Financial Reform Should Start With Foundation

Paul Krugman addresses the problem with the financial "reform" in this oped:

http://www.nytimes.com/2010/04/26/opinion/26krugman.html?partner=rssnyt&emc=rss

The problem with this bill is that there is not enough reform of the credit-rating agencies. If Congress were truly serious about reform, this would be where to start. Not only at the corporate level with Standard & Poors and Fitch's, but with the credit reporting agencies that report on individuals to lenders. Both of these systems are set up to serve the interests of big business, rather than to protect the public or the individual citizen. The purpose of both credit rating agencies and credit reporting agencies have veered off course and are in need of heavy regulation to get them right again.

Credit rating agencies started out as a way to help lenders rate the risk of lending to certain companies, funds or capitalize large business deals. They have become a tool to push through bad business deals.

Credit reporting agencies started out as an unbiased way to rate individual's credit worthiness. It has turned into a tool to allow creditors to charge ridiculous rates of interest and to strongarm people who would otherwise not use credit to do so.

Nobody questions the right of credit reporting agencies to gather sensitive financial information on individuals and then provide that information about individuals to possible creditors (now expanding to employers and insurers). Nobody questions the idea that these agencies have the right to use this information to produce a credit score that we all have to pay to see. Have you ever had erroneous information on your credit report and tried to have it removed? It can be a nightmare multiplied by three. Why do the credit reporting agencies get to decide whether I have enough credit accounts opened? Wouldn't it make more sense for each of US to decide whether we need credit cards or no? And why shouldn't the credit reporting agencies be civilly liable for reporting erroneous information on our credit reports that cause us thousands of dollars on a mortgage or car loan?

We have little or no control over the information that is gathered or reported, the accuracy of the information gathered or reported or the credit score that is created by this information. But the credit score controls the amount of interest we will pay on our mortgages and car loans, how much our insurance premiums will cost and sometimes whether we get a job or not. Who pays these companies to report on us? The lenders. Who benefits if we all have low credit scores? The lenders. There is a built-in motivation for the credit-scoring agencies to adjust their algorithms to keep scores low so that lenders can make more money from credit transactions.

How in the world did we all allow ourselves to become enslaved to something over which we have absolutely no control? And isn't it time that something was done to stop this nonsense?

Credit scoring and credit rating are both the foundations upon which credit is built or destroyed, approved or denied. If there is to be reform, don't you think it makes sense to start with the foundation?

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We Must Demand The Medicare Option Be Put Back In Health Care Bill

THE FOLLOWING IS REPRINTED FROM AN EMAIL I RECEIVED TODAY. I AGREE 100% WITH EVERYTHING THAT IS SAID HERE AND COULDN'T HAVE SAID IT BETTER MYSELF. THUS, THE REPRINT. PLEASE PASS THIS AROUND.


Don't you think it's time we started DEMANDING what we the people
want, instead of meekly and mutely rolling over while corporate
special interests have their way with us? The only thing that would
make the health care so-called reform bill more of a cruel farce
would be for the NRA to slip in a provision permitting loaded assault
weapons in hospitals.

Anything that might have actually made a real difference has been
systematically excluded or stripped out of the bill, killed off by a
lethal combination of weak-minded liberals too timid to fight for
their constituents and stubbornly corrupt industry quislings on the
other side. And those are just the Democrats. In early December they
were talking for a moment about allowing people younger than 65 to
buy into Medicare. That was before they moved with breathtaking speed
to try to kill off any hope of that either.

The Medicare buy-in option must be put back in the bill. This is
non-negotiable. This is our demand and we're sticking to it. When
will we have more votes? If not now, when?

Action Page: http://www.peaceteam.net/action/pnum1025.php

For almost an entire year Congress has been lulling us with the
promise that in the end there would be a robust public option. And
for just as long we have been telling you that it was all a knowing
willful LIE. With every alert we told you the so-called public option
was never anything more than a languaging trick, to get people to
stop talking about single payer, a way to get progressives to
preemptively compromise, only to be cheated out of even a feeble
public option in the end.

