Wednesday, November 26, 2008

My letter from Citibank

Dear Taxpayer,

As you have read in the latest news, our financial institution has undergone some tough times. Some may say that we have brought this upon ourselves with our aggressive, high-risk approach to banking. And it's true that we've needed the intervention of the Federal government to stay solvent.

Like in 1929.
And in 1982.
And in the 90s.
And, well, this week.

Since we are feeling a bit guilty about our repeated inability to police our own actions, and our constant need for taxpayer help, we've decided to give you, a Citibank credit card holder and American taxpayer, a 6-month interest holiday. Congratulations!



(OK, that's what I think they should write.)

So, on the day I read about Citigroup's gotten an infusion of $20 billion from the US government, as well as a guarantee backing hundreds of billions of dollars of bad loans made by Citigroup, the following is an abridged version of the letter I've actually gotten from Citibank.

Notice of Change in Terms and Right to Opt Out

The Changes.
We are changing your Card Agreement. The changes will be effective for all billing periods beginning on or after December 3, 2008. The changes will be effective whether or not you receive a billing statement.

1. We are changing the following sections regarding APRs:

Default APR:
All your APRs (including promotional APRs) on all balances may automatically increase to the default APR if you

- do not make the minimum payment when due
- go over the credit line
- make a payment that is not honored

The default APR equals the greater of (1) the Prime Rate plus up to 23.99% or (2) up to 29.99%.

I really find the timing of this mind-boggling. Back when I first got this card, it was literally illegal (I believe) for any credit card to have a rate over 19.99%.

Bankers run an industry that has not developed a new product in millenia. It's always just money, in one form or another. So how have they maintained the illusion of a growth industry? By perfecting the art of predatory practices. The subprime loans that helped scuttle the mortgage industry are one example, and the predatory practices of the credit card industry are another.

It seems to me that, if the taxpayers are going to be asked to foot the bill to cover all the mistakes made by banks in the past decade, the least they could offer in return would be a cessation of the predatory practices that turn credit card debt into a disaster for so many Americans.

We could have
- a hard limit on maximum interest rates that is much closer to the prime rate. It makes no sense to have the Fed continually dropping the prime rate while letting the big banks charge 25% or more on credit cards
- regulation on the practices of assigning punitive fees and jacking up rates on credit card holders in tough times

It seems very weird to me that when Citigroup makes bad decisions, I have to pay, but if I make bad decisions (hypothetically), I have to pay.

Can we get President Obama and our Democratic Congress to do something to help credit card holders as a quid pro quo for the fact that we're getting stuck with the bill for their bad loan decisions?

Details on Citigroup's history from an article by Annys Shin.

(Cross-posted as diary at DailyKos)

Monday, November 03, 2008

election predictions

Well, it has become the fashion to publish predictions for the election. I just follow the news, but what the heck, seeing as I pick football games every weekend, why not do so for the election?


Well, of course Obama wins. He's well ahead in many of the polls.

As to the State-by-State particulars...

for starters, Obama will probably win every Kerry state. The only one that might flip is New Hampshire. McCain has been putting a lot of effort into trying to make a dent in Pennsylvania, but it will be for naught. I even think that he might know that, but feels that he has to make the effort, or else it will be obvious that he's given up.

For poll details, I suggest

The Bush states where Obama has been leading in polls include
Iowa (+>10%), New Mexico (+8-17%), Colorado (+4-10%), Virginia (+4-9%), Ohio (-2-+9%), Nevada (+4-10%). These have been leads of a reasonably consistent margin.

Other possibilities include Florida and North Carolina, where Nate Silver's simulations tend to favor Obama. Next in line is Missouri, which is the nearest thing to a true toss-up we see.

Red states that might flip in a true landslide include Indiana, Georgia, Montana, and North Dakota.

When I add the states in the first group to Obama's column, his total rises to 311. If I put all the states in the last group into McCain's column, he's at 174.

I'm going to put NC in McCain's column, and FL and MO in Obama's column. The last two are a bit dicey, as both states are notorious for voter suppression. But, what the heck, eh?

If all of this happens, Obama will win 349-189.

PoD says Obama will get 326. He flips NC, FL, and MO from my picks.

Landru says the exact same, but informs me "I said so first".

OK, so now I've changed my mind and switched NC and MO. That would make it 353 for Obama, 185 for McCain.

I have nothing to add about the House or Senate races.