Who Stole the American Dream?

The Heist: Who Stole the American Dream and How We Can Get It Back

Directed by Frances Causey and Donald Goldmacher (2012)

Film Review

The Heist traces the banking regulations Roosevelt enacted during the Great Depression – with the goal of preventing future economic cataclysms – and the systematic dismantling of this regulation that commenced in 1971. The documentary credits this deliberate attack on the financial regulatory system for the 2008 meltdown, the decimation of American unions, the total control of federal government by Wall Street corporations, and the most unequal economic system in the world.

The filmmakers date this orchestrated attack on US financial regulation to the Powell Memo,* which the Chamber of Commerce and Business Roundtable seized on to launch twelve right wing pro-business think tanks (including the CATO Institute, the American Enterprise Institutes and the Heritage Foundation). Funded by six families, these foundations were created with the deliberate aim of capturing business schools and the media with fundamentalist free market ideology. They proceeded to lobby all levels of government for tax cuts on the rich, as well as financing focus groups and psychologists to develop propaganda persuading blue collar workers to vote against their own interests.

In 1980, they succeeded in convincing large numbers of blue collar Democrats to vote for Reagan. In addition to implementing tax cuts for the rich that created the largest federal deficit in US history, Reagan also repealed the Fairness Doctrine,** opening the door to a radio talk show market 90% dominated by right wing talk show hosts like Rush Limbaugh.

Guided by the Powell Memo, right wing Democrat Bill Clinton repealed the Glass Steagall Act,***, deregulated derivatives trading, gutted the Federal Communication Commission’s authority to regulate media monopolies, and sped up the outsourcing of US jobs through the enactment of North American Free Trade Agreement (NAFTA), the Global Agreement on Tariffs and Trade (which created the World Trade Organization).

Obama would prove even more pro-business than Clinton, with his refusal to prosecute the banskters he bailed out, his appointment of GE CEO Jeffrey Imelt (a notorious job outsourcer) to head the President’s Council on Jobs and Competitiveness, his promotion of the myth that Social Security is insolvent, his deregulation of private pensions, and his support for the Transpacific Partnership (TPP).

The film features great clips from Elizabeth Warren, Bernie Sanders, Paul Craig Roberts and Ross Perot (speaking out against NAFTA during his 1992 presidential campaign).

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* The Powell Memo was a memorandum Lewis Powell prepared at the request of the Chamber of Commerce. It remained secret until after his appointment to the Supreme Court. The Powell Memo

** The Fairness Doctrine was a policy of the United States Federal Communications Commission (FCC), introduced in 1949, requiring the holders of broadcast licenses both to present controversial issues of public importance and to do so in a manner that was—in the Commission’s view—honest, equitable, and balanced.

***The Glass–Steagall Act, passed by Congress in 1933, protected customers’ deposits by prohibiting commercial banks from engaging in investments. It was enacted as an emergency response to the failure of nearly 5,000 banks during the Great Depression.

 

 

How Banks Use Credit Cards to Rip Us Off

The Secret of History of the Credit Card

PBS (2004)

Film Review

The Secret History of the Credit Card is an old Frontline documentary featuring Senator Elizabeth Warren when she was still a Harvard law professor and ex-New York governor Elliott Spitzer when he was still state attorney general. It traces the “secret” repeal (and circumvention) of state usury laws that allowed banks to charge as much as 30% on credit card loans. This, in turn, made credit card banks the most profitable companies in the US. In 2003, several of them earned higher profits than MacDonald’s or Microsoft.

In 1981, when Citibank made its infamous deal with South Dakota, high interest rates were causing a massive loss for credit card companies. Although they paid 12% on average to borrow funds from other banks, state usury laws capped the interest they could charge customers at 9%. In return for South Dakota’s pledge to repeal their usury laws, Citibank agreed to move their entire credit card operation to Sioux Falls South Dakota.

The documentary goes on to explore the various marketing ploys the credit card industry employs to con consumers into increasing the credit card debt on which they pay 18-30% interest.

In 2003, approximately 90 million US credit card customers were “revolvers” (paying 18-30% interest on monthly balances), and 51 million were “deadbeats” (the industry term for credit card users who get “free” credit by paying their full balance every month).

The filmmakers are also highly critical of the Office of the Comptroller of the Currency (OCC), the Treasury division charged with regulating banks. They provide several examples of attempts by the OCC to undermine the ability of state prosecutors to protect consumers against credit card companies’ flagrant lawbreaking.

In 2004 when this documentary was made, the Better Business Bureau received more complaints about credit card companies than any other industry.

For copyright reasons, the video can’t be embedded. It can be viewed free at http://topdocumentaryfilms.com/secret-history-of-the-credit-card/

Also see Credit Card Nation – a great book on the credit card rip-off.

Obama Loses Senate Vote on TPP(A)

Wellington anti-TPPA protest Nov 2014

Yet another victory for our side. The tide seems to be turning against corporate America.

