Apr 30

Have you ever had a problem with a huge company that tries to “make you go away” by stonewalling and ignoring you? That’s what Charles Schwab has been trying to do since it sold me auction rate securities in 2008 on the day before markets froze. They had to have known when they took the order that these things weren’t liquid and safe, the two reasons they sold them to me in the first place. They were happy to take the order then…but today they, alone among retail brokers, have refused to make good on the ARSs they sold to conservative investors like me.

I have been using this blog (see my previous posts) and the interest of reporters to make my displeasure public.

Beth Healy of the Boston Globe missed the irony of Massachusetts residents lending the state money for the Big Dig and not being able to get it back by pointing out that the state “saved” money by not calling the notes.  Healy asserts, “…regulators say they’ve done all they can to help.”

Uh, no, not quite. I’ve never received a single response to repeated inquires to the governor, the secretary of state, the attorney general, my local representative and, above all, the source of these ARSs, the treasurer’s office. Why the silence? Simple: it would be too embarrassing for the politically ambitious Treasurer Cahill to force Schwab to settle. And no state department is going to make another department look bad. AG Coakley can get headlines for pursing fraud from just about any company. Why expose the shady dealings the state itself engages in?

Still, Schwab hated that Globe story enough to send me a letter terminating my accounts. No problem, guys, I was happy to leave.

So, you might think, why not complain to the SEC and to Wall Street’s “self-regulator,” the Financial Industry Regulatory Agency (FINRA)? I have, of course. In 2008 I filed complaints with both agencies. How’d that work out?

Just as you might expect. We all know how well the SEC has done at protecting people from Madoff, Stanford and CDOs. With so many larger fish to pry off the hook, paying no attention at all to individual investors stuck in ARSs is a natch.

And FINRA, known as Wall Street’s favorite regulator, actually contributed its former boss, Mary Schapiro, to the helm of the SEC. Miraculously, after years of doing nothing to protect the little guy at FINRA, Ms. Schapiro apparently grew a pair just in time for her confirmation hearings. Just saying you are for strong consumer protection is, I guess, enough to assure congressional committees you should run an agency we now know was dysfunctional.

Still, FINRA — like Schwab — is listening to the political discourse and is maybe (finally) rubbed a little raw by the attention their abject failures have generated. When Jed Horowitz of Investment News wrote about the lack of action in New York’s suit against Schwab, something must have clicked at FINRA headquarters.

A week or so after Horowitz’s article, I got a call from FINRA. I assume the timing wasn’t accidental. They probably hoped to convince me to shut up, at least for another year or two until they find a way to exonerate Schwab or the whole thing blows over.

They wanted me to know they were “actively engaged” and they’d “made progress.” They couldn’t say what, if anything, they actually plan to do. Or when, if ever, they plan to do whatever they decide they are going to do.

While Congress debates partially re-regulating Wall Street, the simple fact is that the entire industry is morally bankrupt and the interests of the country have been repeatedly subjugated to the greed of the industry. Worse, regulators, such as they are, are victims of “regulatory capture.” Even if FINRA wasn’t designed as Schwab’s concubine, it has willingly become one. Schwab asks, FINRA dances.

Mar 22

Well, the political battle of the (still young) century is over. And, despite the ugly fear mongering of the Republicans — and the very sad racial and homophobic epithets tossed at members of Congress this weekend during the final debate by “Tea Party” activists — the country has shown some political spine and done the right thing.

You’d expect me to have been, like the crazies on the right, apoplectic about the proposed changes to health care. Simply, I am a winner in the current system. I actually have a choice of excellent, affordable group coverage for me and my family through either my wife’s employer or mine.

My taxes will go up: I will have to pay Medicare taxes on unearned income. We won’t get a dime in government subsidies to buy insurance. Because we live in Massachusetts, I suspect the Cadillac tax will eventually hit us as well.

