This should be considered a deadly weapon, in light of banks' runaway abuse of overdraft fee policies. (Photo: flickr.com)

Overdraft fees across the board have attracted the interest of Congress lately. Many have said that the way in which overdraft fees are assessed by banks and credit unions is predatory and dishonest. Charging the same high fee for each infraction – even if is for 1 cent – and then charging an additional fee for each day a customer’s account is overdrawn makes it nearly impossible for  already cash-strapped consumers to raise their heads above water.

In a recent case before California’s Supreme Court (Paul Miller et al. v Bank of American, NT & SA No. S149178), the ruling from Kruger v. Wells Fargo Bank (1974) 11 Cal.3d 352, 356 [113 Cal.Rptr. 449, 521 P.2d 441] (Kruger) was put to the test for Paul Miller, a retiree who depends upon Supplemental Social Security for his income (since 1992). Funds are directly deposited into his Bank of America checking account (since 1994). At the time that the direct deposits began, Miller was promised by Bank of America employees that those deposits would “be safe from debits or charges” unless he authorized otherwise.

But Overdraft Fees Came Calling

First, Bank of America accidentally deposited $1,799.83 in Miller’s account. They realized the error and reversed the credit, but not until Miller had made some charges. B of A also failed to give Miller notice of the deduction. The result was that his balance dipped below zero. Overdraft fees followed, which depleted a social security payment. For reference, Bank of America’s NSF fees at that time ranged from $14 to $32 per transaction. Up to five NSF fees could be processed against a checking account per day, with a maximum of $160 in overdraft fees allowed.

Miller pointed out that depleting his social security payment made it impossible for him to pay his rent or living expenses. Yet Bank of America told their long-time customer that he’d have to repay the part of the erroneous credit that he’d spent, but that he “could open a separate checking account for his SSI deposits that would not be used for repayment.” Miller did this, but a few months later the bank twice dipped into this new account to cover the overdraft fees. Both times Miller complained and the money was credited back to him.

And the Same Thing Happened Again

Although he did so infrequently, Miller occasionally overdrew his checking account. Each time, Bank of America hit him with overdraft fees that automatically deducted from his social security income. Bank employees who’d previously assured Miller that no deductions could be made from social security deposits without authorization now claimed that such funds received no “special treatment.”

Interestingly, during trial, a Bank of America executive responsible for checking products at Miller’s branch testified that Bank of America “could develop the capability to identify accounts into which public benefit funds are directly deposited, and could bypass charging NSF fees to those accounts.”

Why Didn’t Bank of America Take the Customer-Friendly Route with Overdraft Fees?

The same executive testified that “in order to prohibit certain account holders from overdrawing their accounts (which would eliminate the Bank’s need to recoup overdrafts or charge NSF fees), the Bank would have to ‘bounce’ more checks, withhold check deposits for the maximum allowable period of four days instead of one or two days before the Bank would make the funds available for withdrawal, eliminate point-of-sale purchases (but not personal identification number (PIN) transactions), and restrict automated teller machine (ATM) withdrawals from non-Bank ATMs.” The executive also stated that larger transactions would be processed before small – regardless of when the transactions occurred – because Bank of America felt larger transactions were “more important.”

More Important for Whom?

Any consumer who has felt the barbed sting of overdraft fees knows that the reordering of transactions is a way that banks stack the deck against consumers. Bank of America claimed in the Miller case that “the Bank’s practice of processing larger transactions before smaller ones results in the same total amount being overdrawn from a particular account.” Yes, but as Mr. Miller’s team clarified, doing so “increases the number and amount of NSF fees imposed.”

Miller would have none of that. His complaints alleged such things as “fraud, negligent misrepresentation, and intentional infliction of emotional distress, as well as violations of Code of Civil Procedure section 704.080; the Consumers Legal Remedies Act (CLRA), Civil Code section 1750 et seq.; the unfair competition law (UCL), Business and Professions Code section 17200 et seq., and the false advertising act, Business and Professions Code section 17500 et seq.” That’s a lengthy list of charges. How would Bank of America fare?

Nearly $300 Million at Stake in Overdraft Fees Alone

The California trial court found that fraud, negligent misrepresentation, CLRA, UCL, and false advertising claims were all viable issues that could be tried. A class was even certified that included “[a]ll California residents who have, have had or will have, at any time after August 13, 1994, a checking or savings deposit account with Bank of America into which payments of Social Security benefits or other public benefits are or have been directly deposited by the government or its agent.”

By the numbers, Bank of America had 1,079,414 such accounts in 2003. They received more than $800 million in government benefits via direct deposit. From January 1994 to May 2003, Bank of America took “at least $284,211,273 in NSF and other overdraft fees from accounts containing Social Security direct deposits.”

What Did the Jury Find in the Miller Case?

The jury found that Bank of America violated the CLRA by “falsely represent[ing] that it ha[d] the right to use Social Security funds from direct deposit accounts that receive government benefits including Social Security funds to pay overdrafts, insufficient fund[s] fees, . . . and money claims it has against class members.” Thus, the jury awarded $75,077,836 in compensatory damages for the class action. Each member also received $1,000 in statutory damages. Finally, Miller received $275,000 for emotional distress.

However, the Court of Appeal later reversed the trial court’s judgment, holding that Kruger did not apply. This is apparently still under review at this time.

What is the Kruger Argument?

Essentially, Kruger stated that a bank “may not exercise its right of setoff against deposits which, derived from unemployment and disability benefits, are protected from the claims of creditors.” But the Appeals Court found that the 1974 Kruger ruling “only applied to cases in which government payments were redirected to pay debts outside the bank.” Overdraft fees, by that logic, are internal debts.

The Office of the Comptroller of the Currency (OCC) sided with Bank of America’s ability to honor overdraft fees in the event of insufficient funds. They claimed that banks can do this without infringing upon 12 United States Code section 24, par. Seventh, or 12 Code of Federal Regulations part 7.4002 or 7.4007 (2009). (Letter, at p. 1). Overdraft fees are considered account maintenance, rather than creating a debt that the bank later collects.

The Consumer Loses Again

Runaway overdraft fees continue to plague consumers who can ill afford them. This is not to say that consumers should not be responsible for their expenditures, but in the case of Miller, I would argue extenuating circumstances. Until this is settled in California court – and until Congress forces banks to curtail abusive overdraft fee practices – the old phrase “buyer beware” still applies. At least there’s no deception with payday loans…

Image from Picasa.

