No One is Stopping Banks from Ripping off Soldiers at US Bases

Fort_Hood_Natl_Bank-e1389936052936New Orleans    You find some dangerous things going along the side road on the way by Susie’s house, but I’m going to take you there with me to see some scary rip-offs of everyone, but especially soldiers and other members of the armed forces.

There was a report on the top ten financial institutions that make their money as a percentage of deposits from various banking fees like converting overdrafts to short term loans and the like.  Keep in mind that overdrafts are always big business for banks who scooped in $32 billion in 2013 along on fees for bouncing checks.  The drift of the storyline of the Wall Street Journal’s review of federal filings of banks was that five of the top ten banks reporting the highest level of bank fees as a percentage of deposits from 2010 were housed in Walmart stores, led by Woodforest Bank.  And, they were right, since obviously Walmart is aiding and abetting a ripoff of its largely low-and-moderate income customers, which I have to heartily condemn.

But, they were silent on another part of the story, which was equally predatory, and directed at vulnerable soldiers, which is likely the real story here:  the top ten banks making most of their money on these up to 300% interest rates on fees were almost always cheek to jowl with military installations and directly, if not solely, catered to the military.

Of the top ten, likely nine of the banks were designed to cash in on their proximity to military bases and the soldier’s syndrome of long months and short money.  So, yes, Fort Sill National bank, has a lot of stores in Walmarts and so does City National Bank and Trust Company, but both are headquartered in Lawton, Oklahoma, the home of Fort Sill.  First Convenience Bank is also one of the top ten on fee income and is number two in Walmart locations, but it joins Fort Hood National Bank in the number nine position on the list as both being headquartered in Killeen, Texas, which of course is the home base of Fort Hood.  Number seven and number ten on the list are lighter on doing business at Walmarts, but calling themselves the Armed Forces Bank of California located near all of the naval bases in San Diego and the Armed Forces Bank headquartered in Fort Leavenworth, Kansas, says it all doesn’t it?   Nor do I have much doubt about the militarily oriented predatory business model of Academy Bank headquartered in Colorado Springs, undoubtedly named in honor of the nearby Air Force Academy.   So, yes, perhaps Sunbank in Phoenix is just a small outfit with a huge amount of its money coming from fees, but I would bet money a map search puts them near the gates of Luke Air Force base.  Just as I would not be surprised at this point if Southern Commerce Bank in Tampa isn’t right up against MacDill Air Force base or the other military outfits from naval to boots on the ground in Tampa.  So, yes, Woodforest National Bank, based in the upscale Woodlands suburb of Houston is a bloodsucker for the Walmart crowd with branches in over 700 Walmarts, but the rest are putting dollar sign targets on the backs of uniformed military around the country and ripping them off right and left.

We have a Military Lending Act passed several years ago which was supposed to protect military from predatory loans, but both the top brass and Defense Department, Walmart, and Congress is allowing predatory financial institutions like these banks and others to deliberately, and almost exclusively, target military and military institutions to reap their ill-gotten gains.  How can Congress or the Consumer Financial Protection Bureau allow this?  This is when we have to wish Elizabeth Warren was a Senator in her birth state of Oklahoma or in Texas where she lived and taught so long, and not Massachusetts, but surely there are plenty of elected officials willing to stand up for the rank and file military against the banks?  Or, am I kidding myself again?


Conservative Institute Scolds Republicans on “Faulty Moral Arithmetic”

New Orleans  You honestly can’t find too many more conservative outfits than the American Enterprise Institute, so when it’s president, Arthur C. Brooks, issues an upbraiding to his fellow Republicans on the op-ed pages of the nation’s premier conservative mouthpiece, The Wall Street Journal, it almost gives a fella hope.  Almost, anyway!   And, when he makes the case that Republican positions are immoral because they do not embrace caring for the poor, it warrants some attention; though I’m not sure this guy has much long term job security anymore.

He cites a study by NYU psychologist Jonathan Haidt of 132,000 Americans that,

“…care for the vulnerable is a universal moral concern in the U.S…” holding that “citizens across the political spectrum place a great importance on taking care of those in need and avoiding harm to the weak.  By contrast, moral values such as sexual purity and respect for authority – to which conservative politicians often give greater emphasis – resonate deeply with only a minority of the population.  Raw money arguments, e.g., about the dire effects of the country’s growing entitlement spending, don’t register morally at all.”

I just know that Congressman Ryan was chafing at reading this as he shined up the House budget proposal and its 10-year plan to deal with debt, read subtext to hammer Social Security and Medicare.

