Monday, August 15, 2011

Republicans Dominate Sunday Talk Shows, Republicans Love Voting When it Favors Them, Banks Charge under 200% Interest, Administration Divided on Economics (Really?),

And Other News That Requires Monday Morning Quarterbacking

Representative Michele Bachmann of Minnesota appeared on  CBS's
Just Answer the Question
and Face the Nation

Michelle Bachmann appeared on all of the Sunday talk show,  and The Dismal Political Economist understands that she is news, but wonders if these shows are not going overboard in booking Republicans.  It may not be deliberate bias, it may be that there just no good telegenic Democrats to book.  Of course, charisma hasn’t stopped them from booking John McCain at every opportunity.

Ms. Bachmann was asked a number of hard questions, which she couldn’t answer but that was okay because she was also asked a number of easy questions which she could not answer.

“All of these kind of questions aren’t what people are concerned about right now,” Mrs. Bachmann complained on NBC’s “Meet the Press.

Republicans in California have suddenly found that they like Democracy after all.  The newly elected Governor of California wanted to raise taxes and put tax proposals to a public vote, but the Republicans in the legislature used their minority status to block even a vote. 

Now a new independent, non-partisan re-districting plan has been created that is not advantageous to Republicans, so, surprise, they may want to put that plan to a vote. 

With the nonpartisan California redistricting commission scheduled to complete its work Monday, state Republicans are seriously weighing whether to seek a referendum that could throw out the results and force the state Supreme Court to draw lines for next year’s election.

It’s just amazing how quickly Republicans find a referendum helpful in California when the outcome could be favorable to them. 

Banks were directly responsible for the Consumer Protection provisions built into the new bank regulations legislation.  They engaged in unacceptable abuses.  One of the most profitable practices was to provide automatic overdraft protection for debit cards, then charge huge fees and interest way out of proportion to the overdraft. 

This has now been largely curtailed, thanks to legislation.  Now banks are going after another way to gain exorbitant fees.  The new product is a “direct-deposit loan”

The direct-deposit advances work like this: A customer typically can request a cash advance online or by phone and obtain an instant line of credit, usually up to $500. When the customer's next paycheck is deposited, the bank repays itself by deducting the loan balance plus any fees

Okay, sounds harmless enough and maybe it’s a good service.  Hm, wonder what the costs are.

For a $200 cash advance from Wells Fargo, the fee is $15. A consumer taking out multiple loans to borrow $200 for two months, for instance, would be charged $60 for four two-week loans.

Do the math.  A rate of 7.5% for two weeks is an annual simple rate of interest of 195% a year.  Wow, under 200% a year interest rate.  What a deal.

Source:  WSJ
Financial firms like U.S. Bank are getting
into the short-term lending game
 that has long been dominated
 by payday lenders. Banks say there
 are key differences between their
lending practices and those
of pure payday lenders.

Wells Fargo has offered its cash-advance service since 1994, charging $1.50 for every $20 borrowed. "We are very up-front with our customers and let them know that it is an expensive form of credit," said spokeswoman Richele Messick.

“An expensive form of credit?!”  No an expensive form of credit is charging say 25% for a cash advance on a credit card.  One positive was noted by the National Association of Loan Sharks who issued a statement saying “We look pretty good now, compared to banks”.

Of course, as you might imagine some “do-gooder” are arguing for government regulation,

Banks, however, say they are acting responsibly

Responsibly defined in this case as keeping the simple interest rate under 200% per year.

Proof, if any was needed on the political shortcomings  of the Obama Administration.  The New York Times reports on a division within the Administration on economic policy.  Here is one side

Mr. Obama’s senior adviser, David Plouffe, and his chief of staff, William M. Daley, want him to maintain a pragmatic strategy of appealing to independent voters by advocating ideas that can pass Congress, even if they may not have much economic impact.

Yes, a winning re-election strategy.  Pass meaningless legislation.  Do not improve the economy.  Campaign on the theme that “we didn’t do much, and what we did do didn’t help.” 

Are these advisers on loan from George W. Bush?

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