Friday Roundup: Neil Cavuto, Durbin Fee, Ohio Issue 2, Democrats Anonymous

I've collected a bunch of miscellaneous items that I wanted to share, so here's a roundup for your Friday reading:

* My friend and fellow blogger, Warner Todd Huston, who writes at Publius Forum, is in the Chicago area and recently had the opportunity to see a behinds-the-scenes look at the Your World With Neil Cavuto show. Cavuto was in Chicago as part of the celebration of the 15th Birthday for Fox News. WTH, as he's known to his friends, also had a chance to talk with Cavuto and his interview is here. Interestingly, I did not know Cavuto has Multiple Sclerosis nor that he is a survivor of Stage 4 cancer. It's a good interview and I hope you take the time to read it.

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* In response to the union-backed We Are Ohio bus tour urging a no vote on Ohio's Issue 2 in November, Building a Better Ohio issued a press release detailing how much the various cities on the tour could save if Issue 2 is passed. Issue 2 is the referendum on Senate Bill 5, the public sector collective bargaining reform bill.

Toledo: The city's police contract includes a 10% pension pick-up, and other city employees get between a 5.5% to a 10% pension pick-up. Pension pick-ups alone cost the city $11.4 million in 2011. Teachers pay nothing toward their health care premium.

How much better would our roads be if we put that $11.4 million toward road repair rather than 'picking up' the employee's portion of their pension? Don't forget, that's over and above the city/employer's portion that we are required by law to pay.

Now, I realize that pension pick-ups have been negotiated in lieu of pay increases. But what many people fail to realize (union and non-union alike) is that the me-too clauses mean that one union might have gone without a pay increase, but all the other unions in the city got the same pension pick-up without the same concession. That's the way a me-too clause works.

So remember this when you hear the claim that pension pick-ups were in exchange for pay increases. It may be accurate in some instances, but more likely than not, it's not true for all - and certainly not for the entire amount.

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* In response to the Durbin Fee, Bank of America, along with many others, decided to begin charging customers a monthly fee for the use of a debit card. Rather than blame himself, Sen. Dick Durbin (D-IL) took the floor of Congress to urge a run on the bank.

Now, he didn't talk about the other banks doing the same thing, so this wasn't a blanket statement telling people that if they're unhappy with one provider of a service, they can (and probably should) try a competitor. No - this was a directed attack against a single company.

So I'm wondering: do shareholders have any legal recourse to hold Durbin personally accountable for any negative consequences or decline in stock value of Bank of America? Probably hundreds of thousands of individuals have an investment interest in the bank - and its subsidiaries - through direct holding of stock or through pensions, IRAs and mutual funds. Can Sen. Durbin be sued personally for using the power of his office to target a single company and urge its demise?

Why does Sen. Durbin hate the working people of America and seniors and retirees who rely upon the value of their investments to either provide them with their retirement income now or in the future? Why would Sen. Durbin want people to lose income? Aren't people hurting enough?

And what about all the bank employees? If the bank loses too many customers, it will have to lay off workers - tellers and secretaries and janitors - due to less need and less income. Why does Sen. Durbin hate all these working-class people who were fortunate enough to actually have a job in today's economic climate?

And if any elected official agrees with Durbin, we should have them answer the same questions. Elected officials need to be held accountable and it's time we start doing so.

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"The ultimate result of shielding men from the effects of folly is to fill the world with fools." ~ Herbert Spencer

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* I'd not heard of the non-profit American Crossroads before, but was sent a link to their latest video, which I found amusing. According to their website, they are:

"...a new kind of non-profit political organization dedicated to renewing America’s commitment to individual liberty, limited government, free enterprise and a strong national defense—through informed and effective political action by citizens like you.
...
Today, America faces much more than a choice among various candidates for public office. We face a Crossroads – a fundamental decision about the future direction of our country that will impact America’s strength and character for years to come."

Here is the video, "Democrats Anonymous," which might actually be pretty timely considering the dissatisfaction we're seeing from the left. Enjoy!