So, why am I pleased at the prospect of real, fundamental, systemic change in health care? Two simple reasons. First, even as a winner in the current system, I can tell you it’s broken, busted, kaput and will bankrupt us. Check this out: I went to see a doctor in my network. Six weeks later, I was checking claims online for another reason and noticed the insurance company had paid thousands for an office surgical procedure I didn’t have on that date. I called the insurance company who wanted me to have to call the doctor’s office and get them to fix it. Sorry, but I took the time to try and fix it by calling the insurance company, who effectively admitted to me that there’s so much waste and confusion in the system that unless I personally undertook to fix it, it would cost them more than they could recover to do it themselves.

Second, anything can happen. Today, I am winner. Tomorrow, I could be destitute. I am willing to pay more now to make sure that when and if the bottom of my life falls out, I could still get medical help. It just seems so basic, so fundamental to life in a civilized country that I am astonished it took 100 years and (probably) will destroy the Obama presidency. One thing I am certain of: without this reform, if the worst were to happen, it would easy to die indigent — a terrible way to go after a lifetime of work and taxes.

Bottom line, this was about fairness to people.

Tagged with:
Jan 11

I’ve really had my fill. I’m up to here (picture my hand patting my chest just below my neck) with the claims Martha Coakley is making about bringing “real accountability back to Wall Street and Washington.” The Attorney General is talking, in part, about the settlements she negotiated in the auction rate security scandal.

Here’s the ad she’s running ad nauseum:

Each time I see it, it rings less and less true, based on my direct experience.

The claims about getting “$1B back from banks” conveniently leave out the fact that the Mass. AG’s office left thousands of small-fry holders of ARSs high and dry in the Commonwealth’s settlement with the banks. She got her press conference announcing a settlement…freeing the AG, the Treasurer’s Office and the banks to get back to business as usual. And the claims of accountability don’t match up with the fact that nobody from her office has ever returned my calls or a letter about this in nearly two years.

Madame Attorney General, isn’t it time, as you say in your ads, that you or someone in your office responds to retail customers’ frozen ARSs? (On the off chance you didn’t see my letter from December, 2008, I’ve attached it to this post.) Isn’t it time for you to stop claiming you’re for the little guy when your office cut deals with Goldman Sachs and UBS that left us out in the cold?

There’s at least one voter in the Commonwealth who knows what the AG’s brand of accountability will mean.

And, no, I am not a Republican.

icon for podpress  Letter to state government about ARSs: Download (162)
Tagged with:
Nov 11

embarrassed

Well, growing a business ethically continues to defy Bank of America. First, it duped shareholders by concealing girnormous losses at Merrill-Lynch last year — then it agreed to paying ML’s brokers astronomical bonuses, all apparently in exchange for an extra $50B in TARP funding.

Next, it pissed off a Federal judge who wouldn’t let BofA off the hook for the ML debacle. The judge simply refused to approve a sweetheart settlement.

Now, its CEO is leaving early…much to the relief of taxpayers, shareholders and John Thain (who’s looking for a new office to redecorate for millions of dollars). And, worst of all from BofA’s perspective, slamming credit card customers is going to be much harder next year because Congress passed new, long-overdue credit card regulations.

So, I guess it’s no surprise that BofA’s marketing is as ham-handed and tin-eared as the rest of the company. Consider this: the well-known WalletBlog has taken Bank of America to task for misleading customers and congressmen on credit card charges. First, Bank of America said it wouldn’t increase fees; then it announced it will. When WalletBlog pointed this out, they got a call from BofA corporate communications, trying to explain how a fee increase isn’t a fee increase by using Clintonesque parsing of words like “pricing.”

OK, so I don’t begrudge a PR type arguing strict meanings with bloggers; they have lawyers who can assure them that the plain meaning of their promise to not raise fees — what normal people understand — doesn’t count…that it’s OK to write a letter to legislators that sounds like a commitment, then decide to do what they really want to: fleece people.

