We were warned when Sec Poulsen proclaimed our only export was financial services here in America!
We don't make anything anymore.
http://www.washingtonpost.com/wp-dyn/content/article/2009/03/11/AR2009031103218.html
"Manufacturing has become too global to permit the United States to revert to the level of manufacturing it had in the good old days of Keynes and Ike, but it would be a positive development if we had a capitalism that once again focused on making things rather than deals. In Germany, manufacturing still dominates finance, which is why Germany has been the world's leader in exports. German capitalism didn't succumb to the financialization that swept the United States and Britain in the 1980s, in part because its companies raise their capital, as ours used to, from retained earnings and banks rather than the markets. Company managers set long-term policies while market pressures for short-term profits are held in check. The focus on long-term performance over short-term gain is reinforced by Germany's stakeholder, rather than shareholder, model of capitalism: Worker representatives sit on boards of directors, unionization remains high, income distribution is more equitable, social benefits are generous. Nonetheless, German companies are among the world's most competitive in their financial viability and the quality of their products. Yes, Germany's export-fueled economy is imperiled by the global collapse in consumption, but its form of capitalism has proved more sustainable than Wall Street's.
So does Germany offer a model for the United States? Yes -- up to a point. Certainly, U.S. ratios of production to consumption and wealth creation to debt creation have gotten dangerously out of whack. Certainly, the one driver and beneficiary of this epochal change -- our financial sector -- has to be scaled back and regulated (if not taken out and shot). Similarly, to create a business culture attuned more to investment than speculation, and with a preferential option for the United States, corporations should be made legally answerable not just to shareholders but also to stakeholders -- their employees and community. That would require, among other things, changing the laws governing the composition of corporate boards."
Thursday, March 12, 2009
Earmarks...let's take a look
FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2006 FY 2006 FY 2006
Earmarks Earmarks Earmarks Earmarks Earmarks R&D Earmarks^ R&D
Defense (military)
336 426 825 1,029 563 73,633
(Army)
120 152 318 322 272 10,821
(Navy)
68 111 178 247 112 18,485
(Air Force)
43 41 134 142 67 22,652
(Defense Agencies)
90 71 127 246 98 19,579
(Other)
13 52 69 72 14 2,097
National Aeron. & Space Admin.
233 190 194 217 50 11,542 50 11,464
Energy
171 138 284 274 167 8,576 318 8,882
(Science programs)
72 50 95 78 35 3,385 49 3,379
(Energy programs)
65 36 114 122 103 1,205 202 1,372
(Defense programs)
35 52 74 73 30 3,986 68 4,131
Health and Human Services
31 62 97 82 5 29,050 4 29,961
(National Institutes of Health)
0 0 0 0 0 27,922 0 28,804
National Science Foundation
50 50 0 0 0 4,163 0 4,124
(Major Research Equipment)
50 50 0 0 0 193 0 193
Agriculture
369 297 220 239 183 2,223 293 2,373
(Agricultural Res. Service)
257 166 86 76 60 1,141 146 1,289
(CSREES)
107 129 125 148 123 624 138 625
(Forest Service)
5 3 8 12 0 329 7 323
Interior
* 14 18 23 12 12 620 12 620
(U.S. Geological Survey)
* 14 11 20 10 10 555 10 555
Transportation
63 54 59 45 0 727 22 742
Environ. Protection Agency
* 62 53 56 51 33 579 33 579
Commerce
72 136 122 109 4 911 198 1,384
(NOAA)
31 107 97 109 4 501 198 693
(NIST)
42 29 26 0 0 379 0 648
Homeland Security
0 0 0 0 0 1,259 0 1,266
Education
0 1 0 3 0 261 0 262
Agency for Int'l Development
4 4 4 4 0 225 4 240
Department of Veterans Affairs
0 0 0 0 0 786 0 805
Housing and Urban Development
30 11 15 5 5 32 5 48
Department of Justice
29 3 0 0 0 82 0 93
All Other
5 2 5 11 0 339 11 357
_____ _____ _____ _____ _____ _____ _____ _____
Total 1,470 1,444 1,906 2,080 1,023 135,007 951 63,199
Earmarks Earmarks Earmarks Earmarks Earmarks R&D Earmarks^ R&D
Defense (military)
336 426 825 1,029 563 73,633
(Army)
120 152 318 322 272 10,821
(Navy)
68 111 178 247 112 18,485
(Air Force)
43 41 134 142 67 22,652
(Defense Agencies)
90 71 127 246 98 19,579
(Other)
13 52 69 72 14 2,097
National Aeron. & Space Admin.
