Tea Party?

I don't like writing about politics. However, there was a very thought provoking interview on NPR today, and I must digress. This issue is almost too important to ignore.

Here's a link... you can listen to the program, and, of course, if you can stomach it, read the internet responses.

http://www.npr.org/templates/story/story.php?storyId=128624203

The discussion primarily addressed racial issues that have cropped up in the tea party movement. It also addressed the fact that there are black, democratic members of the tea party, in spite of what the general population believes.

But it got me thinking.

Let me first address the core fiscal concern of the tea party. From the outside, their message sounds like this:

"We hate Obama, we hate government spending, we hate tax hikes on the wealthy."

They are the few tea party members with loud, vulgar, hate-filled and occasionally racist mouths that give us this impression. But if you throw back to the Boston Tea Party, you see something different. Taxation Without Representation.

If I'm honest, I can actually support the idea of a modern day tea party - that being, that we don't have real representation in congress. It doesn't matter whether it's the right or the left - the lobbyists and big business owners run this country through their lobbying of lawmakers. That's something that any conservative or liberal politician with a shred of honesty will tell you, and in my personal opinion, it is one of the biggest threats to our nation's stability. People like you and I have almost no say over what decisions are made in congress.

Problem is, the tea party's supposed message gets lost in a sea of blatant right-wing lingo, which boils down to "don't raise taxes on the wealthy and stop spending money on government." Let's not even discuss the racism until later.

I don't favor excessive government spending. The national debt is deplorable. Fiscal responsibility is a high-minded and wonderful goal. But where has trickle-down economy gotten our society? I'll tell you. Take a look at GM executives flying private jets to Washington to get bailout money... or Wal*Mart moving into a small town and completely crushing out every ounce of local business... or the entire mortgage meltdown and the resulting Great Recession of 2008. That's where trickle down economy got us. If you honestly want to sit here as a reader and tell me that it's not the case, then you must have shit oozing out of your ears.

Government is spending in an effort to fix the preposterous amounts of damage done to this country by capitalists, who helped drive America into a painful recession. You can call that socialism if you want, and it very well may be, but you can't blame the Democrats or President Obama for that. If the rich fatcats aren't going to do something to fix it, then people like Obama will, because they are tired of watching the middle and lower classes getting trounced on by people who have far more than they ever could need.

What concerns me most is how violent things have gotten in the political realm. When I read about racist remarks from tea party members, or watch Glenn Beck act like a raving lunatic on Fox, I start wondering... how long? How long will it be before the guns come out, the riots flare up? To think that this country could see another civil war within the next five years is staggering, but altogether possible.

I think Americans should have the right to protest government spending. Free speech, the right to vote, the right to have your say are some of our most important core values. But when a group of people come across like child bullies in a school playground... well. First, you lose respect, and second, you plant a seed of division that is bound to turn violent at some point.

Usually, when the kid getting picked on decides to punch the bully back, it's not the fight of a proper boxer or the honor of a well-adjusted fencer. It's the brawl of a terrified, angst ridden wimp who fights ugly to preserve whatever he can, out of desperation.

I hope our society doesn't get to that dark place.

The end of Overdraft Charges... and Free Checking?

When I was sixteen, I opened my first checking account. I didn't have an ATM card, and check/debit cards simply didn't exist. All I had was a good old fashioned transaction register and checks. I discovered very quickly, and much to my dismay, that there was a $15 monthly charge for this checking account. Fortunately, I had some inheritance that was sitting in a custodial account, and all I had to do was keep a balance of $1,000 in the checking account to avoid the $15 charge. No problemo! Sure, once or twice I dipped below the $1,000 mark, but as a bucking high school student with genius level test scores and a good fiscal sense, I kept tabs on it and never had to pay that fee.

Along came this new fangled concept: a "debit card". I have to be honest - these scared the crap out of me. It probably took me two years before I finally agreed to have my very first debit card, and don't you know, it cost me $7 to buy one? It took me another two months to finally use it, and you'd better believe, I was a nutcase at the store.

   "Is there a fee for this?"
   "Well, it depends on what card type you have."
   "It's this one." I handed the card to the daft-faced kid behind the counter, speculatively eyeballing him while he stared dumbfounded at the card.
   Two minutes later.
   "Yeah, definitely, this one doesn't have no fee."
  "Mmm hmm. Okay, are you sure?"
  "Yeah, this one is a VISA debit card. There's only a fee if I run it like an ATM card."

Finally satisfied with what sounded like an intelligent answer, I proceeded with my transaction, and was not charged a fee.

Fast forward a few years. Here comes Fifth Third Bank, with the "Totally Free Checking Account". My ex-wife had suggested I try 5/3, because her parents swore by them. I'm like, "No way. There's no such thing as a checking account with no minimum balance and no fees. What's the catch?"

The catch, as many of you probably know, is overdraft charges.

You've got a guy like me, who keeps every receipt, records every one in the book, and balances to online banking about every week. Then you've got a huge chunk of people who, understandably so, assume that when they swipe that check card, it's immediately coming out of the account.