More on the 'Durbin Fee'

Yesterday I wrote about the predictable consequences of trying to limit bank fees as news of the impact of Sen. Dick Durbin's amendment to the Frank-Dodd bill takes effect.

The amendment limited what banks could charge retailers when they accept a debit card. As a result, the banks are starting to charge a monthly fee to customers who have and use those cards. They're also starting to charge for other things to make up the loss of revenue.

Today, the Chicago Tribune editorializes about the Durbin Fee, which is, I believe, a much better name for the new rule.

The charge, which other banks are likely to adopt, is a direct result of his lawmaking. Call it the Durbin Fee.
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Bankers told Durbin and his fellow lawmakers last year that the interchange fees subsidize free checking accounts and other services, including the convenient practice of making purchases with debit cards at no charge to the buyer. Slash fees to retailers, the banks said, and they would likely recoup the lost revenue by charging their customers for use of the cards. That's exactly what's happening now.

Durbin claimed that a cut in interchange fees would translate into lower prices and better service at Walmart and 7-Eleven. Funny, but no one's handed us a free Slurpee yet. In fact, the chief financial officer of Home Depot told Wall Street analysts in a conference call earlier this year that she expected Durbin's efforts to result in a $35 million annual "benefit" to the retailer.

Having picked sides in a high-stakes business deal—retailers over banks—Durbin denounced Bank of America for the widely telegraphed result. "Bank of America is trying to find new ways to pad its profits by sticking it to its customers," he said.

Shockingly, banks seek to be profitable. Durbin sought to transfer some profits from banks to retailers. The banks are trying to recoup the lost earnings.

Result of the government intervention: Retailers win, banks lose, and you get to pay the Durbin Fee.

Predictable consequences of trying to limit bank fees

Congress, in its infinite wisdom (yes, that's sarcasm), decides that banks shouldn't charge for a particular service. In this case, it's a fee on the use of a debit card.

So they pass a law that prohibits banks from charging merchants a percentage on every use. It's part of the Frank-Dodd financial overhaul bill and this particular restriction is the Durbin amendment, courtesy of Sen. Dick Durbin (D-IL).

But it costs money for banks to offer and process debit cards and their transactions - a factor members of Congress fail to understand. So what is a bank to do?

Well, they decide to charge the actual card holder a set monthly fee instead. Unintended consequences, which are entirely predictable, are certainly not part of the regular thinking of your 'average' congressional representative.

The fees range from $3-5 per month - if you're able to still have a debit card at all. Some banks, like JPMorganChase, have just eliminated the debit card completely.

So in their effort to 'help' consumers, Congress has ended up shifting the costs of the debit card service from the merchant to the card holder. Brilliant! What a bargain!

But that's not all. One aspect of the Frank-Dodd bill was limiting what banks could charge for overdraft fees. Now, in this day and age of instant information and various other provisions (like automatic transfers from savings to checking when the checking account gets to a certain level or overdraft protection programs), there really is no excuse for bouncing a check. People should know how much is in their account and whether or not there are funds to cover a check about to be written. When they write that check and it bounces, they should pay a fee to the bank.

It costs the bank money to return the check, notify you and deal with the subsequent actions that result. Why shouldn't they charge you a fee - large enough to make you not want to ever end up bouncing a check again in the future??? But people don't like being accountable - and politicians are too eager to help limit your liability for your own stupid actions.

And what, exactly, is the provider of a service supposed to do when they can no longer charge you their costs for that service, especially when they know they'll still need to provide the service even when they can't charge?

Well, they'll do what anyone else would - they'll charge for other things in order to cover the costs of the one they can't charge for.

So everyone who banks will pay more so that the small number who bounce checks don't have to pay for doing so. Again, brilliant!

Congress has decided it can determine how much a business should charge and how much profit it can make. They believe they know better than you and I the value of a service in the marketplace. But they're not actually limiting the profit, they're just playing around with various fees and imposing restrictions thinking (or, perhaps more accurately, hoping) that the banks will just take the restrictions and live with them.