233 190 194 217 50 11,542 50 11,464
Energy
171 138 284 274 167 8,576 318 8,882
(Science programs)
72 50 95 78 35 3,385 49 3,379
(Energy programs)
65 36 114 122 103 1,205 202 1,372
(Defense programs)
35 52 74 73 30 3,986 68 4,131
Health and Human Services
31 62 97 82 5 29,050 4 29,961
(National Institutes of Health)
0 0 0 0 0 27,922 0 28,804
National Science Foundation
50 50 0 0 0 4,163 0 4,124
(Major Research Equipment)
50 50 0 0 0 193 0 193
Agriculture
369 297 220 239 183 2,223 293 2,373
(Agricultural Res. Service)
257 166 86 76 60 1,141 146 1,289
(CSREES)
107 129 125 148 123 624 138 625
(Forest Service)
5 3 8 12 0 329 7 323
Interior
* 14 18 23 12 12 620 12 620
(U.S. Geological Survey)
* 14 11 20 10 10 555 10 555
Transportation
63 54 59 45 0 727 22 742
Environ. Protection Agency
* 62 53 56 51 33 579 33 579
Commerce
72 136 122 109 4 911 198 1,384
(NOAA)
31 107 97 109 4 501 198 693
(NIST)
42 29 26 0 0 379 0 648
Homeland Security
0 0 0 0 0 1,259 0 1,266
Education
0 1 0 3 0 261 0 262
Agency for Int'l Development
4 4 4 4 0 225 4 240
Department of Veterans Affairs
0 0 0 0 0 786 0 805
Housing and Urban Development
30 11 15 5 5 32 5 48
Department of Justice
29 3 0 0 0 82 0 93
All Other
5 2 5 11 0 339 11 357
_____ _____ _____ _____ _____ _____ _____ _____
Total 1,470 1,444 1,906 2,080 1,023 135,007 951 63,199
Friday, March 6, 2009
FutureGen --"clean coal" research project
"We all know what this is about. It's an earmark for a single plant," said Sen. Tom Coburn (R-Okla.)
"After Bush rolled out FutureGen in 2003, ..."
...battle over FutureGen accelerated about a year ago when the Bush administration blocked the project hours after Mattoon was chosen over two towns in President George W. Bush's home state of Texas.
In December 2007, the alliance announced its choice of Mattoon, a community of 17,000 people, 190 miles south of Chicago, that had the strongest local support and a geological edge: Beneath the site is a natural sandstone formation that could serve as an ideal trap to keep carbon dioxide emissions stored underground.
But in the weeks after that announcement, the Bush administration began moving behind the scenes to stop the project, even while promoting it publicly.
The reasons behind the Bush administration's decision to kill the plant are the subject of two year-long probes -- one by the Government Accountability Office and another by a congressional committee -- that will be released this month.
THE STIMULUS
New Life for 'Clean Coal' Project
Illinois Plant Was Abandoned by Bush; Now Its Backers Are in Power
By Kimberly Kindy
Washington Post Staff Writer
Friday, March 6, 2009; Page A01
Deep inside the economic stimulus package is a $1 billion prize that, in five short words, shows the benefits of being in power in Washington.
The funding, for "fossil energy research and development," is likely to go to a power plant in a small Illinois town, a project whose longtime backers include a group of powerful lawmakers from the state, among them President Obama.
They were unable to prevent the "clean coal" research project known as FutureGen from being abruptly killed last year by the Bush administration, which had created it and promoted it across the world as an environmentally sound way to produce power.
But now those same Illinois legislators -- including Rahm Emanuel, now White House chief of staff, and Ray LaHood, now transportation secretary -- control the White House and hold key leadership positions in Washington, and FutureGen is on the verge of resurrection.
Energy Secretary Steven Chu said yesterday that he would support the plant with "some modifications."
"I have to say, there are many, many good things about it," Chu said after testifying before a Senate committee.
If FutureGen lived up to its promises, it would revolutionize the use of coal. On what is now 400 acres of cornfields in Mattoon, Ill., backers plan to build a commercial-size power plant that would produce 275 megawatts of electricity, enough to power 150,000 homes. Instead of releasing the resulting carbon dioxide emissions into the air as pollution, however, the plant would pump them into deep geologic formations thousands of feet below Earth's surface.