Always a trailblazer for green policies, California today approved a policy that will put in place efficiency regulations for televisions. These regulations have become necessary thanks to liquid-crystal display and plasma high-definition TVs, which use more than three times as much power as their old-fashioned counterparts.

Energy standards have been put in place regarding large appliances such as refrigerators and air conditioners since the 1970s. California is the first state to pass efficiency regulations for televisions. However, while I think it’s a good idea to create policies that apply to public utilities, I see one flaw in California’s new policy: It applies only to TVs that are 58 inches or smaller.

Once again, rules don’t apply to the rich

All payday loan lenders in California have to follow the same regulations; why don’t all individuals have to follow the same energy consumption rules? To me, it seems as though the state is saying that if you have enough money to afford a huge big-screen TV, the rules don’t apply to  you.

I understand that the reason for the cutoff is that it’s impossible to make 60-inch plasma TVs that would fit the energy standards. However, if California is already placing restrictions on the types of TVs people can buy, why make the exception? Why is it OK for people to use inefficient televisions just because they are huge?

Hollywood hoarders

If this energy policy were to be put into effect somewhere else, it might not matter that super-huge TVs were exempt from the ban. However, there are a whole lot of people who can afford 60 and 72 and 100-inch televisions in California. Hollywood, Beverly Hills and Orange County in general are already crawling with them, just to name a few areas.

Placing the cutoff was likely the result of a compromise with electronics trade groups, which fought against the policy. They are the ones directly affected by the regulations because the law states they can’t sell energy gobbling TVs in the state. The rules don’t say anything about what types of televisions people are allowed to own. Televisions that Californians already own or purchase between now and when the policy goes into effect aren’t subject to the regulations. The standards will be enforced for retailers starting in 2011.

Better than nothing?

The L.A. Times says that the regulations will be a big help in conserving energy in California:

The energy commission estimates that switching to more efficient TVs would save an average of $30 per set per year and $8.1 billion in electricity bills statewide over the first decade. Moving to more efficient televisions would eliminate the need to build at least one large, gas-fired electric power plant, the energy commission says.

Clearly California regulators have done their homework, and the standards will be helpful in their state. I think switching to more energy efficient appliances is always a good idea. It helps the public as well as individuals. However, I dislike the fact that this policy implies what so many people don’t want to believe is true: If you  have enough money, you don’t have to follow the rules.

Payday loans in Ohio still exist, but the opposition continues to bulk up for the next battle. (Photo: Wikipedia.org)

The battle for payday loans in Ohio has been a difficult one for consumers. The recession hit the Ohio workforce harder than most, and the need for emergency short term loans is greater than ever before. Yet the state legislature in their infinite wisdom decided that what their constituents needed was nanny state regulation. Rates were capped at 28 percent APR, which effectively crippled the industry in Ohio and sent credit- and liquid asset-constrained consumers scrambling toward more expensive options. That rate is more stringent that the federal rate of 36 percent APR set for lending to active military, and we know that even at that level, the business model in unsustainable.

Payday Lending is Now

Consumers desire the flexibility to choose what is best for their financial situation. The Columbus Dispatch, rather than turning away from this point in order to blow with the political wind, recently produced an article that was pleasantly even-handed. For some, it’s true: payday loans are “the only way to get by.” While no reputable lender would advocate payday loan dependency, it’s been proven not only in customer surveys but in studies conducted by the Federal Reserve and institutions of higher learning that payday loan can be an invaluable tool for smoothing out financial shocks.

Choice is Good

CheckSmart CEO Ted Saunders pointed out to the Dispatch that “There is a bank right there,” in reference to a traditional institution just a football field away from one of his stores. “They could go right there if they wanted to.”

Competition fosters choice. It also tends to help regulate prices, both of which are benefits to the consumer. But activists like Bill Faith of the Coalition on Homelessness and Housing in Ohio (COOHIO), who appears to be a firm believer in the nanny state, reminds that “People at one point also were excited about high-interest subprime mortgage loans that helped ruin the housing market.” Yet Faith makes an apples-to-oranges comparison. Wall Street shenanigans and impotent governmental policy that allowed it to go on are what destroyed the economy. Payday loans aren’t even in the same ballpark. In fact, studies like those by Dartmouth College’s Jonathan Zinman suggest that capping payday loan rates and otherwise restricting the industry harms consumers’ financial welfare.

Don’t Believe? Ask Somebody Who Has Used Payday Loans

The Dispatch interviewed Amie, a 47-year-old mother of six. Recessionary times have been tough for her budget, and her low earnings make getting ahead almost impossible. Even though she’s found herself jumping from one payday loan to another, she said “I can’t complain. At least they’re helping me,” referring to CheckSmart in Ohio.

That’s ammunition that payday loan critics would use to say that companies like CheckSmart are pulling Amie into an endless cycle of debt. But what we truly have here is a financial landscape where banks, credit unions and even employers have for the most part failed to serve the populace. Requirements to apply for consumer loans through old-school channels often exclude those who need the most help. As wages have not kept pace with the rise of inflation, too many consumers like Amie find themselves in a large hole.

Legislation: Like an Ant Lion’s Hole

Legislators who fight for 28 percent APR and other such unreasonable restrictions upon businesses without the deep pockets of the financial mainstream are creating a nanny state scenario where consumers with nowhere else to turn will have to depend upon the “alms” of the government and their banking tentacles. Freedom of choice sinks beneath the waves. Or, if the government does not assert total control and credit-restricted consumers are left to fend for themselves, regulating payday loan companies out of the market most frequently leaves consumers with even more expensive options, from loan sharks to overdraft fees. At least payday lenders make their costs clear up front. That’s something a bank never does with overdraft fees. If you’re skirting the red, using an ATM card becomes a deadly game, as every infraction can incur a fee of $25 or more, even if you overdraw your account by as little as one penny. But that’s OK, says banks. It’s all in the micro-fine print!

“Banks and other lending institutions aren’t doing their jobs,” says Koziura

That’s what House Financial Institutions Committee chair Rep. Joseph F. Koziura of Lorain, Ohio told the Dispatch. “The system is built on making money on fees now instead of the old-fashioned loaning money and putting money in the system. That’s 90 percent of the reason we’re screwed up.”

