If you are a former IBM Call Center employee and are willing to provide a statement that you were required to work in excess of 40 hours per week at an IBM Call Center by arriving before your scheduled start time to boot up your computer or, perform other preliminary tasks necessary for the performance of your daily duties, please contact Timothy J. MacFall, Esq. or Scott J. Farrell, Esq. at (516) 683-3516.
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Many people are spending 50 - 70 hours a week working a lot of hours to impress their boss to get a high rating when the work that they are actually doing is of little overall value to their team and the company. Many field technical people are spending weeks trying to retrofit solutions that were not sold or designed properly to begin with with products that are not fully integrated or tested.
I would add to this the fact that the current management is financially driven only. They fail to understand the impact of small decisions on 300,000 employees. (one of my sayings is that 300,000 times any number is a large number) For instance, from a sales perspective, they no longer allow Microsoft Office on new laptops. Much of sales and development is now locked into Lotus Symphony even though it works with nothing in the market place today.
One story I would like to relate is about a sales rep that sent a symphony document (*.odp) in response to a customer proposal and the customer responded "Did you send me a virus? What is an odp file." After explaining that the customer needed to get "free" software to see the IBM proposal, they responded, "I don't have time for such nonsense. My time is not free!"
The sales rep, being a better rep, went and bought the software with his own money to get the deal on the table. The maxim, "penny wise, pound foolish" comes to mind and shareholders should not be saying, "great results" but rather asking "could results be even better if we had 300,000 employees working as a team with management?"
This overall strategy seems very short-term focused and probably won't end well. I keep thinking there is some corporate strategy behind this new model. I can't help to think it has something to do with making the remainder of IBM US fail to justify more off-shoring, or something along that thinking. To say the least it's very disheartening. Most days have become a struggle. Thanks for surfacing.
The group is working on a project on Corporate Strategy and Transformation. I would like to offer them hard data on the number of people within IBM affected by the initial announcement in 1999 as Lou says in his book that "some of these benefits changes created a great furor among a small group of IBM employees." I have given them my anecdotal insight into what I saw with not just employees but executives within the business. I have sent them the link to the UK employees burning their Quarter Century Club certificates to get them to understand it was more than a "small group of IBM employees" and the impacts have continued worldwide ever since.
At one time, I think someone documented from hard data an "estimate" of the number of US employees affected by this announcement by "2nd choicers and no choicers." Does anyone have that data in a format that I can use with them? As a disclaimer, it will also probably show up in my second book as these types of interviews are helping greatly in getting that completed by fall. Cheers, Pete.
Go to the files section of this group and look at the Form 5500 Data. Open the file "IBM Pension Statistics 1999-2007-3.xls" and select the 1999 tab. You'll have to do some work to figure out which employees fell into the various groups (First Choicers, Second Choicers and No Choicers).
My quick look at this data says that there were about 78,000 employees who were forced into the C-B plan (the No Choicers).
It also looks like there were about 34,000 Second Choicers. Although most of them probably chose to stay with the old (PCF) pension plan, they still got hurt on retiree medical benefits by being forced into the FHA medical plan. In many cases, being forced into the FHA plan will cost them $80,000 or more over their lifetime.
And don't forget the pension changes that were made in 1995. This reduced the pension of someone who worked for 30 years from 40% of final average salary to around 30% - a 25% reduction in their pension check!
So when the 1999 announcement was made it appears the changes affected greater than 85% of the IBM United States population or approximately 121,000 people.
After "no small furor", an option was given to a group of individuals that were over the age of 40 and had more than 10 years service with IBM. This brought in another 32.2% of the IBM United States population but they received an FHA in place of the medical plans.
This still left approximately 53% or more than 75,000 people in the IBM United States population with a changed retirement and no medical plan. Some of which were my friends that were 35+ years of age with greater than 15+ years of IBM service. Promises made to a 20 something broken 17 years later with family and kids.
Just FYI, this is a work in progress, a short section of which responds to Gerstner's statement in "Who Says Elephants Can't Dance" that the announcement was met with a "great furor among a small group of IBM employees…"
I guess I was one of that "small group" as I got weekly calls from Lloyd Doggett's staff... he has earned my vote just like Jake Pickle before him because of service to their constituents.. I wish more would have been accomplished.