The project's goal is to test and develop affordable technology, on a commercial scale, that can remove 90 percent of emissions produced by coal plants. Chu said he thinks that the plant -- which would be built with a group of private coal and utility companies known as the FutureGen Alliance -- will move forward with some changes that have not yet been determined and will become a part of larger "portfolio" of research plants developed with other countries.
The FutureGen plant is expected to create jobs, and backers are currently pushing it as a stimulus project that could employ as many as 11,000 workers. The alliance must compete for the stimulus funds, but Chu's support adds significant momentum to the effort.
FutureGen's destiny is being decided as the debate over clean coal technology takes center stage in Washington, drawing big money in lobbying fees and campaign contributions. More than $20 million has been spent to hire lobbying firms that have petitioned members of Congress on FutureGen and other clean coal issues, according to a Washington Post analysis. And employees of the energy companies in the FutureGen Alliance have donated $3 million to congressional and presidential candidates.
The battle over FutureGen accelerated about a year ago when the Bush administration blocked the project hours after Mattoon was chosen over two towns in President George W. Bush's home state of Texas. The Illinois delegation responded with a bitter, bare-knuckle fight to save the plant. Without any assurance that their efforts would pay off, backers in Illinois spent tens of millions of dollars to buy land and have the project "shovel ready" -- before there was ever talk of a stimulus bill.
Senate Majority Whip Richard J. Durbin (D), who led the Illinois delegation's efforts, worked the system, blocking some Bush administration appointments and holding hearings to publicly vilify the officials who stood in his way.
"This has been my longest, most difficult battle in Congress," Durbin said.
The fight got a lot easier after Obama was elected. Within weeks, his transition team met with FutureGen's industry partners. In January, when Obama announced his plans for an economic stimulus bill, Durbin and other members of the Illinois delegation quickly crafted a $2 billion line item to fund a "near zero-emissions power plant(s)," and Sen. Byron L. Dorgan (D-N.D.) placed it in the Senate version of the legislation.
Republicans in both chambers pointed out that only one shovel-ready project in the country met the criteria spelled out in the bill: the FutureGen plant in Mattoon.
"We all know what this is about. It's an earmark for a single plant," said Sen. Tom Coburn (R-Okla.), who railed against the item, securing support to keep it out of the House bill. Coburn labeled it "pork," placing it at the top of his government-waste list, which is emblazoned with the image of a pig.
The $2 billion in the Senate bill was zeroed out by the joint House-Senate conference committee that met to resolve differences in the chambers' two bills. In a compromise that Durbin helped craft, the final version of the legislation cut the funding to $1 billion and specified that it go to "fossil energy research and development." The new language still described the project but deflected mounting criticism by opening the door to other proposals.
When the Bush administration moved to kill FutureGen, officials cited its cost, with estimates rising from $1 billion to $1.8 billion as it approached construction. They also objected to a cost-sharing arrangement with industry that required the government to pay for more than two-thirds of the project.
"The likelihood that it would fail, leaving the American people with hundreds of millions of dollars in sunk cost and none of the benefits, is not acceptable," then-Energy Secretary Samuel W. Bodman said in a Feb. 6, 2008, letter to the editor in the St. Louis Post-Dispatch. Bodman declined to comment for this article.
After Bush rolled out FutureGen in 2003, coal mining unions and coal states immediately started leveraging to host the plant. Among the most aggressive was Illinois. Then-Gov. Rod Blagojevich (D) formed the FutureGen for Illinois Task Force, which included the state's entire congressional delegation. He paid D.C. lobbying giant Cassidy and Associates more than $460,000 to help land the plant.
In July 2006, it was clear that the strategy was paying off when the FutureGen Alliance announced the four site finalists -- two in Illinois and two in Texas.
Over the coming months, Illinois further ginned up its self-promotion. The towns of Tuscola and Mattoon held a joint rally at a high school where a man dressed as Santa Claus passed out pieces of coal to cheering residents, politicians and schoolchildren.
In December 2007, the alliance announced its choice of Mattoon, a community of 17,000 people, 190 miles south of Chicago, that had the strongest local support and a geological edge: Beneath the site is a natural sandstone formation that could serve as an ideal trap to keep carbon dioxide emissions stored underground.