But what shows how completely off the planet BofA is…how tin-eared they are…is their request to WalletBlog to lay off:

Naturally, at the end of our call, Bank of America asked that we stop circulating our blog post from last week. But we’re going to hold off on that until they provide the public with some clearer answers. The more digging we do, the more it seems like Bank of America should be taken to task. And it’s possible that we’ve just cracked the surface.

Anyone with half a day’s experience in press relations knows you never ask a writer, blogger or journalist to retract a story in the absence of factual errors. It’s guaranteed to produce exactly what this did: a mention of your arrogance along with an enhanced determination to keep the story going.

Would BofA have asked the Wall Street Journal to recall copies of the paper with a story it didn’t like? How about asking MSNBC to stop talking about a story like this? No…it’s only because the fool who called WalletBlog thinks less of new media — that it can be more easily controlled — that he or she asked WalletBlog to quash the story. It’s emblematic of problems not just in the risk management side of BofA, but throughout the entire bank.

My message to the WalletBlog: keep it up and don’t ever consider retracting something because some corp comm hack who thinks you’re unimportant asks you to leave them alone.

Tagged with:
Oct 22

An open letter to Michael Steele and the Republican Party

Dear Chairman Steele,

Last November, I made a $25 contribution to your party’s candidate. I also made a $25 contribution to the Obama campaign. Then, I wasn’t sure who would have been the better president.

Now, after months and months of non-stop invective from you and your party against President Obama, I am sure I did the right thing in voting for Obama.

Let me get something off my chest: when I gave you my contribution I asked you not to send me email…not to call me at home…not to keep sending me the vile propaganda and lies via snail mail that you are now sending at least twice a week. (We’ll get the the “survey” I’ve attached to this post in just a minute). I made the same request of the Obama campaign. They honored my request; you and your party of naysayers and obstructionists have not.

Instead, you keep sending me items like the “survey” I’ve scanned in and attached to this post. Maybe you thought that you could make wild claims like the one that the current administration is issuing “radical environmental regulations based on unproven theories and the demands of out of-touch left wing extremists.” Or maybe that some misguided Republicans might be pleased that your politicians “…have successfully blocked or amended many of their most radical proposals” while proposing and contributing nothing to the debate.

I get it…I really do. Negative works. Calling everyone names…calling their mothers nasty names…works better than actually governing…being a loyal opposition…contributing to the greater weal. Instead, for your party everything the other party does is wrong; only you can solve problems like Wall Street’s greed, a war based on lies and a sunken economy. Oh…I forgot. For those, we have Republicans to thank. As President Bush said, “Mission accomplished.”

I hope everyone reading this post takes a look at the “survey” you sent me. C’mon…do you think your voters are idiots? These questions are one-sided and are like waving the red flag at a bull. All you want is money…and if you piss people off at government…make them feel it’s working against them, so much the better for you and your power-hungry Senators (and so much the worst for us).

It’s too hard to pick the most egregious of the 19 questions on this “survey.” Clearly, you don’t give a damn about what people think…you just want them to read this, get angry and send you money. Still, what’s the point of a question like #16 (Are you in favor of the federal government taking a permanent ownership stake in the nation’s largest banks)? Aren’t Citibank and AIG dying to pay back TARP funds so they can get back to ripping off investors without government oversight? Didn’t the taxpayers line Goldman Sachs’ pockets with credit-default swap payments via AIG’s bailout? Isn’t it enough for you that Wall Street is too big to fail while the rest of us aren’t?

Seriously, Chairman Steele, if you want people to consider Republicans to be capable of running the country, start by working with the current administration to fix the problems we have. Next, admit to the failed policies of eight years of the Bush administration…including torture, warmongering and being asleep at the economic switch.

And please, please stop sending me twice-weekly appeals for money disguised as the worst kind of pandering direct mail.

icon for podpress  The Republican's Stop Obama : Download (301)
Tagged with:
Oct 07

shillwarning

Well, this is one of those times when the government acts and you get to chose your reaction. On the one hand, the emergence of the ‘net as the definitive source of reviews for everything from software to celery has become a bonanza for the shills of the world who review products for filthy lucre and who pretend or obscure that they’ve been bought.