That's exactly what Nancy Pelosi said today. The senior House
leadership is prepared to surrender any public option of any kind in
exchange for a handful of legislative mumbles, some OTHER way to hold
insurance companies accountable. Oh, please, slap us on the wrist
with a wet noodle. Except that the one and ONLY thing that would
actually hold them to account would be real competition from a
righteous, low overhead public program, just like we have in Medicare
right now!!

To all of those who wrote and argued to us, "No, we have to
compromise our principles, we can't stand up for what we believe in,
we have to surrender now and hope to make it better later," that's
what you said. What has your capitulation got you? What are we left
with now but a total corporate takeover over of our public health
care system, every American forced to buy corporate insurance or pay
a federal penalty. NOW do you believe us?

Well, believe us now also when we tell you that the game is not only
not over, it has not yet even BEGUN. This bill is destined to be the
most DESPISED piece of legislation in American political history, and
woe unto the political future of any member of Congress who does not
jump up howling about this bill. But in the first instance, that is
what we must do ourselves. Jump up howling and keep howling.

Action Page: http://www.peaceteam.net/action/pnum1025.php

Our singular message is this: Put the Medicare buy in back in the
bill. We will be pumping out the alerts on this as fast as we can all
this month. But somehow YOU folks have got to find a way to generate
at least a million messages to Congress, by mobilizing everyone you
know to speak out like never before. And that's just for openers.

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RIPPING APART THE RATIONALIZATIONS FOR PASSING THE CURRENT HEALTH ‘CARE’ BILL INTO LAW

An unsigned editorial in today’s NY Times set about to list the reasons why we should pass health care reform legislation. Below, I refute their points, one-by-one.

THE HEALTH OF MILLIONS OF AMERICANS The fact that 46 million people in this country have no health insurance should be intolerable.

Wrong. The fact that people in this country cannot afford HEALTH CARE should be intolerable. I know it is hard to think outside of the box, but if we don’t, we end up rewarding the very people who have created this problem. Insurance companies, doctors associations, hospital associations, pharmaceutical corporations and medical supply companies, AMONG OTHERS, have colluded to create a system of ever-rising costs for the consumer. Real reform would cut the waste and fraud from this system. No bill that is currently being considered would begin to do that. It’s not about HEALTH INSURANCE, It’s about HEALTH CARE. Please think about that. It’s important if you want real change instead of a giant corporate giveaway at taxpayer’s expense to stop assuming that we need insurance in order to pay for health care. Other countries don’t.

We consider it a moral obligation and sound policy to provide health insurance to as many people as possible. While the pending bills would fall short of complete coverage, by 2019, the Senate bill would cover 31 million people and the House bill 36 million who would otherwise be uninsured under current trends.

Wrong again. If you look at the bill and the way it intends to go about “covering the uninsured,” it is doing so mainly by forcing people who cannot now afford insurance to purchase insurance. Except that they still can’t afford it. So they aren’t going to buy it. This mandatory insurance clause is based on a premise that the uninsured have the money to buy insurance but are just being irresponsible and not buying it. Even if people who work at places that don’t currently provide insurance for their employees are given the benefit by their employers, it will most likely mean that they have to pay for it somehow. Congress just can’t seem to get it through their heads that PEOPLE CAN’T AFFORD IT.

The argument is that the government will provide SUBSIDIES for people. What is being suggested currently is that the government would subsidize the policies of people making 150% of poverty level according to federal guidelines. Let’s look at those guidelines, shall we?

