Friday, December 18, 2009

Bad Bet, or Bad Beat? Higher Education by the Numbers

As long as I'm touting "the gambler's way," which is basically applying gambling/probability in order to make decisions about the world, I should apply it to education. Being of the worker bee class, I can remember when my friends and I would balk at our fees and all of the other associated costs of higher education in America.

Then there was grad school stories. I distinctly remember when Devon called me one summer from Harvard Law; my jaw dropped when he told me what the numbers were. Luckily, Dev's a smart cookie, and doing quite well. But talk about dodging bullets.

And that was then.

Like everything else, college costs have exploded, and the amount of debt a person incurs now before even becoming gainfully employed is a "mini-bubble" that I've always felt unsustainable. As with all bubbles, the chickens eventually come home to pop them, to mix aphoristic metaphors.

To "do the math," as gamblers would say, we're lucky to have James Altucher, who's a pretty accomplished hedge fund wiz. After his recent article - which I was tipped off to by Howard Stern - there's an earlier blog post from February '08 by Altucher which, though not as analytical from the numbers perspective, is much more aggressive as a rhetorical argument.

I'd like to hear his take on entrepreneurship, which he advocates instead. The first article treats that a bit blithely, and you can trip and fall big time in that arena as the vast majority of businesses fail in year one, and the vast majority that get to year two also fail then. So, I agree with his prescription, I'd just like to see what he thinks should be a support system for entrepreneurs. But that's a minor thing in relation to the theme; both are good articles, and I couldn't agree more.

The NY Post, at:
http://www.nypost.com/p/news/business/school_of_hard_cash_ep3MueBoMIiUqVe8uDAwmK


SCHOOL OF HARD CASH

Biz degree is bad investment

By JAMES ALTUCHER
Last Updated: 3:58 AM, November 1, 2009
Posted: 12:59 AM, November 1, 2009

Somehow I went wrong as a father -- the other day my two daughters informed me they eventually want to go to college.

I said, "No way!" and they attempted to argue with me. I have no problem with them talking back to me but somehow they've been brainwashed by society into thinking that college is a good thing for intelligent, ambitious young people to do.

Let's look at the basic facts about higher education.

The average tuition cost is approximately $26,000 per year -- including $10,000 in living costs, books, etc. -- or roughly $104,000 for a four-year program.

Some people choose to go to more expensive private colleges and some people choose to go to cheaper public schools, but this is an average. Also, a huge assumption is that it's just for four years.

According to the Department of Education, only 54 percent of undergraduates get their diploma within six years. So for the 46 percent that don't graduate -- or take 10 years to graduate -- this is a horrible investment. But let's assume your children are in the brilliant first half who finish within six years -- and hopefully within four.

Is it worth it?

First, let's look at it from a purely monetary perspective. Over the course of an individual's lifetime, according to the College Board, a college graduate can be expected to earn $800,000 more than his counterpart that didn't go to college -- $800,000 is a big spread, and could potentially separate the haves from the have-nots.

But who has and who doesn't?

If I took that $104,000 and invested it in a savings account that had an annual interest income of 5 percent I'd end up with an extra $1.4 million over a 50-year period -- $600,000 more then a sheepskin-toting peer.
[emphasis mine]

That $600,000 is a lot of extra money an 18-year-old could look forward to in her retirement. I also think the $800,000 quoted above is too high. Right now most motivated kids who have the interest and resources to go to college think it's the only way to go if they want a good job. If those same kids decided to not go to college my guess is they would quickly close the gap on that $800,000 spread.

There are other factors as well. I won't be spending $104,000 per child when my children, ages 10 and 7, decide to go to college. College costs have historically gone up much faster than inflation. [emphasis mine] Since 1978, the cost of living has gone up three-fold. Medical costs, much to the horror of everyone in Congress, have gone up six-fold. And college education has gone up a whopping tenfold. This is beyond the housing bubble, the stock market bubble, any bubble you can think of. [emphasis mine]

So how can people afford college? Well, how has the US consumer afforded anything? They borrow, of course. The average student now graduates with a $23,000 debt burden, up from $13,000 12 years ago. Last year, student borrowing totaled $75 billion, up 25 percent from the year before. [emphasis mine]

If students go on to graduate degrees such as law degrees they can see their debt burden soar to $200,000 or more. And the easy borrowing convinces colleges that they can raise prices even more. So what should people do instead?

One idea: start a business. You don't need to be an entrepreneur to get valuable experience selling a service, or buying some set of goods cheap and selling them expensive. A year or two of that will be a substantial education in salesmanship, finance, and how to deal with the ups and downs of any business.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Financial Times, at:
http://www.ft.com/cms/s/0/5554c882-d90d-11dc-8b22-0000779fd2ac.html

College a waste of time and money for kids

By James Altucher
Published: February 12 2008 02:00 | Last updated: February 12 2008 02:00

Last week I made an off-the-cuff comment in my column that stirred up several e-mails asking if I was serious. What I said was that I had no intention of sending my kids to college. I was dead serious. I find the thought of college abhorrent, particularly for 18- to 20-year-olds. Kids have a lot of energy at that point, and to deaden it with a forced, unsupervised diversity of random topics taught by mostly mediocre professors is a waste of that energy.

I can't remember anything good coming from my freshman year - other than starting a business with a few of my classmates, which inspired me for subsequent businesses.

We set up a company called "CollegeCard", which offered debit cards to college students. This was 1987, before credit cards were common for college kids. Parents would send us money, which we'd deposit in the student's account with us, and the students could then use their cards up to that amount. My role was to convince every business in town not only to accept our card but also to offer discounts to its users. At night I ran the delivery business, which delivered from every restaurant that accepted our card. I was notoriously incapable of generating any tips, though one of my partners, Wende Biggs (daughter of Barton) always got great tips. (I had an unrequited crush on her.) Thankfully, she'll never read this because she now lives on a farm in France.

Here is what's wrong with college.

First, and foremost, it's too expensive. To send a kid to college you need from $200,000 to $400,000. That's insane. There's no way the incremental advantage they get from having a diploma will ever pay back that amount. Perhaps for the first time the opportunity cost (a phrase I remember from Economics 101) of college does not equal the extra profits generated by the degree.

Second, I don't believe in a balanced education. Most colleges require students to take a smattering of art, maths, sciences and so forth. Taking 10 courses a year on wildly different topics, with enormous homework responsibilities, not to mention droning, boring professors for at least eight of the 10, is the surest formula for creating complete non-interest and inability to remember anything in any of the topics covered. What a waste of $400,000.

And third, there are far better uses of time. One reader asked what her kid should be doing instead of college. Here are some of my responses:

1. Working - not just a labour or service job, but there are internet-content jobs out there. I have high school and college kids working for me who are making over $50,000 a year from writing gigs on the internet. Scour Craigslist for opportunities, your favourite blogs, or websites related to your favourite interests. Companies are dying for good content. Create your own blog, get yourself noticed, build relationships with other content companies and communities.

2. Take half the fee for one semester, give it to your kid, and tell him or her to start a business. Not every youngster has entrepreneurial sensibilities, but it's always worth trying once. The cost for starting a business is next to zero, so it's a viable alternative. What business should they start? For one thing, now that Facebook and MySpace have open development platforms, try out a few applications for these platforms; for a few hundred dollars you can outsource development of these applications to India, and get your friends to start trying them. Make sure they are viral (that is, a message should appear "click here to get all your friends to try XYZ") and see which ones are a success. I mention Facebook and MySpace because every kid is familiar with these sites and comfortable with the subtleties, and it's this comfort that can create the best businesses.