But in the weeks after that announcement, the Bush administration began moving behind the scenes to stop the project, even while promoting it publicly.
The reasons behind the Bush administration's decision to kill the plant are the subject of two year-long probes -- one by the Government Accountability Office and another by a congressional committee -- that will be released this month.
Internal department e-mails and memos show that Bodman directed his staff to develop an alternative plan, exploring whether to scrap the large plant and replace it with five or six smaller plants to test pieces of the same technology. The e-mails show that staff members were skeptical of the new plan, dubbed "FutureGen Plan B," which would call on the industry to pay a higher share of the cost.
"New money riding in to save the day seems unlikely," said one e-mail. Staff members described the new plan as unworkable and came up with their own name for it -- "the Frankenstein."
Incensed by what he viewed as duplicity on the part of the Bush administration, Durbin began making frequent calls to Bodman's office, records show, and quickly organized a campaign to keep the plant alive. He aligned 19 other members of Congress to join him in late December 2007, first by signing a protest letter to Bodman, then by gathering fellow lawmakers to confront the energy secretary.
The meeting in Durbin's office quickly became heated, as Bodman told lawmakers for the first time that the plant in Mattoon was dead.
"This is a meeting unlike any meeting I've been a part of. Members of Congress are literally screaming and waving their fists at the secretary," said someone in attendance, who spoke on the condition of anonymity because of the ongoing debate over FutureGen.
"We won this competition fair and square," Durbin said. "I told Bodman point-blank, 'We are going to keep this alive for the next president.' "
The next day, Bodman went public with his decision to replace the FutureGen project with multiple smaller plants. Obama and the rest of the Illinois delegation wrote to Bush, charging that the secretary had "misled us and the people of Illinois, creating false hope in a FutureGen project which he had no intention of funding or supporting."
The group organized three congressional hearings in the spring, challenging Bodman to explain his decision. In July, the Senate Appropriations Committee voted to protect $134 million in funding for FutureGen in Mattoon, prohibiting the Energy Department from spending it on anything else.
Still, Bodman moved forward with Plan B, hoping to set the new plan in motion before the next administration was in place. But just four sites submitted proposals; two did not qualify and two others were incomplete, according to lawmakers and former department staffers.
Last week, Durbin and the delegation persuaded Congress to lift a freeze on $73 million of the money set aside in July, directing Chu to use it for the project if it is revived. The same day, the delegation sent Chu a letter, arguing that the plant in Mattoon should get the stimulus money because it is "five years ahead of any comparable project. . . . We cannot further delay on this promising technology."
Research editor Alice Crites contributed to this report.
"After Bush rolled out FutureGen in 2003, ..."
...battle over FutureGen accelerated about a year ago when the Bush administration blocked the project hours after Mattoon was chosen over two towns in President George W. Bush's home state of Texas.
In December 2007, the alliance announced its choice of Mattoon, a community of 17,000 people, 190 miles south of Chicago, that had the strongest local support and a geological edge: Beneath the site is a natural sandstone formation that could serve as an ideal trap to keep carbon dioxide emissions stored underground.
But in the weeks after that announcement, the Bush administration began moving behind the scenes to stop the project, even while promoting it publicly.
The reasons behind the Bush administration's decision to kill the plant are the subject of two year-long probes -- one by the Government Accountability Office and another by a congressional committee -- that will be released this month.
THE STIMULUS
New Life for 'Clean Coal' Project
Illinois Plant Was Abandoned by Bush; Now Its Backers Are in Power
By Kimberly Kindy
Washington Post Staff Writer
Friday, March 6, 2009; Page A01
Deep inside the economic stimulus package is a $1 billion prize that, in five short words, shows the benefits of being in power in Washington.
The funding, for "fossil energy research and development," is likely to go to a power plant in a small Illinois town, a project whose longtime backers include a group of powerful lawmakers from the state, among them President Obama.
They were unable to prevent the "clean coal" research project known as FutureGen from being abruptly killed last year by the Bush administration, which had created it and promoted it across the world as an environmentally sound way to produce power.
But now those same Illinois legislators -- including Rahm Emanuel, now White House chief of staff, and Ray LaHood, now transportation secretary -- control the White House and hold key leadership positions in Washington, and FutureGen is on the verge of resurrection.
Energy Secretary Steven Chu said yesterday that he would support the plant with "some modifications."
"I have to say, there are many, many good things about it," Chu said after testifying before a Senate committee.
