Oct 28, 2015 – Arsenal For Democracy Ep. 148

Posted by Bill on behalf of the team.

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Guest: Heather R. Andrews. Topics: RushCard malfunctions harm vulnerable, low-income consumers; why the post office should offer some banking services; what we can learn from a 1945 speech by President Truman. People: Bill, Kelley. Produced: October 25th, 2015.

Episode 148 (48 min):
AFD 148

Discussion Points:

– Broken promises as a prepaid debit card pitched, with hip-hop cred, to poor consumers breaks down.
– Should the post office offer limited banking services for low-income people in the U.S.?
– In a Sept 1945 address to Congress, Pres. Truman outlined what the country must do after the war. What can we learn from that today?

Related Links

Guest essay by Heather R. Andrews: “Russell Simmons’ RushCard leaves vulnerable flat broke”
AFD: “Should USPS be empowered again to offer banking services?”
AFD: “13 of Truman’s 21 policy points from 1945 are relevant today”

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Should USPS be empowered again to offer banking services?

Arsenal Bolt: Quick updates on the news stories we’re following.

Speaking of underbanked Americans without access to safe, low-cost services for cashing checks and saving money…

Don’t miss “Bernie Sanders’s Highly Sensible Plan to Turn Post Offices Into Banks” – The Atlantic:

…only about 7 percent of the world’s national postal systems don’t offer some bank-like services.
[…]
The reason why this would be so useful in the U.S. is that somewhere between 20 and 40 percent of the population has to rely on check-cashing or payday-lending services, which in some places charge usurious rates that send people into spirals of recurring debt.
[…]
…in 1910, William Howard Taft introduced a postal-savings system for new immigrants and the poor that lasted until 1967.

 
Low-grade localized socialism we can believe in! (And a new revenue stream for our constitutionally mandated postal service.)

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Russell Simmons’ RushCard leaves vulnerable flat broke

Guest essay by Heather R. Andrews: Broken promises as a prepaid debit card pitched, with hip-hop cred, to poor consumers breaks down.

Def Jam co-founder and RushCard promoter Russell Simmons.

Def Jam co-founder and RushCard promoter Russell Simmons.

October 12th, 2015 marked the beginning of what can only be described as a nightmare for customers of a prepaid debit card service called “RushCard,” which has been heavily promoted by early hip-hop mogul Russell “Uncle Rush” Simmons.

Customers often arrange for their paychecks to be deposited directly to the card accounts. Now, due to a “software upgrade in the transaction processing system” – also described as a “glitch” or a “conversion” – customers have been experiencing a $0 balance on their cards or had no access to their funds.

For many of this particular card’s customers, being locked out of their account for days means they are not able to pay bills or buy essentials such as diapers, medicine, or food. Some customers are left with no other options and have resorted to crowdfunding.

Slowly the story has been percolating into mainstream media, but only minimally and very late. Lack of coverage, along with form letter style responses from Russell Simmons and RushCard employees, have only added to customers’ desperate frustration.

Customers have been instructed to send Simmons himself direct messages via Twitter to resolve their issues. Many customers created Twitter accounts to voice their concerns, receive assistance from any source available, and to DM Russell Simmons — as directed.

I have been tracking and boosting these messages for several days on Twitter. Card holders are tweeting about late fees, repossessions, utility disconnections. Along with the stories came pleas for Russell Simmons to do something. As of yet, no one is reporting that they have been assisted by Simmons or anyone on his team.

Simmons did issue an apology last Wednesday. In part:

“I want to personally reassure you that your funds are safe and that we are addressing every issue as quickly as possible. I deeply apologize for the hardship this is causing and give you my solemn commitment that we will fix these problems.”

 
As of yesterday, on day 9, customers were still waiting for Russell Simmons to fix those problems. Meanwhile, those funds remained unavailable for immediate use on bills and necessities.

So where did this problem come from? Not the technical problem, but rather the problem of a service with such a vulnerable consumer base that could ill afford a “glitch.”

RushCard/UniRush, a financial services company and one of the first providers of prepaid debit cards, was founded in 2003 by Russell Simmons, one of the co-founders of Def Jam Recordings and numerous other business ventures. By 2011, on the strength of claims that the card would financially empower its customers and promote financial literacy, UniRush had amassed a reported 1.5 million customers.

UniRush’s success has not been without its issues already. Even before this most recent problem, RushCard has come under fire for its high fees, bad customer service, and predatory marketing strategies.