3. Spend a year trying to become good at one thing. Whatever your child's greatest interest is, whether cooking, chess, writing, maths, there are so many resources on the internet available for learning that college is almost the last place a kid should go to pursue a passion. Intense immersion in a favourite topic is the surest way to become an expert in that field.

And what about travel? Well, I'm not a big believer in that unless it's completely supervised. There's plenty of time to travel later in life. But right at home there's a plethora of opportunities that can far exceed the value of a college education at a 10th of the cost, and lead to greater experience and opportunities in career, wisdom, and life development.

james@formulacapital.com

Friday, December 11, 2009

2 Words: "Oo" & "fah"

WOWeeee. This is no holds barred in your face by DEMOCRAPS, the party that some "liberals" still believe in. In light of everything that's happened with EM08, and in relation to derivatives, Brooksley Born, this is plain astonishing. The brazen manner in which these shitheads operate is jaw dropping.

If you can believe it, my bigger point is that this new proposed oversight committee, the "Financial Services Oversight Council," scares me to no end. Why?

Listen, my thing over the last year or so has been what I call "the refs," and there were plenty of them in the making of EM08. Simple logic tells us that creating another set of refs isn't the answer, let alone fighting over more or less regulation of derivatives. After all, the mortgage poisoned financial products would not even have seen the light of day, if the CRAs had properly done their job of rating those products junk status, or at the very best as a cautionary investment.

In other words, Don't treat symptoms; get to the root causes. But in the worst case of logic ever, now uncle scam wants to create more refs. This is just plain stupid.

The answer is to not create more refs, but to find out why it is that the many refs we have now and just as importantly, the systems that they operate in, cannot, do not, or will not proceed effectively and do their job.

1. "Effectively" as defined as to relevantly inform the public, so that the public can make informed decisions and guide congress.

2. "Effectively" meaning in concise, plain language, not paper tsunamis that congress is so enamored with that filibuster and turn most people completely off. Any savvy investor will more often than not only read the exec summary of a business plan, and base her decision on that; the elevator pitch, management teams, and the proformas. - that's what it's for, to display that one can effectively communicate without a lot of broohaha used car salesman marketing gibberish. The logic being, if you can't do that, then why should money decide that you're capable of starting, building, and maintaining/managing a business if you can't even clearly talk about it, much less map it out and show "little things" like cash flow, year to year projections and roi coherently. Makes sense to me. Now, for shits and giggles, let's imagine congress trying to conform their diarrhea of the pen to that constraint. Funny, huh?

What this is really saying is that congress and the refs who are on the governmental side of the equation (don't forget, there are other, ngo/individual refs, such as the fourth estate, analysts, trade organizations, academics, authors...) must learn how to effectively communicate in general, but particularly when risk is involved and with our money. ANY savvy investor, from Buffett to Soros, would be accorded this going in to some high stakes gambling. It lets you know the risks involved so that - just as a gambler does - you can evaluate, assess risk, and set odds. In other words, one can make an informed decision. The American public represents the biggest stake pool in the world, but in terms of investing we're treated like caged animals to be fed scraps and water and kept at bay with cattle prods. The bottom line for the American people is that if congress can't do this, then they need to get the fuck out of Dodge. Make no mistake, unless the system is revamped, you're being served, and it's on a plate with garnishing.

3. "Effectively" in terms of being elected by the general public and not appointed. It's high time the American people became financially literate - way too much is at stake to be left in the hands of a few elite shitheads and their field negros who do their massas bidding.

4. "Effectively" as to be mirrored at every level; fed, state, county, city. It's outrageous how the present poisonous mindset infects every level. Just this past week, the LA County Board of Supervisors loaned $14 million to the LA Opera - while tens of thousands of Angelenos are stranded out of work.

As usual in Bizarro World, though, "they're" all about putting on a show and treating symptoms.

To those who don't believe the fix is on, keep reading...

cartoon by the great Jules Feiffer

http://www.scpr.org/news/2009/12/10/house-eases-restrictions-derivatives-trades/

Thursday Dec. 10th
House eases restrictions on derivatives trades

8:56 p.m. | Jim Kuhnhenn | The Associated Press

WASHINGTON — A bipartisan coalition in the House voted late Thursday to make it easier for corporations to engage in complex derivatives trades without government restrictions, eroding the reach of proposed regulations to govern Wall Street.

Democratic attempts to toughen the legislation failed.

Though not major setbacks, the votes illustrated the difficulties facing House Financial Services Committee Chairman Barney Frank and the Obama administration as they seek to pass legislation aimed at preventing a recurrence of last year's Wall Street crisis.

Key votes loomed ahead, with a final vote on the sweeping legislation scheduled Friday.

Democrats hoped to fend off an amendment Friday that would eliminate the creation of an independent Consumer Finance Protection Agency. The agency is a central element of the Democrats' legislation and the Obama administration's proposed regulatory changes.

The amendment was offered by Rep. Walt Minnick, a conservative Democrat from Idaho, and seven other centrist Democrats. The U.S. Chamber of Commerce, which has been running national television ads against the creation of a consumer agency, said it would base its support for lawmakers in next year's elections, in part, on how they voted on the amendment.

"I think we're going to beat the Minnick amendment, but it's a real test," Frank, D-Mass., said Thursday. Creating a consumer agency is a top priority for consumer groups and for labor organizations such as the AFL-CIO.

Democratic leaders also were pushing changes that would add further restrictions on banks and financial institutions. One, vigorously opposed by banks, would let bankruptcy judges rewrite mortgages to lower homeowners' monthly payments.

A coalition of banking organizations on Thursday sent lawmakers a letter urging them to vote against the amendment. The House previously passed bankruptcy-mortgage legislation, but it failed in the Senate.

The legislation imposes new regulations on derivatives, aiming to prevent manipulation in and bring transparency to a $600 trillion global market. But an amendment by New York Democrat Scott Murphy, adopted 304-124 Thursday night, exempted businesses that trade in derivatives, not as financial speculators, but to hedge against market fluctuations such as currency rates or gasoline prices. The amendment also provided an exception for businesses that are not considered too big to be a risk to the financial system.

A Democratic effort to make more companies subject to derivatives regulation failed 279-150.

The Chamber of Commerce circulated a letter Thursday urging lawmakers to vote for the Murphy amendment and against the broader regulation.

The House debate comes more than a year after the downfall of Wall Street banking house Lehman Brothers Holdings Inc. panicked the financial markets and forced an unprecedented intervention by the federal government. The Senate is expected to consider a bill next year.

Backing for the overall bill splits along party lines. Republicans cast the legislation as a continuation of unpopular financial industry bailouts, while Democrats portray the GOP as reflexively opposed to any controls on Wall Street.

"What we've seen from the Democrats...is an attempt to spend our way into jobs, an attempt to borrow our way into jobs and now an attempt to bail out are way into jobs," said Rep. Jeb Hensarling, R-Texas. "And what is the result? The result is the highest unemployment rate in a generation."

Democratic leaders have focused on their own ranks, however. They had to scramble Wednesday after party centrists rebelled and threatened to delay the bill if the House was not allowed to vote on their proposed amendments.

