Nevertheless, what motivates me is the idea that people can have better lives.  Our economy at large could be vastly improved if banks were the personal and business account “relationship partners,” that they claim to be.  Jimmy Stewart was not that far off the mark in “It’s a Wonderful Life,” in other words.  Financial capital plays an important role (though it is given more credit than it deserves, i.e., social capital is critical also) in entrepreneurship, and we certainly need more small business start-ups, a healthier small business environment (growth), and more jobs would be the result.

We’ve got major problems, and one of them is that a lot of the creative thinking and innovation going on in the banking industry is associated with finding new ways to take money from small business accounts and consumers.  Much of the furor has died down, but at the height of the bailouts, banks were giving out bonuses while at the same time changing terms so fast that they lost the trust of millions.  I have not forgotten my own personal experiences, but suffice it to say that were I to be presented with a marketing research (brand identity) question, “Among large national banks, which one or ones would you trust with your credit card processing account [auto loan, personal or business checking account, credit card account, any type of account]?,” I could name many of the top brands, but I could not say that I trusted a single one.  Since I think that my sentiments above are consistent with those of millions of other small business and consumer account holders, I think that’s a pretty fair indication that our banking system is broken.  There’s not much about dealing with banks that’s “wonderful.”

Unfortunately, I think millions of hard-working Americans would have the very same lack of trust for the lawmakers and regulators that govern them generally, and as it pertains to creating an environment that is conducive to growth and prosperity (including the regulatory environment for banks).  Let me take and reword the first sentence in the paragraph above to further illustrate my point:  We’ve got major problems, and one of them is that a lot of the creative thinking and innovation going on among lawmakers at the federal, state, and local levels, is associated with finding new ways to take money from ALL businesses and citizens.  (Presently, the aim seems to be for purposes of redistribution to recipients who take more than they are willing to give back to society.)  Since I think that my sentiments above are consistent with those of millions of other small businesses of all size and consumer account holders taxpaying citizens (those who are paying for the upkeep of persons who are not paying or planning to pay as long as they can “get free government money”), I think that’s a pretty fair indication that our banking system government is broken.

I wrote a while back offering some thoughts about how we could made great strides towards fixing the housing market.  I have more ideas, although I don’t proclaim to be an economist, about other aspects of our economic mess.  All of the economic advisers, the FED, TV talking heads, and others who endlessly pontificate haven’t seemed to come up a way to “fix this mess,” so I have no choice but to think about issues and the economy myself!  For instance, remember when we were bailing out GM?  We could have instead placed a purchase order for government vehicles with demands for curb-jumping innovation such that they were super-energy efficient (or at least no gasoline burners).

A distant colleague of mine asked me what I thought of a Ford Fiesta a couple of years ago, and I really didn’t know much about them (other than I haven’t had a great track record with Fords, my most recent, a Ranger truck, needed a head replacement for “no good reason,” and despite excellent maintenance–that’s a long story).  I did a little research online at the time, and I found out that there are other versions of the Fiesta around the world that get 65 mpg that are not available here in the U.S. (they run on diesel, and the tax rate on diesel impedes the feasibility of selling the cars here — so a double whammy: taxes prohibiting fuel efficiency and innovation).  Instead of bailout money, we could have invested in that technology or even better technology.  I know, it’s widely believed that Ford didn’t take bailout money (but there is a back-story).  The point I’m making, however, is not car-brand specific.  Rather, instead of bailout money the government could have issued purchase orders directly and created powerful incentives for consumer purchasing of very high-efficiency vehicles that a lot of people could really use right now in light of being fleeced at the pump on a regular basis.  This would have been easier than a moon shot as better designs are already on the drawing boards.

Presently, we have one of the highest corporate tax rates in the world.  But at the same time we (according to political rhetoric) want businesses to start, flourish, and hire people.  Since businesses can’t do that, we have to ask ourselves a question: “Do we feel lucky?  Well do we?”  Suppose we elected people who were really creative and innovative, and they passed laws that would ensure that corporations paid low taxes, or horrors, no taxes for a while, at least to jump-start the economy?  OMG, how could we afford that?  One way would be to stop spending billions on supporting people who can’t find jobs because businesses, rightfully so, are in no mood to hire.

By the way, a little accounting lesson for those who believe that corporations “eat the taxes” (so there’s no downside if they pay more):  Corporations pass on the taxes in the form of higher prices for their products and services, to you.

I’m almost out of time for today, but I would conclude by adding that with all of the arguing about middle class tax rates going up or down, taxing the “wealthy,” or not, focused on federal tax rates, people need to consider the embedded taxes and fees in everything we buy.  I just wrote three checks to my daughter’s public high school for courses that she is taking (course fees, I thought I already paid with my growing property tax bill, vehicle tax bill, sales tax bill, etc., Huh?).