Moreover, Simmons used his image and influence to appeal to the Black community. His target market specifically was “underbanked Americans.” The underbanked are low-income individuals and families with limited access to banking services by geographic location, credit history, discrimination, or other factors. These consumers were drawn in by UniRush promising no credit checks, $5.00 credits, designer logos, and the ability to receive direct deposits up to 2 days earlier. For the poorest Americans, already saddled with consumer debt and struggling to make ends meet, these little things could make a difference, however briefly. Read more

Transatlantic regulators lay fines for foreign exchange cheats

Big fines Wednesday morning on five big investment banks from US and UK financial regulators for transatlantic currency trading collusion:

It’s another dark day for the banking sector, with several of the world’s biggest financial institutions being fined for their role in rigging the global foreign exchange market.

…regulators on both sides of the Atlantic have announced fines totalling around £2bn, or $3.1bn, against HSBC, Royal Bank of Scotland, UBS, JP Morgan and Citigroup.

The UK’s Financial Conduct Authority [FCA] has imposed fines totalling £1.1bn, and America’s [Commodity Futures Trading Commission] CFTC has imposed fines of an additional $1.4bn, (£900m).

All five banks have been penalised because their staff colluded to fix the official rates at which currencies were trading against each other in the international markets.

 
I’m sure they still probably made a lot more money off the collusion and manipulations than they’re being fined, but at least there’s a bit of justice.

But the real takeaway? Good lord, even Britain’s financial regulators at the FCA produce better videos (watch below) than Americans do. It’s like a dry BBC comedy but for white collar crime. Somehow they manage to make an incredibly dull description of illegal transaction activities into a gripping and funny set of infographics and deadpan reading of curse-filled chat transcripts by bankers.


 
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September 3, 2014 – Arsenal For Democracy 98

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Topics: Big Idea – Low-Income Banking Reform; 2018 and 2022 World Cups controversies revisited; Guest interview on the Ebola outbreak – Sara Laskowski, US Peace Corps, Guinea. People: Bill, Nate. Produced: August 29, 2014.

Discussion Points:

– Big Idea: How could the U.S. reform and expand consumer banking services for local income Americans to reduce predatory lending and other bad practices?
– Will sanctions on Russia and Qatar’s sponsorship of terrorism, among other problems, force the FIFA World Cup to change locations or schedules in 2018 and 2022?
– Guest Interview: UD Alum and Peace Corps member Sara Laskowski discusses being evacuated from Guinea due to the Ebola outbreak.

Part 1 – Consumer Banking Reform:
Part 1 – Consumer Banking Reform – AFD 98
Part 2 – Future World Cup Controversies:
Part 2 – Russian and Qatari World Cups – AFD 98
Part 3 – Sara Laskowski on Guinea and Ebola:
Part 3 – Sara Laskowski – AFD 98

To get one file for the whole episode, we recommend using one of the subscribe links at the bottom of the post.

Related links
Segment 1

The Globalist: “The Democratization of Banking” by Robert J. Shiller
NYT Editorial Board: Reining in Payday Lenders

Segment 2

Moscow Times: Putin Hopes Russia Won’t Lose Right to Host World Cup 2018
Washington Post: New study says 2022 World Cup in Qatar will be too hot to even sit and watch
James Dorsey/Al Jazeera: The stakes are high in Qatar’s World Cup drama
James Dorsey/The Turbulent World of Middle East Soccer: Gulf states and their US critics seek to shape US perceptions on the soccer pitch
James Dorsey/The Turbulent World of Middle East Soccer: Amnesty International report undermines Qatar’s soft power defense strategy

Segment 3

Sara Laskowski / Guinean Dreams: On Being Evacuated: It’s Every Volunteer’s Worst Nightmare
AFD: Ebola outbreak causes Peace Corps pullout

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iTunes Store Link: “Arsenal for Democracy by Bill Humphrey”

And don’t forget to check out The Digitized Ramblings of an 8-Bit Animal, the video blog of our announcer, Justin.

Irresponsible lending pressure? Really?

new-york-stock-exchange-200Guest post by Chris Chinn. You can follow him on Twitter @yeloson.

In the November/December 2013 issue of Foreign Affairs, there’s an article by entitled “Why Banking Systems Succeed — And Fail
The Politics Behind Financial Institutions”
.

The essay starts on obvious and solid ground — that the political interests of varying groups in any society shapes how its banking policies are made — but along the way drops out the culpability of the banks in the 2007/2008 crisis. Instead they place the blame on the government regulations and special interest groups in as the primary driving force in the bank collapse, while pretending there wasn’t a massive profit incentive for the banks in the whole process.

In other words, in their view, the fault for the collapse lies with regulations designed to make banks consider low-income people for financing, rather than with the trading around of mortgages.

Let’s review what’s wrong with this claim and what really happened:
Read more