At issue were changes they sought to ease regulatory provisions on consumer protections and complex derivatives trades. The impasse broke, but only after top Democrats spent more than an hour with high-level Treasury Department officials in Speaker Nancy Pelosi's offices crafting a compromise.

Rep. Melissa Bean, D-Ill., succeeded in getting her consumer protection limits inserted into Frank's version of the bill. Her provision would make it harder for states to enforce their own consumer protection rules on national banks. Under the compromise, states would not be able to pre-empt federal consumer laws if the state law "materially" interferes with the business of banks.

"It's solid progress in the effort to provide consistency and uniformity to the American consumer," said Scott Talbott, chief lobbyist for the Financial Services Roundtable, an industry group.

The broader legislation hits big banks hardest, a response to public anger at the notion that some institutions had grown too big to fail and pushed the nation's financial system to the brink of collapse.

It would create a Financial Services Oversight Council to monitor the financial system and watch for future threats. Large, interconnected firms would have to put more money into their reserves. They would have to feed a $150 billion fund to cover the costs of dismantling a failing competitor. And even if healthy, they could be forced to downsize if they are deemed a grave threat to the economy.

"American families will no longer be at the mercy of the Wall Street in terms of their jobs, their homes, their pension security, the education of their children," said Pelosi, D-Calif.

---

The bill is H.R.4173.

© 2009 The Associated Press. All rights reserved.

The Two Fakes


With Goldman Sachs of Shit now braying like jackasses at the top of their mass media consorts' outlets for any and all that they're going to provide options instead of cash for bonuses, the Big Game is on, and folks, it's in full effect like at no time in history. (How's that for a run-on intro?) Hey, say what you will about shitheads like Hitler or Stalin; not that it's better than American hypocrisy, but at least they were unabashed in their prejudices and tyranny.


I've long maintained that the American System - be it politics or the market - is in large part marketing. From politicians lying through their teeth on the stump to the credit rating agencies grading the so-called "financial products" that contained the bomb in a basket toxic mortgages that lit the fuse for EM08, the American System relies on two categories of people; sharks and suckers.

There's that time worn poker adage; if you look around and you can't spot the sucker, guess what?

It doesn't get any more direct than watch what people do, not only what they say.

Meanwhile, back at the ranch, with all of the the democraps' foaming at the mouth about "financial reform," in the democrap controlled house they've now - get this - relaxed the oversight on derivatives.

I know, I know, I know, I know, I KNOW; welcome to Bizarro World....

So strap on your hard hat; here's some more hypocritical posing bullshit on their retardican brothers. From the great David Cay Johnston...

Btw, there are lots of hyperlinks in the original HuffPo posting; if you want 'em, better go to the original.

Image; Liz Asher: www.lizasher.com/Secular_Artwork.html

===============================

Huffington Post, at:
http://www.huffingtonpost.com/david-cay-johnston/gop-favors-public-option_b_296703.html

GOP Favors Public Option for Property, Not People
by David Cay Johnston
Pulitzer Prize-winning investigative journalist
Posted: September 23, 2009 03:14 PM

Atop the front page of the New York Times today is a color photo of Georgia homes flooded up to their rafters, an image that illustrates how when it comes to insurance our Congress applies two standards, separate and unequal, one for property and a lesser one for people.

Unlike people without health insurance, homeowners have access to public option flood insurance.

Even those who fail to take personal responsibility to buy insurance to protect their property can get benefits, thanks in good part to politicians who are leading opponents of public option healthcare.

Consider the example of Trent Lott of Mississippi, who was that state's senior senator when Hurricane Katrina hit in 2005, flooding his home looking out on the Gulf. Lott had not exercised personal responsibility by taking out flood insurance even though it was available from the federal government at low cost. He did have private insurance, but his insurer refused to pay much of the claim, saying it was not wind damage (which was covered by the policy), but water damage (which was excluded).

Weeks later Lott introduced Senate Bill 1936, which would have authorized retroactive flood insurance. The idea came from Representative Gene Taylor, a Democrat who represented the Mississippi Gulf Coast, which should remind us that when there is voter demand for reform, and campaign contributions are not the driving force, the parties have worked together.

Lott's bill would have let flood victims pay 10 years of flood insurance premiums after-the-fact plus a 5 percent late payment penalty. Since this storm was rated a once in 500 years occurrence, even 10 years of premiums would not come close to covering the real costs, meaning a taxpayer subsidy was built into the Lott bill.

Instead of being laughed at by his fellow Republicans for promoting socialism, the concept of retroactive relief was warmly embraced, although not the idea for retroactive insurance. Instead the government went with handouts.

Senator Thad Cochran, also a Mississippi Republican and at the time chairman of the Senate Appropriations Committee, was key to getting taxpayer benefits for flooded property, according to Taylor's staff. The benefits were issued and expanded twice, a total of about $18 billion in all, Taylor's staff estimated.

Contrast the two Mississippi Republican senators' determined action to get welfare for flooded buildings with their votes against expanding SCHIP health insurance for poor children.

Cochran opposes a public option in health care; Lott, now a lobbyist, says Obama should just declare victory after some minor tweaks, a way to oppose without quite saying so.

Mississippi Governor Haley Barbour, the former head of the Republican Party, has spoken cautiously, but also appears to oppose a public option. But he, too, was an enthusiastic supporter of retroactive benefits for flooded property. Barbour even got the relief expanded and urged everyone to get their government property benefits.

There is also an interesting twist in this public option for another aspect of the health care debate - what to do about those who decline to buy insurance.

In Mississippi the relief for flooded buildings came with a requirement that owners buy flood insurance. It went further, requiring a covenant be added to their property deeds requiring the current and all future owners of that property to maintain public option flood insurance.

There is another word for that: government mandated insurance.

How about a similar retroactive option for people with a pre-existing condition who do not have health insurance? Many of these people had insurance before the recession cost them their jobs and with it, their health care coverage. Even people who took personal responsibility and had health insurance now may be without healthcare insurance because the recession cost them their jobs or their employers enough revenue to continue coverage.

Why should those who lost their jobs and thus their healthcare insurance be held to a different standard than irresponsible homeowners like former Senator Lott?

I call federal flood insurance a public option because it is provided by the federal government., It is sold, however, through individual insurance agents who collect commissions on the policies.

Private, for-profit insurers could sell this insurance if they wanted. The problem is that rating the risk of a once-in-a-century or even once in-a-millennium event is difficult and requires a huge pool of capital held in reserve to cover benefits that may be due tomorrow or in the year 2805.

Socializing these risks makes sense, and so does trying to minimize them with building codes that discourage building in some areas and require mitigating designs (like putting the first floor 15 feet above sea level). Individual policies for flood insurance, which many people must now rely on for health care coverage, would be like selling insurance for kindergarten in case of pregnancy or prosecution insurance in case you are a crime victim.

Congress is so generous in its subsidies for property that the public option for flood insurance even covers property built in flood prone areas. And you can literally buy insurance on the day of a flood in some cases, and 1 day before in others.

Along the Gulf Coast, on the barrier islands on the Atlantic, in below-water expanses behind river levees and in desert communities plagued by flash floods, our federal government is there using tax dollars to help take care of damaged property.

But people? Providing a public option so people can buy health insurance through the federal government is "socialism," according to Senator John Kyl, the Republican senator from Arizona, a desert state where flash floods are as permanent a feature of reality as sickness and injury. Will someone ask Kyl why he favors what he calls socialist policies for property, but not people?