On the other hand, while advertising isn’t a protected form of free speech, it’s sad that we need government intervention limiting speech to prevent these people from preying on grandma’s Google search for cookie dough.

Into this fray steps the FTC with new rules to take effect in December, 2009. (I’ve attached a PDF of the new rules to this post for your convenience.)

You can see the rules struggling to keep up with new and social media. That, in itself, is an interesting commentary on how technological innovation always outstrips government’s ability to keep pace, much less anticipate the impact of technological change. Consider this heavily parsed defintiion from the rules:

An advertiser’s lack of control over the specific statement made via these new forms of consumer-generated media would not automatically disqualify that statement from being deemed an “endorsement” within the meaning of the Guides….Thus, a consumer who purchases a product with his or her own money and praises it on a personal blog or on an electronic message board will not be deemed to be providing an endorsement.

In contrast, postings by a blogger who is paid to speak about an advertiser’s product will be covered by the Guides, regardless of whether the blogger is paid directly by the marketer itself or by a third party on behalf of the marketer.

…For example, a blogger could receive merchandise from a marketer with a request to review it, but with no compensation paid other than the value of the product itself. In this situation, whether or not any positive statement the blogger posts would be deemed an “endorsement” within the meaning of the Guides would depend on, among other things, the value of that product, and on whether the blogger routinely receives such requests.

You all clear on that now?

icon for podpress  FTC advertising rules on blogging and social media: Download (241)
Tagged with:
Jul 29

pound of flesh

The short version of a long story is that Charles Schwab sold me auction-rate securities, promising liquidity, then stonewalled me when the market disappeared for the ARSs. Meanwhile, every other firm on the planet — and I mean every one – made their clients whole. Goldman Sachs, the auction agent for the ARSs I bought: settled. Fidelity: settled. BofA: settled. TD Ameritrade (late of zero-doc mortgage loan fame): settled.

You can only imagine the lengths I’ve gone to to try to bring this to the attention of regulators. I’ve spoken to regulators in Massachusetts (the issuer of the ARS I bought, the proceeds of which were used to finance the Big Dig), Illinois, and last summer, New York.

I’ve written letters…called representatives…filed complaints with FINRA (famous for being the securities industry’s favorite regulator and the former home of the new SEC chairman. Buy lots of empty mattresses as long as these people are protecting you).

I clearly remember the conversation I had with the NY AG’s office last year. They “got it” but when nothing happened for months, I assumed that office, like all the others I had implored, had moved on to more newsworthy pursuits. Like compensation at AIG and why Lehman Brothers’ collapse was good for the candle-making industry.

Then, finally — finally! – last week, the New York State Attorney General — from among all the attorneys general in the country who were beating their chests about protecting investors last year — sent Charles Schwab a demand letter (attached below).

Charles Schlemeil had convinced themselves they hadn’t lied…they hadn’t stolen my money…that it was those nasty Wall Street firms who were at fault when the ARS auctions tanked. “We’re not the bad guys,” they claimed. “We just sold these things ‘downstream.’ We don’t have anything at all to apologize for or make good on.” Schwab stood on principle! It was a victim, too!

Principle, shminsciple. Now that the NY AG is onto them, they’re talking about how much it’ll cost them to hold off the litigation and whether or not that’s a better deal for them than paying up. This was always a calculation of cost and until now it simply cost those bozos-in-$900-suits less to stonewall than to pay up. When nobody appeared to care, it was easy to argue principle.

Yes, I’m upset that I can’t get to my money…that Schwab lied to me…that talking to Chuck turned out to be talking to a wall. That Schwab is full of schit when it comes to doing the right thing — what everyone else did — for their clients.  But mostly, I was unhappy that in the face of such obvious avarice and fraud, none of the responsible regulators did anything about it. One nastygram like this was all I was looking for…and now that my home state AG has sent it, it’s only a matter of time until Charles Schwab capitulates.