POVERTY GUIDELINES

The 2009 Poverty Guidelines for the 48 Contiguous States and the District of Columbia*

Persons in family / Poverty guideline
1 / $10,830
2 / 14,570
3 / 18,310
4 / 22,050
5 / 25,790
6 / 29,530
7 / 33,270
8 / 37,010
For families with more than 8 persons, add $3,740 for each additional person.
* Guidelines for Alaska and Hawaii average two to three thousand dollars more per category. SOURCE: Federal Register, Vol. 74, No. 14, January 23, 2009, pp. 4199–4201

So, using these numbers, those that would qualify for subsidies would be those who made less than the following amounts in the following categories (again, the numbers are slightly different in Alaska and Hawaii):
150% of Poverty income for 1 = $16,245.
150% of Poverty income for 2 = $21,885.
150% of Poverty income for 3 = $27, 465.
150% of Poverty income for 4 = $33,075.

The government would have to pay 100% of the premiums for these people in order for them to be able to have insurance because a family of three could simply not afford a penny of insurance if it was trying to live off of $27,465 per year. And what about a family of four that makes $24,000 per year? No subsidies for them? How will they afford the premiums? THEY CAN’T and that doesn’t change under the legislation. So, those folks get to pay a fine. Great; they can’t afford to out-of-control, sky-rocketing health insurance premiums, so now they have to pay a fine. Increasing the burdens on an already overburdened working class; that really solves the problem, doesn’t it?

MORE SECURITY FOR ALL Horror stories abound of people — mainly those who buy individual policies — who were charged exorbitant premiums or rejected because of pre-existing conditions or paid out for years and then had their policies rescinded when they got sick.
Such practices would be prohibited completely in three or four years under the reform bills. Before that, insurers would be barred from rescinding policies retroactively and the bills would establish temporary high-risk pools to cover people with pre-existing conditions.
If reform legislation is approved, employees enrolled in group coverage at work would also be more secure. If workers are laid off — an all too common occurrence these days — and need to buy policies on their own, insurers would be barred from denying them coverage or charging exorbitant premiums for health reasons.

But no mention of how much is “exorbitant.” Where in the bill is the language that defines how much the insurance companies CAN charge these people? Could someone find that language for me??? Probably not because the government is mandating that the insurance companies can’t deny anyone coverage, but they aren’t regulating what the greedy buggers can charge. Oh, yes, THAT’S helpful. Without a government-run program, who will ensure that the premiums for these high-risk pools will be affordable? Does anyone remember that one of the problems that we are trying to solve with this so-called reform is that people won’t have to bankrupt themselves in order to afford the care they need? Where is the guarantee in this legislation that people with pre-existing conditions will be able to afford the insurance that the insurance companies are “being forced” to sell them? There is none. What a relief!

And a brief word about portability of coverage. So you get laid off from work and you no longer have insurance coverage. Well, don’t be sad; you can buy your own and the bad old insurance companies can’t charge you “exorbitant” (a term that is never defined) rates. Lucky you! Except, you don’t have the same income you had before but you still have the same bills. How the hell can you afford to buy insurance?? Ooopps. Guess Congress wasn’t thinking about that one. (My husband and I found ourselves in this very situation just three years ago. COBRA would have cost me over $1000 per month. With both of us laid off, it was a challenge just to pay the bills we had in order to not lose everything we had)

CUTTING COSTS Americans are justifiably concerned about the rising cost of health insurance and of the medical care it covers. The reform bills won’t solve these problems quickly, but they would make a good start.
Despite overheated Republican claims that the reforms would drive up premiums, the Congressional Budget Office projected that under the Senate bill the vast majority of Americans (those covered by employer policies) would see little or no change in their average premiums or even a slight decline. Those who buy their own policies would pay somewhat more — but for greatly improved coverage.

Except that I overheard a closed meeting of interested parties behind the scenes of this health care legislation discussing the “fact” that knowledgeable sources are predicting a rise in the rates of health care premiums over the next three years in advance of this legislation going into effect and some are predicting they could double in that time. How is that handled in the legislation? Congress kindly provides the insurance industry with enough time to rape us all real good before the changes go into effect. Now that’s Change you can believe in!