And what about the denial of coverage you paid for, which so enraged Lott that he filed a lawsuit against his insurer, State Farm? Lott, like others, was told that their policies would cover the modest damage like broken windows and torn roofs caused by the hurricane's winds, but not the surge of storm waters, even though the wind drove those waters into Lott's living room.

Health insurance companies have found more than 1,400 reasons they can retroactively take away health insurance benefits from people, Congressional investigators found after digging through the fine print of insurance contracts. (You, of course, have read and understand every word in your health insurance contract, right?) A woman who had acne was denied breast cancer coverage, for example, though she later got her coverage restored.

And health insurance companies have become masters at digging up excuses to rescind policies, as shown by the recent hearings held by Representative Henry Waxman, who chairs the House subcommittee on Oversight and Investigations.

For-profit health insurers literally reward doctors who deny costly care to people, making corporate-run death panels a lucrative enterprise. As recounted in my book FREE LUNCH, Dr. Linda Peeno denied a heart transplant to a man she never met even though she was certain it would cause him to die. She did so in Kentucky, where she had a medical license, by stamping "denied" on a form even though the man was in California, where she was not licensed. Humana, one of the biggest for-profit health insurers, rewarded her and Dr. Peeneo got a conscience that caused her to stop that work and start working to end such abominations.

We have elevated property above human lives. That members of Congress who frequently proclaim their religious faith and cite the Bible as their guide would put property above people suggests they need to actually read the texts they claim guide them. Neither Jesus nor the Old Testament prophets ever put property first. They did however denounce those who did, labeling their deeds with a simple word: evil.

Two standards, separate and unequal, for the health of property and the health of people, are un-American. This bias in favor of property over people should be ended with all deliberate speed by raising the standard for people to that of property. A public option would be one small step in that direction.

Sunday, December 06, 2009

Cuts for Cooky: Art Laboe

The banning of cruising is among the many changes that LA's undergone in my lifetime. Popularized in George Lucas' American Graffiti," Sunday nights at East LA's Mecca, Whittier Boulevard, was the scene. The various car clubs all had their spots; among them, Groupe, Imperials, New Life, and my personal favorite, Orpheus, whose plaques were in the traditionally classic East Los Olde English style.

Right in the very heart of Whittier Blvd. is the Oracle of the Eastside sound, where any and everyone who is into the music we dug went - Sounds of Music.

In the age of the Net, with everyone jacking stuff, they're probably suffering. But years ago, more than I care to remember, they were the only ones who had Ralfi Pagan - though a Puerto Riqueno and originally from the Bronx, Pagan was an Eastside legend, and when he was mysteriously murdered it only added to his mystique - and Joe Bataan - part Filipino brother from Spanish Harlem - of the famous Fania label.


Casting a large shadow over the entire Eastside sound was one man; Art Laboe. Spinning oldies but goodies and taking dedications, everyone knew who he was, from politicians to vato locos and in between. As far as DJs, between Laboe and Wolfman Jack (the latter broadcasting from Mars via XERB, while everyone else's call letters in LA began with K; KPPC, KLOS, KMET, KROQ...), the two ruled the radio airwaves.

Later, he'd parlay his name into packaging and distribution via his "Oldies But Goodies" albums, and it seemed as though he had hundreds of them.

The following article finds Laboe still going strong in his 80's; in fact, Fish and I were out over the weekend, and I turned it to 92.3, and there he was, taking dedications from "Papos" to "Flaca." I'm sure it's like this for anyone who grew up with Art; every time I hear him it conjures up my tumultuous youth.


Radio legend Art Laboe and producer Tom Peniston inside Laboe's Hollywood studio. His show ranks near the top in its evening time slot, according to Arbitron ratings, and is popular among listeners 25 to 54 years old. (Jay L. Clendenin / Los Angeles Times)

LA Times, at:
http://www.latimes.com/news/local/la-me-laboe12-2009nov12,0,7073357,full.story


COLUMN ONE
At 84, Art Laboe's an oldie but still a goodie

After more than 50 years on the radio, the disc jockey is still going strong, playing sentimental songs and taking dedications. His deep, soothing voice is cherished by his Latino listeners.
By Esmeralda Bermudez
November 12, 2009

The disc jockey smiles when he hears Juanita Santos' raspy voice.

"Art," she says from her small town near Fresno, "I want you to tell my husband, Juanito, 'You're my Chicano king. I'm your booty- licious. I can't live without you. I'll never let you go.' And I want you to blow him a big kiss for me and play 'You're My Shining Star.' "

"OK, Juanita. Here goes that kiss. . . . Muaah!"

Phone lines flash six nights a week inside a dimly lit Hollywood studio where Art Laboe sits before his microphone, faithful to his old-fashioned format: playing sentimental oldies and taking dedications. For more than 50 years, his deep, soothing voice has been as cherished among Latinos in the Southwest as Chick Hearn's rapid-fire staccato once was among Lakers fans.

Listeners with nicknames such as Mr. Porky, Lil' Crazy, Big Papi, Bullet, Bugsy and Payasa call in from Oxnard, Riverside and Boyle Heights; from Phoenix, Albuquerque and Nevada. They are lonely women, rueful men, rapt lovers, entire families with squeaky-voiced children who ask Laboe to wish their grandmothers good night.

The 84-year-old disc jockey helps them celebrate anniversaries, mourn their dead and profess their love. He is the intermediary who reconciles arguments, encourages couples to be affectionate, sends out birthday wishes and thank yous.

His program, which is especially popular among listeners 25 to 54 years old, has consistently ranked near the top of its evening time slot, according to the ratings firm Arbitron. The Art Laboe Connection plays in more than a dozen cities in four states and draws about a million listeners a week.

"His show was the first place a young Chicano kid had to air his feelings, the first place you could say something and be heard," said Ruben Molina, author of two books on Chicano music and American culture. "It was like an intercom where you could tell the world -- our world -- 'I'm sorry' or 'I love so-and-so' and everyone knew the next day."

Messages arrive by phone, a few by mail. Sometimes Laboe reads them on the air:

Her name is Ana Ivette Vasquez and I want to let her know that I'm really sorry for doing her wrong, for all the tears she dropped and pain I put her through. I want to dedicate you this song from deep down in my heart: "I Need Love."

Other times he plays the recorded voices of listeners, who speak to him as to an old friend, often in a broken English laced with gangster slang.

I want to hear "Wasted Days and Wasted Nights" for all the firme homies from Orange County, from their homie Dreamer. I want to tell them to keep their head up and stay strong.

"He is more Chicano than some Chicanos," said comedian Paul Rodriguez, who grew up listening to Laboe. "And everyone from the toughest vato to the wimpiest guy would say the same."

::

Laboe eases into his leather chair just before the 7 p.m. start of his broadcast on HOT 92.3 FM. Tea and cough medicine are within reach. His producer, Tom Peniston, sits across a radio mixing board, munching on a sandwich.

The light blinks with the evening's first call:

This dedication is to Marcela Baca. I wish the family would just stop fighting. I wish we could all get along. This is Alex in Phoenix, Arizona. . . . .I want to play that song "So" by War.

Laboe comes to life on the microphone. He'll prod a shy caller to declare his feelings. He'll blush when another gushes, "Oh my God, I can't believe I'm really talking to you!"