If FutureGen lived up to its promises, it would revolutionize the use of coal. On what is now 400 acres of cornfields in Mattoon, Ill., backers plan to build a commercial-size power plant that would produce 275 megawatts of electricity, enough to power 150,000 homes. Instead of releasing the resulting carbon dioxide emissions into the air as pollution, however, the plant would pump them into deep geologic formations thousands of feet below Earth's surface.
The project's goal is to test and develop affordable technology, on a commercial scale, that can remove 90 percent of emissions produced by coal plants. Chu said he thinks that the plant -- which would be built with a group of private coal and utility companies known as the FutureGen Alliance -- will move forward with some changes that have not yet been determined and will become a part of larger "portfolio" of research plants developed with other countries.
The FutureGen plant is expected to create jobs, and backers are currently pushing it as a stimulus project that could employ as many as 11,000 workers. The alliance must compete for the stimulus funds, but Chu's support adds significant momentum to the effort.
FutureGen's destiny is being decided as the debate over clean coal technology takes center stage in Washington, drawing big money in lobbying fees and campaign contributions. More than $20 million has been spent to hire lobbying firms that have petitioned members of Congress on FutureGen and other clean coal issues, according to a Washington Post analysis. And employees of the energy companies in the FutureGen Alliance have donated $3 million to congressional and presidential candidates.
The battle over FutureGen accelerated about a year ago when the Bush administration blocked the project hours after Mattoon was chosen over two towns in President George W. Bush's home state of Texas. The Illinois delegation responded with a bitter, bare-knuckle fight to save the plant. Without any assurance that their efforts would pay off, backers in Illinois spent tens of millions of dollars to buy land and have the project "shovel ready" -- before there was ever talk of a stimulus bill.
Senate Majority Whip Richard J. Durbin (D), who led the Illinois delegation's efforts, worked the system, blocking some Bush administration appointments and holding hearings to publicly vilify the officials who stood in his way.
"This has been my longest, most difficult battle in Congress," Durbin said.
The fight got a lot easier after Obama was elected. Within weeks, his transition team met with FutureGen's industry partners. In January, when Obama announced his plans for an economic stimulus bill, Durbin and other members of the Illinois delegation quickly crafted a $2 billion line item to fund a "near zero-emissions power plant(s)," and Sen. Byron L. Dorgan (D-N.D.) placed it in the Senate version of the legislation.
Republicans in both chambers pointed out that only one shovel-ready project in the country met the criteria spelled out in the bill: the FutureGen plant in Mattoon.
"We all know what this is about. It's an earmark for a single plant," said Sen. Tom Coburn (R-Okla.), who railed against the item, securing support to keep it out of the House bill. Coburn labeled it "pork," placing it at the top of his government-waste list, which is emblazoned with the image of a pig.
The $2 billion in the Senate bill was zeroed out by the joint House-Senate conference committee that met to resolve differences in the chambers' two bills. In a compromise that Durbin helped craft, the final version of the legislation cut the funding to $1 billion and specified that it go to "fossil energy research and development." The new language still described the project but deflected mounting criticism by opening the door to other proposals.
When the Bush administration moved to kill FutureGen, officials cited its cost, with estimates rising from $1 billion to $1.8 billion as it approached construction. They also objected to a cost-sharing arrangement with industry that required the government to pay for more than two-thirds of the project.
"The likelihood that it would fail, leaving the American people with hundreds of millions of dollars in sunk cost and none of the benefits, is not acceptable," then-Energy Secretary Samuel W. Bodman said in a Feb. 6, 2008, letter to the editor in the St. Louis Post-Dispatch. Bodman declined to comment for this article.
After Bush rolled out FutureGen in 2003, coal mining unions and coal states immediately started leveraging to host the plant. Among the most aggressive was Illinois. Then-Gov. Rod Blagojevich (D) formed the FutureGen for Illinois Task Force, which included the state's entire congressional delegation. He paid D.C. lobbying giant Cassidy and Associates more than $460,000 to help land the plant.
In July 2006, it was clear that the strategy was paying off when the FutureGen Alliance announced the four site finalists -- two in Illinois and two in Texas.
Over the coming months, Illinois further ginned up its self-promotion. The towns of Tuscola and Mattoon held a joint rally at a high school where a man dressed as Santa Claus passed out pieces of coal to cheering residents, politicians and schoolchildren.