What happened when half of Ohio’s 1,600 payday lending outlets closed down after approval of a 28 percent APR rate cap? Lots of people hopped into the unemployment line, for one. Consumers kowtowed to the voice of government and made life more difficult for those who can ill afford such windmill chasing. There were certainly some payday lenders who were unscrupulous in their dealings with customers, but it was not a majority. Payday lending is a regulated industry with a keen eye toward consumer relations. Groups like the Community Financial Services Association and the Online Lenders Alliance are there to ensure that consumers can safely enjoy the use of payday loans.

But Payday Lenders Aren’t Being Allowed to Run Legitimate Business

Charging $15 per $100 loaned is common for a payday loan. For a two-week loan, paying 15 percent interest is reasonable for an emergency service that can expose the lender to a great deal of financial risk. But Ohio legislators managed to convince consumers (lead the lemmings?) into laws that prevent payday lenders from even doing that. According to the Dispatch, CheckSmart charges up to that rate, but it’s broken down into numerous fees in order to circumvent faulty legislation. It gets around the 28 percent APR rate cap as it currently exists. And CheckSmart makes each of the individual fees clear to its customers, who continue to use their services. The truth is what consumers want, not horror stories that leave you thinking, “Yeah, that really doesn’t happen to most people.” No hook hands scraping the door at midnight, no dolls that move on their own and no payday loan debt traps… that’s story time, kids.

Legislators Still Aren’t Satisfied

Ohio legislators are continuing to drive for a 28 percent APR rate cap that applies to any payday loan and closes the loopholes. “The latest bill up for debate in a House committee,” writes the Dispatch, “would cap interest at 28 percent for all loans of up to $1,000 made for a term of three months or less.” That would kill payday lending in Ohio. A vote is set for early December.

Payday Lending: A Tool to Be Used with Healthy Caution

Payday lending is not a magic ATM. It isn’t money to fulfill your wildest cash desires at a moment’s notice. Such unbridled use can easily lead to dependency, when what a consumer’s finances need is sound budgeting. But regulating payday lending out of business in Ohio because a minority of consumers use the payday loan product in ways it was not intended to be used is no answer. If people fear the nanny state when it comes to bailouts and healthcare, shouldn’t they also fear it in this avenue of consumer finance?

Speaking of government, there’s an invention called Social Security. While it has been a cash lifeline for some, many others worry that it may be a financial scam, a Ponzi scheme that is costing the modern workforce millions each year. Yet legislators make no earnest attempt to reform that system. They consider payday loans a more desirable target, perhaps? There might just be more of a campaign war chest in that field, thanks to the banking industry. Vote as the dollars go; isn’t that the way?

Related Video:

Photo: http://www.flickr.com/photos/wwworks/ / CC BY 2.0

Child cruelty is something I do not take too kindly to. It doesn’t matter who you are or where you come from, placing a child in any type of danger is absolutely intolerable.

Being a responsible parent requires time and mass amounts of love and effort. Of course, things can get tough and struggles are inevitable when it comes to parenthood. Being a parent can be hard – physically, emotionally, and financially. Some have had to rely on installment loans every so often just to meet the needs of the little ones who depend on them for nurturing, protection, and love. It’s not always a joy-ride when reality demands that you adapt to change and make grand sacrifices. However, no matter how difficult parenting can be, it gives no grounds, no right to pose harm on a helpless child.

Seven month-old Baby Found Under Bed

The 7-month-old baby that was reported missing over the weekend has been found and in good condition. Seven-month-old Shannon Lee Dedrick was found hidden under a bed in a 2-by-3 foot cedar chest.

According to CNN, authorities believe the baby’s mother, Crystina Lynn Mercer, gave her daughter to the child’s paternal aunt, Susan Baker, sometime around Oct. 31, 2009. The next day, they reported the child missing and some 75 volunteers scoured a kilometer radius around the home for evidence. The baby, who was missing for a total of five days, was hidden for 12 hours with no food or water, except for a little blanket that was found in the box with her. Police found baby Shannon Dedrick Wednesday night alive and well.

Justice for Shannon Lee Dedrick

Both Mercer and Baker have been taken into custody and are being charged with a third-degree felony on interference of child custody. They were also charged with several misdemeanor charges for making a false report of a missing child, a false report of a crime, and contributing to the delinquency of a child. The child’s father, James Russell Dedrick Jr., was also taken in for questioning, but was later released without any charges.

President Obama's plans for the Consumer Financial Protection Agency could mean that debt relief is closer than ever for the downtrodden. (Photo: flickr.com)

The recession has forced America to face some of its most deep-seated systematic financial troubles. One thing that has become clear is that unscrupulous mortgage lenders and credit card agencies have dined for far too long upon consumers who largely didn’t understand that they could hold out for something better. Foreclosure and bankruptcy have amplified the burden on consumers, courts and the economy as a whole tenfold, which makes the question of how debt relief should be handled a more pressing issue that it has been in decades.

Cornell and George Washington Law School Economics lecturer and former professor Dr. Neil Buchanan ponders in a recent FindLaw column entitled “Should Federal Agencies or Courts Protect Consumers in Financial Markets?” which side of the regulatory coin America needs most. Existing regulatory agencies are being given more extensive duties by the Obama administration in order to help make America’s financial markets safe and sound. At the same time, new agencies like the newly minted Consumer Financial Protection Agency appears to be on its way to receiving unprecedented powers. In theory, it will have the power to police how mortgage lenders, banks, credit card companies, payday lenders or any other consumer finance company interacts with consumers. It is Buchanan’s opinion that allowing regulatory agencies to protect consumers is the best route, as relying solely upon the courts wouldn’t be enough of a deterrent to keep suspect lenders from indulging in bad behavior. The ideal system would have both in place as a regulatory enforcement clearing house.

But Isn’t This Big Government Clogging the Market?

