The St. Petersburg Times’s has an excellent profile of an MBA who’s gone from a six-figure job to bagging groceries in three years. It’s a snapshot of the downwardly mobile in post-crash America:
The national unemployment rate is 10 percent, the state rate is 11.5, and the local rate is 12.3. For every open job, according to the Bureau of Labor Statistics, there are 6.4 people who want it and need it.
Gould is in none of those numbers. He is part of the large swath of the humbled underemployed — people who during the recession have gone from highly educated and highly paid to paper or plastic.
That would be why we and many others have called on the press to emphasize the U-6 unemployment number more than it has in the past. Although, it appears even Gould’s plight isn’t captured in that stat, which is still at a seasonally adjusted 16.5 percent.
This is great reporting and feature-writing by Michael Kruse and the St. Pete Times. Now who got bumped out of a bagging job because our economy severely underutilizes even some of the best-educated?
— The Los Angeles Times runs down the major changes in the federal law affecting credit cards that took effect yesterday. But what’s striking is: You mean we have to have laws to prevent companies from doing this kind of stuff?
* Increased interest rates cannot be applied retroactively to existing balances. New rates can apply only to new charges.
* The interest rate on a fixed-rate credit card cannot be increased during the first year an account is open unless the customer is more than 60 days behind in making a payment.
* Banks cannot automatically sign up customers for programs that allow them to exceed their credit limit for a set fee. Customers must proactively opt-in to such programs.
* Fees on a credit card, such as the annual fee, cannot be more than 25% of the card’s initial credit limit.
* The due date for credit card payments must be the same every month, and payments cannot be due earlier than 5 p.m. on a business day. Customers have until the next business day when a due date falls on a weekend or a holiday.
This is a rogue industry. Yes, present tense intended.
— I was all set to criticize Bloomberg for creating a false impression here that it’s got some kind of scoop or picked up on something most everybody missed regarding the Schedule A memo released last month by Darrell Issa, the congressman who’s been kicking tail on the House Oversight Committee.
A potentially more important development slipped by with less notice, Bloomberg Markets reports in its April issue. Representative Darrell Issa, the ranking Republican on the House Committee on Oversight and Government Reform, placed into the hearing record a five-page document itemizing the mortgage securities on which banks such as Goldman Sachs Group Inc. and Societe Generale SA had bought $62.1 billion in credit-default swaps from AIG.
Bloomberg itself has written about this, as has Reuters’ Matthew Goldstein, who set the ball in motion with a FOIA request when he was a BusinessWeek reporter that caused the Fed to cover up public information. My impression was that the story went big (I went on paternity leave for a few weeks right after the news). But a quick Factiva search shows it didn’t. The WSJ gave it all of 324 words. That’s nearly 324 better than the NYT did, though. The only mention I find there is at the tail end of a story and it just notes that Issa released it.
So good for Bloomberg for revisiting this in-depth. We’ve criticized the one-and-already-been-done journalism mentality, so more power to them. And this is good stuff:
The public can now see for the first time how poorly the securities performed, with losses exceeding 75 percent of their notional value in some cases. Compounding this, the document and Bloomberg data demonstrate that the banks that bought the swaps from AIG are mostly the same firms that underwrote the CDOs in the first place.Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at firstname.lastname@example.org. Follow him on Twitter at @ryanchittum.
The banks should have to explain how they managed to buy protection from AIG primarily on securities that fell so sharply in value, says Daniel Calacci, a former swaps trader and marketer who’s now a structured-finance consultant in Warren, New Jersey. In some cases, banks also owned mortgage lenders, and they should be challenged to explain whether they gained any insider knowledge about the quality of the loans bundled into the CDOs, he says.
“It’s almost too uncanny,” Calacci says. “If these banks had insight into the underlying loans because they had relationships with banks, originators or servicers, that’s at the least unethical.”