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Overdraft Fees are Still a Problem

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(NNPA) A new report by the Consumer Financial Protection Bureau (CFPB) finds that overdraft fees continue to pose high risks to consumers, despite recent regulatory changes. The report focuses on the dreaded overdraft charge, the fees banks and credit unions collect for covering customer transactions that exceed checking account balances.

Sounds simple; but many times the terms that accompany these fees are complex, and too often the costs are out of proportion to the overdrawn amount. Variations in how transactions are posted to checking accounts and limits or the lack thereof on the number of fees allowed in a single day can be confusing and harmful to consumers. Even though practices vary among institutions, one thing is consistent: consumers lose tens of billion to overdraft fees every year.

For customers with only marginal bank balances, the costs incurred by overdraft fees can remove available funds for other household needs.

“What is marketed as overdraft protection can, in some instances put consumers at greater risk of harm,” said CFPB’s Richard Cordray. “Consumers need to be able to control their costs and expenses, and they deserve clarity on those issues.”

The CFPB found that overdraft fees on debit card and ATM transactions in particular are associated with higher rates of involuntary account closure. As a result, the affected consumers become less able to open a checking account at another institution.

The new CFPB report follows a 2010 rule by the Federal Reserve that required financial institutions for the first time to secure customer approval before enrollment in overdraft coverage for debit and ATM transactions. Wide variations in the number of “opt-ins” by institutions indicate that some are more aggressive than others in obtaining consent forms from their customers.

Following the announcement of the 2010 rule, the Center for Responsible Lending (CRL) noted that the rule did not address clear abuses that customers experience once they are enrolled, including the exorbitant cost of debit card overdraft coverage or re-ordering transactions to maximize fees. And because the size or frequency of the fees was not addressed, financial institutions have the incentive to secure as many opt-in forms as possible.

Previous research by CRL has found that:

· Most debit card transactions that trigger overdrafts are far smaller than the size of the overdraft itself;

· Most consumers surveyed would rather have their debit card transaction declined than have it covered in exchange for an overdraft fee;

· In 2008, Americans aged 55 and over paid $6.2 billion in overdraft fees; Americans aged 18-24 paid nearly $1.3 billion in overdraft fees.

CRL along with others including Pew Charitable Trusts, have also called for banning institutions from processing transactions from the largest to smallest. This change would diminish the number of overdraft fees charged and thereby free-up consumer monies for other items. In reaction to the CFPB report, CRL said, “We remain concerned about financial institutions that deliberately trigger overdraft fees by re-ordering daily transactions from the highest to lowest, often resulting in more fees from customers. This deceptive practice remains far too common despite fueling widespread litigation. . . .We look forward to future studies by the CFPB that will shed even more light on an issue that affects millions of Americans each year.”

Charlene Crowell is a communications manager with the Center for Responsible Lending. She can be reached at: Charlene.crowell@responsiblelending.org.

Pvt. Bradley Manning Deserves an Award, not Jail Time

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(NNPA) The court martial of Pvt. Bradley Manning for allegedly providing thousands of classified documents to WikiLeaks is the latest in efforts undertaken by this administration to crush whistleblowers. In fact, the Manning case is reminiscent of that faced by Daniel Ellsberg in the famous “Pentagon Papers” incident surrounding the Vietnam War. In the case of the Pentagon Papers, Ellsberg released classified documents concerning the Vietnam War to the New York Times. These documents revealed the criminality and hypocrisy of the U.S. aggression.

Yet, the Bradley Manning case is not simply the latest in a list of prosecutions. It stands as a particularly illustrative example of steps taken by an administration that had promised so-called transparency when Obama was elected in 2008. Instead, we have found something to the contrary. Not only have whistleblowers faced retaliation, the Obama administration has used the Espionage Act six times in order to squash whistleblowers.