Some will surely feel that way. What I have seen from state governments is an overzealousness to regulate payday lending, to the point where it is impossible for such legitimate businesses to operate in some states. Mortgage lenders and credit card company supporters would likely have similar complaints, although the path of destruction their industries have carved is rather hard to ignore. Buchanan begins his argument by considering the “courts only” option. If it were possible t regulating a market in need of deep repair like the mortgage industry through simple enforcement of the law, that would be ideal. However, Buchanan doesn’t see that as being enough. Sometimes the courts might work in favor of the consumer and debt relief, but not often enough. Extreme circumstances would be required to convince most judges to see cause to invalidate a contract. The “non-elite” consumers, as Buchanan calls those most in need of debt relief, would not receive the help they need.

There is precedent here, but it could be a one in a million kind of thing. Buchanan points to a New York Times story where a judge ruled that a homeowner’s mortgage debt could be completely discharged during bankruptcy. This loop in legal convention happened due to a technicality: the mortgage company couldn’t prove it had the legal right to collect payments on the homeowner’s mortgage due to the fact that their mortgage had been repackaged and resold so many times that the paper trail had been lost. The mortgage company claimed this was “standard procedure” now, but the judge wouldn’t accept such shenanigans. Since the judge wasn’t exactly sure who was due the money, he decided he couldn’t compel the consumer to make mortgage payments to any one party.

“Saved by a Technicality” Won’t Work for Everyone

Buchanan rightly points out that not all judges will be as determined to call mortgage lenders’ bluff in such situations. “Standard procedure” should hold in most cases, meaning that homeowners would still be legally obligated to follow the terms of their mortgage contract. And mortgage lenders have certainly learned something from that case and are making sure all paperwork is in order. Once again, the deck will be stacked against consumers.

Don’t Depend Upon Courts for Debt Relief

Courts enforce the law. When a consumer enters into any legal contract with a lender, the terms of that contract are in most case subject to enforcement by law. Buchanan considers the vast majority of consumers to be “grossly mismatched” against mortgage and credit card companies. Mandatory arbitration clauses, hidden interest spike triggers and means of computing interest are always written in the best interests of the creditor. Consumers often agree to such contracts because they feel they don’t have any other choice. New regulatory agencies may be able to curtail abusive practices that are currently considered legal, but until that time officially arrives, there is too little hope that the average consumer will be able to fight back through the court system.

Courts Have Been Friendlier to Finance Companies

Families can go to court to attempt to prove that they shouldn’t have to pay under the terms of less than legal contract. However, Buchanan believes most judges will stick to enforcing contract language. In turn, the lending companies themselves are effectively using the court system to compel consumers to pay, even if it is through wage garnishment.

What about “Equitable Doctrines” for Debt Relief?

Hoping that lenders lose their paperwork isn’t a good strategy. That’s where “equitable doctrines” come into play. These can create situations where courts might be willing to set aside otherwise valid contracts because they feel that it there were unconscionable circumstances that placed the consumer under duress or undue influence to sign. Buchanan draws our attention to the “doctrine of unconscionability” itself, claiming that it works in two ways. First, in terms of procedure, there is the scenario where a contract was formed under suspicious circumstances. Second, there is the scenario where the substance of a contract is deemed grossly unfair. If both conditions are met, a contract like a mortgage, credit card agreement, etc, will not be enforced.

Too Good to Be True?

Perhaps it is. It all looks great on paper, says Buchanan, but debt relief is hard to come by via equitable doctrines. Only the most extreme cases are considered by courts, and for most people, having trouble paying a mortgage or credit card they signed up for won’t be enough to sway a judge. This raises the question in Buchanan’s mind as to whether courts should be compelled by stronger legislation to accept equitable doctrine arguments based on things like unconscionability. But as with any other action fought through courts, the cost would likely be prohibitive. Moreover, lenders would still be favored because “losing a contracts case legally cannot result in a company paying punitive damages,” writes Buchanan. “If you lose a contracts case, you merely pay what you would have paid anyway; and if you win, you are ahead. Thus, from the standpoint of repeat players, there is no reason not to abuse your customers (except to maintain goodwill, which many of the companies at issue here have already forfeited).” Then there are plenty of consumers who simply will not have the stomach to sue or be willing to accept a lesser settlement.

Calling on the Government for Debt Relief

Traditionally, the government has remained behind the scenes while consumers have pursued their right to take debt relief matters before the court system. As Buchanan suggests, however, this route has not often proved itself to be effective for the average consumer. In situations where genuine signs of abusive practices and unconscionable contracts are involved, new government agencies could take up the baton and make financial regulation more consumer-friendly.

“An agency can be empowered by Congress to order changes in behavior, changing business practices broadly and generally in order to level the playing field on which financial institutions and their customers do business,” says Buchanan. There could even be scenarios where lenders themselves could support agency regulation over the courts. “Out of control lawsuits” that financial institutions claim burden them unnecessarily would certainly be something lenders would be willing to leave behind so that a regulating agency can rule on matters. “But that hypothetical,” Buchanan writes, “ignores the financial industry’s real agenda, which is to fight to maintain both weak legal rules (allowing them to win in court) and weak-to-nonexistent agency regulation.”

Congress, Act Now

New agencies are about to spring forth from the executive branch to regulate the financial abuse of consumers through deceptive practices. Congress is in a perfect position to arm these agencies with more consumer-friendly laws that will make reasonable debt relief easier to attain. It’s that kind of consumer protection that Neil Buchanan and most concerned consumers are in search of as America looks to emerge from the darkness of the recession into the light of a stronger domestic America.

Image from Blogspot.

The unemployment extension, passed November 5, 2009, was included in a bill with the homebuyer tax credit, and now millions of Americans can continue to collect benefits. The homebuyer tax credit was extended to 2010 in April. The unemployment extension means workers whose unemployment insurance was set to run out before the end of the year can collect benefits for an additional 14 weeks.

In states with especially high unemployment rates, the unemployment extension includes six weeks in addition to the 14-week extension. People collecting unemployment in states with rates higher than 8.5 percent will be eligible for a 20-week unemployment extension after the president signs the bill tomorrow morning.

Who is paying for the unemployment extension?

Don’t worry, you won’t have to go into tax debt because of this bill. The government isn’t taking money from tax payers just to turn around and give tax credits to those same taxpayers. The unemployment extension will be paid for the same way unemployment insurance has always been paid. That wouldn’t make any sense. CNN reports:

The proposal would be funded by extending a longstanding federal unemployment tax on employers through June 30, 2011.

How many people does the unemployment extension cover?