He observes rules that he says keep him in business: Never flirt with a woman or call her "baby" or "honey" because it drives away male callers. Never ask if a caller is in prison -- it's not polite. Some in his audience have come to speak in a sort of code, referring to cities that hint that their loved one is incarcerated.

I want to dedicate "The Ship Won't Sail Without You" to my husband, Big, in Chino from Roxanne. I love you and I'll be up that way tomorrow.

Most important, the disc jockey never judges his listeners.

"Here's somebody . . . . who might feel that what they have going on is of little importance in life," Laboe said. "And now they come on the radio and their voice goes out to the whole world."

Laboe, just over 5 feet tall, has bulging eyes, bushy brows and a prominent nose. As a boy, he always was the loner, the Armenian kid other students barely noticed, especially girls.

Drawn by the anonymity of radio, Laboe started his own amateur station in 1938 out of his bedroom in South Los Angeles. He was 13. Back then, he was Art Egnoian and he had recently moved to California from Utah to live with his sister.

"The radio opened up new doors for a guy who wasn't a big, good-looking hunk," he said.

After serving in World War II, he did stints at various radio stations and changed his name to Laboe when a general manager said it was catchier. When rock 'n' roll struck in the 1950s, Laboe launched a live broadcast from Scrivners, a drive-in restaurant in Hollywood. Masses of teens crowded around him to request songs and dedications, and his career took off.

He wanted to be a concert promoter, bring in big bands. But the city of Los Angeles banned youths younger than 18 from attending public dances and concerts. So he decided to host shows in El Monte, which attracted teenagers from the Eastside and its growing Mexican American population.

Latinos poured in to see Chuck Berry, Ray Charles and Jerry Lee Lewis at the now-defunct El Monte Legion Stadium. Laboe played the rhythm-and-blues and doo-wop these youths craved. He compiled his fans' favorite songs on vinyl records, eight-tracks, cassette tapes and ultimately compact discs featuring Mexican American acts. He learned to pronounce Spanish names.

"It was never intentional," Laboe said. "The connection was there and when they came, I welcomed them with open arms."

Laboe became part of the emerging Chicano identity in Los Angeles, his voice and music the soundtrack of lowrider shows and nights spent cruising Whittier Boulevard. He is the only non-Latino selected as grand marshal of the East L.A. Christmas parade and is a favored award recipient among Latino organizations. At their functions, he says, he is often "the only white guy in the room."

These days he descends from his Hollywood Hills home in a black Jaguar and lunches at the Chateau Marmont.


His home decor features a nude portrait of Marilyn Monroe hanging above his bed, made up in pink-and-white sheets. A giant oil painting of his deceased cat, Baby, is the focal point of the living room. Motivational sayings written on Post-It notes (If you believe in your power to do great things, you will) share space on his refrigerator door with doctor's notices detailing the symptoms of a stroke.


He has lived in the home, mostly alone, since 1964, when he and his second wife, a Las Vegas showgirl, divorced. Most of his relatives, with the exception of two older sisters, have died. "My listeners," he said, "they are like a family."


Regular Laboe listeners include middle-age mothers and high-ranking politicians in the state Capitol. His fans identify with the melodramatic songs he plays the way Tennesseans identify with country music. Some callers express themselves in Laboe-isms, parroting the lyrical verses heard on the oldies show.


I want to tell him to 'Smile now, cry later' because 'I will always be there for you.'


State Sen. Gil Cedillo (D-Los Angeles) remembers cruising through Boyle Heights with Antonio Villar (later Villaraigosa) in the future mayor's canary yellow 1964 Chevy, bumping Laboe's music. It was the early 1970s, and Laboe was everyone's favorite uncle in the neighborhood, he said.


"There was no place else to be," Cedillo said, "but right there, listening to his music."


::


The crowd roars as Laboe steps onstage.


"We love you, Art!" young women yell in unison from their seats.


"You're the man!" the men holler.


It is the last hour of the Art Laboe Show LIVE concert in San Bernardino in September, and about 13,000 people, nearly all of them Latinos, are packed into the San Manuel Amphitheater.


Tattooed teenagers in baggy clothes sway in their seats alongside grandparents and children. Many slow-dance in the aisles and sing out loud as Evelyn "Champagne" King, the Manhattans and other acts perform songs that Laboe has helped keep alive.


The disc jockey emerges from backstage to introduce the last act. He is in his sixth suit of the evening, a gold polyester number that shimmers under red and yellow lights. He looks out into the audience and blows kisses.


"What a night! And it's not over yet. Wait till you see what we have coming up next."


Many of his fans, seeing his enthusiasm and hearing his vibrant voice, would never imagine the man on stage is almost 85.


"What is he?" asks a 16-year-old concertgoer. "I think 54. Or 63? . . . 61?"


No matter his age, Laboe has no plans to quit any time soon. He wants to syndicate his show in more states, enter the Radio Hall of Fame and learn how to use Twitter.


Yet radio is not the draw it once was. The recording studio he bought in the early 1960s no longer makes a profit and is up for sale. Some nights, a tired Laboe heads out early, leaving recorded dedications for his producer to read on the air.


Still, if the end of the Art Laboe era is approaching, his fans don't see it. Or don't want to believe it.


"I know he won't live forever," said Estella "Proxie" Aguirre, 67, a listener since the 1950s. "But I get a lump in my throat just talking about it. I love him like I love my husband, except Art Laboe and I never argue."


esmeralda.bermudez@latimes.com

Saturday, December 05, 2009

Cada de Lastima! Eh, You Thought!

As a kid I made my ma's head explode so many times, not the least of which when I was sent to continuation school, the notorious Vail Continuation. Aye, Madre de Dios, the stories I could tell. Okay, not a story, but here's one memory.

Vail was practically all guys, and the few chicks were scags. So when I got there, I of course do the typical scoping out, and couldn't help but notice Huera; she was really pretty, and not just in relation to the scags. But the thing is, she was a Chola, and I mean with a capital "C" as in plucked eyebrows penciled in, teased hair y todo.

So I couldn't pass up the opportunity to post this because it's too funny. Here's an Asian/Latina homey who's from the bay area but seems to know a lot about East Los, Gloria Nava, aka, Baby Smiley.

Aye te wacho, putas!

Friday, December 04, 2009

Flappin' Their Yaps

It was with a raised eyebrow greeting that I heard of Barack's "Job Summit" along with the word, "bullshit." More stage show, so "they" can appear as if 1. They care, and 2. They're doing something pragmatic, let alone relevant.

If anyone believes that something with teeth and traction emerges from this taxpayer funded way off Broadway show, I'm setting the over/unders at 2 years and let's be generous; let's say they employ 10% of the real number of (approximately) 20% under & unemployed,(~*~) including those who have fallen out of the system and those who've just given up. Now, I don't know what that number is, and maybe no one really does, but if we say there's 300 million here, then it's 60 million and 10% of that is 6 million jobs. Anyway, I have such faith in the ability of politicians and the American System's abilities to only really work for the elites, that I'll give 4 to 1 on the bet. If anyone's serious, closing's a week from now.

This should also illustrate something to the very vocal critics of the government and politicians, from the high, such as Peter Schiff, to the low, such as certain friends of mine who subscribe to the "government just mucks up everything" because they're idiots, incompetent, etc., etc. etc.