Most people who would be buying their own policies would qualify for tax subsidies to help pay their premiums, which could reduce their costs by thousands of dollars a year. And small businesses would qualify for tax credits to defray the cost of covering their workers.

Wait—tax subsidies??!! Does that mean that people have to come up with $500 per month for insurance premiums for their family (and I am being conservative with that estimate because I am paying $800 for my employer-sponsored plan) and the government will pay them back at tax time?!! HELLO, CONGRESS? POOR PEOPLE DON’T HAVE $500 PER MONTH TO SPEND ON ANYTHING THAT DOESN’T FEED, CLOTHE, OR HOUSE THEM. Do you understand what it means to be poor? Obviously not. Ditto for small employers-the costs of covering employees could force layoffs or complete shut downs in order to keep cash flow in the black.

The inexorably rising cost of hospital and medical care is the underlying factor that drives up premiums, deductibles and co-payments. No one yet has an answer to the problem.

Oh, so you’re saying that this bill does nothing to solve the biggest problem facing us where health care is concerned—rising costs?? You know, you are right. I can’t argue with you, there, New York Times unnamed editor. The bill could have addressed rising costs by setting allowable costs, but the doctors associations and hospital associations that helped to write the bill didn’t see that as advantageous to their bottom line, so those ideas were scuttled. The “inexorable costs” are rising in order for the shareholders to get a larger profit share at the end of each quarter. Are you telling me that there is no way to fix that problem? Other countries have it licked already.

THE TIME HAS COME For decades, presidents from both parties have tried in vain to reform the health care system and cover the uninsured…If this chance is squandered and Republicans gain seats, as expected, in the midterm elections, it could be a decade or more before reformers have another opportunity. Americans shouldn’t have to wait any longer.

This is the weakest argument of all for passing this lousy legislation that does nothing to solve the problems that were stated at the outset as the reason for reform. The legislation was written by special interests. It is written to benefit them, not to solve any problems that the consumer is having. If all are covered, health insurance companies will see increased business. Good for them. If all are covered, Hospitals and Doctors will be assured payment for their services, no matter how exorbitant those charges may be. Good for them. This bill does nothing to lower the price of medicine, so Pharmaceutical companies are happy. And this bill does nothing to regulate costs for any service or product, so everyone involved with profiting from your illness is happy. Good for them. And it has the added benefit of not solving the problem of unaffordable insurance and health care costs for the working poor of this country, not solving the problem of unaffordable insurance premiums for those with pre-existing conditions and not solving the problem of exponentially-increasing health care costs in the future.

Unnamed New York Times Editor is saying that it’s broke, and although we could have fixed it, this bill doesn’t, but we should support it anyway because it's all we're going to get. That makes no sense at all. And then there is the lingering threat of “pass this bill now or you will get nothing anytime soon.” There is no reason to pass a crappy bill that only benefits the special interests and doesn’t solve the problems because of the possibility that Congress won’t be able to go back to the drawing board and come up with something better. It’s their job and it is up to the American people to force them to do it. If unnamed New York Times Editor wants to be defeatist, that doesn’t mean the rest of us should go along with this charade.

The truth is, since this bill was written by the special interests and has been negotiated all along on a daily basis by and among those special interests, there was never any intent by Congress to fix the problems of the consumer. They only meant to hand more power and money to the people who are plaguing us.

And that is one good reason to NOT vote for or support this fraud.

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Women Can’t be Trusted to Make Their Own Healthcare Decisions

It’s a fact of life; women are too stupid to make decisions relating to their own healthcare or reproduction. (Well, except wealthy women, of course.) We should always be told what to do by the government or insurance companies. That is why it was so easy for Nancy Pelosi to sign away reproductive rights for women in the House version of the Healthcare Reform Bill. Society, churches, the government and insurance companies have decreed that only wealthy women have the right and the power to decide whether they will carry a pregnancy to term and bring another child into the world.

Come now, you say, that is surely over-exaggerating the situation.

