2.19.2012

Geez.. I Hate Banks

But then, now that I know how to play the games, I should love them...

Online Banking
I tend to be ahead of the curve when it comes to technology, so it should be no surprise I've been banking online longer than most.  In fact, my bank itself is virtual - no brick and mortar locations (okay to be fair I DO use a local bank, but it isn't my primary bank).  

Of all the great benefits of banking online, one giant benefit doesn't exist, and banks won't allow it.  I'm talking about the overdraft charge.   

People like myself who automate payments online do so because we fully expect to have the cash in hand at the time payment is due.  And for the most part it works out well.   There have been one or two instances where I accidentally set up payments every week as opposed to every two weeks and as a result was overdrawn.  Which leads to this question - If my bank sees there's not enough money in the account, why process the payment anyway?  

The answer of course is fees.   Online banking, if a bank really cares about its customers, could prevent most overdrafts (it won't eliminate overdrafts though).   But banks do not care about its customers, they care about shareholders.  Of all the banks I've done business with, only one - just one - automatically cancels a scheduled payment if there's not enough cash - ING Direct.  I was really impressed with this online bank for a lot of reasons, but when I saw how they handle potential overdrafts, it really won me over.   Unfortunately the bank was sold to Capital One, and since I'm already familiar with Capital One, I had to dump that bank.

My challenge to all banks:  provide me with a means to avoid overdrafts and I will consider using your bank.   Note:  I said avoid overdrafts - which means prevent, stop, evade, cease, avert, overdrafts.  It does NOT mean I want your "overdraft protection" - which requires I put MORE money in your bank.  

History of Overdrafts
There is a bona-fide reason for overdrafts.  And I should note that I appreciate the "service" my bank gives me when it comes to withdrawing more money than I have available.   

For example, if my bank rejected a check I wrote to cover my rent, the landlord would A) charge me a bounced check fee, B) require all future payments to be made by money order, and/or C) sue.    In such a case, I would gladly pay my bank $35 to cover that check.   Of course the bank would gladly accept my money.  


By doing so, the bank can help preserve your credit rating.  In other words, if that check were allowed to bounce, your landlord will quickly report you to the credit rating agencies which in turn will make it exceedingly difficult for you to obtain credit or employment at a later date.  So by covering that check, the bank is doing you a big favor.   


An aside to that, the banks had a process of paying the larger sums first.  The idea was that for most people, the two biggest checks written each month were for rent and for a car note.   Both of which have a big impact on your credit score. As a result, you can get hit with an overdraft of $35 for a $5 cup of coffee even though you made that purchase before you wrote the check to your mortgage company.  Unfortunately for banks, that makes the situation worse because the perception is they are penalizing their customers for minor transgressions.  That rule has been made illegal under the new Banking Law.  It remains to be seen if it will be helpful or not. 

But those scenarios apply to checks - a financial instrument that can float (meaning I give a promissory note to a vendor, who in turn cashes at his bank at a later time).  In the modern era, I and many people like me do not write checks.  We pay either by ATM or online - both of which are transactions that do not float (meaning nearly instant).   Instead of a promissory note I give to a vendor, I tell my bank to pay the vendor directly.   A caring bank would tell me - "hey, you don't have enough money.  We won't honor this request".  What I have is a bank that gleefully pays my $5 latte just so it can tack on $35 in overdraft fees.  

And Now....
In addition to not providing me services I really want, banks have taken my tax money too!   How rude!   


Fortunately, I have the US Government to get my money back and I have reason to believe they will.  Other bailouts generated revenue for the US Treasury.  Banks are making money and eager to pay back these bailouts.  Shortchanging Uncle Sam would be bad for business.  


I now know how they make their gains - and their gambits.  And I've learned they do not want consumers to do what they do.  In short, banks borrow money to make even more money.  It was legal before the financial crisis and is still legal after the crisis, but with more scrutiny from regulators.   Big banks do not want Joe Schmoe to do the same because they fear they won't get their money back.   So on a lot of loans there are restrictions on what you can do with that money.  For example, you cannot take out a loan for a house and then buy stocks with it.  It MUST go to the house you said you were buying.  