Brooks argues to his elephant herd that they need to go in another direction, and actually “make improving the lives of vulnerable people the primary focus of authentically conservative politics.”  Big flappy ears are hearing the call of “compassionate conservativism” again from the Bush era, and I bet they are standing their ground.

Admittedly most of what Brooks really says is repackaging and better marketing of the same policies under the softer texture of “caring” for the poor and elderly.  So, he is not in favor of simply bashing the unions and bureaucrats, but is in favor of exactly the same policies that would devastate union members and government protections.

I’m not sure how he reconciles the morality of all that, which makes the Republican dilemma even more difficult than a simple rebranding or re-messaging of the same ol’ slop.  As my old lawyer used to say constantly, “if it looks like a duck, quacks like a duck, and swims like a duck, it’s probably a duck.”  And, not an elephant.


Wall Street Journal Continues Curious Campaign against Lifeline Telephone for the Poor

New Orleans   Spencer Ante and the Journal continue their curious, and in many ways deceptive, campaign against the FCC’s lifeline telephone program, which allow the poor to have basic access to a telephone for less than $10 a month for emergency messages and a limited number of texts and calls.  The company’s’  providing the service still make money, just not as much on the regular customers, and if the lifeline customer exceeds the limits, then they make more of course.

Last week in the Journal the front page story was on the significant decrease in lifeline telephone users due to a 2012 policy of the FCC requiring outreach via mail to lifeline telephone holders to re-verify their accounts, since previously eligibility had been accessed through self-certification.  Not to get nostalgic, but last week the Ante and the Journal reported clearly that all sources attributed the decrease to the users failure to respond.  This week, Ante slid over that concession, saying instead, “A Wall Street Journal review of FCC data showed that more than 40% of the subscribers at the program’s top carriers were either ineligible or failed to show that they were unqualified.”  The new spin allows the Journal to advance their unproven claims of fraud in the program, even as the program’s cost and number of users decreased.

The culprit in this story is the new, smaller companies that were allowed in recent years by the FCC to participate in the program and therefore compete for the business.  The legacy companies were not as interested in the smaller profits of the lifeline program, but the new upstarts were anxious to build a customer base and satisfied with the smaller profits of the program, so were involved in aggressive customer outreach in low income communities.  I would have thought the Journal would at least play some lip service to the old school conservative arguments about the benefits of increased competition, free enterprise, etc, etc.  In the age of Murdoch and his communication conglomerate though, the battle cry seems to be to circle the wagons and protect the big boys.   Attacking the poor is of course as old school as it gets, but that is just the way business is done under either paradigm it seems.

The story rakes as one of the smaller outfits over the coals for turning in applications in without a signature in Wisconsin and makes something of 23 people who might have more than one phone.  There seems to be no current comment on one change involving the FCC’s lack of recognition, especially in multi-unit apartment complexes, that qualified individuals might share the same address.  The Journal perhaps sees that as possible fraud, rather than life for the poor.  Neither is there any mention that one of the largest new companies in the market is Mexican billionaire Carlos Slim’s Tracphone operation.  Maybe the Journal wants to tread more carefully in that direction before slinging out more innuendo.

I’m not sure why the Journal has launched this new campaign, but lifeline telephone service is an essential for the poor and elderly, and as I have argued in Citizen Wealth, we need to achieve maximum eligible participation.   The cost of this program dropped in 2012, but it is still unclear if everyone who should be getting the program is receiving the benefit.  Furthermore, as even Ante reported earlier, this service is paid for by consumers and then passed back through the FCC, so this is not a taxpayers’ dollars being misused situation.

If you can figure out the real beef here, call me, maybe?



Walmart Workers Strike or Publicity?

Walmart Strike

New Orleans       Some eighty-eight (88) Walmart workers have walked out of 25 odd stores around the country according to the UFCW and its Walmart organizing project director, Dan Schladerman.  The Times, Wall Street Journal, and other parts of the financial press have played the worker action as a strike and as the first strike against Walmart in its 50 year history.   The company has said, essentially “Phooey!”  and derided the whole thing as nothing more than a “publicity” stunt.  Does it matter?

A reporter from the Guardian called me to ask if this was the first walkout ever at Walmart.  No, of course not!  Workers have gotten wild hairs and hit the streets en masse many times.  No one who has spent any time organizing Walmart workers hasn’t heard about such incidents, but this is true of workplaces almost virtually everywhere.  Organizers always listen for – and hear! – of past struggles.  All of that though is hardly the point.  For sure, this is the first time that the UFCW chose to organize workers in some of the small number of stores where it has established small beachheads to walkout in support of a protest against the company, and that’s what is important here.  I have also heard some reports now that we are several weeks into this that workers in a few stores have protested independently, which not only proves by earlier point, but is a hopeful sign for the UFCW for the future.

