Thursday, July 23, 2009

Rich Assholes, Debt Collection, Hedge Funds & Healthcare

The hedge fund--those lovely instruments that enriched a few, then crashed the economy and stripped the rest of us--owned the debt collectors (the lovely folks who call and hound you for $50 you owed back in 1993, and resell the zombie paper so it remains on your credit report). And they owned the arbitration company to which consumers were FORCED to use in the event of any dispute. Kinda the way insurance companies, HMOs and Big Pharma does. And a lot of other corporate heavyweights who deal with ordinary people. They can what they please to you; you have to use bought arbitrators...
Well, the Minnesota Attorney General, channelling Eliot Spitzer when he wasn' chasing ass, saw right through that. Details here. Recall, for 8 years the states had to protect the little guy, as Bush-Cheney had other aims. Now, the states are broke, and Barack, Holder and a re-tasked FTC are trying to pick up the pieces. At least Minnesota had the sand to strike back, forcing this relationship out in the open, and causing a divestiture of the arbitration element. But the philosophy of greed, adhesion contracts, disparate power, lobbying--it's still there. Same genes as Big Healthcare and Big Pharma ; the DNA is dug in deep and the hedge funds are just that material without all the brick and mortar trappings. Fanboys and girls--capital's just recycled rich folk largesse. Contrary to well placed myth, it doesn't come from noble widows & orphans investing their pennies. And in turn, these leeches own the smaller leeches, like credit card companies/debt collection firms. And I bet Goldman Sachs is in there somewhere hahaha.
Note: (so you don't think I have it in for arbitration as a concept), in family law/divorce, or in commercial settings where the parties are on equal footing and want to hold down the drama, arbitration works. The American Arbitration Association agreed--volunteering to get out of consumer related arbitration. They make enough skrilla on corporate/commercial stuff.
Perhaps Barack needs to play up this populist approach...this unified gang out to make money and screw the health reform maelstrom. Entrenched power and greed can always brainwash the clearly malleable skulls out there. But linkages like this are hard for even the most seasoned moron to ignore. And finally more than a few will wake up. Not only on healthcare, but financial regulations, banking/credit card protections, etc.

We'll see. At least I won't have to talk to a goofy arbitrator first.


BahamaBruce said...

The money is out there, being squirrelled away or being invested in Dubai. So when they say don't tax the rich, or there's no momey, they are full of SHITE!

Remember what your Warren Buffet said when your rightwingers complain of class warfare. "My class always wins."

Anonymous said...

Is the phrase FUCK THOSE MUVFUKKAS inappropriate?

Anonymous said...

SoCal 82Tiger Says:

Professor: First lets be real for just a moment – The VAST MAJORTIY of consumer credit cases are bad cases in which the consumer is looking to avoid his/her financial responsibility for something they did not know or understand. Public ignorance of what people sign their names to is rampant! You and I both know that no one reads the contracts they sign let alone understand what they are signing (Witness the cause to half of the real estate debacle in this country). Hell forget real estate; how many of us read our car loan, cell phone plan, or internet use plan agreements? We all think we know what they say so we don’t bother to read them until there is a problem and then we are “SHOCKED” … “SHOCKED”… to discover what we agreed to!

With all that said a 95% plus creditor success rate in arbitration strikes me as higher than anyone should expect (and the WSJ thought so too!). As one who has worked in this area for 20-plus years I would have expected that a true creditor success rate should be closer to 75% …

It seems to me that the problem is not the arbitration process but the manor in which a creditor has the right to pick their arbitrator... Giving the creditor the right to pick the company (and in many cases the actual arbitrator) is a recipe for disaster. Make arbitration a random assignment process supervised by the presiding court and you will go miles towards breaking the cozy system that has developed between arbitration companies and creditors. That combined with teaching consumers TO ACUTALLY READ, KNOW, AND UNDERSTAND THE TERMS AND CONDITIONS OF THE AGREEMENTS THAT THEY SIGN would go a long way towards ensuring that consumer claims brought to arbitration are successful as they are brought with merit not feelings.

As a bonus our court systems (or Bar Associations?) might themselves create their own independent pools of retired or semi-retired judges & attorneys to provide greater opportunities for arbitration diversity and fairness. With no guarantee of business from any one client the arbitrator does not become the de facto creditor employee beholden to maintaining the good graces of the creditor.

So whaddya say CC??? Can our legal system step up to actually solve this problem OR will trial attorneys block any attempts at reform that might served limit their chances to sue???

Anonymous said...


When the consumers say hey you ar hitting me with fees, jacked up rates and other nonsense based on what? And their only way of asking for help is with a company owned arbitrator, I'd say that's a travesty so I repeat FUCK THOSE MUVFUKKAS! Even the Republicans are getting in on this--the one way Palin scares some of the traditional people who back her is that she doesn't like this regime either!!! But I think she'll be bought off soon if not already.