Nearly 2 million people collecting unemployment in the U.S. are scheduled to have their benefits expire before the end of the year. The sad thing is, if Congress had agreed on this bill sooner, 200,000 Americans could have gotten their unemployment extension, too. CNN reports:

The Senate had been bickering over the details since September, and that cost more than 200,000 people their benefits. Some 7,000 unemployed Americans run out of benefits each day, according to the National Employment Law Project.

The national unemployment rate now is 9.8 percent, the highest it has been in 26 years. Tomorrow, the day the president signs the bill, new unemployment statistics will be released. I wonder if that had anything to do with Congress finally deciding to pass the unemployment extension on November 5, 2009.

Image from Flickr.

Congress today passed a bill that extends the homebuyer tax credit, which was set to expire at the end of this month. Homebuyers who initiate their purchase between now and April 2010 will be able to take advantage of a $6,500 deduction in their federal taxes for that year.

Of course, this tax credit isn’t available to all homebuyers. And, of course, there have been some changes to the tax credit that exists through this month. The most noticeable change is the amount, reduced to $6,500 from $8,000. But, hey, if you really need the extra $1,500, you can always apply for a pay day loan. First-time homebuyers are still eligible for a tax credit up to $8,000.

More changes to homebuyer tax credit 2010

You may have noticed that I wrote “homebuyers who initiate their purchase” earlier. Anyone who has purchased a home knows that it doesn’t happen overnight, so the bill stipulates that the buyer must sign a sales contract by April 30 and close the sale by June 30 to get the credit.

This year, only people who had not owned a home for three years were eligible to receive the credit.  Now, people who have owned their current home for at least five years can be eligible for the tax credit if they buy a new home. Also, the maximum income you can earn and still be eligible has been reduced to $125,000 for individuals and $225,000 for couples.

Exemptions from homebuyer tax credit

So, to review, people who have owned a home less than five years, people who make too much money and anyone who doesn’t sign a sales contract within the allotted time frame are not eligible for the credit.

Furthermore, the credit only applies to purchases of a primary residence. The cap on the home’s price is $800,000.

On a side note, the same bill that extends the homebuyer tax credit to 2010 also extends unemployment benefits so that people can collect them for an additional 13 weeks.

No more doctor's note needed in Breckenridge, Colorado.

The federal government still states that possession of marijuana is illegal, as does the state of Colorado. However, in the city of Breckenridge, Colorado, people who possess less than an ounce of pot will not face any criminal or civil charges.

Yes, on election day 2009, Breckenridge, Colorado, voters made marijuana legal — to an extent. Basically, police who work for the City of Breckenridge can’t charge people with a crime for possessing up to an ounce of marijuana, though the police chief says they “still have the ability to exercise discretion.” Let’s pick this apart, shall we?

No state revenue

People often argue that pot should be legalized because it would bring in revenue through sales tax for states and perhaps provide some debt relief. However, Breckenridge, Colorado, has legalized only the possession of pot, not the sale of it. So the only people who benefit financially are still the dealers, who can still be busted if they’re found with more than an ounce.

Furthermore, anyone who gets caught by state police or federal agents can still be arrested for pot possession. So, really, the numerous publications that are saying the vote was “largely symbolic” are right on the money.

Do you have a doctor’s note?

Of course, medical marijuana is legal in the State of Colorado, and unfortunately for the voters of Breckenridge, Colorado, their symbolic vote might get the state some extra attention from the feds. In states such as California, where medical marijuana is illegal, federal agents are trying to shut down dispensaries.

This is, of course, because even medical marijuana is still illegal on a federal level. Now that Breckenridge, Colorado, has established itself as a progressive player in the game of legalizing marijuana, the state might become more of a target for federal enforcement of pot laws. Then again, maybe they don’t care if a bunch of hippies in a ski town smoke a bowl. I guess we’ll see.

Image from Flickr.

All kinds of publications, from trashy tabloids to respected newspapers, are reporting that Nicolas Cage is broke. Maybe they are just using “broke” for space reasons, but I don’t think that’s the right word for what Nicolas Cage is.

Nicolas Cage was bilked out of millions by his business manager, and he has a lawsuit to prove it. As a result of his manager, Samuel J. Levin, and his actions, Nicolas Cage ended up owing the government $6 million in back taxes. This amount is the result of a combination of federal income taxes and property taxes.

Trust in a greedy world

Just as it is a risk for payday lenders to trust that borrowers will repay their loans, it was definitely a risk for Nicolas Cage to trust one man with all of his money. Levin apparently managed all of Nicolas Cage’s financial transactions, including investments. People Magazine reports that in his lawsuit, Nicolas Cage says he is facing up to $20 million in losses because of Levin’s actions.

I don’t feel sorry for Cage when I read all the headlines screaming “Nicolas Cage is broke!” because he isn’t broke. I do feel sorry for him because he was betrayed by someone whom he clearly trusted a great deal. He clearly has lost a lot of money, and he is doing what he needs to do to repay his taxes.

Nicolas Cage selling assets

The buzz says that Nicolas Cage has put up his New Orleans mansion for sale at $3.5 million. Also, he is selling his Hollywood mansion, which he bought for $35 million, for half of that. People also says he’s auctioning off a residence in Las Vegas.

I think Cage’s actions are logical and responsible, given that he says in his lawsuit that Levin “lined his [own] pockets with several million dollars in business management fees while sending Cage down a path toward financial ruin.”

Taking responsibility

So many celebrities are irresponsible with money, and instead of recognizing that they can’t maintain the lifestyle they’ve been living, they simply continue to rack up debt. In Cage’s case, he wasn’t irresponsibly, necessarily, except for the fact that he trusted the wrong person with his money. People Magazine says:

In the lawsuit filed against his business manager, Cage says he “relied on Levin to handle his financial affairs to ensure that he and his family would have a financially secure future built on the foundation of the substantial monies Cage earned through years of hard work.”

“He is now forced to sell major assets and investments at a significant loss and is faced with huge tax liabilities because of Levin’s incompetence, misrepresentations and recklessness,” the lawsuit alleges.

Cage’s actions show that, even though he believes someone else is resposible for his financial situation, he’s taking resposibility for paying off the debts in his name. Though this still does mean Nicolas Cage is broke, he will likely never see back the millions that he’s lost on his property and other investments, even if he does win his lawsuit.

Image from Flickr.