Thanks to you and for everyone's support on this forum and Kathi's run at getting it taken to the Supreme Court. An amazing accomplishment! Thanks again. Cheers.
The fact that union representatives showed up (I know they were not invited to the Dallas meeting, but showed up any way), probably also caused concern for IBM. The bad press they were getting and the political pressure from Sanders and Jeffords also likely contributed to come up with a compromise.
I also believe that the programmer in Austin who sent out the detailed note about how much money he was losing (to Gerstner) and copied the IBM world also had a major impact. IBM might have underestimated our use of technology for communication.
I had been spending quite a bit of time on Pok. The place was in revolt. There were planes flying overhead towing banners asking "Who stole your pension." I think the internet played a part. It allowed the far flung IBM workforce to connect. I think that IBM was afraid of unionization and rightly so.
I was fortunate. When the first pension cut came along, I was within 5 years of retirement and I was grandfathered in to the old plan. Then I was a first choicer and opted for the old old plan. Regards, 73, Bob Nelson, K2QPN, IBM 1967-2005, ITS NE Area Technical Support Staff.
Most of the second choicers had no clue that they should have continued to fight on for better medical coverage than the FHA. Only as they finally think of retiring do they now begin to learn how much they lost.
I was hired in 1973. Even though I was shafted by the 1995 retirement plan changes (my 5-1/2 year long pension wear away ended only 12 months before I retired -- thank you IBM!), I consider myself lucky that I have the old medical even if not the pre-1995 'old' pension. -Lyn
Under the PCF (Pension Credit Formula) plan, most people would receive about 30% of their final average salary after 30 years of service. Because the PCF plan used a point system which had its own cap, it would max out at about 35% of final average salary after 35+ years of service.
The end result is that most employees who retire under the PCF plan wind up with about a 25% cut in their pension vs what they would have had if the S&E plan had continued unchanged.
Depending on your age and years of service at the time the PCF plan was put in place, people were affected differently, just as the C-B conversion affected people differently.
Yeah, I'm also from the "Class of '73" and had hoped to work for a few more years yet, but got RA'ed in May of 2010 along with my entire department. There were 10 of us in the department, and only 3 of us were eligible for the old pension, old medical. Two were too young for retirement eligibility of any sort (both with 16 years with IBM, but one aged 50 - the group baby, LOL - and the other aged 53. He was a couple months short of getting a retirement bridge.
The other 5 were all retirement-eligible - over 55 with at least 15 years of service - but not eligible for the old pension, and getting only the FHA. And when I heard what they were having to pay for the medical plans just about made me sick. I think my work partner's medical plan (for himself and his wife, who has various health issues) cost more per month than the pension he is getting from IBM, and that's just for this first year! And like me he still has a good 7 years to go to reach Medicare eligibility.
So yes, I'm thankful too, though of course bummed about the losses of '95, but at least squeaked through the first choice door in '99.
Here are the rates for the old (non-FHA) and new (FHA) plans:
|Coverage||Non-FHA (Original Plan) Cost||FHA Cost|
Those are the rates for the CHEAPEST PLAN. Those are just the monthly rates for the high-deductible plan. The rates DO NOT INCLUDE THE DEDUCTIBLE. You pay the deductible IN ADDITION to the monthly rates.
If you need coverage for more than SELF, you really got nailed. YOU. HAVE. A. HEALTHCARE. PROBLEM.
ERIC also offered the ongoing experience of ERIC members who sponsor cash balance and other hybrid pensions plans as an example of the adverse consequences that misguided regulations can have. ...
Among their multiple 'issues' are these two:
REALLY? This is the same verbiage they pulled in 1999, still singing the same old four bars. They have already dismantled America's only safe and reliable pension plan, the DB plan. What are they after next? Kathi.