But I have news for them.  I am going to beat them at their own game.  I won't break the law, and I'm not advocating for anyone breaking the law or lawful contracts, but all contracts have loopholes and I've found mine.   The result:  the next loan I get will go to my favorite stocks.  I've been investing with Monopoly money, and have done quite well.  I have also invested with real money and did well, just not as well as I have lately.   The goal - make my bank pay me, instead of me paying my bank.  


Of course, I'll keep you updated on my progress.  






Idiota - Santorum is Missing a Few Marbles

Former Pennsylvania Senator Rick Santorum Says Obama Thinks Man Should Serve the Earth 



I'm trying to be open-minded to this man, but he doesn't make it easy.  He says man's role is to husband the earth's resources and be good stewards of the earth.  Well said, but wrong.  Mother Earth has been here for billions of years and man has only been here for a tiny fraction of that time.  She doesn't need a man.  

To go deeper... If mankind were to die today, Mother Earth would keep on turning and frankly, over time, would repair the damage we did.    However, if Mother Earth died today - she'd take us and all living beings with her. So to say the Earth is a priority over Man is correct.  Her fate is our own.  Civilizations throughout the ages knew that.  For some reason, we've lost that focus and so has Santorum.  Fortunately, Santorum has reminded us that President Obama has not lost that focus, so there is hope for us all if we re-elect Barack Obama.  

I think what he's trying to say is our focus should be on ourselves (what else would an alleged conservative say?), and tend to the earth after damage is done.   For example, in his mind, there's no need for regulations on oil companies.   Let them do their thing and when the next Exxon Valdez or Deepwater Horizon disaster comes up (and it WILL) then we'll worry about how to clean it up.   

Most of the rest of us know we cannot wait until disaster happens to fix things.  It's too late then.  We cannot wait until global warming becomes irreversible - we'll all be dead by then.  And just because it's unlikely that "The Event" will occur in our lifetime doesn't mean it won't happen and doesn't mean we should disregard it.  Our descendants will bear that cost if we do nothing.  A conservative - especially ones who speak so passionately about public debt - should understand.  Santorum doesn't.    



Mr. Santorum goes on to talk about his ideas on education.  He says parents should run schools, not the federal government, not the state, not local municipalities - but parents.   It's an idea of a long by-gone era - pre-Civil War America - where communities came together to build schools.   In this idea, Mr. Santorum has a point - but a woefully misguided one.   

For starters, parents are no longer involved in education as we once were.  It is a travesty, but the truth.  Particularly in poverty-stricken areas in America where the parent either works two jobs just to keep food on the table or strung on out crack or too drunk to attend or care about Parent-Teacher meetings.  The same is true in many suburban school districts.  For whatever reason, parental participation has fallen off a cliff.  

But let's take Mr. Santorum at his word - his idea that parents run schools.  Okay, then who decides on where the school is located?  Who decides which contractors to build a school or an extension?  Who interviews the teachers?  Who will discipline the kids (and the teachers) when needed?  Who will make up the curriculum for teachers to follow?  Who decides on teacher pay?  Who is responsible for maintenance and upkeep of the school?  We can get Newt Gingrich and his kids to clean the bathrooms so that shouldn't be a problem, but what if the plumbing breaks?  Who fixes it? Who is responsible for fire, tornado, hurricane, earthquake evacuations?   

It's a full time job to run a school.  The parents would need some mechanism to hire a superintendent, pay him/her a fair salary and give him/her clear directions on what they want from the school.  Parents cannot get together to meet on every such decision they run busy lives themselves, hence the idea of a school board.  Then there's the money.  What are parents to do, pass around a collection plate every month and deposit funds into a PayPal account?  No!  The most logical mechanism for collecting money to pay for school is through the local and state government - through property taxes and school bonds.  

So, Mr. Santorum, if America were to take you up on your fabulous offer to turn back the clock to 1812 we would simply wind up right back where we are today - albeit woefully unprepared for the modern era.  We don't have time for fanciful time travel, so suck it up!  The people who are going to elect you are perfectly okay with public schools being public!   So if you want to help, work with what we have already agreed to.  As I've said many times:  either lead, follow, or get out of the way.  

NPR Topics: News