Get Giant Lenders Off Corporate Welfare

February 27, 2010

corporate welfareBy Nicole Mayer:

Eliminate the middle man and you pay less.  Everyone knows that.  So, once and for all, it’s time to save the taxypayers some money by removing private lenders from the process of writing government backed student loans.  It’s a concept the Obama administration has embraced and is pushing to make a reality.  Consumers would be much better off if they would just hurry up.

Time to Get it Done

It was one year ago that President Obama first unveiled a proposal to have the government take control of the federal student loan industry.  The plan was to eliminate the Federal Family Education Loan Program (FFELP), in which private lenders service federal loans and rake in big bucks doing so.  A June 2009 analysis conducted by the Congressional Budget Office showed this switch could result in a savings of $87 billion in taxpayers money over the next ten years.

A Washington Post article in May 2009 noted, “for the past two decades, every attempt to overhaul the $85-billion-a-year student loan industry by eliminating subsidies to lenders has faced insurmountable opposition from one of the most powerful institutions in the business: Sallie Mae, the world’s largest student loan company.”

However, when President Obama unveiled his plan in 2009, Sallie Mae curiously didn’t come out full force against it.  In fact, Sallie Mae’s February 26, 2009, press release stated “We commend President Obama’s call to invest savings from low-cost federal funding sources to help students achieve their education goals.” Sallie Mae was “committed to delivering and servicing federal student loans regardless of the funding source.”

Get Giant Lenders Off Corporate Welfare

The plan seemed like a no-brainer.  Get giant lenders like Sallie Mae off corporate welfare and give money to students who need it.  The House of Representatives gave its approval by passing the Student Aid and Fiscal Responsibility Act of 2009 on September 17, 2009, with a vote of 253-171.

But the tides have changed. Today, the student lending bill is stuck in the Senate. It is now vulnerable to revision, weakening and delay.  Even if it survives revision, there are doubts over whether the Senate will pass the bill any time soon.  Democratic support for the bill is weaning along with the many Republicans who have already expressed opposition.  So, what happened?

What Happened?

Let’s look at the timing of this. In February 2009, Sallie Mae, the source of the heaviest student loan lobbying of all time, was engaged in a bidding war over a government contract worth hundreds of millions of dollars.  The company was at risk of losing its lifeline– the servicing of federal student loans and the fees and subsidies that come along with that job.  Is not hard to see why Sallie Mae would stand behind any proposal made by the government while its very existence was in jeopardy.

Fast forward one year later.  Sallie Mae was awarded the highly sought-after servicing contract , and now the company’s tune has changed.  Although it claims its position has not wavered, the lending giant now insists “the President’s proposal could be enhanced in a way that preserves private sector competition. . .”

Saving Money for Whom?

Then came the “research” done by the private lenders, claiming they could also save the taxpayers’ money. This statement may come as a slap in the face, making one wonder, so you could have been saving us money all along but you just didn’t bother?  The Congressional Budget Office’s response to the private lenders’ proposal, known as the “Student Loan Community Proposal” was that it would take $13 billion of the estimated $87 billion of savings and put that money right into the private lenders’ pockets.

Secretary of Education Arne Duncan recently spoke out in support of student loan reform in a Wall Street Journal Op-Ed piece.  In that article, Duncan recounts that “For far too long, bankers have gotten a free ride from the U.S. Department of Education.”  Duncan goes on to state, “Sallie Mae, the largest player in the student lending business, has spent millions of dollars to lobby Congress and run ads in several states, claiming that our proposal will cost jobs and inhibit service.  These claims must be challenged.”  Secretary Duncan points out that “Sallie Mae sent thousands of American jobs overseas in 2007 to further increase profits, and it agreed to bring them back last year only to compete for our loan-servicing business.”  The Consumer Warning Network was the first to cover this chain of events in an April 2009 piece.

The future of the Bill at issue is unknown. If you have an opinion, contact your Senators and share your opinion!

Banks: The New Loan Sharks

February 25, 2010

The Daily Show With Jon Stewart Mon – Thurs 11p / 10c
Make it Rain – Bank of America
www.thedailyshow.com

The Consumer Warning Network has been examining loan sharking rates charged on consumer credit cards over the past few months. Recently, The Daily Show with Jon Stewart took a humorous look at Bank of America’s hidden credit card fees and The Mob. Click here to watch!

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Lawsuit Filed to Shake-Up Loan Modification Limbo

February 25, 2010

We’ve heard it all before. Federal programs, banks and lenders promising to help homeowners facing foreclosure. All too often what we see as a result is a disgrace.  The lenders lead desperate homeowners down a path of hope, only to cold cock them with the reality that, “NO, we won’t give you a loan modification, after all.”  Of course, the denial comes many months after the homeowner has dutifully paid thousands of dollars in reduced monthly payments during a “trial modification.”  The process of trying to get a lender to work with a homeowner has turned into torture for far too many individuals who don’t want to lose their homes.

A glimmer of hope for consumers comes in the form of a couple of class action lawsuits filed by a Boston area law firm.  It may finally shake things up a bit.  Two lawsuits were filed this week in US District Court in Boston, which claim Wells Fargo and Bank of America have not followed federal rules for mortgage loan modifications, leaving some homeowners stuck in foreclosure “limbo.”  Click here to read more about the suits in the Boston Globe.

Oysters and Food Safety – A Slimy Political Problem

February 24, 2010

oysters & politics

By Terry Smiljanich:

“He was a bold man that first ate an oyster,” so goes the famous quote by Jonathan Swift.