But until then, I am anticipating the pound of flesh the NY AG will extract from Schwab and grateful to my fellow Noo Yawkers for stickin’ with it for us little guys.

icon for podpress  NY AG ARS demand letter to Charles Schwab: Download (338)
Tagged with:
Jan 22

insurance-companies-demonstrate-greed-once-again

Maybe it’s your health care insurer manipulating your out-of-network health care claim reimbursements to increase their profits.

Remember last fall when you signed up for the significantly more expensive plan that lets you choose a doctor out-of-network? You thought you were being smart.

Instead, it turns out you’re being screwed. Your extra premiums are finding their way into the pockets of the same insurer who buys TV ads with happy, young, healthy mothers and fathers in the park playing Upsie with their cute, giggling babies. Not a care in the world, presumably, because they’re covered…but it’s really a picture of ignorant bliss because when that baby needs a specialist, that couple’ll have to sell the Chevy and walk to appointments to pay the doctor’s bill.

Check out this report from the New York State Attorney General on how insurance companies are screwing their policyholders on out-of-network reimbursements. It’ll make you sick (just be damn sure you don’t go out-of-network to see a doctor).

For me, this is just another example of the unrestricted greed that nearly 30 years of Reaganism (“government is bad…unrestricted markets are good”) has generated and the incalculable damage it has done to our society. If a business can figure out a way to screw you — and better yet, legally do it in the dark like United Healthcare did with the cost database it uses to reimburse policyholders — well, that’s just normal, right?

Everywhere you look, we’ve been  cheated. Big Business is totally out-of-control. The financial system has collapsed — and taken our security with it. Even our ideals were trashed mercilessly by a government that lied to us all.

But, oh boy, watch out. This country has had mega-pendulum-political-swings in the past (the Progressive Era, the New Deal). If there are more people out there who think like me (and you bet there are), politicians had better get the message and get some stuff done (health care, re-regulation of the business and financial worlds, a sane foreign policy). And they better get it done now.

Dec 30

whale_wars

I was channel surfing recently (no mean feat on a Verizon FIOS system), and paused briefly on Animal Planet’s Whale Wars. I was instantly riveted…but not because of what the show is ostensibly about.

Briefly, it’s a cinema verité recounting of the struggle between environmental radicals and the Japanese whaling fleet in the Southern Ocean. The self-styled “sea shepherds” aren’t letter-writing activists. They’re true amateur anarchists who favor “direct action,” placing themselves in danger to save whales from the Japanese whom they believe are illegally killing whales.

For their part, the Japanese are clearly hiding behind a combination of doubleplusgood international agreements (which allow a limited catch of whales for “research”) and lax enforcement of environmental policies by other governments. At $1M per whale and a permitted catch in the thousands, this is a big business and the research claim is patently bogus.

It makes for a great plot for a reality show. But while all the critical reviews of the show have focused on the action, the question of who’s right and who’s wrong in this struggle (the producers clearly favor the environmentalists) is less gripping for me than watching a cult leader in action.

The real centerpiece of the show is Captain Paul Watson (always referred to as “Captain”). This is a man who has pissed off his home country of Canada and lead them to criticize him individually like nobody I’ve ever seen (here and here). Imagine a national government calling you out like this! He co-founded Greenpeace (something he writes extensively about with apparent pride), yet was drummed out for being, apparently, uncontrollable.

But the real drama in Whale Wars — and something I think was unintentionally documented in the video — is how Watson creates, develops and promotes his cult of direct action. In short, we’re watching a Jim Jones or maybe a Hitler at work.