It’s true, you can’t be thrown in prison for 10 years for robbing a cash advance loans store. However, the situation is different if you have already served time for robbery before. A man who robbed a payday loan store in Minnesota at gun point has been sentenced to 10 years in prison followed by six years of extended supervision.

There are a few other extenuating circumstances that contributed to the lengthy sentence given to Raymundo Gallegos. He has been in prison for armed robbery before, and the judge said Gallegos didn’t show remorse for this crime. Furthermore, his charge comes with the added detail that he used “threat of force.” Two employees at the payday loan store says he threatened to shoot them in the head if they didn’t give him cash.

Details on the robbery

The robbery occurred June 16, and despite the months that have gone by, one employee is still on medical leave because she is too afraid to go to work. The manager of the cash advance loan store, called Check Mate Cash Advance Center, said he wasn’t scared, but he was angry.

After Gallegos pulled out a handgun at the payday loan store in LaCrosse county, the manager says, “”I had to stare down the barrel of that gun for two to three minutes. I have to live with the fact that, had that gun gone off, I might not be standing here today.”

A special case

Perhaps the judge was trying to make somewhat of  an example of Gallegos. The judge during the sentencing said “What you did cannot be excused in any way, shape or form.” Payday loan store robberies have become more and more common lately as criminals have figured out that the stores must keep large amounts of cash on hand in order to do business.

Unfortunately, most payday loan store robberies do not end with the robber getting 10 years in prison. Usually, the last thing heard about a payday loan store robbery is that “police are seeking a suspect.” Last week, several reports flooded in about payday loan store robberies, including incidents in Oklahoma, Kansas and Indiana. In most cases, the culprits have not been found. However, payday loan stores every day are increasing security measures, and police are starting to crack down in many areas.

Leo and Lucille Frank during his trial, 1915 (Photo from Wikimedia.org)

Tonight showcases a very contradicting documentary about the case of Leo Frank, and you won’t need quick cash to see it. The documentary will be aired tonight on PBS.

Leo Frank was a Cornell-educated Jewish industrialist who was lynched in Georgia for the murder of 13-year-old Mary Phagan, who worked at Frank’s factory. Frank was convicted of the crime and was initially sentenced to death.

Frank fought hard for his innocence. The conviction was appealed 13 times, losing each time, and made it all the way to Supreme Court. Georgia Gov. John Slaton, however, eventually reduced his sentence to life imprisonment. The decision only fueled the scorching anger and hate in the heart and mind of the people. According to the Los Angeles Times, a mob organized by a Superior Court judge, the son of a U.S. senator and a former governor took matters into their own hands. They abducted Leo Frank from a state prison and hanged him from an oak tree.

Leo Frank Lynching Story Lives On

Up till this day, the story of Leo Frank lives on. People are still fascinated by this story for many reasons. The case itself remains a puzzling mystery. There was no solid evidence that Leo Frank was the person responsible for the death of the 13-year-old girl that was found in the basement of the National Pencil Company 96 years ago. From what it looks like, the ruling judgment and the lynching of Leo Frank were based on vague understanding and direct assumption. Nevertheless, it’s quite obvious that prejudice and discrimination played a huge part in this case.

PBS Documentary: The People v. Leo Frank

“The People vs. Leo Frank” will air tonight at 10 p.m. ET on PBS. The documentary will include commentary, recollections, and archival images. Almost a century after the lynching of Leo Frank, his story still burns and continues to command attention from the general populace.

Related Video:

With this debit transaction cost $35 more than you think?

The Associated Press reports that some senior congressional Democrats want to draw up legislation that would limit how much banks can charge customers in overdraft fees. Personally, I have been slapped with $105 in overdraft charges before for transactions that equaled a lot less than that, so I certainly would feel better knowing that banks are no longer allowed to charge $35 per purchase

Of course, I could have saved a lot of money if I had gotten a payday cash loan. The average fee for a $100 payday loan is $15, so if I would have been smart and taken the initiative, I’d be $90 richer.

Picking on payday loans

Of course, banks do not want this legislation to become a reality. And, of course, as banks always do when when people point out their unethical practices, they are trying to shift focus onto a different institution. The common strategy is that when people say “banks are bad” the banks say “payday lenders are worse!” Even though this is totally untrue. The Associated Press reports:

Michael Menzies, president of Maryland’s Easton Bank and Trust Company, said eliminating overdraft protection for many customers will mean denying charges and embarrassing customers or forcing them to rely on high-cost payday lenders.

Clearly, Menzies has no idea what he is talking about. The numbers I have already presented you with prove that overdrawing your bank account is more expensive than getting a payday loan, even if you’re only charged once. How can a guy whose bank charges $35 when someone goes $1 over their balance point fingers at payday lenders, who charge $15 for a $100 loan?

Overdraft fee legislation

The idea behind the overdraft fee legislation is to require banks to ask customers whether they want overdraft protection or not. Banks insist that their customers would rather be charged an overdraft fee than have their debit card denied, but I am pretty sure that is universally untrue.

How many people do you think have kicked themselves because they bought some cheap thing they didn’t really need and ended up paying an additional $35 for it? Another idea for the overdraft legislation is that banks would only be able to charge customers overdraft fees once a month and no more than six times per year. I think that regulation would really help out customers and it definitely makes sense. I think it is atrocious that banks can charge such high fees over and over, each time you make a purchase after your account is overdrawn. I think it makes a lot more sense to charge the fee only once.

Proportional charges

The senators also say the legislation should require that banks base the overdraft charge on the amount by which the account is overdrawn. As it is now, most banks charge $35, whether the customers overdraws the account by $2 or $200.

Essentially, an overdraft charge is the bank’s way of lending  you money for your purchase — with or without your consent — and charging you for that loan. A $35 fee for a $2 loan is a little ridiculous, but $35 for $200 is understandable.

Photo: http://www.flickr.com/photos/compujeramey/ / CC BY 2.0

No matter how far you go or how much quick cash you have access to, the importance of the responsible use of money remains the same. The more money you make doesn’t necessarily mean you’re the next Bill Gates. As a matter of fact, the more money you have, the greater your responsibilities become. Let’s consider the story of Antoine Walker for a moment.