Full disclosure, I am receiving a DB pension from IBM, but I know it might get cancelled at any time and will lose value as inflation continues since my DB check will never change. I can only hope IBM doesn't cancel my DB check and inflation stays low or deflation actually becomes a possibility. I took full advantage of IBM's 401K plan in terms of my contributions which meant I got the max IBM match. It was obvious IBM as well as almost all companies wanted to stop DB plans. I can't say I made the best decisions in my 401K plan, but I knew it was up to me and/or my advisor.
My point is that no company will offer a DB plan unless competition requires it. It's a new world. DB plans are a thing of the past; I feel lucky to have a DB check each month as well as a 401K account that I do my best to manage given my knowledge, risk tolerance, etc.
Health benefits are no different in my opinion. Instead of companies providing health benefits, I'd rather have a larger salary with the responsibility for securing health care up to me as I see fit. Obviously, if I believe I need to buy health care insurance, it would be cheaper if I'm part of a group seeking health care insurance, but those are the trade-offs I must consider. Maybe my local Credit Union can form a group to buy insurance. Again, if you think IBM or any other company OWES you health care, you need to wake up and smell the stench. Companies are in business to make profits for their shareholders; companies will only offer employee benefits that they consider mandatory to retain the type of employees they need to meet their profit objectives.
Get the picture?
You probably won't believe this, but I believe in Capitalism, but only when government gives no financial incentives for companies to do or NOT do this or that particular "planet."
But then, we don't have a contract to hold these promises true, do we?
Instead, we have a company that screws us every time it can get away with it. A company that we can't trust. A company that demonstrates abusive power. A company that rapes its employees for the betterment of the executives.
I love capitalism too, but I'm no fool.
And I'm not drinking the Kool Aid that says 'It's a new world, pensions & health care are a thing of the past, just be self reliant.' That 'self reliant' thing only works if you have yours and no one else has theirs. It's not capitalism. Don't get the two confused.
When was the last time you tried to get health insurance outside of IBM? Your family would suffer. You would change your tune right in the middle of the song.
Please, go be self reliant. The sooner the better, so you too will grow up to be no ones fool. Kathi.
The IBM'er was explaining to the contractors why things were so screwed up. As I listened, I heard things like "The support team is not in The U.S. and they can barely speak English. No IBM employee here in The U.S. can understand a word they say." Then there was this comment: "The overseas resources don't have any skills. They don't have a clue as to what they are doing. They screw up everything"
One of the contractor employees asked the IBM'er: "Why does IBM hire them if they cant get the job done?"
The IBM'ers response: "I don't know. To save money, I guess."
The IBM'er was then asked: "How does IBM save money if everything that has been done overseas has to be fixed by an IBM'er here in The U.S.?"
I laughed to myself because this sad story can be repeated in nearly every IBM location anywhere in The U.S. It doesn't matter what the work or the product is. It's the same story everywhere you go.
I am one of those IT knowledge workers of which you speak. From what I see as a group they are in fact STUPID. Not stupid in their profession, but stupid in buying into the propaganda that unions are bad and capitalism is good. If one talks about regulated capitalism (which has been proven to work) they think you are from Mars. Most of my colleagues have masters' degrees in business, computer science or engineering, but they know about as much of U.S. history as an average fifth grader and therefore are easily manipulated. If you mention the hundreds of unionized Americans killed during strikes by U.S. troops, police and private security forces in the 19th and 20th centuries most have not a clue of such actions.
As a generalization they have overblown high opinions of themselves and end up supporting policies against their own self-interests as they see themselves as part of an elite. The managers laugh at them and manipulate their overblown high opinions of themselves.
Cons: Be careful: when interviewing college level candidates IBM will advertise 'potential' bonus as part of your base salary, making it seem like you are being offered more.
IBM considers 2 factors when determining your yearly bonus: (A) Was IBM profitable? (B) Did IBM meet it's own projected financial targets? That way, when IBM does poorly, your bonus will be negatively affected by (A). When IBM does well, your bonus will be negatively affected by (B). Historically, IBM will always over-project it's financials so (B) will always be in affect.
IBM's goal for salary is to be "competitive". So given the industry's salary range for a particular position, their goal is to pay you at the 50% mark of that range. That is their 'goal'... which means you will typically get paid in the 40% (or lower) mark with small yearly increases to slowly move you towards that 50% mark.