But companies are in the business to make a profit. They don't exist to provide jobs (that's just a by-product of their effort to make money). They don't exist to do social programs (again, that's a by-product of their desire to have customers who thus help them to make a profit). They exist because they want to make money - for the owners and shareholders/investors - many of whom are the very people who are so adamant about restricting their profits in the first place.

In fact, it makes no sense to me that many unions argue against corporate profits when those very same profits are necessary to provide the jobs and benefits the unions so desire. And, most of the pension plans in America - whether individual IRAs, public pensions or private company pensions - are vested in the stocks of the very companies that are being demonized. Can you say 'stuck on stupid'???

So, when a company gets told by government that it can't make a profit with one item, it will begin charging for one that was previously free or add to the price of existing ones - or both.

This is completely and entirely predictable for anyone who understands anything whatsoever about business.

But Congress is, apparently, clueless and so, thanks to their 'help' for us poor consumers who cannot make good decisions on our own, we're now paying more.

Brilliant!

When policies fail, demonize

The health care 'reform' that Democrats and President Barack Obama are pushing is failing to gain support among the American public.

Citizens, outraged over the issue, are angrily confronting their representatives in town halls and forums within their districts. As a result, representatives are calling out the police and acting indignant over the outrage and opposition they're getting from their bosses - but that's another subject for another day.

So what's a politician to do?

Create an enemy.

Start talking about how some entity is "taking advantage" of you, or is "evil, immoral and villainous" in how they deal with you. Demonize a particular industry so you can rally the masses in an emotional appeal 'for' you and 'against' someone else.

It's a tried and true tactic from a political perspective, though usually it's used on prior officeholders. Democratic Party strategist Liz Chadderdon recently said:

"I think Bush-bashing has been alive and well since '07 and, since it keeps working, why not use it? Voters have short memories..."

So if it works, why not?

And that's the game plan for the health care bill.

Sen. Dick Durbin jumped on the bandwagon attacking insurance companies.

“The health insurance companies are some of the most profitable businesses in America. By fighting change they're protecting their bottom line.”

Yep - there's a profitable business industry employing and providing services for millions. They must be bad.

Now, remember, these are for-profit organizations. You pay them an agreed-upon amount in the hopes that you never have to take advantage of what they are guaranteeing in return. And if you do have to take advantage of their coverage, you're pretty sure the total you've paid them over time is going to be less than what they end up paying on your behalf. That's the way insurance works.

But Durbin wants you to think negatively about these companies - because they want to make a profit on behalf of their shareholders (who probably include many individuals very similar to you). If he's going to get you to support his plan to put them out of business - and that's what the legislation will do - he has to get you to hate these companies, or at least distrust them so you want what he's offering instead.

Hypocritical House Speaker Nancy Pelosi went so far as to call these businesses, 'the villains':

"It is somewhat immoral what they are doing. Of course, they have been immoral all along how they have treated the people that they insure," MSNBC's Luke Russert quoted her as saying. "They are the villains in this."

Of course, taking campaign donations from such villainous, immoral entities is perfectly okay for her - but we shouldn't trust them. Oh no!

I hate the class warfare approach to politics these days. I don't believe that people with money are evil because they have more than me. I don't believe I'm entitled to the fruits of their labor simply because they have more fruit. I believe I should be rewarded for my hard work and my labors. I should not have my fruit taken and given to others who haven't worked as hard or for as long as I have.

I also don't believe that profit is a dirty word, or that for-profit companies are evil because they exist to make money on behalf of their shareholders and owners. I don't believe I need to have an enemy to make me 'feel' positively about a policy that's being promoted.

Most importantly, I believe that the need to create an enemy in order to get people on a particular side of an issue clearly demonstrates the weakness of that position in the first place. And our immediate reaction to such a ploy should be distrust and rejection the tactic, the person using it and the policy.

But with many people, appealing to their emotions and using the politics of envy and greed, works. I just hope we can stop 'feeling' and start 'thinking' before it's too late.