Antoine Walker in Need of Credit Repair

Former Celtic star Antoine Walker had it all; fancy cars, dazzling jewels, beautiful houses and, of course, the pricey life of gambling. He lived amongst the all-stars and Hall-of-Famers of the world. With all the money in the world at hand, you would never have thought someone like him would be in desperate need of a credit repair. The truth is, however, Antoine Walker is broke.

According to the Boston Globe, Walker was taken into custody in July for writing almost a dozen bad checks for casino markers in Las Vegas. The total amount added up to a whopping $1 million. Walker was able to pay off only a small percentage of that debt before charges were filed, leaving the total amount owed, including court costs, at $905,050.

Antoine Walker also owes an enormous amount of quick cash to several financial institutes. Boston Globe reports that Walker owes J.P. Morgan Chase Bank $1.5 million, American Express $53,000, and $1.5 million to Wachovia. He also owes his former agent almost half a million dollars in unpaid fees.

According to the report, Antoine Walker, 33, is facing three felony counts for drawing and passing checks without sufficient funds with intent to defraud. He could face up to 4 years in prison for each of the charges.

Another Lesson Learned

The story of Antoine Walker provides a very good lesson and reminder for all of us. Money is both a blessing and a curse. It all depends on how well you manage your finances. If you need quick cash, you’re in the right place for it. Just remember to add it to your budget and manage your money wisely.

Tom Cruise, famous Scientologist. Image from Flickr.

The French government has never recognized the Church of Scientology as a religion. It has always viewed it as a “sect” or simply a commercial operation. Now, after two women filed complaints against the Church of Scientology, the French court has said the Church of Scientology is guilty of fraud.

Now, several French Church of Scientology leaders and two branches of operation in France have been fined. Prosecutors also asked that the Church of Scientology operations in France be dissolved.

Church of Scientology not banned … yet

BBC News reports that the court stopped short of banning Church of Scientology operations from the country. However, BBC also reports that a ban on the Church of Scientology is still possible, though it does not say where it got that information. France has always taken a stance on the Church of Scientology, saying it was only out for quick cash and has never been a legitimate religion. BBC News says:

Unlike the US, France has always refused to recognize Scientology as a religion, arguing that it is a purely commercial operation designed to make as much money as it can at the expense of often vulnerable victims, the BBC’s Emma Jane Kirby reports from Paris.

Church of Scientology has more troubles

In the U.S., a Hollywood connection has yet again brought the Church of Scientology to the forefront of the media. The director of the Oscar-winning film “Crash” has left the Church of Scientology after 35 years. Paul Haggis says his reason for leaving the church  is its stance against gay marriage and its position on gay rights.

Paul Haggis wrote a letter to the Church of Scientology’s Celebrity Centre, saying he could no longer be part of an organization that tolerates “gay-bashing.” The Church of Scientology officially supported the Proposition 8 ban in California, which made it illegal for same-sex couple to marry after the supreme court declared it legal.

Image from Flickr.com. Coming to a small town near you - ain't that America!

The reasons aren’t clear, but the targets sure were

First World Management runs a butcher shop on the edge of town, and the meat it provides is meat that is slaughtered and butchered to Islamic dietary specifications.  Islamic dietary laws are very specific about meat, and for meat to be considered Halal (similar to Kosher) it must be procured according to a very specific set of rules, or dhabiha.  The shop in question slaughters and butchers dhabiha meat for consumers, most of which are in Chicago.  There are only a few employees, all Muslims – less than 10, most of which live in trailers behind the shop.

Over a dozen FBI vehicles, snipers and a helicopter…and no arrests!

Nearly 100 FBI personnel descended on this location on Sunday, October 18th, and no arrests were made.  (This cost taxpayers a lot more than a few payday loans worth.)  No one in the town, not even the mayor was aware anything was going to happen.  The only people who did were the Grundy County Sheriff’s Department, who were notified two weeks in advance of the incident. You can read up on the incident at Fox News, though more coverage is likely to be forthcoming.

Aren’t we supposed to NOT have secret police in this country?

It’s speculated that the raid was done in order to root out immigration violations.  However, no arrests were made, and the size of it makes it look like something beyond the scope of immigration affairs.  There was a recent terrorism arrest and plot, but if this were an anti-terror raid, why wasn’t anyone detained, and why weren’t any charges filed?  The FBI is a multi-billion dollar a year expense on the taxpayers, and it is highly dubious that they don’t have anything to do.  State intimidation is one of the things that the Founders and Framers were universally against, so this looks suspicious to say the least.

UPDATE: It wasn’t for nothing

Pictured: A sweat lodge in Hawaii. Many cultures have used sweat lodges for centuries, but they are very selective about the materials used. Image from Flickr.

James Arthur Ray a couple of weeks ago charged a few dozen of his followers $9,000 to attend a five-day retreat that culminated in spending couple of hours in a makeshift sweat lodge. Three people died and several others were hospitalized.

A lawyer representing a woman who survived the ordeal says Ray “created a death trap.” The “sweat lodge ceremony” took place after five days of activities that including physically taxing exercises and fasting. The lawyer represents Sidney Spencer, 59, who is suing Arthur Ray because she nearly died from kidney and liver failure.

An empire of crazy

The incident is still under investigation, but as sweat lodge survivors start speaking out, it’s beginning to look like there’s a very good change Arthur Ray will end up in prison. At first, I thought those prosecuting him didn’t have a leg to stand on because the whole thing was voluntary. In fact, many participants probably had to get hard money loans to pay the $9,000 fee for the retreat.

However, Beverly Bunn told The Associated Press that when someone reported that another participant was passed out, he said “Leave her alone. She’ll be dealt with in the next round.” I do believe that there is a term for letting someone die: negligent homicide.

Who is Arthur Ray?

Arthur Ray created the best-selling documentary “The Secret,” and he has appeared on “The Oprah Winfrey Show” several times, gaining him quite the following. I can see a sort of “Million Little Pieces” scenario unfolding soon. Remember what happened when it turned out the author of that book was a fraud? Imagine what it would be like if it turned out an Oprah cohort was a murderer!

Arthur Ray urged all of the participants to stay in the 120-degree sweat lodge for the duration of the ceremony. Sweat lodge survivors say they were chastised if they tried to leave, though they were not physically forced to stay. Read the full story about Arthur Ray’s sweat lodge at ABC News, and listen to CNN audio from a sweat lodge survivor.

