Wednesday, November 4, 2009

Connectedness again; or Apophenia Part III; or Banks are Evil

PART 1. The other day I read that 74% of all bankruptcies were related to a catastrophic illness in the family, which was not covered all or in part by any insurance. This number is one of the data points used to heighten awareness for the public debate on health care reform, at least in part because of the impact on the economy. Now if this statistic is true, wouldn't you think the banking industry would be pushing congress hard for health care reform? Have you seen any evidence of such? If they are doing so, I haven't seen anything from them on TV or the internet, or on the 2-3 times a week I read the paper. And I watch a lot of TV. Isn't bankruptcy logically connected to the even larger number of sub-prime loan defaults? Shouldn't the banks care???

PART 2. According to, a website of the Center for Responsive Politics, there are 904 active lobbyists for the Department of Health and Human Services. It is 4th in rank for registered lobbyists only after both houses of Congress and the DoD. From a cursory review, not one of the 904 was a bank (I checked all the "Bank of..." possibilities, and looked up a couple big names--they weren't on the list). As you might expect, the list is largely pharmaceutical companies and medical profession associations. If the banking interests are hidden by virtue of large holding or parent companies whose names I don't recognize, then my observation is flawed; but I'm betting not. By issue, namely Health, 2,271 lobbyists filed reports with the government in 2009 and again I could find no one from the banking industry among them. Moreover, health care was the number one $$ expenditure by Federal lobbyists this year. Here's a link with more info:

PART 3. Assuming banks are well aware of the connection, we are left to wonder how seriously bankruptcies actually affect the banking industry. Apparently banks can still see a profit through write-offs. Forget altruism for a moment, if there was a potential profit to be had, or even cost avoidance, shouldn't the banks be more vocal about helping people avoid bankruptcy? So, what does the banking industry lobby for? Well, there was the big change 10 or so years ago that allowed them to enter the mortgage industry--the sub-prime disaster a result of this and poor oversight by our government. But they are keeping busy--these days the banks are hustling to change peoples' charge account terms to beat out the deadline for Pres. Obama's charge card reforms. We've received notices from Citi, HSBC and Capital One telling us what they're going to do. Reining these people in is most welcome, but most importantly, banks are still allowed to charge the highest interest rate to the poorest people under ceretain circumstances.

Few people read this blog, but if anyone can point out to me how these comments are flawed I will gladly print a retraction and sheepishly fold my tent. Takers?

Subnote: Lots of talk about what the President hasn't done that he promised to do pre-election; personally I knew he couldn't close Guantanamo and get us out of SWA immediately and yet I still voted for him. Face it, once you're in the seat you find out a lot more about the wheels within wheels complexities of these issues, and have to deal wisely with all of it. Here's two things he did do: first, the aforementioned credit industry changes, fixing what he characterized as "unfair" but I call downright evil; second, he issued Executive Order 13490, which created new restrictions on former lobbyists appointed to the executive branch. Read this second one as stopping lobbyists who used to be members or have unprecedented access to insider influence with administrations--a direct assault on unfair advantage gained by "insiders." Yay Prez!

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