Suspend Remittance Charges for Philippines Typhoon Recovery

o_keeley_tigra_500x279New Orleans   There was a front page story in the Wall Street Journal about the fact that more and more of the remittance business from banks and money transfer organizations like Western Union and MoneyGram is between countries in Latin America rather than from US and Canadian immigrants to Latin America.  Western Union in 10 years has seen US-based transfers drop from more than half of its business to only 30% of the $79 billion it moves.

            What I have not seen, that I should have seen, and correct me if I’m wrong, so ACORN International will know and Google can get right, is any indication that Western Union, MoneyGram or any major US-based bank has suspended remittance fees for immigrant families and relatives in the US who are trying to send desperately need money to the Philippines in the wake of the terrible typhoon disaster the country is experiencing.   I heard from Judy Duncan of ACORN Canada yesterday where our Remittance Justice Campaign is a major emphasis, that some banks had announced that they were suspending fees temporarily to help out.   In the US, we may be reading about a $13 billion dollar JPMorgan Chase settlements, but we are not reading about banks or MTOs stepping up in this huge Katrina-level disaster.

            And, in the Philippines this matters even more than in most countries.   Some of the best remittance policies in the world exist in the Philippines, because, like it or not, exporting labor is a linchpin in their national economy, so before issuing a work visa overseas, the government instructs traveling workers in how to handle transfers at the lowest possible cost.  With workers all over the globe, and all over the US in hospitals and other occupations, a suspension of remittance fees during this crisis even for a couple of weeks could mean many more millions that could go to direct relief, family-to-family, person-to-person.

            ACORN International is calling on banks and MTOs in the US to immediately suspend remittance fees so that money can move immediately to families in perilous circumstances desperate for aid from their families.   This is the season for Thanksgiving and Christmas.   Rather than just bowing our heads, let’s stand up straight and demand that banks, Western Union, and the rest do right and do it right now.

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Remittances Increase from USA, Progress on Disclosures, and Pushback from MTOs

New Orleans  I badly want to say that there is finally progress in the United States on remittances, which are financial transfers from immigrant families, migrant workers, and others to their families and communities back in their home countries.  The Wall Street Journal reported that the volume of money being remitted has in fact gone up based on the numbers available for 2010.  Our colleague, Manuel Orozco, the foremost US expert on remittances, even predicts an increase of 7% to 8% to Latin America and the Caribbean this year, which is also good news for developing countries.  The toothless World Bank says that the 215 million migrants it estimates around the world are moving $372 billion to developing countries in 2011 and they expect it to hit $399 in 2012 and $467 billion in 2013.  These are huge numbers, especially when one country after another continues to look the other way as migrants and immigrants are gouged by the costs of sending the money through the various money transfer organizations (MTOs).

The much heralded Consumer Financial Protection Bureau (CFPB) that was the brainchild of Elizabeth Warren, now running for the U.S. Senate in Massachusetts took up the matter this year and has promulgated regulations.  Unfortunately, they gummed the problem as well, possibly because of the limits on their authority.  Rather than addressing the predatory nature of the pricing, the final rule which takes effect in February 2013 simply puts forward the standard liberal palliative of better disclosure.  I’ve often shared the limited value of the disclosures in the tax preparation industry for predatory refund anticipation loans (RALs), where the companies (H&R Block, Liberty, Jackson-Hewitt) were all too willing to flaunt their 250% on computer screens and big posters, knowing that the marks (clients?) were so desperate for their money they had no choice but to suck down the charges.  This is the same song now with remittances, simply another verse.

To quote their own website summary, the CFPB rule says the following:

The rules require companies to give a disclosure to a consumer before the consumer pays for a remittance transfer. The disclosure must list:

  • The exchange rate,
  • Fees, and taxes,
  • The amount of money to be delivered abroad.

Companies must also provide a receipt or proof of payment that repeats the information in the first disclosure. The receipt must also tell consumers the date when the money will arrive.

Companies must provide the disclosures in English. Sometimes companies must also provide the disclosures in other languages.

I’ll read the whole 113 pages of the rule in coming days in hopes of finding something more helpful, but I’m afraid that’s the deal.

Outrageously, Miriam Jordan of the Journal reports this new rule “could raise costs for consumers…some experts said.”  She then quotes someone from Wells Fargo, which is an embarrassment of a bank on almost every count,

Daniel Ayala, head of global remittance services at Wells Fargo, praised the rule for creating a level playing field.  But he cautioned that, ‘there are details that could…ultimately result in limiting access, higher costs and confusion.’

Are you kidding me?!?  Finally having a wee bit of transparency (in English which doesn’t necessarily help!) and a receipt is going to raise costs.   Wells Fargo and their banking and MTO buddies simply have no shame.  I hope these hypocrites made a big fat contribution to Clinton’s Global Initiative, because they certainly don’t mind exploiting the living bejesus out of these immigrant and migrant families.

In Canada the bill to cap costs at 5% (remember that is the World Bank and G-8 goal!) is making progress.  More endorsements have come forward from the Canadian Union of Postal Workers (CUPW) and the University of Toronto Student Union.  There are also encouraging discussions with the Liberals, who may actually join with the NDP in a joint bill.  I’m holding my breath.  Somewhere developing countries and the workers trying to help their families have to get a real break on costs, not just a piece of paper with some numbers on it.

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