Oysters have been a food treat since prehistory, but everyone knows they can also be a threat.  Eating them raw can pose some risk.  A big enough risk that the FDA wants to do something about it. But then came politics, rearing its ugly head.

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Toyota Memo Brags of Saving $100 Million by Limiting Recall

February 22, 2010

A damaging memo has been uncovered that makes Toyota look as if  the safety of its customers is just a pawn in a game of profits. The troubling document surfaces just as Toyota executives are set to head to Washington D.C. this week to face Congressional hearings.

The Detroit Free Press explainsToyota’s leading U.S. executive boasted to the automaker’s Washington staff last summer that they had saved the company more than $100 million by limiting regulatory action on sudden acceleration to a recall of equipment such as floor mats.  That is according to documents turned over to a key U.S. House committee which will hold the hearings beginning Tuesday.

The Wall Street Journal reports the claim was made in a presentation for Toyota executives titled “Wins for Toyota Safety Group.”  Among the “wins” the document lists are the savings claim, as well as a federal government “decision to close safety investigations of the Toyota Tacoma truck without ordering recalls, and delays to new safety rules that saved the company hundreds of millions of dollars.”  The presentation, the Journal speculates, “By linking safety issues to corporate profits, could prompt difficult questions for company executives, including President Akio Toyoda, who is scheduled to testify Wednesday before the Oversight Panel.”

The carmaker’s chief executive, Akio Toyoda, is set to testify before the oversight panel on Wednesday. The House Energy and Commerce Committee opens the round of hearings on Tuesday, while a Senate committee will meet on Toyota next week.

New Credit Card Law Brings Change for Consumers

February 19, 2010

A new law that cracks down on credit card companies takes effect this week.  Issuers will no longer be allowed to retroactively hike your credit card interest rate, which, in turn, makes it easier for you to get out of debt.  Another result will be to make it tougher for college students to get credit cards.  Click here to watch a story from KTVN in Reno on how this will affect how students do business.

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Man Illegally Rents Foreclosed Homes

February 19, 2010

Anyone renting a home may want to ask a few extra questions before signing a lease these days.  One scam run out of central Florida has left several renters wondering where to go.  A man took over foreclosed properties, changed the locks and rented them out to unsuspecting families.  He says he did nothing wrong.  Click here to check out this report by WFLA TV’s Peter Bernard, to hear the story.

Grapefruit Juice and Medications Don’t Always Mix

February 18, 2010

By Terry Smiljanich:

Grapefruit juice is good for you. Packed with fiber and Vitamin C, it’s a great way to start your day. But wait! What medications are you on? You need to know that grapefruit juice doesn’t mix that well with some medicines.

The foods we consume can have a profound effect on the medicines we take. They can directly affect the ability of the body to absorb the medications. Some foods lower the ability of the body to absorb medicines, while others speed up the body’s ability to absorb them.

Lowering the absorption rate can obviously decrease the effectiveness of a medication. Milk, for example, slows down the ability of your body to absorb certain antibiotics (tetracycline). Vegetables with high Vitamin K content (e.g., spinach and Brussels sprouts) can reduce the effectiveness of blood thinners like Coumadin.

Increasing the body’s ability to absorb medicines can, however, be just as bad. If your body takes in the medicine too quickly, you can suffer what amounts to an “overdose” of the medicine, with dangerous results.

Quick Absorption

Grapefruit juice falls into the quick absorption category, and there is a wide range of medicine that can cause an adverse effect when taken in close conjunction with grapefruit juice. These drugs are:

If you take any of these medications, you should ask your doctor about any safeguards to follow regarding grapefruit juice. Better yet, if you take any medications, ask your doctor whether there are any potential problems associated with certain foods.

Other citrus juices, such as orange juice, do not have the same absorption problems posed by grapefruit juice. Fruit juices, including grapefruit, can be a part of a healthy diet. A little caution is all it takes.

The Scammers Are Phishing Again

February 15, 2010

By John Newcomer:

I got an email the other day from Wachovia Bank alerting me to some unusual activity in my account. The bank warned me that I would have limited access to my account until this issue was resolved.  A helpful link was provided so that I could log onto my account and clear up the “unusual activity.”   There was only one tiny problem.  I don’t have an account with Wachovia.

This is what is known as a Phishing Scam.  Phishing comes from the techies who replace “Ph” for the letter “F”. What the scammers are doing is “fishing” for private information, so they can get steal your credit card number or bank account.  In some cases, they are looking to steal your identity.

Don’t Get Duped

The scammers are good.  The email looks very official, logo and all, and the internet address is service@wachovia.com.  It must be real, right?  No, it is a SCAM. Legitimate banks may bombard you with offers, but they will NEVER ask for personal or banking information on the internet.  If you have any doubt about the Phishing email, call the bank directly or go onto its official site and make an inquiry. NEVER click on the link in the email.

What should you do if you receive an email like this?  You should  forward the spam to the FTC at spam@uce.gov and report it to the bank impersonated in the phishing email. Then hit the Delete Key.

Never, ever answer the email and provide banking or personal information.

Fake Money Rip Off

February 15, 2010

By Chad Soriano:

Small businesses are having a hard enough time these days, and as if the recession wasn’t enough, imagine getting stuck with counterfeit cash after providing a service or product to a consumer.  It’s happening more and more.  Click here to check out this report on the problem of businesses getting stuck with fake money, by Greensboro NBC affiliate WXII.

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