Have you read your power company or phone company bill, your cable bill, your gasoline pump notice (about taxes on each gallon of gas)?  Did you know that government fees are another way of charging you, taxes?  Have you taken a taxi or flown on an airline (taxes and fees are really loaded up in those fares)?  Indeed, the bookkeeping and collection costs for all of the taxes and fees are so numerous and bloated (redundant), that there is huge waste in the thousands of little decentralized systems located everywhere in the United States, aimed at collecting a few pennies, dollars, or thousands of dollars, from each and every person or business.  No wonder we’re broke, our systems are very poorly designed such that there’s less and less efficiency.

Things could be far more “wonderful.”  We could change all of this, but we’re going to need to work together and be more creative.  The really wonderful news, is that I know we can do it.

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“Among other things, the FDIC found that Higher One and The Bancorp Bank were: charging student account holders multiple nonsufficient fund (NSF) fees from a single merchant transaction; allowing these accounts to remain in overdrawn status over long periods of time, thus allowing NSF fees to continue accruing; and collecting the fees from subsequent deposits to the students’ accounts, typically funds for tuition and other college expenses.”

In a Bloomberg article, attribution was given to Mark Volchek, Higher One’s chief executive officer for saying the company “is fixing its practices as required in the settlement and has credited affected account holders.”  Isn’t that nice?  After a legal/regulatory action, forcing the company to give students their money (e.g., tuition refunds) back, Higher One is going to issue “restitution” to the approximately 60,000 students (FDIC) it was willing to trap in a circular pattern of being overdrawn, in which they continued “racking up fees” (Bloomberg).

One detail in the list of changes that are to be made on the part of Higher One’s practices stood out, to me: “[Higher One is required to] not charge more than three NSF fees on any single day to a single account.”  So, one merchant transaction leads to three NSF charges, a day…is that what they were doing?

In my role as an educator, I think I have developed a greater appreciation than I ever did in the past (before becoming an educator) for some of the challenges faced by academic institutions.  Nevertheless, I do assert that banks are very good at dreaming up new ways to engage in fleecing people, and the debit card phenomenon is one of them.  Debit cards have been sold to government officials, administrators and others in the public sector as a convenience.  But at what cost?  Students may have gotten their deposits faster (that’s a questionable claim–is an account holder really able to draw against deposits before those deposits have actually cleared?), however, they also had their money unfairly taken from them faster, and repeatedly, too.

From a search engine results page, I spent a few minutes perusing a few of the web pages that served as a partial inspiration for the title of this post; “partners” or “pushers”:

“HACC has partnered with Higher One“

Kentucky Community & Technical College System (KCTCS) proclaims “Smart Money Starts Here!” and promotes a $50.00 (MasterCard) gift card (link on bottom left):

“Simplify Your Life With The Valencia Debit Card“

University of Montana: “services that provide the ultimate convenience and ease of use“

Last I heard, statements like those above are called “benefit appeals” in marketing.  I suppose that if I had the time to drill down, I could assemble an exhaustive list of Higher One’s university clients (sounds like a good project for a member of the media: RESEARCH YOUR STORIES!).  According to this article, “Higher One holds card agreements with 830 campuses nationally that enroll 6.2 million students, according to testimony at a May Department of Education hearing by Higher One attorney Robert Barbieri.”  This is an excellent backgrounder on the larger issues surrounding campus debit card programs.

One remark about the PR “spin.”  You’ve gotta love it.  Volchek was also quoted by Bloomberg to suggest that the “relatively low civil money penalty imposed reflects how seriously we take our commitment to our customers.”  Since when have banks and their executives individually suffered large penalties or at all for engaging in their abusive practices?  Most settlements appear to me to be: “You got caught.  You have to stop doing that and give back what you took.”

Has anyone gone to jail over the mortgage meltdown?  At least according to this article in American Banker, nope, and it’s “unlikely” (that anyone will).  Apparently, as an executive it’s okay to create a culture of greed, corruption, fraud and abuse, as long as one does not personally fill out the paperwork that is associated with immoral or illegal behavior (executed by underlings).

So much for Higher One’s, “we must not be that guilty, look at the small fine,” excuse.

And, yes, even though I manage to make ends meet, it sure as heck isn’t getting any easier.  I still carry my own student loan (a big one that’s been a “ball and chain” around my neck, for years).  I have no appreciation whatsoever for those who profiteer on the backs of those of us who are trying to better ourselves and the world around us by seeking to educate or become better educated.  Therefore, in my opinion, Higher One’s actions are not a new low for the banking industry as a whole, but they have certainly been loathsome.