But this is yet again looking through the wrong end of the telescope; it's just a matter of perspective. I actually think government is too efficient. People need to step away from how events boil down to themselves and look at the effects in the world around them; hey, news flash, but EM08 didn't happen by accident, and that includes the bailouts without stipulations. Bailouts, lest we forget, that happened really, really fast and efficiently and that went against public consensus. Sounds pretty efficient to me - for elites.

For starters, there's my wheel house; conglomeration/concentration. Despite anti-compete/trust laws, elite money interests are conglomerated everywhere in America; oil, healthcare, mass media, autos, insurance, cell phones, retailing (with the largest conglomerate in the world), food production, electricity, water....

Then there's the American System's great facility at going after "the bad guys" - the real bad guys. Remember, I agree with Frank Luntz and marketers even before him who, in turn, was/were before Tom Friedman who is currently running around saying, "You name something, you own it." In this next example of the American System's efficiency, look at how it effectively eliminates or minimalizes counter views, again, from high to low. Look at the methods, appropriate again, from high to low. Eliot Spitzer, who had AIG (his heat was a huge factor in nailing Hank Greenberg) and investment banks in his sites, is taken out by the "sex scandal" bullet, while Dick Cheney prospered. Cheney, who has clear conflicts of interest and even treason following his sluglike slime trail in the form of the Plame Affair.

And right on time, on the "low" level, it's the 40th Anniversary of the assassination of Chi-town BPP Chairman Fred Hampton, as hard, revolutionary and charismatic as you wanna be. That cat was as electrifying as Malcolm, he was that bad. As is said by Caine about O-Dog in the Hughes Bros. Menace II Society, "He's America's worst nightmare; a nigga that don't give a fuck." (I of course wouldn't say worst; that's reserved for the devils, but, you know...) Hampton didn't give a fuck, but in this case it was what uncle scam thought. So of course, uncle scam couldn't have that, and basically bought off an informant - I won't mention the sucker by name cause he's not worth it - in order to get the layout of Hampton's apartment. At that point Hampton was just bum rushed in his own bed with his 8 month pregnant mother of his unborn son next to him (she survived) and assassinated him in cold blood! Of course, the spin afterwards was that it was instigated by Hampton, despite overwhelming forensics to the contrary, such as 90 shots going in and one that was fired by presumably Hampton's bodyguard straight up. By the way, among the rounds, some of it was machine gun fire.

Then of course post their cold blooded murder, uncle scam lied about everything, stating the "viciousness of the Black Panthers" and how the popo was basically reacting to Hampton's aggressiveness. Just remember that bullet ratio of 90 to 1.

Better than I is a word from my fellow American to put this "high and low" point in order; don't know his name, but I want to praise him. I was listening to some of NPR's take on the Job Summit, and the usual roundelay of experts from right and left. But then, the clouds parted and the sun broke through in the form of taking it to the streets with some "man on the street" takes.

The gem was what sounded like coming from an older black brother, and I paraphrase:

When the banks cried out that they needed help, they went ahead and gave them billions real fast. But now that there're millions of people out of work, they wanna talk about it.

This is the EM08 comment of the year, if you ask me.

=======================

(~*~) Let's also be honest - at least - and admit to ourselves that if the real under/unemployment numbers are near 20%, for black and brown peeps it's way higher.

In other words, a recession for all is a depression for people of color.

Tuesday, December 01, 2009

Plastic People

Frontline has done it again; they've managed to make my head explode.

I'd been putting off watching The Card Game which is Frontline's further explorations on these shitheads that are more commonly called bankers. Of course I succumbed, and like I said, my head exploded.

Then I found the following NYT piece, coincidentally with the same title as Frontline's documentary - in both cases, one of the most astounding facts was the uncovering of processing by the banks. The way the bankers are gaming the system is a procedural one, and it goes like this; so you move away from using your credit card(s) because you opt for the more sane debit card. However, the second you go over your limit, in this case, over your deposit amount, you are assessed a fee. Logical enough, right?

But here's the catch; say you make 4 debit card purchases throughout the day, and here listed chronologically; one for a $2 coffee at 8am, one for a $10 lunch at 12pm, one for a $50 mp3 player at 3pm, and one for a $125 pair of shoes at 4pm. The bankers will actually tally your purchases in non-chronological order so that it throws you over your limit more rapidly.

Let's say you've $150 in the bank now; you have a deposit as of yesterday for $400 that's yet to clear. As the days go on, the bankers are actually tallying the larger amounts first, even if they are in non-chronological order - if it gets you over the limit before your deposit clears!

The above is just a scenario, but generally speaking, this strategy is all about getting you to bust over the limit as quickly as possible so that they can assess penalty fees.

Chickenshit, right? Yup.

This is why I will never bank with a major bank again, and every single American should withdraw right now and go with your local community bank or credit union (pending due diligence, of course).

If a group with a head of steam would call for that, it'd be a real sea change, revolutionary in spirit if not action, and it'd be something I could throw my lot in with. In fact, as of earlier this year, I already have, withdrawing from one of the majors and depositing in my credit union.

Also, if you noticed, I most purposefully wrote "bankers" instead of "banks." This is because I'm more than tired of "banks" being faceless. Corporations shield individuals and that's a law that needs to be changed. Let's not forget, "banks" don't go after you like sharks in a feeding frenzy, BANKERS do. They and their support system of boards and investors.(~*~) You can shame a "bank," sort of, but we should never forget, bankers and their cronies sit in dungeons with the tortured hanging in cuffs from the walls, pleased by the screams. Call out the bankers, the people, by name, not some amorphous entity called a "bank."

If you need names, email me, or look here or here to see what these jerkoffs look like. At least.

Last, I agree with Peter Schiff on many, many things, economically. There's tons of stuff on him but I have been planning a post that is now coming to fruition soon. I've added him to my EM08 Dream Team, and here's - despite its Fox origin - a really good video of him talking truth to power, followed by the NYT article. He disagrees with one of the EM08 Dream Team-ers, Meredith Whitney, on credit cards in regards to taking them away from consumers. I love Meredith, but also thought that was funny logic when I heard her break down credit cards before. There's a qualitative difference between allowing people to go further into the hole - which, although not a certainty, given the history of Americans is a pretty safe bet - versus doing what needs to be done in terms of correcting a bubble that's at a trillion, and tick tick ticking like the time bomb it is.

There. Add that to the big pile of crap that is the post dumbya and present Barack world.



NYT at:
http://www.nytimes.com/2009/09/09/your-money/credit-and-debit-cards/09debit.html?_r=1

September 9, 2009
The Card Game
Overspending on Debit Cards Is a Boon for Banks
By Ron Lieber and Andrew Martin

When Peter Means returned to graduate school after a career as a civil servant, he turned to a debit card to help him spend his money more carefully.

So he was stunned when his bank charged him seven $34 fees to cover seven purchases when there was not enough cash in his account, notifying him only afterward. He paid $4.14 for a coffee at Starbucks — and a $34 fee. He got the $6.50 student discount at the movie theater — but no discount on the $34 fee. He paid $6.76 at Lowe’s for screws — and yet another $34 fee. All told, he owed $238 in extra charges for just a day’s worth of activity.

Mr. Means, who is 59 and lives in Colorado, figured employees at his bank, Wells Fargo, would show some mercy since each purchase was less than $12. In addition, a deposit from a few days earlier would have covered everything had it not taken days to clear. But they would not budge.

Banks and credit unions have long pitched debit cards as a convenient and prudent way to buy. But a growing number are now allowing consumers to exceed their balances — for a price.