Summary: IBM is definitely a company you would want to invest in, but not necessarily a company you'd want to work for.
Advice to Senior Management: Fresh younger talent is going elsewhere... the majority of your professional employees are those that have vested 15+ years and once they're gone.... ???
Cons: - organizational structure (like company made of companies); - processes and bureaucracy; - savings, budget cuts and expense freezing whenever wherever!!!!!!!!!!!!; - horrible workload
Yes, IBM used to be a great place to work. As our HR calls it an "Employer of your choice". That was however 3-4 years ago. Then someone got a great idea: why not to take advantage of 'global crisis' and start saving on employees. Let's tell them "it's crisis out there, we cannot raise your salaries. Be happy we don't fire you like HP does its employees". Then the crises faded out but hey! salary increases and annual rewards remained on the same level.
You got more and more work literally on a monthly basis, if someone leaves IBM there is no new hire but the rest of the team 'absorbs' the work. Annual salary reviews has become a joke, annual bonuses (even with PBC 1!!!!!) a very very stupid joke. Whenever an employee who works 12 hours a day (every day!!!!) complaints to management the answer is always the same...."that's the challenge and we are confident you'll manage it. It's within your potential so grab the opportunity and show yourself.". When employee asks back "what do I get for it?" the answer is "well...you'll get the opportunity to grow...both personally and professionally. Remember, money is not that important".
Advice to Senior Management: You are loosing skilled employees who have dedicated years of excellent contribution to IBM. You are loosing top performers and above average contributors who made a difference. Yes, you save money and make shareholders smile. But for how long?
For many years IBM unions, including the Alliance, have worked together as a network of information and cooperation. The new Global Union Alliance, under the umbrella of the International Metalworkers Federation (IMF) and Union Network International (UNI) takes that network to another level and will include many more IBM unions. This past year new IBM unions have formed in Bulgaria, Chile and Argentina. In a statement from the IMF and UNI about the new Global Union to IBM unions:
As IBM has set itself up as a truly global company, trade unions also need to set up a truly global alliance cooperating to the maximum extent for the benefit of their members and IBM employees. This meeting creates an IMF/UNI Global Union Alliance at IBM of trade unions with members working for companies owned by IBM or companies in which IBM has a significant interest.
The purpose is to express the determination/commitment of trade unions at IBM to work together at global level based on shared values and objectives to strengthen communication and cooperation and to implement action coordinated by IMF/UNI global union.
The objectives are:
The partners of the Alliance will work together with the aim of protecting and furthering the interests of IBM employees throughout the world.
The partners will take concrete action to enlarge the network by improving contacts with unions in countries where employees are unionized and make every effort to organize unorganized plants/locations.
The Alliance@IBM looks forward to the forming of this new organization for IBM employees and their unions.
As many of you know, we have lost many members due to job cuts at IBM US.
Please help us build the American section of the new IBM Global Union Alliance. If you are not a dues paying member of the Alliance, please consider joining today at: https://afl.salsalabs.com/o/4004/donate_page/alliance-join
The intent is to reduce the full time staff - cut costs. It is expensive to pay benefits and commit to employing people full time when you may just want them for short term projects. With Liquid Portal, there is no commitment. Liquid Portal freelancers will be cut loose when the project is complete. IBM is aggressively moving forward with Liquid Portal, and they don't care about negative impact to project schedules. It's probably because they want to get it well established before employees wake up and realize they are being displaced.
BTW, it is foolish for IBM US employees to compete on Liquid Portal. You are essentially telling IBM that you don't have enough to do with your full time job, so you you might as well be RA'ed so you can participate as a freelancer, as well. However, if you do attempt to compete as an IBM US employee, keep in mind that your costs are higher than a China/India GR. When selecting Liquid Portal event participants, we are being told to favor the GR players because they are cheaper. Wake up, everyone - it is looking very bad for IBM US employees, particularly in IGS, although I am sure LP will spread to SWG soon enough. -Anony2-
I'm betting that just about every executive of a for-profit health insurance company, whose total compensation ultimately depends on the value of their stock options, woke up on Good Friday considerably wealthier than they were 24 hours earlier. Why? Because of the spectacular profits that one of those companies reported Thursday morning.