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I certainly appreciated the captured remarks and headline, “SunTrust CEO Calls JPMorgan a `Black Eye’ for Banks” in the video from Bloomberg embedded below (although in the end he is “politically correct as a member of the banker’s club” in commending Jamie Dimon for his handling of Chase’s trading loss debacle).

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While I mean no disrespect to the author of the petition letter, it does contain one sentence that I am afraid may fall upon deaf ears as it is intended to be sent to SunTrust’s CEO:

“Imagine losing your job or struggling with a low income, and on top of it being assessed a monthly fee taking away more precious funds.”

Unfortunately, I don’t think very many top banking executives are worried about their personal finances (stock options, bonuses, perks, “golden handcuffs”).  Yet the PR spin proclaiming , “poor, pitiful banks–regulations did this,” for the most part apparently unquestioned by the media, continues.  Meanwhile, look at Suntrust’s 10-K filed with the SEC February 24, 2012.  I found this statement on page 40 regarding SunTrust’s increased employee compensation expenses interesting (especially since I haven’t had a raise in four years while the price of cream cheese has risen from approximately 89 cents to $1.89):

“The $130 million, or 5%, increase in employee compensation expense related to higher compensation from improved business performance and increases in client-facing full-time equivalent employees.“

I also found in advancing through SunTrust’s “Regulatory Filings” numerous instances where a “Statement of changes in beneficial ownership of securities” was made, as depicted by the screenshot below.

Now, I can already guess that a retort, “this is taken out of context,” could be submitted if the above quote was found to be disagreeable by SunTrust or anyone else.  But then again, so are statements like: “Over the last few years, changing financial regulations have cut into the revenue of big banks like SunTrust,” and “The pricing changes reflect the costs of doing business” (the latter was attributed to a SunTrust spokesperson; here is a link to the Huffington Post article from which these two examples were taken).

I acknowledge that it is true, “higher compensation” for SunTrust employees does qualify as a “cost of doing business.”

Here’s another interesting tidbit, quoting an article found on Wall Street Journal’s MarketWatch site (Aug. 9, 2011): “[SunTrust’s board] approved a sharp increase to the company’s quarterly dividend, making it one of the latest companies to join a growing trend of corporations rewarding shareholders with cash.”

So, student checking account holders and others with small account balances, the lesson is, as an alternative to suffering and petitioning against SunTrust, you could change your strategy.  Become a SunTrust shareholder and then you can benefit when it triples its checking account balance requirement and/or imposes other fees that “reflect the costs of doing business.”

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I originally opened that checking account several years ago when SunTrust offered an employee program through a previous university employer.  I did use direct deposit for my payroll checks, for years, until SunTrust decided it wanted to convert the account, eliminate benefits that had been attractive, impose a $5 debit card fee, and otherwise come to a whole new arrangement.  As per the article link above, several banks were attempting the same thing, but consumer “fury” caused SunTrust to back down.

However, I made new arrangements, too.  I opened credit union accounts (checking, savings, kids’ accounts, a safe deposit box, et cetera).  I set-up everything I needed elsewhere, and my account relationship with SunTrust is now just a hollow shell.  At the time that I was opening the credit union accounts I had a conversation to the effect that “business was booming,” spurred on by change in terms notices, new fees, and the like, from traditional banks.  I couldn’t help but notice other differences in my “brand experience,” comparing SunTrust to the credit union.  With my SunTrust account I set-up an overdraft protection account by enduring a process that was not dissimilar from my point of view to a mortgage application.  The paperwork was astounding, I thought, at the time.  With the credit union, it was practically verbal by comparison, for an overdraft protection amount that was more than triple the size of the one at SunTrust.

SunTrust continues to send me (as a valued and long-term customer) various offers for a plethora of banking services.  But, there shall be no credit card, mortgage, investment, or other account.

Oh, and that car loan offer, it “backfired”–for SunTrust–too.

Here’s the part I really find interesting.  The PR “spin” from the banks is all “poor, pitiful us.”  The media seem to just take whatever is sent via email from bankers and reprint verbiage that reflects this smoke and mirrors spin.  For instance, in the article linked above the following quote is presented:

“The pricing changes reflect the costs of doing business and staying competitive with other banks, as well as balancing the needs of its customers, SunTrust spokesman Hugh Suhr stated in an email.”