Photo: http://www.flickr.com/photos/denharsh/ / CC BY 2.0

First it was Letterman, now ESPN MLB analyst Steve Phillips is in the spotlight for the same mischievous deed. Steve Phillips has been suspended for a week by ESPN after reports of an affair he had with a 22-year-old production assistant named Brooke Hundley. Things are looking pretty rough for the former Met General Manager. He could possibly lose his family and career over this sex scandal, something not even a personal loan can save.

Once a Cheater, Always a Cheater

Have you ever heard the saying, “Once a cheater, always a cheater”? Well, that definitely seems to be the case with Steve Phillips. This is not the first time Steve Phillips has been accused of sleeping with other women. As a matter of fact, in 1998, Phillips confessed to having multiple love affairs including an affair with a female team employee, Rosa Rodriguez, who filed a sexual harassment suit against Phillips. The case was later settled out of court.

New ‘Fatal Attraction’ Edition Starring Steve Phillips

According to the New York Post, Steve Phillips confessed to having three sexual encounters with the young ESPN assistant before dumping her in July. According to an exclusive police report, things got pretty nasty after the break-up. Brooke Hundley began harassing Phillips’ wife, Marni, with pestering phone calls and leaving inappropriate voice and text messages. She even began stalking Phillips’ 16-year-old son on Facebook while posing as a high school classmate, only to grill him with personal questions about the family later.

Marni Phillips also told police that she spotted a woman walking down the driveway to a parked car as she drove home with her 7-year-old son. Instinctively, she knew it was the woman her husband was involved with and immediately called the police. The woman got into her car, threw it on reverse, and smashed the rear end of her vehicle into a pole before driving off.

Stuck in the door of her house was a letter addressed to Marni. In the letter, Hundley wrote in details about the intimate relationship she had with Steve. For further proof, Hundley even provided a graphic description of Steve’s birthmark located on his crotch and inner thigh. Talk about obsessed! You can read the full original letter here.

Fatal Attraction Ending – No Bullets, Just Another Lawsuit

Through it all, for whatever his reasons are, Steve Phillips has decided not to pursue criminal charges against Brooke Hundley. Nonetheless, Phillips is suspended for at least one week and his beautiful wife has filed for divorce. This sounds like the perfect time for a personal loan.

Hacking into others' phones? Yep, unfortunately, there's an app for that. Image from Flickr.

SpoofCard is, put simply, a service that allows you to change the phone number that shows up on someone else’s phone when you call. It sells its services under the slogan “Be who you want to be,” and advertises itself as a tool to protect your privacy. It costs about 20 cents per use.

Seems pretty harmless so far, eh? Well SpoofCard also advertises that you can use it to prank call your friends. That’s a little questionable, but still OK if it’s all in good fun. Because no one would ever use a service for something it wasn’t intended for, right? Say, harassment or hacking into someone’s voicemail.

Yes, hacking

Sure enough, some people have figured out how to use SpoofCard to hack into people’s voicemails. Malicious people can use SpoofCard to hack into the voicemails of anyone whose number they know. That means people can listen to others’ messages, change their outgoing greeting, you name it.

In fact, if you were to take it even further, you could use services such as pizza delivery and money lenders who use phone numbers as people’s account numbers. Doesn’t sound so harmless now, does it?

SpoofCard malice and mayhem

Instances of maliciously using SpoofCard have started to pop up in the press. First it was reported that celebrities such as Lindsay Lohan and Paris Hilton had their phones hacked. Brickhouse Security reports that Dolce and Gabbana Publicity Director Ali Wise was fired from her job after she used SpoofCard to hack into people’s phones more than 700 times. Ahem, I said SEVEN HUNDRED TIMES.

And if that isn’t enough, guess what she was doing. She was hacking into the voicemails of her ex-boyfriends’ new girlfriends, listening to their voicemails and deleting them as she saw fit. Can we say psycho? Also, there have been instances of people using SpoofCard to disguise their numbers while making fraudulent 911 calls.

Yes, SpoofCard is still available. No, I am not going to tell you how to use it.

Image of Bernard Kerik from Wikimedia.

Bernard Kerik knows that committing tax fraud is a no-no. He made that clear in 2004, when he withdrew his name from consideration for Secretary of Homeland Security. At that time, Bernard Kerik admitted that he had committed tax fraud.

Bernard Kerik had employed an illegal immigrant to work for him as a nanny. Although he had failed to pay taxes on his employee, Kerik said he didn’t know the worker was undocumented. This was only the beginning of his legal troubles. He apparently didn’t know, or didn’t care, that confidential information must remain confidential when one is being investigated for conspiracy, fraud and possible mob connections. But let’s back up.

More charges flood in

Shortly after Bernard Kerik withdrew his name from the running for Secretary of Homeland Security, investigations began regarding ethics violations, unclassified misdemeanors. He pleaded guilty to those and paid a $221,000 fine.The court said “pay the money now, and you’ll be free,” so he did.

But it wasn’t over. Near the end of 2007, Bernard Kerik was indicted by a grand jury. His charges include conspiracy, tax fraud and making false statements. That brings us to the present, where Bernard Kerik was out on bail and waiting for his trial, which begins Monday.

Breaking the rules

Just a quick primer on the justice system: When someone gets arrested on charges, they get thrown in jail and have the opportunity to post bail. If the accused pays the bail money, they can be let out of jail until they get their sentence, which happens after the trial. However, people who are out on bail generally must agree to certain conditions in order to remain out of jail.

In major cases such as Bernard Kerik’s, it’s imperative that the accused does not share sensitive information about the case with the public. So although Bernard Kerik posted his $500,000 bail, he violated the conditions of his release when he posted confidential documents on his defense web site, according to USA Today. The judge ruled that this action could potentially sway jurors and that Bernard Kerik could not be trusted to honor the terms of his release, so he was hauled back to the slammer.

Who cares about Bernard Kerik?

So why is everyone so interested in this Bernard Kerik fellow? He was police commissioner in New York City during the Sept. 11, 2001, attacks on the World Trade Center. He was seen often on television with Mayor Rudy Giuliani, and Giuliani recommended him for Security of Homeland Security.

Bernard Kerik also served as Interim Minister of Interior of Iraq for a few months in 2003, just after the start of the Iraq War.