Among those suddenly wealthier executives, by the way, are the corporate medical directors who decide whether or not patients will get coverage for treatments their doctors believe might save their lives.
UnitedHealth Group, the biggest health insurer in terms of revenue and market value, earned so much more during the first three months of this year than Wall Street expected that investors rushed to buy shares of every one of the seven health insurers that comprise the managed care sector. In my view, it would be more accurate to call it the managed care cartel. ...
UnitedHealth's shares shot up more than 8 percent during the day. Increases of that magnitude are so rare that I could almost hear the champagne corks popping in the Minnetonka, Minnesota office of UnitedHealth's CEO, Stephen J. Hemsley. ...
Wall Street analysts had worried that health insurers would have such a hard time complying with the provisions of the year-old health care reform law that their profit margins would decline. Those concerns were put to rest when UnitedHealth reported that its operating margins were "stable" at 8.7 percent in the quarter. The company's stellar performance should also put to rest -- forever -- the myth that "ObamaCare" is "bleeding insurers dry," as industry apologist Sally Pipes contended in a Feb. 24 commentary in Forbes. ...
As you can imagine, Hemsley and other UnitedHealth executives were peppered with questions during the company's conference call with Wall Street analysts last Thursday. They wanted to know how UnitedHealth had pulled off such a stunning accomplishment.
As it turned out, they pulled it off by paying far fewer medical claims than anyone had expected. That in and of itself is not new. Last year was one of the industry's most profitable years because, the big insurers insisted, their policyholders had not needed to go the doctor or check into the hospital as much as they had in the past. Consequently the insurers did not have to pay as many claims. The reason they gave was that the flu season last year was much less severe than predicted.
Well, it turns out that dog won't hunt anymore. UnitedHealth executives admitted during the call with analysts Thursday morning that "the incidence of influenza was substantially higher this quarter than last year." So, even though more people had to be treated for the flu during the first three months of this year than UnitedHealth had expected, the company still managed to spend less on medical claims during the quarter than investors had expected. ...
Contrary to what insurance company bigwigs try to make us believe, it is not snow, sleet and freezing rain or mild flu seasons that enables these companies to blow Wall Street's estimates out of the water. What they will not admit is that their companies are making record profits by pushing more and more of us into benefit plans that require us to pay a whole lot more out of our own pockets before they will pay anything for our medical care.
And I'm betting that if the insurers had to disclose their rates of claim denials and the number of procedures their medical directors are refusing to pay for, we would see that those numbers are increasing, and maybe substantially. Medical directors know they play a key role in meeting Wall Street's expectations, and they're rewarded with raises, bonuses and, yes, stock options, if management is pleased with their job performance. The less money these companies pay out for care, the more is left over to reward shareholders and a bunch of corporate executives.
This is why, folks, that "utilization" is down. Growing numbers of people who have insurance, who are paying hard-earned money every month for coverage that is increasingly inadequate as well as expensive, simply can't scrape up enough cash to go to the doctor or hospital or, in many cases, even pick up their prescriptions. That is a trend that the insurers are determined to continue. And while we are being forced to go without necessary care and empty our pockets to pay our premiums, insurance company billionaire Stephen Hemsley and his cohorts are stuffing their pockets -- with our money.
With that he entered the world of concierge medicine, a growing subset of medicine where patients pay doctors anywhere from $1,500 to $25,000 a year to receive personalized attention and care. (Dr. Glazer said he was paid toward the top of this range.) In most cases, patients presume that in an emergency their concierge doctor will push them to the front of the line to see a top specialist.
Even as more people are struggling to pay medical bills and being rushed through office visits with their doctors, an elite group with money has another option: exclusive medical care, around the clock and anywhere in the world, including on a yacht or private plane.
One of Dr. Glazer's clients, for instance, has had his yacht outfitted with a system from Guardian 24/7, a company in Leesburg, Va., founded by former White House doctors that advertises itself as offering "medical protection previously available only to the president of the United States." The company's "ready room" will allow a doctor trained in the system to perform basic medical care remotely if something should go wrong while the patient is on the high seas. "There is very little that we can't do with the triage room on their yacht," he said.