In December 2007, the alliance announced its choice of Mattoon, a community of 17,000 people, 190 miles south of Chicago, that had the strongest local support and a geological edge: Beneath the site is a natural sandstone formation that could serve as an ideal trap to keep carbon dioxide emissions stored underground.
But in the weeks after that announcement, the Bush administration began moving behind the scenes to stop the project, even while promoting it publicly.
The reasons behind the Bush administration's decision to kill the plant are the subject of two year-long probes -- one by the Government Accountability Office and another by a congressional committee -- that will be released this month.
Internal department e-mails and memos show that Bodman directed his staff to develop an alternative plan, exploring whether to scrap the large plant and replace it with five or six smaller plants to test pieces of the same technology. The e-mails show that staff members were skeptical of the new plan, dubbed "FutureGen Plan B," which would call on the industry to pay a higher share of the cost.
"New money riding in to save the day seems unlikely," said one e-mail. Staff members described the new plan as unworkable and came up with their own name for it -- "the Frankenstein."
Incensed by what he viewed as duplicity on the part of the Bush administration, Durbin began making frequent calls to Bodman's office, records show, and quickly organized a campaign to keep the plant alive. He aligned 19 other members of Congress to join him in late December 2007, first by signing a protest letter to Bodman, then by gathering fellow lawmakers to confront the energy secretary.
The meeting in Durbin's office quickly became heated, as Bodman told lawmakers for the first time that the plant in Mattoon was dead.
"This is a meeting unlike any meeting I've been a part of. Members of Congress are literally screaming and waving their fists at the secretary," said someone in attendance, who spoke on the condition of anonymity because of the ongoing debate over FutureGen.
"We won this competition fair and square," Durbin said. "I told Bodman point-blank, 'We are going to keep this alive for the next president.' "
The next day, Bodman went public with his decision to replace the FutureGen project with multiple smaller plants. Obama and the rest of the Illinois delegation wrote to Bush, charging that the secretary had "misled us and the people of Illinois, creating false hope in a FutureGen project which he had no intention of funding or supporting."
The group organized three congressional hearings in the spring, challenging Bodman to explain his decision. In July, the Senate Appropriations Committee voted to protect $134 million in funding for FutureGen in Mattoon, prohibiting the Energy Department from spending it on anything else.
Still, Bodman moved forward with Plan B, hoping to set the new plan in motion before the next administration was in place. But just four sites submitted proposals; two did not qualify and two others were incomplete, according to lawmakers and former department staffers.
Last week, Durbin and the delegation persuaded Congress to lift a freeze on $73 million of the money set aside in July, directing Chu to use it for the project if it is revived. The same day, the delegation sent Chu a letter, arguing that the plant in Mattoon should get the stimulus money because it is "five years ahead of any comparable project. . . . We cannot further delay on this promising technology."
Research editor Alice Crites contributed to this report.
Wednesday, March 4, 2009
“When are consumers going to stop getting the short end in this bailout?
Credit card firms back in hot seatBy VICTORIA MCGRANE & LISA LERER | 3/4/09 4:13 AM EST
Longtime supporters of credit card reform have a new weapon in their rhetorical arsenal: the $700 billion Wall Street bailout.
“The big banks got billions of our tax dollars to rescue them from their own financial mess. Now they turn around and hit us with higher interest rates and fees on our credit cards,” read a recent alert from the Consumers Union, the publisher of Consumer Reports.
Indeed, a coalition of consumer advocates believes the time is right for cracking down on high credit card fees, abusive practices and loose regulations in the credit card industry.
“When are consumers going to stop getting the short end in this bailout? Chase, Citibank, HSBC, Capitol One and others recently hiked interest rates, with the average card rate now about 14 percent. Meanwhile, the banks are paying as little as 0 percent for overnight loans. Unbelievable,” the alert declared before prompting the reader to tell Congress to pass credit card legislation.
Consumer advocates and some Democrats have pushed for tighter credit card regulations for more than a decade, but they could not overcome resistance from card issuers, banks and financial services firms. Last year, a credit card bill sponsored by Rep. Carolyn Maloney (D-N.Y.) passed the House but died in the Senate. And in a January 2007 hearing, Senate Banking Committee Chairman Chris Dodd (D-Conn.) put the industry “on notice,” warning card issuers to halt abusive practices.
Now, in the wake of the financial crisis, advocates believe a major credit card bill has become almost inevitable.