The administration’s stand towards whistleblowers exists in stark contrast to its attitude towards both the criminality on Wall Street as well as the criminality of those who lied us into the Iraq war. In neither case have criminal prosecutions taken place. Think about it for a moment. The Bush administration manufactured evidence in order to carry out a blatant act of aggression against a sovereign nation. This aggression resulted not only in the deaths of thousands of Iraqis and U.S. personnel, but it has totally destabilized the nation of Iraq itself. Despite this, no one from the Bush administration has been prosecuted.

We can also look at Wall Street. Obama came into office in the midst of the worst financial collapse and recession since the Great Depression. Much of what accounted for the financial collapse was the result of criminal activity on the part of elements of the financial community. Instead of prosecution and jail time the perpetrators of this disaster had the audacity to insist that they were still entitled to their annual extravagant bonuses. Oh, and by the way, many of these same Wall Streeters, saved by the Obama administration from masses of people who wanted to string them up, ironically decided to side with Romney in the 2012 election. No good deed goes unpunished, I suppose.

So, let’s now go through the scorecard. Individuals who have attempted to identify criminal behavior by government officials, agencies, etc., face retaliation, and in the case of Manning, jail time. They are in some cases accused of providing aid and assistance to the enemy. What they did was to call things as they were and to point out precisely the sorts of activities that this administration claimed that it opposed.

Bradley Manning should not face any jail time. In fact, he needs to get an award for his courage.

The other night I was watching Spike Lee’s She Hate Me. If you have not seen it, take a few moments to do so. One of the issues that Lee raises is that the “little people” who do the right thing and call out injustices frequently suffer, whereas those in the elite who carry out the injustices, not only frequently get away with it, but they may gain some benefit. The classic example was Frank Wills, the African-American security guard who discovered the Watergate break-in. For an action that should have netted him a medal, he found himself ultimately cast aside and treated as, in effect, a criminal.

You may have expected more from the Obama administration. It won’t happen unless we insist otherwise. It is not just about Obama the man; it is about an administration.

Bill Fletcher, Jr. is a Senior Scholar with the Institute for Policy Studies, the immediate past president of TransAfrica Forum and the author of “They’re Bankrupting Us” – And Twenty Other Myths about Unions. Follow him on Facebook and www.billfletcherjr.com.

Why Black Business Programs aren't Working

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(NNPA) Last week, I explained why we have Black business programs. The evolution of them from the Civil Rights Movement and the Civil Rights Act of 1964 is the cause for their existence. Title VI of the Act and along with U.S. Supreme Court decisions justifies their existence. The most frustrating thing about it is the fact that most of them don’t work too well. Our collective gains in the public and corporate marketplace have been little and slow in coming. If we had genuine efforts and very positive results after 49 years of law there would be no need for affirmative action and minority participation programs. In other words, there would be no more discrimination in the business marketplace. But unfortunately, racism still raises its ugly head.

Let’s look at some examples.

The most important part of making someone eligible for participating in these programs is certification. For some reason, in 2008, the Small Business Administration ceased certifying Small Disadvantaged Businesses (SDB). This will open the door for false claims and fraud. The federal programs will become littered with “front” businesses participating as if they are small and disadvantaged. A million dollar White-owned business could now claim to be a SDB. Thus, there will be participation reports that are terribly inflated and misleading. Maybe that is what the SBA’s intent is since their current level for Black participation is 1.5 percent (in 2012).

State departments of transportation are required under Title VI to have diversity programs. The Los Angeles International Airport (LAX) chooses to have a strange version of a program. It’s the race neutral program. Programs that address racial discrimination by having a race neutral program are shams. In essence, race neutral means “White men companies only.” It doesn’t work and their numbers show it. In fact, the whole state of California is 54 percent ethnic minority but their procurement programs are virtually void of any acceptable measurement of Blacks, Hispanics, Asians and Native Americans. On the corporate side, Silicon Valley is a wasteland in terms of procurement diversity. It doesn’t do much better in its hiring practices either. Old Mississippi still lives – it’s in California.