Under the federal employees' health plan, which covers eight million people, the government pays a fixed share of premiums. So the federal contribution generally keeps pace with rising premiums, which in turn reflect rising health costs.
No such guarantee exists under the Republicans' plan to transform Medicare, approved by the House on April 15 as part of a budget blueprint to cut federal spending and deficits. ...
So, the Congressional Budget Office says, under the Republican plan, Medicare would pay a shrinking share of beneficiaries' total health costs, and seniors would pay a growing share. For a typical 65-year-old, that share would be 68 percent in 2030, more than twice what it would be under current law, the budget office said. ...
But Representative Chris Van Hollen of Maryland, the senior Democrat on the House Budget Committee, said the similarities ended there. "We keep hearing that Republicans are offering seniors exactly what members of Congress get," Mr. Van Hollen said. "It simply is not true."
The implication is that if it's good enough for us, it is good enough for you. During the 2008 election campaign, then-Sen. Barack Obama used a variation of this line to tout the need for universal health coverage, saying during the third presidential debate: "If you don't have health insurance, then we're going to provide you the option of buying into the same kind of federal pool that both Senator [John] McCain and I enjoy as federal employees." Ryan's phrase is alluring — many Americans apparently believe that members of Congress get great benefits — but is it accurate? ...
How does this system compare with what Congress gets?
The federal plan provides lots of health-care options, with a range of about five to 15 plans for each enrollee, according to the Congressional Research Service. All of the health plans offer a standard package, but there are variations in what those plans pay for. On top of that, members of Congress get some extra perks, such as care at military hospitals and, for a fee, limited medical services from the attending physician at the Capitol.
In many ways, the federal plan works a lot like the run-of-the-mill employee-sponsored health insurance plan. The bulk of the costs are picked up by the employer — in this case, the government — with the employee contributing his or her share according to a set or negotiated rate. Under a 1997 law, the government pays a set rate of 75 percent of the costs of the health plans selected by federal employees and members of Congress. The employee (and members of Congress) pick up the other 25 percent.
Ryan, in his quote, said the new Medicare would be "working like a system just like members of Congress and federal employees have." But the comparison begins to break down once you consider the premium support payments. Ryan would peg the premium support to the consumer price index, a broad gauge that has been rising more slowly than have health care costs.
The Congressional Budget Office, the nonpartisan arm of Congress, analyzed Ryan's plan and estimated that by 2030, the government would pay just 32 percent of the health care costs, less than half of what the federal plan currently pays. The other 68 percent of the plan would have to be shouldered by the retiree. (The CBO estimated that if traditional Medicare stayed in place, the government would pay 70 to 75 percent of the costs.)
The CBO analysis also assumed that adding private insurance plans into the mix would raise administrative costs and would not keep medical inflation as low as traditional Medicare has done. Ryan disputes these assumptions. "We believe — based on experience — the competitive elements of patient-centered reform will exert downward pressure on the cost of a private plan, and that therefore the government's share of the tab will be higher," said Conor Sweeney, a spokesman for Ryan.
But insurance company lobbyists know the media are not paying much attention. And so they are able to influence what the regulations actually look like--and how the law will be enforced--with little awareness, much less scrutiny.
At a January meeting of several hundred patient and consumer advocates in Washington, a top aide to Health and Human Services Secretary Kathleen Sebelius all but pleaded with those in the audience to bombard the Obama Administration with messages insisting that the law be implemented as Congress intended. Rest assured, he told them, that the insurance industry's lobbyists were relentless in their demands that the regulations be written to give them the maximum slack. ...
But the consumer groups believe the administration itself has caused some of the problems by taking so long to finalize the regulations. The NAIC got its work done comparatively swiftly. "There is a clear pattern of leaning toward the insurance industry more than consumers," one of the patient advocates told me. The consumer advocates, most of whom not so long ago were applauding the Democrats for getting reform enacted, even if it fell short of their original goals, are becoming increasingly discouraged, partly because there are so many more lobbyists for the insurers than for consumers. It's hard to compete with them. "We're outnumbered 100 to 1," said one of the consumer advocates. It's clear," he added, "that the insurers are willing to make life more difficult for patients" by trying to weaken and delay the consumer protections. It's also clear that, at least for now, the insurers seem to have the upper hand in dealing with the White House.