However, as can be seen in documents posted on SunTrust’s “Recent Earnings & Conference Presentations” page, the numbers I have presented below (a screenshot from this quarterly report) tell a different story than that of “woe is me“:

The aforementioned article also states that “over the last few years, changing financial regulations have cut into the revenue of big banks like SunTrust.”  Maybe.  But is it possible that “over the years bankers have threatened that regulations [against outrageous abuses, corruption, incompetence and greed, e.g., the mortgage meltdown] would be bad and that they are now making good on that promise by using every possible excuse to raise fees in the name of declining revenues”?  (One source of declining revenues might be people migrating to credit unions, you think?)

Reporters: DO YOUR JOB!  RESEARCH!

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For those who are interested, here is a direct link to the site’s Court Documents page.  I find Chase’s response in the “Chase’s Answer to Master Class Action Complaint” document most interesting, in that it repeatedly denies any responsibility for its actions against the plaintiffs (and/or class members).

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Over the summer (while teaching two courses) I have received phone calls and emails, informing me about what has been going on with Chase behind the scenes, as a settlement was in the works. I won’t say from whom, but rest assured these notices were not from Chase. The news was motivating to me, and I really wanted to restore the site to announce this:

A ONE HUNDRED MILLION DOLLAR CHASE CREDIT CARD SETTLEMENT

Here’s the other news (that’s nothing new): After using “the Google” searching on the phrase “100 million dollar Chase credit card settlement” I found one Reuters.com “hit” (which I do appreciate) followed by a number of law-class-action-type website hits, and nothing else on the first results page that was even remotely associated with the mainstream media. Yes, I did also search on the variations “100 million dollar Chase settlement” and “$100 million dollar Chase lawsuit” with about the same results. I admit that these three aforementioned phrases are not exhaustive, but if this story was being covered as robustly as some of the latest celebrity break-ups or coverage of their acts of infidelity (drug problems, trashiness, handbags, shoes, whatever), these search terms would be more than good enough to show a plethora of hits.

Well, I’ll at least give the mainstream media credit where it is due. There has been coverage of the horrifying events in Aurora Colorado, and don’t get me wrong, there should be. I mainly object to the lack of coverage on the banking industry because of the obvious reason, it advertises so heavily that it can effectively minimize the impact of media attention.

Did you click on the above Reuters link yet? Did you see the part, “JPMorgan spokesman Paul Hartwick declined to comment. The bank had argued that the changes in loan terms was a sensible means to reduce risk amid uncertain economic conditions”?

I guess that means that those of us who were impacted by Chase’s extremely egregious (but admittedly not murderous) acts won’t be receiving an apology either after they each receive their share of $4 per person and a coupon for a free ATM transaction (I made the per-person share up, but I doubt that whatever the amount may be, plaintiffs are made whole relative to the heartache and aggravation they have suffered).

As for the argument made by Chase about being “sensible,” it’s always “sensible” from the point of view of bankers to “reduce risk” (interweaving an element of truth, I note, allows for obfuscation at its best). However, what Chase and certain unscrupulous members of the banking industry at large have done, in their zeal to change terms (unfairly), is place every one of us at risk by melting down our financial system. It was bankers’ greedy practices that brought on “uncertain economic conditions” in the first place, remember? (I don’t think “uncertain economic conditions” have subsided for my family; how about yours?) Of course, Chase probably needed to reduce risk relative to some of its operations so that Jamie Dimon’s posse would have money to (party, play, gamble) utilize elsewhere. I submit that “gambling elsewhere” is arguably the case in the instance of Chase’s more recent (estimated) multibillion dollar trading losses.

Yeah, individual consumers and small business credit card users needed to help Chase free-up capital and “reduce risk in an uncertain economy” for that.

Tisk, tisk, how sad, a few of the gamblers are going to lose their bonuses (until the next bailout?).

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Besides credit card customer abuses, impacting both consumer and small businesses, Chase is also still at the top of my own personal list of the most egregious abusers in the mortgage arena. Because practically every other commercial aired on TV news channels seems to be from Chase, I don’t think it’s much of a leap to assert that the financial incentive its advertising schedule provides likely has an impact on what news coverage we do and do not see. I think Chase’s advertising dollars have certainly had an influence in a tendency toward “buying off” the mainstream media.

As an example, I have only seen barely a smidgen of CNN coverage on what Chase did to military families. In case you’ve already forgotten (for lack of coverage), I have not. Moreover, foreclosing on ANY of them, and overcharging thousands of them was horrible. Don’t you get it Chase? We’re not accounts, we’re human beings. Meanwhile, if I watch CNN for an hour or two, it repeats some stories over and over and over again in that same time-frame. But on the day I saw a mention of Chase’s foreclosure story on military families, the story seemed to be very short, and I did not see it repeated again at all (which was glaringly noticeable given the typical incessantly repetitive style of CNN coverage I have observed). Humm, go figure. Time’s up. The answer is obvious. No media outlet is going to mess with one of its major advertisers.