The real story here that seems to be missing in all of the financial press, and is very important, may speak to an important shifting of strategy and targeting by Schladerman and the UFCW, which could be significant.  All of this activity was prompted by a protest and walkout in Elwood, Illinois at one of the largest Walmart distribution centers in the country.  Workers there had signed petitions protesting working conditions and demanding a living wage from a Walmart contractor.  The contractor, Roadlink, fired the workers in retaliation.  This week the workers were reinstated with full backpay and other reports indicate that Walmart forced the company to make other improvements for the workers with safety protections, shin guards, and so forth.  A rally by hundreds at Elwood turned in a 100,000 petition signatures in support of the workers before the reinstatement.  This is a clear victory, and what the mainstream stories seem to have missed is that the other protests were largely in support of the walkout and workers at Elwood, and that the “stores” included workers from other distribution centers.

All of this matters.  Walmart labor relations officials in Bentonville are smart and savvy.  Their contractor in Illinois massively screwed up, creating an obvious labor law violation by firing workers for concerted activity.  Schladerman and the UFCW to their credit jumped on this miscue like dogs on a bone, since all of this walkout activity now is protected “concerted” activity under the NLRB and the equivalent of a quarterback getting a free pass after the defense was offside if the officials didn’t stop play.  Walmart knew its contractor had cooked their goose and that no one would understand the difference between them and their contractor, so muscled up and got folks back to work.  Given the laziness of the press and the virtual absence of a sophisticated labor press, Walmart was able to do this virtually unnoticed, catching a huge break.

The heart to pressuring Walmart is its distribution system.  For years the UFCW was simply ceding the distribution warehouses to the Teamsters.  When we worked on the Merced, California project over the years, the Teamsters they were a great ally locally for our campaign, but we were never able to convince the IBT’s Warehouse division to let us go after the other California distribution centers where we had found interest and unhappiness.  If Schladerman has finally gotten a handle on this and a clear path to organize and agitate in this area for UFCW’s campaign, then he finally at long last has some bullets in his gun, and he’s fired the few he could load in recent weeks.

So, sure, this isn’t much of a strike, it’s not the first walkout, Black Friday is in no danger, and it’s not particularly historic, but it is great publicity and it communicates to a million or more Walmart workers that there might be a heartbeat in the UFCW and its worth a listen, look, and maybe some action in the future.  The Detroit sit down strikes did that, too, remember?  That’s not this situation, but if the UFCW is in the warehouses now and doesn’t make the mistake of going traditional, but instead doubles down on its “majority unionism” program, as we did several years ago, and moves to sign up a couple of hundred thousand members and keep agile and ready to respond to the breaks that come their way, then, yes, this could be the first call for history in the making.


Last Gasp Support for Grameen Bank and Microlending?

Muhammad Yunus

New York City   To see George Shultz, a former US Secretary of Labor, Treasury, and State and Madeleine Albright, a former UN Ambassador and US Secretary of State, co-sign an op-ed piece in the Wall Street Journal as a last gasp move to prevent the Bangladesh Government’s takeover of the path breaking micro-lending institution, the Grameen Bank, is a good sign that Hail Mary passes are being thrown in desperate last minutes to save any semblance of shareholder control of the institution.

We’ve talked about microlending before in these pages.  We’re skeptical.  We do not see such programs as poverty reduction mechanisms so much as we see them as interest bearing instruments for job buying.

Nonetheless, we have never supported the controversial ousting of Muhammad Yunus, the original director and widely recognized “father” of this movement, because it looked fishy and though technically within the power of the Bangladeshi government, still seemed to be political retribution for Yunus public comments about starting a separate political party.  Despite worldwide recognition and the lion’s share of a Nobel Prize, Yunus was booted last year without much ceremony.

Shutlz and Albright do the right thing by emphasizing that the Nobel was awarded to Yunus but also to all of the small shareholders, who number in the millions, and have had the ability, much like a cooperative, to elect their own manager, which was the job Yunus had held.  The government holding a minority number of board seats (outnumbered 2 to 1 by the smaller holders) is moving to acquire the right to appoint the manager directly.

All of these former Secretaries of State oppose this move, as they should, and the current Secretary of State Hilary Clinton has spoken forcefully in support of Grameen’s current structure as well.

