Afford Food Nears Three-Year Low - Overall access to basic needs also declines to a new low - Gallup - by Lymari Morales - November 10, 2011 - WASHINGTON, D.C. -- The percentage of Americans reporting that they had enough money to buy the food they or their families needed continued to decline in October, nearing the record low seen in November 2008. The percentage who did not lack money for food in 2011 fell to 79.8% from 80.1% in September, continuing a decline that began in April. This is only the second time since Gallup and Healthways began tracking this measure as part of the Gallup-Healthways Well-Being Index in January 2008 that less than 80% of Americans reported that they had enough money to buy food throughout the past year. The record low was in November 2008, at the start of the economic crisis, when 79.4% reported that they had enough money to buy food for themselves or their families. This measure -- which asks if one had enough money to buy food in the past 12 months -- has decreased to its lowest level of the calendar year each October since 2009. The reason for this pattern is unclear and does not appear to be related to world food prices. In 2008, fewer Americans reported that they had enough money to buy food in August and November than in October, likely affected by high gas prices in the former case and the onset of the economic crisis in the latter. Still, this October finds fewer Americans saying that they had enough money to buy food over the past year than in each October for the past three years.          Further indicating that Americans are facing mounting economic strain, the percentages saying they have enough money to provide adequate shelter or housing and healthcare and/or medicines for themselves or their families have also declined each October since 2009. These percentages did show slight improvement between 2008 and 2009. ...


Thanksgiving Meal Cost Jumps 13% - Bloomberg - Jeff Wilson - Nov 10, 2011 -  The cost of a Thanksgiving dinner in the U.S. will jump 13 percent this year, the biggest gain in two decades, as prices rose for everything from turkey to green peas to milk, the American Farm Bureau Federation said.
A meal for 10 people on the holiday, which falls on Nov. 24 this year, will rise to $49.20 from $43.47 last year, the biggest increase since 1990, based on foods traditionally served including stuffing and pumpkin pie, the farm group said today in a release. Turkey was the most expensive and had the biggest gain, with a 16-pound bird up 22 percent at $21.57.                “Our informal survey is a good barometer of the rising trend in food prices this year,” John Anderson, a senior economist at the Farm Bureau in Washington, said in a telephone interview. “We are starting to see the supply response to higher prices, but there are substantial lags.”                Thanksgiving meal costs are up more than the pace of food inflation in the U.S., where the government forecasts prices will increase 3.5 percent to 4.5 percent this year, the fastest since 2008. Rising commodity and energy prices boosted the cost of food eaten at home by 6.3 percent in September compared with a year earlier, according to data from the Census Bureau.


Median home prices fall for 3Q in most US cities - AP - By DEREK KRAVITZ, AP Real Estate Writer - November 9, 2011 - WASHINGTON — Home prices dropped in nearly three quarters of U.S. cities over the summer, dragged down by a decline in buyer interest and a high number of foreclosures. The National Association of Realtors said Wednesday that the median price for previously occupied homes fell in the July-September quarter in 111 out of 150 metropolitan areas tracked by the group. Prices are compared with the same quarter from the previous year. Fourteen cities had double-digit declines. The median price in Mobile, Ala. dropped 17.7 percent, the largest of all declines. Phoenix and Allentown, Pa., Atlanta, Las Vegas and Miami also experienced steep declines. Eight cities saw double-digit price increases. The largest was in Grand Rapids, Mich., where the median price rose 23.7 percent. South Bend, Ind., Palm Bay, Fla., and Youngstown, Ohio also saw large price increases. The national median home price was $169,500 in the third quarter, down 4.7 percent from the same period last year. Most analysts say prices will sink further because unemployment remains high and millions of foreclosures are expected to come onto the market over the next few years....



Ten Million American Families Sliding Towards Foreclosure - Sherwood Ross - Infowars.com - November 8, 2011 - Of the 55-million families with mortgages, 10.4-million of them “are sliding toward failure and foreclosure”—a tragedy that will depress the U.S. housing market for years to come, a result of too many houses for sale and too few buyers.                     That’s the blunt conclusion of distinguished economics journalist William Greider, to be published in an article in the November 14th issue of The Nation magazine. America’s “Economic recovery will have to wait until that surplus (excess houses) is gone, because the housing sector has always led the way out of recession,” Greider says. “The more housing supply exceeds demand, the more prices fall. The more prices fall, the more families get sucked into the deep muddy. The vicious cycle is known in the industry as the death spiral. So far, there’s no end in sight.”                     Greider says the solution is to forgive the debtors: “Write down the principal they owe on their mortgage to match the current market value of their home, so they will no longer be underwater. Refinance the loan with a reduced interest rate, so the monthly payment is at a level that the struggling homeowner can handle.”                  Forgiving the debtors is the right thing to do, Greider continues, “because the bankers have already been forgiven. The largest banks were in effect relieved of any guilt for their crimes of systemic fraud or for causing the financial breakdown—when the government bailed them out, no questions asked.”                 Far from a show of gratitude, Greider notes the response of the banks has been ugly. “Right now, these trillion-dollar institutions are methodically harvesting the last possible pound of flesh from millions of homeowners before kicking these failing debtors out of their homes—the story known as the ‘foreclosure crisis.’”                   The largest and most powerful banks are standing in the way of the solution and the Obama administration “is standing with them,” Greider adds, “because bankers and other creditors would have to take a big hit if they were forced to write down the debt owed by borrowers. The banks would have to report reduced capital and their revenue would decline if homeowners were allowed to make smaller monthly payments.”



12 FactsAbout Money And Congress That Are So Outrageous That It Is Hard To Believe That They Are Actually True - The Economic Collapse Blog

#1 The collective net worth of all of the members of Congress increased by 25 percent between 2008 and 2010.
#2 The collective net worth of all of the members of Congress is now slightly over 2 billion dollars.  That is "billion" with a "b".
#3 This happened during a time when the net worth of most American households was declining rapidly.  According to the Federal Reserve, the collective net worth of all American households decreased by 23 percent between 2007 and 2009.
#4 The average net worth for a member of Congress is now approximately 3.8 million dollars.
#5 The net worth of House Minority Leader Nancy Pelosi increased by 62 percent from 2009 to 2010.  In 2009 it was reported that she had a net worth of 21.7 million dollars, and in 2010 it was reported that she had a net worth of 35.2 million dollars.
#6 The top Republican in the Senate, Mitch McConnell, saw his wealth grow by 29 percent from 2009 to 2010.  He is now worth approximately 9.8 million dollars.
#7 More than 50 percent of the members of the U.S. Congress are millionaires.
#8 In 2008, the average cost of winning a seat in the House of Representatives was $1.1 million and the average cost of winning a seat in the U.S. Senate was $6.5 million.  Spending on political campaigns has gotten way out of control.
#9 Insider trading is perfectly legal for members of the U.S. Congress - and they refuse to pass a law that would change that.
#10 The percentage of millionaires in Congress is more than 50 times higher than the percentage of millionaires in the general population.
#11 U.S. Representative Darrell Issa is worth approximately 220 million dollars.  His wealth grew by approximately 37 percent from 2009 to 2010.
#12 The wealthiest member of Congress, U.S. Representative Michael McCaul, is worth approximately 294 million dollars.

Insider Trading by Nancy Pelosi - The appearance of impropriety is impropriety!!!

Judge Napolitano: Feds Fix Economic Numbers