My father (now deceased) was a fighter pilot and served his country honorably until his retirement as a Lieutenant Colonel. As a small child, I remember his deployment in the Middle East. In fact, my mom recently gave me a box that made me cry. It was filled with military pins, patches, postcards from foreign countries, his Air Force gloves, and other reminders of his life and mine. These military memorabilia from my dad also made me think of Chase. I don’t think that Chase has exhibited the one value that is needed to justify its continuation as an institution: honor. What Chase did to these military families turns my stomach.

I receive a number of subscriptions to newsletters and notices from consumer organizations. One of these is from “Showdown in America,” which is organizing “two days of direct action on J.P. Morgan Chase and others” in Ohio on May 16 to 17, 2011. It has also been helping to promote this video, by PICO National Network, and I am proud to do the same:

In other news, Bank of America, you’re “on my list,” too. You’d better recognize that when you send change-in-terms notices to me (four recently), I will read them. I’ll be getting back to you on that.

© Dr Robert Lahm for ChangeinTerms.com, 2011. | Permalink | 5 comments | Add to del.icio.us
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Here’s a little background information. If you are familiar with this blog, then you already know that I am employed as an entrepreneurship professor at Western Carolina University. I’ve been researching the use of credit cards by small businesses, entrepreneurial bootstrapping (starting a business from scratch with little or no capital), and similar topics in connection with scholarly writing for a number of years. I am not a life-long academic, however (and “bootstrapping” is something I have done myself in the past, in the course of starting my own former businesses).

Remember the C.A.R.D. ACT? You know, the one with loopholes that are “big enough to drive an armored truck through“? The one that the credit card companies spent millions to lobby against (using as one source of funds, taxpayer’s own bailout money)? The one that applies to fixed rate consumer cards, but exempted “business credit cards” and variable rate cards (see the “loopholes” link cited above — credit card companies conveniently used the incredibly long waiting period before the C.A.R.D. Act kicked in to convert accounts to variable rates)?

Who does Congress think it’s fooling? The banking industry “influenced” Congress to write the C.A.R.D. Act in such a way as to create the image of a victory for consumers (thanks to its largess and “concern for the commoners”). Unfortunately, what our representatives really did was to draft and pass legislation with all the room the industry needed to wiggle out of giving consumers (and small businesses) the one thing they really needed: protection from a bunch of abusive bullies who to this day, have not changed their ways. It’s still all about the bonuses!

Now, focusing on the topic of small business and professional credit cards, the aforementioned Wall Street Journal reporter whom I was speaking today (Jessica Silver-Greenberg) asked me to try to help her find some living examples of individuals who have been “switched” (either knowingly or without really being informed as to what the switcheroo was all about) from a consumer card to a business or professional card. She subsequently emailed the following to me:

It was great to speak with you. If you could post the following on your website, that would be fantastic.

So, I am looking for any one who has received a solicitation for a small business or professional card in the past year. I am interested particularly in cardholders who have been approached by credit card companies, either by mail or by phone to switch into a professional/small business card from a personal credit card.

If you could post that on your blog, and tell anyone interested to email me at Jessica.silver-greenberg@wsj.com that would be wonderful.

Thank you so much.

Jessica

(Of course I will post it, Jessica — as long as credit card companies play “bait and switch,” I am delighted to do so.) Although Jessica has offered her email address directly, I would be happy to forward anything to her on behalf of ChangeInTerms.com readers (and, I’d actually like to hear from you myself, if you respond to the request; comments are welcome below this post as well).

© Dr Robert Lahm for ChangeinTerms.com, 2010. | Permalink | 4 comments | Add to del.icio.us
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So what was my “anniversary post” to be?  It’s not like I forgot the anniversary itself.  It was the day I opened my mail and read in sickening disbelief the change in terms notice that Chase sent to me.  On December 3, 2008 I responded.

I won’t forget.

No matter how much advertising Chase can buy, thereby suppressing the truth about its unethical actions in the mainstream media, I won’t let Chase forget, either.

I have plenty to do at work right now (it’s final exam week).  However, rest assured that I’ve been “making my list and checking it twice,” and I know all too well that banks and their lobbyists  have been very, very naughty, and not at all nice.  The popular uproar continues, while the the back-room negotiations with “our” elected officials continue to feed “fat cat” bankers at the expense of small businesses, taxpayers, the economy, you, my family, and me.  I’ll have more to say on all of these things.

© Dr Robert Lahm for ChangeinTerms.com, 2009. | Permalink | 11 comments | Add to del.icio.us
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