Today the Guardian reported that Tuesday’s 52-45 senate vote shut down further discussion of the Transpacific Partnership Agreement. Owing to the threat of filibuster, this procedural vote required at least 60 “ayes” in order to let the Senate host discussions on whether or not to give the president “fast track” authority.* Failure to reach that threshold puts the future of the TPP(A) in jeopardy.

The proposal was defeated by Democrats wanting to add measures to protect US workers and prevent currency manipulation.

Most analysts agree that the eleven other countries negotiating TPP(A) are unlikely to agree to the treaty unless they know the US Senate will approve it without modification.

Many also believe the setback spells an end to any chance the US will sign up to the TPP(A) before the next US presidential election in late-2016.

According to the Guardian, TPPA opponents have been emboldened by the growing influence of liberal senators Elizabeth Warren and Bernie Sanders and were joined by all but one Senate Democrat in voting against moving forward with TPP.

Only one Democrat, Senator Tom Carper of Delaware, backed the measure. Pro-trade Oregon Senator Ron Wyden, who championed the fast track measure in committee, changed his vote to “no.” He’s insisting that fast track be bundled together with three other trade bills, including one that would impose import duties on countries that manipulate their currencies for unfair trade advantage.

TPP is a secret treaty being negotiated behind closed doors without input from the public or elected representatives. Documents released by Wikileaks in March revealed the TPP(A) has a clause known as Investor State Dispute Settlement (ISDS). It means if local or national governments enact legislation for greater environmental protections, health regulations or rules to assist local businesses – anything that interferes with foreign corporations’ profits – the corporations can sue them in secret tribunals run by corporate lawyers.

Here in New Zealand, we are especially concerned about a clause in the leaked text that would allow pharmaceutical companies to sue us for using generic drugs (in preference to brand named drugs) in our National Health Service. We’re also concerned the TPP(A) would enable Monsanto to sue us over laws that prohibit farmers from planting GMO crops.

Besides the US and New Zealand, the other 10 countries involved in TPP(A) negotiations are Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico Peru, Singapore, the and Vietnam.

Read more here

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*With “fast track” authority, the Senate would be forced to vote a bill approving TPP(A) up or down without amending it.

Financial Exploitation of Communities of Color

Dream 2015 is a shocking new report describing the systematic impoverishment of people of color. By denying them access to banking services (eg checking accounts to cash their pay checks), Wall Street forces them to rely on fringe financial services, such as check cashing outlets, payday loans and auto title lenders. As Robert Manning writes in Credit Card Nation, many of these predatory outlets are owned by the big banks. Charting interest rates as high as 730% a year, they siphon off $103 billion annually from desperately poor communities.

In 2014, 16.7 million Americans were “unbanked,” ie had no access whatsoever to banking services. Another 50.9 million were “underbanked.” The “underbanked” typically have a checking account but lack access to small dollar loans and other banking services.

A total of 53.6% of black households and a total of 46.4% of Latino households are unbanked or underbanked. The most common reasons given are the absence of full service banks in communities of color and insufficient income to meet minimum balance requirements and overdraft fees. Ninety-three percent of all bank branch closings in 2008 were in zip codes with below median income.

Dream 2015 proposes a number of practical solutions to a problem that clearly plays a major role in growing poverty and income inequality. Among other potential solutions, they propose

• Enacting federal legislation capping interest and limiting the size and length of payday loans. Seventeen states have anti-usury laws, but according to Manning, fringe financial companies evade these laws by incorporating in states that don’t have caps. An existing federal law prohibits lenders from charging military personnel more than 36% annual interest – this protection needs to be extended to all Americans.
• Strengthening the Community Reinvestment Act to require all banks to provide small dollar loans to the communities they serve.
• Strengthening the Consumer Financing Protection Bureau.
• Strengthening public-private partnerships such as Bank On and Lending Circles  that provide microlending* services to communities of color.
• Modernizing US electronic payment technology. In the US electronic transfers take three to five business days to be credited to the recipient bank account. In most other countries (including New Zealand and Mexico), electronic transfers take at most a few hours.
• Expanding financial services at all 36,000 US post office branches to include checking, debt, savings and small loan services.

In my view, the latter is the most practical and easily implemented. Last year Senator Elizabeth Warren argued eloquently argued for it in the Huffington Post. There are post offices in most communities, regardless of income level, postal workers already get financial services training (because they sell money orders), and it would provide a new source of income now that digital communications are eroding the demand for snail mail service.

The US post office used to offer postal savings accounts between 1911 and 1917. They were phased out because they couldn’t compete with the higher interest rates banks offered (no longer an issue now that US banks pay less than 1% interest on savings).

Presently France, Germany, Japan, China, Brazil, India and New Zealand offer banking services in their post offices. New Zealand’s Kiwibank is a full service bank offering low cost credit and debit cards and mortgage loans in addition to checking and savings accounts. They also have some really clever TV ads.**

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*Microlending or microcredit is the extension of small loans to enterpreneurs too poor to qualify for traditional bank loans.

**The surly looking suits represent the Australian banks that own all but one of our private banks.