"But dependency on government has never been bad for the rich. The pretense of the laissez-faire people is that only the poor are dependent on government, while the rich take care of themselves. This argument manages to ignore all of modern history, which shows a consistent record of laissez-faire for the poor, but enormous government intervention for the rich." From Economic Justice: The American Class System, from the book Declarations of Independence by Howard Zinn.
As you may recall, Republicans ran hard against bank bailouts. Among other things, they managed to convince a plurality of voters that the deeply unpopular bailout legislation proposed and passed by the Bush administration was enacted on President Obama's watch.
And now they're doing everything they can to ensure that there will be even bigger bailouts in years to come.
What does it take to limit future bailouts? Declaring that we'll never do it again is no answer: when financial turmoil strikes, standing aside while banks fall like dominoes isn't an option. After all, that's what policy makers did in 1931, and the resulting banking crisis turned a mere recession into the Great Depression. ...
So what's the solution? The answer is regulation that limits the frequency and size of financial crises, combined with rules that let the government strike a good deal when bailouts become necessary.
Remember, from the 1930s until the 1980s the United States managed to avoid large bailouts of financial institutions. The modern era of bailouts only began in the Reagan years, when politicians started dismantling 1930s-vintage regulation. ...
Last year Congressional Democrats enacted a financial reform bill that sought to close these gaps. The bill extended regulation in a number of ways: consumer protection, higher capital standards for major institutions, greater transparency for complex financial instruments. And it created new powers — "resolution authority" — to help officials drive a harder bargain in future crises.
There are many criticisms one can make of this legislation, which is arguably much too weak. And the Obama administration has frustrated many people with its too-lenient attitude toward Wall Street — exemplified by last week's decision to exempt foreign-exchange swaps, a major source of dislocation in 2008, from regulation.
But Republicans are trying to undermine the whole thing. ...
To see what's really going on, follow the money. Wall Street used to favor Democrats, perhaps because financiers tend to be liberal on social issues. But greed trumps gay rights, and financial industry contributions swung sharply toward the Republicans in the 2010 elections. Apparently Wall Street, unlike the voters, had no trouble divining the party's real intentions.
And one more thing: by standing in the way of regulations that would limit future financial crises, Republicans are giving further evidence that they don't really care about budget deficits.
For our current deficit is overwhelmingly the result of the 2008 financial crisis, which devastated revenue and increased the cost of programs like unemployment insurance. And while we managed to avoid large direct bailout costs (a fact not appreciated in public debate), we might not be lucky next time. More and bigger crises; more and bigger bailouts; more and bigger deficits. If you like that prospect, you should love what the G.O.P. is doing to financial reform.
Stockman also attacked Rep. Paul Ryan's (R-WI) budget plan, noting it "does not cut one dime from the debt" in the next three years. Indeed, in addition to being draconian and regressive, Ryan's budget fails to accomplish the only thing it sets out to do — solve the deficit — despite claims from Washington journalists that his plan is "serious."
The case has broad implications for consumers because all sorts of companies, like banks, builders and even nursing homes, use contracts that require disputes to be settled through arbitration and forbid class actions. Banks and credit card companies, in particular, have come under scrutiny recently for their use of such binding arbitration clauses in customer contracts.
"I think it will make it very difficult for consumers to recover for overcharges, mischarges, incorrect billings or identity confusion in disputes with credit card companies or banks," said Michael Donovan, a lawyer in Philadelphia who co-wrote an amicus brief filed on behalf of the plaintiffs in the case. The decision, he said, will "make it difficult for consumers in resolving the typical disputes that they have with companies large and small."
Here's some background: The decision involved a case brought against AT&T Mobility by a California couple who objected to a $30 charge for what was advertised as a "free" cellphone. They filed a lawsuit seeking class-action treatment. But the couple had signed a standard contract with AT&T that required them to resolve disputes through arbitration — a private legal proceeding — and barred them from banding together with other customers to seek class-action treatment, whether through arbitration or in a lawsuit brought in a traditional court.