Surely, it is not. What is a more fundamental fact of life than if you don’t have the money, you can’t have it?? Here is the WaPo analysis of the language in the House Bill:

The amendment would prohibit abortion coverage in the government-run plan and any private plan on the new marketplace that accepts people who are using government subsidies to buy coverage.
Under that language, abortion coverage would be unavailable not only to working-class women buying coverage with government subsidies, but probably also to women buying coverage on the new marketplace without federal assistance. The amendment suggests that women could buy separate "riders" covering abortions, but abortion-rights supporters say it is offensive to require a separate purchase for coverage of a medical procedure that for most women is unexpected.
http://www.washingtonpost.com/wp-dyn/content/article/2009/11/08/AR2009110818453.html

If women in this country can’t get abortion coverage on government insurance and they can’t get insurance that funds abortions with a government subsidy, that effectively prevents about half the women in this country from being able to afford an abortion. This is gender discrimination pure and simple. If that is not the case, then I DARE the Senate to add an amendment to their bill preventing coverage for any prescription or service that treats male sexual dysfunction or impotency. After all, if God had intended these men to be able to use their organs, they wouldn’t be having these problems. So, it’s a moral and religious outrage that science is providing these services to men.

Reps. Baron P. Hill (Ind.), elected with the class of 2006 that gave Democrats the House majority, and Dan Maffei (N.Y.), who rode to office with President Obama on a Democratic wave last year, were among the last lawmakers to make up their minds on Saturday's historic health-care vote.
Both voted yes, helping to push the count to a razor-thin majority of 220. Neither viewed the much-hyped furor over the creation of a government-run option to compete with the private insurance industry as a major factor in their decisions. For Hill -- and a couple of dozen other Democrats -- the decision came down to a last-minute compromise that paved the way for an amendment ensuring that no federal funding would go to abortions. For Maffei, it was a long series of discussions with staff, experts, his constituents and Obama.
"I've always wanted to get to yes," Hill, who was part of a conservative Democratic blockade to the legislation in July, said after voting to approve the legislation.
"It's pretty closely divided. Either way, it would have been a profile in courage or a profile in being ordinary," Maffei, a former Capitol Hill staffer, said of public opinion in his Syracuse-based district.
http://www.washingtonpost.com/wp-dyn/content/article/2009/11/08/AR2009110818056.html?wpisrc=newsletter

Pelosi sold out women everywhere. You can say whatever you want, but it is a FACT. Shame on every single woman in congress, especially Nancy Pelosi. Women are not second-class citizens. Where would this country be without women?

How would this country function if for just ONE DAY, we all stayed home and did ABSOLUTELY NOTHING for anyone but ourselves?

Then there is this little nugget on a blog over at Air America Radio’s site:

First things first. An expanded Medicare will do for now. And while the Stupak amendment is a sharp slap in the face for what most of us on the left deem an acceptable outcome, there is the fact that we're seeing legislative movement for the first time in years on the issue of health care reform in America.
http://airamerica.com/politics/11-10-2009/did-kos-jump-shark-tancredo/?p=3

The Stupak Amendment is SO much more than a sharp slap in the face to the women of this country. It ties women’s hands. It codifies discrimination in healthcare. It does to women EXACTLY what conservatives have been screaming about all summer; it gives power to the government to prevent women from making their own healthcare choices. It is COMPLETELY UNACCEPTABLE. It is so much more than what this writer from Air America makes it out to be as he blithely hands MY healthcare decisions to the government and insurance company bureaucrats.

If this bill denied certain healthcare choices to homosexuals, African Americans or other minorities, there would be no question that it would be a non-starter. But it seems that the left has decided that while this is not “deemed” an “acceptable outcome,” they will stand for limiting the rights of women if that is what they have to do to get healthcare reform done.

What other minority would the left sell down the river? I can’t think of one.