Not the case.

Depending on the merchant, it can take anywhere from five minutes to five business days for that transaction to even appear in your checking account. This is because various merchants will pay different fees for their credit/debit card transaction machines, and based on how much they want to pay, the transactions are either zapped to the bank immediately... on a daily basis... or on a weekly basis.

Therefore, any of you who are not as anal retentive as me with your check card reciepts and checkbook... have probably gotten hammered with cascading overdraft charges before. It sucks... but it's also why banks have Free Checking accounts. Simple math here, friends... $15 bucks a month for the account, or $0 bucks a month... with the possibility of racking up anywhere between $30 and $3,000 bucks a year in fees.

It's very similar to a concept I learned in college my professor called "The Delta Principle". Delta Airlines lowers their ticket fare... Continental has to do the same to be competitive and not lose business. So does Southwestern. The same principle applies in banking. It's why so many people have problems with overdraft charges, and it's the very same principle that got our country in trouble with subprime lending.

Now that you understand a bit more about overdrafts and the principle behind Free Checking accounts, let me tell you about Federal Regulation E.

Reg E mandates how Electronic Funds Transfers take place. This includes Check Card point of sale transactions. The changes mandate that a bank/credit union can no longer authorize a point of sale purchase into overdraft status without a customer's written permission. This change takes place August 15th, at which point all banks have to adhere to the rule.

Banks are generally calling this "Opt-In" and "Opt-Out". You are either "Opting In" to having transactions approved into overdraft status (and thus paying fees), or you are "Opting Out" - to which effect your transaction would simply be declined, causing potential embarassment or hassle, but avoiding overdraft charges.

PNC Bank, for example, is offering clients the opportunity to Opt-In or Opt-Out now. However, come August 15th, every customer who has not made a decision will be Opted Out (because they don't have their written permission yet). Consult your institution to see how they are handling it.

Side note - if you Opt In, I can almost guarantee you will never, ever, ever again get an overdraft fee refunded. You signed on the dotted line, you're paying the fee.

How does this affect Free Checking accounts? Here's how. In general, it costs a bank about $300 a year to handle a basic checking account. This takes into account things such as teller transactions, online services, service/maintenance needs, and check processing (which, by the way, is the most expensive service to run). In general, the exhuberant amount of money banks have made off chronic overspenders has more than buffered the cost of running a basic checking account. However, as you can well imagine, the people who have been hit the hardest with fees will be the ones who choose to opt-out, so banks are going to need to find another way to meet the bottom line. And no... CEO's won't be taking salary cuts.

Fifth Third Bank has already announced that they are going to cease offering the Totally Free Checking account. Who knows if and when they will stop offering it to their existing customers. Other banks are sure to follow suit (For the record, PNC and US Bank have announced that they will continue offering Free Checking accounts). What you may see are banks charging a basic monthly fee for accounts... unless you meet some other qualification that reduces cost. Such as:

•  Paperless statements
•  Accounts that limit checkwriting and/or branch visits
•  Accounts with a minimum balance requirement (banks re-invest these funds to gain revenue)
•  Accounts that focus on online/electronic activity, such as direct deposit

That's certainly a lot of information to digest, but it's wise to start thinking about it now. What can you do to avoid monthly service charges? What can you do to avoid getting stuck in BFE without gas and your card keeps getting declined? What can you do to avoid getting excessive overdraft charges since you chose to opt-in?

Consult your bank. And if you end up with some idiot for a teller or banker, come talk to me at PNC. My number is 513-272-4200 ext. 23827, and I'm paid to answer questions like these.

PS: Here's the link to the Government Website on Reg E:
http://www.fdic.gov/regulations/laws/rules/6500-3100.html

When Mistakes Haunt

Haunting memories are hard to overcome. It seems as if I'm reminded of mistakes on an almost daily basis. It's not that I go looking for these reminders. They're just there. They pop up at the most inopportune times and stick around in my mind like old chewing gum stuck on the sole of your shoe.

The biggest challenge with old mistakes is that you can't really go back and fix them. I mean, you're limited insomuch as the level of contact you have with the people or circumstances within which these mistakes were made. You might have the opportunity to go and right a wrong between you and someone else... but even if you do, that opportunity may not be here at the right time. The timing might be wrong, or you might just simply be too afraid of addressing that person... wondering what it might do to your friendship.

On the flip, and this is where it gets very difficult... sometimes, you don't have that opportunity at all. Sometimes you have to live with the guilt, or the pain, or whatever it is, simply because you can't go back and fix it. The mistake is done, permanent, etched into the tablet of your history without any chance of reversal.

Some might recommend that you simply put these things behind you. That's all well and good. I've done it time and time again. All it takes, of course, is some new circumstance that reminds you of past mistakes. We're not robots with a magic delete button. We're living breathing souls, and when we're reminded of some distant pain or mistake or memory, it comes back to haunt us. Terribly so.