Banks market it as overdraft protection, and the fees it generates have become an important source of income for the banking industry at a time of big losses in other operations. This year alone, banks are expected to bring in $27 billion by covering overdrafts on checking accounts, typically on debit card purchases or checks that exceed a customer’s balance.

In fact, banks now make more covering overdrafts than they do on penalty fees from credit cards.

But because consumers use debit cards far more often than credit cards, a cascade of fees can be set off quickly, often for people who are least able to afford it. Some banks further increase their revenue by manipulating the order of a customer’s transactions in a way that causes more of them to incur overdraft fees.

“Banks will let you overspend on your debit card in a way that is much, much more expensive than almost any credit card,” said Eric Halperin, director of the Washington office of the Center for Responsible Lending.

Debit has essentially changed into a stealth form of credit, according to critics like him, and three quarters of the nation’s largest banks, except for a few like Citigroup and INGDirect, automatically cover debit and A.T.M. overdrafts.

Although regulators have warned of abuses since at least 2001, they have done little to curb the explosive growth of overdraft fees. But as a consumer outcry grows, the practice is under attack, and regulators plan to introduce new protections before year’s end. The proposals do not seek to ban overdraft fees altogether. Rather, regulators and lawmakers say they hope to curb abuses and make the fees more fair.

The Federal Reserve is considering requiring banks to get permission from consumers before enrolling them in overdraft programs, so that consumers like Mr. Means are not caught unaware at the cash register.

Representative Carolyn Maloney, Democrat of New York, would go even further by requiring warnings when a debit card purchase will overdraw an account and by barring banks from running the most expensive purchases through accounts first.

The proposals carry considerable momentum given the popularity of credit card legislation signed into law in May. They also have a certain inevitable logic, since the credit card legislation requires a similar “opt in” decision from consumers who want to spend more than their credit limits and pay the corresponding over-the-limit fees. Overdrafts are simply the reverse, where the limit is zero, and the bank charges a fee for going under it.

But with so much at stake, the banking industry is intent on holding its ground.

Bankers say they are merely charging a fee for a convenience that protects consumers from embarrassment, like having a debit card rejected on a dinner date. Ultimately, they add, consumers have responsibility for their own finances.

“Everyone should know how much they have in their account and manage their funds well to avoid those fees,” said Scott Talbott, chief lobbyist at the Financial Services Roundtable, an advocacy group for large financial institutions.

Some experts warn that a sharp reduction in overdraft fees could put weakened financial institutions out of business.

Michael Moebs, an economist who advises banks and credit unions, said Ms. Maloney’s legislation would effectively kill overdraft services, causing an estimated 1,000 banks and 2,000 credit unions to fold within two years. That is because 45 percent of the nation’s banks and credit unions collect more from overdraft services than they make in profits, he said.

“Will they be able to replace it with another fee?” Mr. Moebs said. “Not immediately and not soon enough.”

They will certainly try. For instance, some banks have said they might slap a monthly fee of between $10 to $20 on every free checking account. At the moment, people who pay overdraft fees help subsidize the free accounts of those who do not.

Banks may also have to answer a question that many consumers ask and that Ms. Maloney has raised in her proposal: Why can’t banks simply alert a consumer at the cash register if they are about to spend more than they have in their account, and allow them to say right then and there whether they want to pay a fee to continue?

The banking industry says that simply is not possible without new equipment and software, costs that would be borne by consumers.

“If you think about when you swipe your card at, let’s say, Starbucks or at the Safeway or the Giant, there is no real sort of interaction there,” said Mr. Talbott. “It’s just approved or disapproved. So how logically would that work? Would a screen come up? Would someone at the bank call the checkout clerk and say, ‘That customer is overdrawn?’ Logistically that would be very difficult to implement.”

No one could have imagined this controversy decades ago, when the A.T.M. card was born. Back then, it was simple: when money ran out, the card was usually rejected by the banks.

But then A.T.M. cards started acquiring Visa or MasterCard logos, allowing users to “debit” their bank accounts for purchases. A thorny issue soon sprang up. What if there wasn’t enough money in a cardholder’s account to cover a purchase?

For years, banks had covered good customers who bounced occasional checks, and for a while they did so with debit cards, too. William H. Strunk, a banking consultant, devised a program in 1994 that would let banks and credit unions provide overdraft coverage for every customer — and charge consumers for each transgression.

“You are doing them a favor here,” said Mr. Strunk, adding that overdraft services saved consumers from paying merchant fees on bounced checks.

Some institutions do not see it that way, and either do not offer overdraft services or allow their clients to decline the service. “We’ve never subscribed to the notion that individuals who overdraw or attempt to should be allowed to do so without the opportunity to opt in,” said Gary J. Perez, the president and chief executive of the University of Southern California Credit Union.

A Source of Easy Money

But many of the nation’s banks have found that overdraft fees are easy money. According to a 2008 F.D.I.C. study, 41 percent of United States banks have automated overdraft programs; among large banks, the figure was 77 percent. Banks now cover two overdrafts for every one they reject.

In all, $27 billion in fee income flows from covering overdrafts from debit card purchases, A.T.M. transactions, checks and automatic payments for bills like utilities; an additional $11.5 billion arrives from bounced checks and other instances in which banks refuse to pay overdrafts, Mr. Moebs said.

By contrast, penalty fees from credit cards will add up to about $20.5 billion this year, according to R. K. Hammer, a consultant to the credit card industry. For instance, customers incur penalties for paying their bills late or by spending beyond the credit limit the bank has set for them. Banks also make billions in interest from credit cards.

Most of the overdraft fees are drawn from a small pool of consumers. Ninety-three percent of all overdraft charges come from 14 percent of bank customers who exceeded their balances five times or more in a year, the F.D.I.C. found in its survey. Recurrent overdrafts are also more common among lower-income consumers, the study said.

Advocacy groups say banks are making a fortune because consumers are unaware of the exorbitant costs of overdraft services. And banks, they argue, have an incentive to keep it that way.

That is what Mr. Means found when he approached his Wells Fargo branch in Fort Collins, Colo., to redress the $238 in fees he was billed. An employee explained that her ability to waive fees had been revoked by the bank because she had refunded fees for too many customers, Mr. Means said she told him.

Rory Foster, a former branch manager in Illinois, said that Wells Fargo based its compensation for managers in part on overall branch profitability. Fee income, including that from overdrafts, is part of the calculation.

A spokeswoman for Wells Fargo, Richele J. Messick, said the bank did not tie branch manager pay directly to fee collection.

‘I Can’t Afford That’

Yet fees, and how they are generated, remain a mystery to many consumers. Because regulators do not treat overdraft charges as loans, banks do not have to disclose their annualized cost to consumers.

And often, the price is enormous. According to the F.D.I.C. study, a $27 overdraft fee that a customer repays in two weeks on a $20 debit purchase would incur an annual percentage rate of 3,520 percent. By contrast, penalty interest rates on credit cards generally run about 30 percent.

“People would be shocked at how brutally high those fees are relative to the costs of a credit card,” said Edmund Mierzwinski, the consumer program director for the United States Public Interest Research Group.

Ruth Holton-Hodson discovered that the hard way. She keeps close tabs on the welfare of her brother, who lives in a halfway house in Maryland and uses what little he has in his account at Bank of America to pay rent and buy an occasional pack of cigarettes or a sandwich.