Every five years, states and cities are supposed to perform a disparity study to determine if discrimination among businesses exist. The state of Illinois has recently done a study. The study shows that Blacks are the most discriminated group among all contractors (duh!). It calls for strict improvement in the goals. Funny, the governor’s office is trying to suppress the study because of pressure from White women groups who are over-utilized according to the study. The truth sometimes hurts and this state needs to come to terms with its ongoing discrimination against Black businesses. The Illinois Black Legislative Caucus should block all legislation until this study is implemented.

There is a similar situation in Milwaukee. The city’s recent disparity study shows Black businesses being heavily under-utilized while Hispanics and White women seem to have no discrimination against them. Guess who is suing the city to stop the implementation of this program? The Wisconsin Hispanic Chamber of Commerce. They want a race neutral program. I don’t know what kind of kool-aid they are drinking. Their law firm has ties to anti-affirmative efforts. Go figure.

There is also Jacksonville, Fla. Their recent disparity study is being held up by the city council. Black and Hispanic groups have come together to demand the implementation of the study which clearly shows Blacks and Hispanics terribly under – utilized. I think the city’s Black mayor ought to step up – sooner rather than later.

There are many cities and states that are recalcitrant in complying with Title VI and the two rulings of the U.S. Supreme Court. We have run out of patience. The National Black Chamber of Commerce, led by our chair, Dorothy Leavell, is going to go on the offensive. We are going to call out entities such as those listed above and put public exposure and pressure on these elected officials who are timid about addressing discrimination. My Lord! It has been 153 years since the Civil War began and slavery was finally condemned. Full citizenship is our demand.

Most cities with the biggest problem are without a functional Black chamber of commerce. If they do have one, it needs to step up its value to the local community and get involved or just shut itself down. The three poorest big cities with large Black populations are Detroit, Cleveland and Cincinnati. Yet, none of these cities have a really functional Black chamber of commerce whose focus is on Black business development.

Let’s stand up and make these programs work. It is on our shoulders and it is time to march.

Harry C. Alford is the co-founder, President/CEO, of the National Black Chamber of Commerce. Website: www.nationalbcc.org. Email: halford@nationalbcc.org.

A Closer Reading of Obama's Terrorism Speech

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(NNPA) I read the speech. I read it carefully. Again, an excellent speech; as a result, you have to read it closely to see what it is actually saying and what it is not saying.

The Obama administration is saying that the formal war against terrorism will come to an end…eventually. It is saying that the war was justified. It is also saying that the war against Iraq was misplaced, a point that the administration has been saying for a while.

Yet it is also saying that the U.S.A. went to war with a network. Let’s be clear that Al Qaeda is a very loose international network of terrorists. Are they deadly? Of course, but so is the Mafia. The notion of going to war with a network has always been problematic, particularly when that war justified targeted assassinations, bombings and invasions of various countries. It also became problematic when there was such a loose definition as to what constituted terrorism and, therefore, who actually is a terrorist and who supports terrorism.

This goes to a point that the president did not cover. The “war against terrorism” was never clearly defined as a war against Al Qaeda, though most people thought that that was the essence of it. Under the rubric of “terrorism,” all sorts of organizations were grouped, including groups that are engaged in military insurgencies but not terrorism, such as the Communist Party of the Philippines and their military wing, the New People’s Army. Also included in that list of terrorists has now been former Black Panther, Assata Shakur.

In other words, the war against terrorism has been used as a means of targeting a wide spectrum of individuals and organizations that have crossed paths with the U.S.A., irrespective of whether they have ever engaged in the targeted killings of civilians in order to advance a political agenda.

The president never renounced this.

The Obama administration felt compelled to speak out on its approach towards combating terrorism in part because of the growing storm around drone attacks. As I have said previously, drones are a weapon but the attacks could just as easily be happening as a result of piloted aircraft or snipers. The issues that this—and the former Bush administration—keep side-stepping have included the sovereignty of other countries; the failure to actually apprehend alleged terrorists and instead rely on targeted assassinations during which civilians have frequently been killed; and the question of whether targeted assassinations can be used within the borders of the U.S.