Watson clearly uses people as grist for his “mission.” A cook damages a propeller on the helicopter. Watson then publicly asks him to illegally board one of the Japanese vessels to “make up for the helicopter.” After 36 hours being held as a prisoner on the Japanese boat, the cook is returned to the welcome of the entire crew. The camera catches Watson at the moment the cook is back on board saying that he won’t go down on deck to welcome the cook back…instead one of the staff “priests” Watson has on board should bring the poor Aussie up to see him on the bridge. Upon being lead to see Watson, the cook is immediately placed on sat phone with the media in order to extract maximum press value from the incident. Not once do we hear Watson commend the cook for his foolish bravery.

To up the ante, later Watson proposes an all-female team to board a Japanese vessel. This goes awry, and in the process one woman shatters her pelvis. Ladies, how’d you like to have a shattered pelvis on a boat in Antarctica weeks from port with your only company being zealots on a mission? Not once do we see Watson demonstrating any concern for the woman. Only for the “mission.” We do, however, see him pissed off at the amateurs’ ineptness in carrying out his plans.

Watson, in true cult style, is also isolated from the volunteer crew — the raw meat — by a layer of officers on the boat who transmit both his orders and his message. They reveal themselves to be sycophants of the worst type, and when the original doctor on board raises questions about the dangers of boarding parties, he is quickly purged for a more pliant medic.

Are you fascinated yet? I am telling you, this TV show isn’t about whales. It’s Introduction to the Psychology of Cults 101. It demonstrates how in the crucible of a complex environmental issue a charismatic leader can, using classic techniques of isolation (what’s more isolated than a boat at sea for three months?) shape, implore, shame and motivate people into doing his bidding. Chat ‘em up, get ‘em to do what you want, no matter how dangerous, call the press, dock the boat, send ‘em home and do it again next year.

For me, the proof of all this is on the Sea Shepherd website. I noticed that on the show every time Watson was shown in his cabin, he was on a computer. After reading the website, I am convinced that he’s writing and posting much of the news on the site himself. And the site is really a paean to Watson, penned by Watson, who always refers to himself in the third person.

I am reading Ian Kershaw’s massive Hitler: A Biography, in which Kershaw documents exactly how Hitler — unable to have normal relationships with anyone save his mother — uses people in the most expedient, opportunistic way possible to achieve his ideological objectives. And, on a much smaller scale (but maybe just as dangerously?), that’s how Watson uses the people on his boat.

I’ve never seen a more fascinating television show…it isn’t about whales at all. It’s about a whale of a demagogue.

Tagged with:
Oct 12

I’ve been way too busy to blog.

But today, while my kid was drilling analogies in preparation for the SSAT, the blog muse struck.

It’s Sunday, and I’ve just reviewed my retirement account statements from September 30. That was bad enough. But with the miracle of Quicken, I was able to see specifically the carnage wrought by the market meltdown of the last two weeks since 9/30. Going from bad to cataclysmic has wiped out years of parsimony, leaving my personal financial situation questionable. We’ve often heard the stories of people “wiped out” in the Depression of the 1930′s. Could that be happening here?

Then, on a happier note I searched on “UMA” because I’d just gotten a BlackBerry that switches from the cell network to Wi-Fi. I think this is amazing because seamlessly switching from one protocol to another is no mean trick.

Clicking around, I found this story on college students preferring Wi-Fi to beer.

Sorry, but no. I remember college without Wi-Fi. The only thing we preferred to beer was women. And since I founded a failed Wi-Fi hotspot company in early 2002, I know how popular beer remains with respect to being…uh…”online.”

Now the only question is, if you can’t afford beer or the college loans it takes to get that free dorm-room Wi-Fi, does this absolutely guarantee an Obama victory next month, just as Roosevelt was swept in after the Hoover administration’s market-based dogma ruined the economy? (Sounds just like the current Bush administration, doesn’t it?)

And, if it’s Obama (oh yeah, it’s gonna be Obama), does he drink beer? Hillary did…that’s why I liked her.

Now you get the SSAT-level analogy that politics is to beer as poverty is to Wi-Fi, right?

Tagged with:
preload preload preload