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No BAILOUTS Act

We have all heard about this Wall Street bailout and NO POLITICIAN in this country today will go on record as a big supporter of it. Nobody likes this bill. They didn't like the initial plan proposed by Hank Paulsen, they did not like the first or second versions of this bill and they don't like the current version, either.

Personally, I believe that the most current version of the bill is the WORST and I hope Congress will fail to pass it AGAIN.

The reason that I say that is because we keep hearing this false choice that we either hold our noses and pass this one or do nothing. But those are not the only two choices that we have. There are other proposals out there, but you are not hearing about them. Now you are.

Below, I am posting a bill in the works from Pete DeFazio and several others are co-sponsoring. It is not a bailout, but it provides for the liquidity that the market is saying they currently lack.

The most immediate crisis that this economy faces is the lack of liquidity in lending. Banks are not lending money to other banks and businesses are facing the possiblity of not being able to get capital loans to make payroll and pay their vendors. This is what could break our whole economy. The answer is not to pay Wall Street but to ensure that banks will regain their ability to continue the inter-bank loans that enable businesses to run. DeFazio's bill addresses this need and some other important issues, without handing Wall Street a blank check.

I ask you to read this proposal and click on the title of this blog to read an article about this bill. Then please pass this on to your friends. We all need to get behind this sort of RESPONSIBLE legislation and make sure Congress does the right thing to fix the problem. Call your Congressperson and him/her to support a Responsible Solution to the current crisis.

Bringing Accounting, Increased Liquidity, Oversight and Upholding Taxpayer Security

1) Require the Securities and Exchange Commission (SEC) to require an economic value standard to measure the capital of financial institutions.

This bill will require SEC to implement a rule to suspend the application of fair value accounting standards to financial institutions, which marks assets to the market value, no matter the conditions of the market. When no meaningful market exists, as is the current market for mortgage backed securities, this standard requires institutions to value assets at fire-sale prices. This creates a capital shortfall on paper. Using the economic value standard as bank examines have traditionally done will immediately correct the capital shortfalls experienced by many institutions.

2) Require the Securities and Exchange Commission to restricting naked short sells permanently.

This bill will require SEC to implement a rule that blocks naked selling, selling a stock short without first borrowing the shares or ensuring the shares can be borrowed. Such practices many times harm the companies represented in the sales and hurt their efforts to raise capital. There is no economic value produced by naked short sales, but significant negative effects.

3) Require the Securities and Exchange Commission to restore the up-tick rule permanently.

This bill will require SEC to implement a rule that blocks short sales without an up-tick in the market. On September 19, 2008, the SEC approved a temporary pause of short selling in financial companies “to protect the integrity and quality of the securities market and strengthen investor confidence.” This rule prevents market crashes brought on by irrational short term market behavior.

4) “Net Worth Certificate Program”

This bill will require FDIC to implement a net worth certificate program. The FDIC would determine banks with short-term capital needs and the ability to financially recover in the foreseeable future. For those entities that qualify, the FDIC should purchase net worth certificates in these institutions. In exchange, these institutions issue promissory notes to repay the FDIC, counting the amount “borrowed” as capital on their balance sheets. This exchange provides short term capital, with not cash outlay. Interest rates on the certificates and the FDIC notes should be identical so no subsidy is necessary.

Participating banks must be subject to strict oversight by the FDIC including oversight of top executive compensation and if necessary the removal of poor management. Financial records and business plans should be subject to scrutiny while participating in the program.

In 1982, Congress approved a program, known as the Net Worth Certificate Program, that allowed banks and thrifts to apply for immediate capital assistance. From 1982 to 1993, banks with total assets of $40 billion participated in the program. The majority of these banks, 75%, required no further assistance beyond the certificate program.

5) Increase the FDIC Insurance limit from $100,000 to $250,000.

The bill will require the FDIC raise its limit to provide depositors confidence that their money is safe and help eliminate runs on banks which are destabilizing to the industry.

Peter DeFazio - Member of Congress

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