Well and good, but one gets the feeling reading between the lines that the die is cast and the government is already the winner here.  Grameen was a bank with a high interest, daily collection set of loan products, not a democratic, activist, peoples’ organization.  Under attack, there was no way to move a base, because the base was passive and captive.  There is no way to pretend that bank shareholders are the same as the membership of a progressive and activist organization, and in Bangladesh the silence of the shareholders speaks volumes about the limits of financial “democracy” and its ability to confront autocratic state power.

Like it or not, you can mark your scorecard now:  Government 1, Grameen Bank 0.


Walter Reuther is Alive, Well, and Leading an Auto Workers Union…in Korea!

Union members, left, wearing head bands saying 'Unity Fight,' at negotiations with Hyundai in Ulsan, Korea.

New Orleans   Yes, Walter Reuther, the great, visionary, charismatic, progressive, and disciplined labor leader of the United Auto Workers (UAW) in the United States is alive and well and leading an auto workers union, but his name is Moon Yong-moon and his union is in Korea.  Rather than representing workers at GM, Ford, and Chrysler, he is leading workers aggressively at Hyundai and its subsidiary, Kia Motors.   Today they are once again embarking on strikes at both facilities on issues that would have seemed frontline in Reuther’s day, but now seem exotic:  ending night shifts, sharing a percentage of the profit, and hiring contract workers.  In these days when on the front page of the Wall Street Journal we read about the ass whipping taken by the Machinists at Caterpillar, is it possible that buried in the same newspaper we can find real hope and inspiration from Korea?  What’s going on here?!?

First the economy and the fiscal position of these Korean car companies is advantageous.  Their inventory in the US  is in short supply and their sales have been robust, giving workers some leverage.

Secondly, the unions do not face the same “lockout” pressures in Korean labor law, so the union has been able to take the company out on strike on a day-to-day basis depending on the progress at the negotiating table, which is generally not possible in the USA.  Not counting the 8-hour strikes the union has called for yesterday and today at both companies, in the last month according to strikes have cost the world’s 5th largest automaker (based on combined sales) a billion dollars.  At Hyundai the union has “hit the bricks” 18 times in the last 5 weeks since July 13th and a dozen times at Kia.

Thirdly, the issues are broad based.  The union has been on a long term campaign led by Moon Yong-Moon to eliminate the graveyard shift.  Over the years they have won limitations to 20 hours of plant operation, but in this round of negotiations they want to cap work not at two 10-hour shifts per day, but at two 8-hour shifts per day with no worker on the clock past midnight.  Why?  Moon argues according to the report in the Journal that “night-shift work is unhealthy.”  In an interview with reporter, Kyong-Ae Choi, (who also wrote the piece as part of the Murdoch-owned DowJones Company) Moon said, “working through the night has caused chronic fatigue, sleep disorders, and indigestion for workers” and “in some cases, it is also to blame for family troubles.”  What union leader, worker, or company executive would ever disagree with Moon on any of that?  Nobody!  But, when was the last time any American union made the fight.  This is so “old school,” that modern workers wouldn’t even believe it was ever part of any school!   How would the company maintain production?  Here Walter Reuther Moon says simply that the company would have to hire more workers.  The company predictably says the existing workers would have to become more productive.

The union also wants 30% of the company’s “net profit to be used for performance-based pay.”  You would think that is exactly what would make the workers more productive and align with the company’s goals, but not surprisingly, the company is balking at this Reuther-type proposal as well.

The latest strike action came after some progress on all of these issues.  There’s serious money on the in the company’s offer, though not up to the union’s demand, and shockingly to North American unions, there’s real movement on shortening shifts and hiring-in contract workers.  According to Kyong’s report in

Monday, Hyundai offered to invest KRW300 billion in facilities to introduce the daytime-only shift system in 2013 and to gradually give permanent contracts to more than 3,000 subcontracted workers by 2015.

Moon may lead his members to victory or something close to it.  He’s not a typical 21st century labor leader.  According to Kyong in the Journal:

The 48-year-old has been fired three times and arrested four times for union activities since joining Hyundai in 1986.  Short and usually wearing close cropped hair, he is known for eschewing the niceties of union-company bargaining, avoiding handshakes and smiles at negotiations.

Moon may be a hard-ass but he is also a dreamer.

“I want an equal partnership with the company on behalf of union members…”

Who says crazy things like that and then tries to make them happen anymore in these decades since Reuther?  Not much of anybody!


Hyundai union chief Moon Yong-moon (middle)