“Critical mass for credit card reform is definitely at its highest level ever,” said Travis Plunkett, legislative director of the Consumer Federation of America. Credit card legislation has been introduced in both the House and the Senate already this year.
Credit card defaults have risen over the past year as strapped consumers struggle to make their payments. Some lawmakers see a parallel between abusive credit card fees and the predatory mortgage lending that contributed to the subprime crisis. Now, public and congressional anger at Wall Street is clearly coloring lawmakers’ attitudes toward credit card lenders as well.
A co-sponsor of the House bill, Rep. Maxine Waters (D-Calif.) assailed CEOs of major banks for raising interest rates on consumers after accepting billions in taxpayer-funded bailouts during a Feb. 12 hearing.
Addressing the eight Wall Street CEOs as “captains of the universe,” she demanded to know which of them had notified credit cardholders of increased rates. Bank of America CEO Ken Lewis said his company has raised rates on 9 percent of its customers. Two other CEOs also raised their hands in the affirmative, including the head of embattled Citigroup, which recently reached a new deal with Treasury to give the federal government control of about 36 percent of the company.
Dodd did not make this specific criticism when he introduced his own credit card legislation the same day as the CEO hearing in the House, but he believes the timing is right for credit card reform.
“Families in Connecticut and across the country are struggling to make ends meet as layoffs continue, home values plunge and lines of credit are cut or canceled,” Dodd said. “The last thing they need is further financial hardship brought on by abusive credit card practices. These practices are wrong, they’re unfair, and they must end.”
“At a time when Americans are becoming increasingly reliant on credit cards, credit card companies are being more aggressive about finding ways to charge their customers,” he said.
In the House, Maloney reintroduced The Credit Cardholders’ Bill of Rights. Her bill is sponsored in the Senate by Democrats Charles Schumer of New York and Mark Udall of Colorado. Lobbyists and advocates are also closely watching Dodd’s bill. Both bills would prohibit arbitrary interest rate increases and excessive fees.
There’s been action on the regulatory side as well. In December, the Federal Reserve passed the strongest credit card rules in decades, banning certain practices that rapidly increase penalties. The new rules also forced credit card companies to be clearer about their billing practices.
The Fed rules won’t take effect until mid-2010. That’s far too late for struggling cardholders facing default now, say consumer advocates arguing for even stricter legislation.
Banks say they are currently working to implement the new Federal Reserve rules, which they believe address most if not all of lawmakers’ concerns about credit card practices.
The lenders also warn that tougher action by Congress might backfire and force lenders to tighten credit just when consumers need it most.
“There is a serious risk that such actions could end up hurting the very people they’re trying to help because it limits the ability of card companies to lend to consumers and small businesses at the very time they can least afford it,” said Ken Clayton, managing director of credit card policy for the American Bankers Association. The trade association is leading the industry’s efforts on the credit card issue.
The bad economic environment has driven up the cost of credit card lending, despite what the Federal Reserve has done, Clayton argues.
Rising delinquencies and unemployment rates mean that fewer people are paying their bills. Moreover, investors are shying away from the secondary market for asset-backed securities — which funds 50 percent of credit card lending, he said. Lenders have been forced to turn to more expensive sources to fund lending, further driving up the cost of that credit.
The Treasury’s program to address this dynamic for credit cards, known as the Term Asset-Backed Securities Loan Facility, was just announced Tuesday. The program’s goal is to help lower the cost of credit for consumers by providing investors with financing to help them purchase certain asset-backed securities.
Lawmakers should allow the program time to work, Clayton said.
“They have to be worried that if they do something that spooks investors, it will just perpetuate the problem that they and the Federal Reserve and the Treasury Department are trying to get at.”
Longtime supporters of credit card reform have a new weapon in their rhetorical arsenal: the $700 billion Wall Street bailout.
“The big banks got billions of our tax dollars to rescue them from their own financial mess. Now they turn around and hit us with higher interest rates and fees on our credit cards,” read a recent alert from the Consumers Union, the publisher of Consumer Reports.
Indeed, a coalition of consumer advocates believes the time is right for cracking down on high credit card fees, abusive practices and loose regulations in the credit card industry.
“When are consumers going to stop getting the short end in this bailout? Chase, Citibank, HSBC, Capitol One and others recently hiked interest rates, with the average card rate now about 14 percent. Meanwhile, the banks are paying as little as 0 percent for overnight loans. Unbelievable,” the alert declared before prompting the reader to tell Congress to pass credit card legislation.