Like many people, I would like to believe that a new day is upon us. I would not hold my breath. This administration has been very hawkish on certain key international matters, including targeted assassinations. The long-term consequences of such hawkishness will probably be additional “blow back,” that is, actions taken against people in the U.S. as retribution.

We in the U.S.A. must speak up and demand clear and alternative policy rather than eloquent speeches. It will also necessitate that we stop cowering every time we hear the “T” word—terrorism.

Bill Fletcher, Jr. is a Senior Scholar with the Institute for Policy Studies, the immediate past president of TransAfrica Forum, and the author of “They’re Bankrupting Us” – And Twenty Other Myths about Unions. Follow him on Facebook and www.billfletcherjr.com.

Don’t let Bank Payday Exploit Seniors and Social Security

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(NNPA) The term “payday loans” often evokes images of stores with garish neon signs; but these products have moved into the banking sector that is supposed to be more respectable. About half a dozen banks now push payday loans, though they give them more enticing names such as “Ready Advance” or “Easy Advance.” Yet there is nothing easy about a loan with a triple-digit interest rate and terms designed to entrap.

Responding to public concerns and new research, federal banking regulators recently issued proposed rules and called for public comment on reining in bank payday lending.

Thus far, consumer advocates and lawmakers at both the state and federal levels have spoken up. The issue is generating even more notice because bank payday loans hurt senior citizens disproportionately. According to research by the Center for Responsible Lending (CRL), more than one in four bank payday borrowers are Social Security recipients.

Florida’s U.S. Senator Bill Nelson and Sen. Elizabeth Warren of Massachusetts together called for regulation that would specifically protect America’s older consumers. In a joint letter to the Office of the Comptroller of the Currency (OCC), the Senators cited their committee work as well as recent research by CRL.

“As Chairman and member of the Senate Special Committee on Aging, we take very seriously our responsibilities to seniors and elderly consumers who expect and deserve fair and transparent financial services,” said the Senators.

They added, “Social Security was created to provide seniors with financial support to help them cover basic living expenses not for banks seeking new sources of revenue by exploiting retirees with limited means. Therefore it is critical that banks be discouraged from using government benefits as proof of income, and we would hope such a provisions would be included in the final guidance.”

Earlier this year, CRL released new research that refuted the claim by participating banks that their payday loan products are only for short-term emergencies and carry marginal risks. Actual borrower experiences revealed a far different experience. Instead, the typical bank payday borrower:

Is charged an annual percentage rate (APR) that averages 225-300 percent;
Took out 19 loans in 2011, spending at least part of six months a year in bank payday debt; and
Is twice more likely to incur overdraft fees than bank customers as a whole.

At that time, CRL advised, “More than 13 million older adults are considered economically insecure, living on $21,800 a year or less. Senior women in particular face diminished incomes because of lower lifetime earnings and therefore lower Social Security and pension benefits.”

Although Florida is often characterized by its large senior population, the most recently available U.S. Census data reveals that elderly poor live in many locales. More than one in five elderly residents in Boston, Chicago, Houston, Los Angeles and three of New York City’s boroughs are also poor. Nationwide, the worst concentrations of elderly poverty were found in the Bronx at 38 percent and Manhattan with 30 percent.

In its comments to OCC, CRL advised, “Though the number of banks making payday loans remains small, there are clear signals that bank payday lending will grow rapidly without strong action by all the banking regulators. . . . At a time when older Americans have already experienced severe declines in wealth resulting from the Great Recession, banks take these borrowers’ benefits for repayment before they can use those funds for health care, prescription medicines or other critical expenses.”

It appears that Senators Nelson and Warren would agree.

“Left unchecked, deposit advances pose a significant credit risk to the banking system, particularly if offered by an increasing number of banks,” concluded the Senators. “In the aftermath of a debilitating financial crisis and the ensuing economic recession, it is critical that banks maintain high quality underwriting standards for all types of loans, including deposit advances.”

Charlene Crowell is a communications manager with the Center for Responsible Lending. She can be reached at: Charlene.crowell@responsiblelending.org.

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