Anonymous said...

SoCal 82Tiger Says:

Anon – Re: Charge fees, raise rates and other nonsense.. for what? Truthfully what you are describing in your rant is better said to be a customer service issue or problem... Arbitration like the litigation process is designed for resolution of contractual violations (Ex: Reg. Z/TIL, FCRA, or FDCPA Violations). AGAIN I REPEAT: if people read, knew, and understood what they signed they would be better consumers and learn to shop for creditors who does not "fee or interest gouge" the customer (Ex: small banks or credit unions)… They also would be better prepared to prevail on legitimate violations of their contracts when they occured.

For what is worth, credit lending is a business not a charity. If it were your money borrowed with a promise to repay wouldn’t you ask borrowers to pay you back on time? Ahhh... YES!!! And IF the borrower was late or stopped paying you WHAT WOULD YOU DO? Certainly you might offer to make alternative arrangements and many borrowers would be happy that you were working with them! BUT, what about the 10% – 20% of consumers that willfully ignore your offers to work with them??? In lieu of your contract rights would you accept an IOU from them until they can pay you again??? If so for how long… A month? A year?? 10 years??? Unless you’re independently wealthy, I doubt you would be so accommodating!
In simplest terms our credit system works because everyone does what he or she are supposed do - borrow and pay back on time, MOST IF NOT ALL OF THE TIME! That includes corporate creditors as well as consumers. In case you did'nt notice over the last 9 months - EVERYONE, people and companies, are hurting having lost money and wealth. I assume that in your mind it is unfortunate that a sign to know that we are all on our way towards getting out of this mess will occur when creditors again start showing that they can consistently make money again… That may not sound touchy feely BUT that’s the truth!

Unless you’ve experienced working in the world of credit service (which by the tone of your rant I doubt), you would have no idea just how many people feel perfectly fine about delaying or ignoring their credit responsibilities until they are in serious financial and delinquency trouble. By that time they are often beyond the ability of the creditor to easily work with or help them.

You can glibly say F the creditor for charging fees or raising interest rates, BUT I can just as easily say F the consumer for blind ignorance! The lesson here should be NEVER sign or CO-Sign to ANYTHING unless you know what the hell you are signing on to… IF you can say you ALWAYS do that then congratulations you are far better and smarter then 90% of consumers in the good ol’ USA.

Lisa said...

Without credit, there would have been no economic boom in the past. It's like pushers and junkies, with the police looking the other way. I remember when the 2005 bankruptcy reform act was coming and we had all sorts of lobbying coming out of banks and mortgage companies about how people are stupid, and deadbeats. Yet these are the same people banks, credit card companies and mortgagers got rich from. Afterward, we find out most people are declaring bankuptcy because of catastrophic medical bills, job loss without any safety net, and divorce. So much for people who don't read the fine print or are free spenders.

I thought it was criminal when Barack backed off from supporting the "cram down" which even Eric Holder supported. This was all lobbying from banks. Bankruptcy should be able to tell any creditor to "take a number."

The bankuptcy issue is the analogy to this issue from Nat Turner.

I am not convinced that just having a bunch of disclosures is real consumer protection. Terms need to be controlled. You see the lobbyists in local and state govs and on the Hill pour out like ants when something comes up to regulate the money made off working people. Ultimately even so-called brilliant people are caught up in debt, debt collection, etc. The fees, trap doors, penalties are the only way some financial entities can make extra money.

Lisa said...

Nat this was an interesting article

P.S. We liked your critical review of CNN.

Anonymous said...

Re BB - Money squirreled away in Dubai

That's a joke Dubai in on the verge of going more financially bust then the USA... Don't believe the media hype it’s not the next Switzerland…

Re Lisa - Cram Down

By cram down I assume you mean secured property ... Perhaps you need to think that through that idea... Whenever you support cram downs you’re allowing people to dump debt that that are legally responsible to pay. Any cram down becomes a loss the creditor has to eat from their earnings and/or capital reserves. That is money they cannot recoup to re-lend to another person in need of credit – so it hurts future borrowers. If that happens often enough you've just made a creditor insolvent: i.e. they are loosing money faster then they earn and replace it... AND that means hugely less options for loans to many more future borrowers

AND with cram downs it’s not just limited to debt made through stupid-crazy 100% interest only pick a payment ARM’S during an over heated real estate market.
It’s also a cram down option for people who made a conventional 10% or 20% down secured loan years earlier and are also now upside down from the recent huge contraction in real estate values…OR even the person who finance a new car or RV and lost 1/3rd value when they drove the vehicle or vessel off the sales lot..

With the exception of government backed investments (Ex: T-Bills, FDIC & NCUA insured accounts) There are no perfect guarantees to ANY investment including your home. Anyone using a home as a short-term investment is asking to get burned by market forces. When will any one acknowledge that the “enemy” is just not greedy bankers its greedy people thinking that they can get something for nothing…

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