Consumer advocates and some Democrats have pushed for tighter credit card regulations for more than a decade, but they could not overcome resistance from card issuers, banks and financial services firms. Last year, a credit card bill sponsored by Rep. Carolyn Maloney (D-N.Y.) passed the House but died in the Senate. And in a January 2007 hearing, Senate Banking Committee Chairman Chris Dodd (D-Conn.) put the industry “on notice,” warning card issuers to halt abusive practices.
Now, in the wake of the financial crisis, advocates believe a major credit card bill has become almost inevitable.
“Critical mass for credit card reform is definitely at its highest level ever,” said Travis Plunkett, legislative director of the Consumer Federation of America. Credit card legislation has been introduced in both the House and the Senate already this year.
Credit card defaults have risen over the past year as strapped consumers struggle to make their payments. Some lawmakers see a parallel between abusive credit card fees and the predatory mortgage lending that contributed to the subprime crisis. Now, public and congressional anger at Wall Street is clearly coloring lawmakers’ attitudes toward credit card lenders as well.
A co-sponsor of the House bill, Rep. Maxine Waters (D-Calif.) assailed CEOs of major banks for raising interest rates on consumers after accepting billions in taxpayer-funded bailouts during a Feb. 12 hearing.
Addressing the eight Wall Street CEOs as “captains of the universe,” she demanded to know which of them had notified credit cardholders of increased rates. Bank of America CEO Ken Lewis said his company has raised rates on 9 percent of its customers. Two other CEOs also raised their hands in the affirmative, including the head of embattled Citigroup, which recently reached a new deal with Treasury to give the federal government control of about 36 percent of the company.
Dodd did not make this specific criticism when he introduced his own credit card legislation the same day as the CEO hearing in the House, but he believes the timing is right for credit card reform.
“Families in Connecticut and across the country are struggling to make ends meet as layoffs continue, home values plunge and lines of credit are cut or canceled,” Dodd said. “The last thing they need is further financial hardship brought on by abusive credit card practices. These practices are wrong, they’re unfair, and they must end.”
“At a time when Americans are becoming increasingly reliant on credit cards, credit card companies are being more aggressive about finding ways to charge their customers,” he said.
In the House, Maloney reintroduced The Credit Cardholders’ Bill of Rights. Her bill is sponsored in the Senate by Democrats Charles Schumer of New York and Mark Udall of Colorado. Lobbyists and advocates are also closely watching Dodd’s bill. Both bills would prohibit arbitrary interest rate increases and excessive fees.
There’s been action on the regulatory side as well. In December, the Federal Reserve passed the strongest credit card rules in decades, banning certain practices that rapidly increase penalties. The new rules also forced credit card companies to be clearer about their billing practices.
The Fed rules won’t take effect until mid-2010. That’s far too late for struggling cardholders facing default now, say consumer advocates arguing for even stricter legislation.
Banks say they are currently working to implement the new Federal Reserve rules, which they believe address most if not all of lawmakers’ concerns about credit card practices.
The lenders also warn that tougher action by Congress might backfire and force lenders to tighten credit just when consumers need it most.
“There is a serious risk that such actions could end up hurting the very people they’re trying to help because it limits the ability of card companies to lend to consumers and small businesses at the very time they can least afford it,” said Ken Clayton, managing director of credit card policy for the American Bankers Association. The trade association is leading the industry’s efforts on the credit card issue.
The bad economic environment has driven up the cost of credit card lending, despite what the Federal Reserve has done, Clayton argues.
Rising delinquencies and unemployment rates mean that fewer people are paying their bills. Moreover, investors are shying away from the secondary market for asset-backed securities — which funds 50 percent of credit card lending, he said. Lenders have been forced to turn to more expensive sources to fund lending, further driving up the cost of that credit.
The Treasury’s program to address this dynamic for credit cards, known as the Term Asset-Backed Securities Loan Facility, was just announced Tuesday. The program’s goal is to help lower the cost of credit for consumers by providing investors with financing to help them purchase certain asset-backed securities.
Lawmakers should allow the program time to work, Clayton said.
“They have to be worried that if they do something that spooks investors, it will just perpetuate the problem that they and the Federal Reserve and the Treasury Department are trying to get at.”
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