When the brother, who has a mental illness that she says requires her to assist with his finances, started falling behind on rent, Ms. Holton-Hodson found he had racked up more than $300 in debit card overdraft fees in three months, including a $35 one for exceeding his balance by 79 cents.

Ms. Holton-Hodson said she spent two years asking bank employees if her brother could get a card that would not allow him to spend more than he had. Though Bank of America does not typically allow customers to opt out of overdraft protection, it finally granted an exemption.

“I’ve been angered and outraged for many years,” she said. “When there is no money in his account, he shouldn’t be able to pay.”

Anne Pace, a spokeswoman for Bank of America, said the case was “complicated issue without any simple solutions,” but declined to elaborate, citing privacy concerns. She added the bank allowed customers to opt out of overdraft services on a “case-by-case basis.”

And when a consumer does overdraw an account, banks have found a way to multiply the fees they collect by rearranging the sequence of transactions, critics say.

Ralph Tornes, who lives in Florida, is pursuing a lawsuit against Bank of America for charging him nearly $500 in overdraft fees in 2008 after it rearranged his purchases from largest to smallest. In May 2008, for instance, Mr. Tornes had $195 in his account when he made two debit purchases for $8 and $13; the bank also processed a bill payment of $256.

He claims that Bank of America took his purchases out of chronological order and ran the biggest one through first. So instead of paying $35 for one overdraft fee, he was stuck with three, for a total of $105.

Mr. Talbott, of the Financial Services Roundtable, said some banks reordered purchases based on surveys showing that consumers want their most vital bills, like rent and car payments, which tend to be for larger amounts, paid before items like a $3 coffee.

Consumers who have been slapped with large fees as a result of this practice have a different perspective. “There is no reason they should get the little guy because he’s only got a few bucks in his account,” said Ryan Pena, 24, a recent college graduate who has filed suit against Wachovia, now part of Wells Fargo, for what he says are abusive practices, including reordering his purchases. “I can’t afford that.”

Officials at Bank of America and Wachovia declined to talk about specific complaints, but echoed Mr. Talbott’s remarks on processing payments.

The Debate in Washington

These lawsuits open a window onto the questions that government officials and banks are now trying to answer. Do consumers actually want overdraft service? Can they use it responsibly? If so, what is the best way to deliver it?

Federal regulators have acknowledged problems with overdraft fees since at least 2001 but have done little aside from improving disclosure and issue voluntary guidelines they hoped the industry would follow. That year, Daniel P. Stipano, deputy chief counsel for the Office of the Comptroller of the Currency, wrote that a company that markets overdraft programs to banks showed a “complete lack of consumer safeguards.”

In 2005, after intense industry pressure, the Federal Reserve ruled that overdraft charges should not be covered by the Truth in Lending Act. That meant bankers did not have to seek consumers’ permission to sign them up, nor did they have to disclose the equivalent interest rate for the fees.

That same year, the Federal Reserve said that some banks had “adopted marketing practices that appear to encourage consumers to overdraw their accounts.” It issued a list of “best practices” that asked banks to more clearly disclose overdraft fees, let customers opt out of overdraft programs and provide an alert when a purchase occurs that would put the account below zero. But critics said the recommendations had no teeth.

“No regulator has made any of their bank examiners adhere to best practices,” said Mr. Halperin, of the Center for Responsible Lending. “The result is over that time period consumers have paid probably upwards of $80 billion in overdraft fees while the Federal Reserve considers and considers and considers whether or not they are going to do anything.”

Officials at the Federal Reserve dispute that they have not taken sufficient action on overdraft fees, noting that they imposed tougher disclosure requirements in 2004 and are now considering additional regulations to address abusive practices. They will disclose their intent before the end of the year.

What no one disputes is that the stakes in the coming battle on overdraft fees are enormous. Ms. Maloney said she did not push her overdraft legislation this spring because the uproar from the banking industry could have jeopardized the credit card bill.

“It was very important to provide more tools to consumers to better manage their credit cards,” she said. “And now I think they deserve the same treatment with debit cards.

=============================

~*~ When corporations do bad things and are caught, they have armies of lawyers and banks of connections in order to work the odds in their favor. Instances like Enron's Ken Lay or Jeff Skilling, Tyco's Kowslowski and Bernie Madoff shown in court on the hot seat or getting sent to the joint are the exceptions. These kinds of exceptions serve the American System's purpose of The Big Game, which is to further the illusion of justice being practiced fairly. In other words, it's pr.

The real truth lies in "throwing money at problems," or fines. This is where the other corporate army comes into play, this time in the form of accounting pinheads. Here's how it works;

Say there's a malpractice case against "Big HMO" (BH). First, BH uses its lawyer army and political payoffs that garner connections to set a cap on payouts. They of course have help in the payout and lobbying realms from BI (Big Insurance) and who knows who else.

Second, and once the payout cap is set, let's say at $200k, now they have a number to work with. This is key.

Once the cap is set, and if BH sees its odds of winning as on the negative side, all the number cruncher pinheads have to do is figure out how long to prolong a case in order to payout from interest. This is part of the reason why, procedurally, cases are protracted and bog down; economic imperative.

Examples exist of corporations doing harm and getting caught, then paying what sounds like huge fines. In reality, the fines are often nothing compared to profits as well as in some cases, damages incurred. One need only look at Exxon destroying the livelihoods of the working class in Prince William Sound as a result of the Valdez oil spill.

The recent examples of the government bailouts are the most glaring examples of the way politicians, the judiciary and legislative branches, together with corporate lawyers and lobbyists all work toward creating goodwill for extremely bad, criminal people and business models. In fact, not only does "the system" support well-positioned bad people and business models when they fall on hard times, as we've seen with the TARP and auto welfare, the American system actually rewards bad behavior and bad business models!

The other salient aspect to "The Big Game" is the financial reporting and journalism by the mass media, itself a conglomerated mass of super corporations. (Of note as of this writing, mass media is about to conglomerate down even further, as it looks like the takeover of NBCU - itself a fairly recently conglomeration from Vivendi-Universal - by Comcast is about to go down.) By concentrating mass media down to a handful of corporations whose main objective is profit, elements of fair journalism are slashed; local bureaus and germane to covering corporate malfeasance, investigative journalism.

Thus, highly conglomerated mass media works against probing, concentrated and sustained journalism on corporations such as Halliburton, Goldman Sachs, JPMorgan/Chase... let alone the super conglomerates that control mass media. Meanwhile, there will be plenty of coverage about shootings, rapes, murders, car crashes, celebrity sex scandals, and all of the "run-of-the-mill" public gawking sans peeking around the wizard's curtain that would constitute hard looks at the American System.

This last point is but another expression of the American System that focuses resources on watching "the little people" in order to keep them in check. At universities and colleges, sociological studies aren't probing into the super rich elites and the American System that works on their behalf, let alone their political assumptions and they way they see those through to reality. They're more concerned with "Why do kids in the barrio have a 35% drop out rate?" There must be something wrong with "those people." On the street level, cops, let alone surveillance cameras, aren't going after nor watching politicians and corporations doing sweetheart tit-for-tat deals, let alone monitoring bankers and their machinations, they're sitting at speed traps or setting up cameras at intersections (both huge cash cows to cities, which, once again, intersects economics and justice), because, as everyone knows, and to paraphrase Dillinger, that's where the criminals are.