The company, relying on the contract, said the case couldn't proceed in court, or as a class-action case in any venue. Lower federal courts refused to enforce the arbitration agreement. The case ended up at the Supreme Court, which found for AT&T.
But by taking advantage of myriad breaks and loopholes that other countries generally do not offer, United States corporations pay only slightly more on average than their counterparts in other industrial countries. And some American corporations use aggressive strategies to pay less — often far less — than their competitors abroad and at home. A Government Accountability Office study released in 2008 found that 55 percent of United States companies paid no federal income taxes during at least one year in a seven-year period it studied.
The paradox of the United States tax code — high rates with a bounty of subsidies, shelters and special breaks — has made American multinationals "world leaders in tax avoidance," according to Edward D. Kleinbard, a professor at the University of Southern California who was head of the Congressional joint committee on taxes. This has profound implications for businesses, the economy and the federal budget. ...
The United States is virtually alone in trying to tax its multinational corporations on their foreign earnings, but it allows companies to avoid those taxes indefinitely by keeping profits overseas. That encourages companies to use accounting maneuvers to shift profits to low-tax countries and to invest profits offshore, says David S. Miller, a partner at Cadwalader, Wickersham & Taft in New York. ...
In addition to being complex and uneven, the United States corporate tax code is inefficient and has become a diminishing source of revenue. Corporate taxes accounted for about 9 percent of all federal revenue in 2010. At $191 billion, they were equal to 1.3 percent of the nation's gross domestic product. Most industrial countries collect more from companies, about 2.5 percent of output. Only a portion of that disparity can be explained by the many types of businesses in the United States that elect to be taxed at an individual rate. ...
Furthermore, some business owners complain that the American system unfairly rewards disingenuous bookkeeping rather than innovation. It forces companies to compete "based not on product quality and services, but on accounting gymnastics," said Paul Egerman, former chairman and chief executive of eScription, a medical transcription service in Boston.
But the main point is, what are we supposed to have a civil discussion about? The truth is that the two parties have both utterly different goals and utterly different views about how the world works. It's not nice to say this (but the truth is rarely nice): whatever they may say, Republicans are not concerned, above all, about the deficit. In fact, it's not clear that they care about the deficit at all. They're trying to use deficit concerns to push through their goal of dismantling the Great Society and, if possible, the New Deal; they have stated explicitly that they want to reduce taxes on high incomes to pre-New-Deal levels. And it's an article of faith on their part that low taxes have magical effects on the economy.
Mr. Obama believes that the major social insurance programs are a good thing, and has extended them with health reform. Some of the best-known research by his chief economist, Austan Goolsbee, debunks claims that tax cuts for the rich pay for themselves.
It used to be that you could count on two pensions – social security and a pension from your employer. But now work-related pensions are an endangered species and Social Security is under assault from a lethal combination of Wall Street's insatiable greed and the pernicious philosophy of Ayn Rand.
For much of the post-WWII period, private sector workers could count on decent, defined benefit pension funds that paid a fixed monthly amount for as long as you lived. Most also included options that allowed your spouse to receive benefits for the rest of his or her life after you died. You felt like you could survive into your golden years and provide for your loved ones.
Defined benefit plans are much more secure than 401(k)s, which end when the money runs out. The odds are that you will quickly outlive your 401(k). In fact, the average 401(k) has a balance of only $45,519, and 46 percent of all 401(k)s are worth less than $10,000.
Twenty-five years ago, 80 percent of large and medium-sized firms offered defined benefit pension plans. Today only 21 percent have them. And half of all full-time workers (and most part-time workers as well) have no workplace retirement plans at all.
The birth and death of private pension funds are directly connected to the rise and decline of unions. In 1955, more than one in three private sector workers belonged to a union and those unions fought hard for pensions and health care benefits. Currently fewer than 7 percent of all private sector workers are in unions so private employers feel little pressure to provide such benefits. Corporate America has stopped offering pensions because it doesn't have to.
But corporations do feel enormous pressure to deliver higher profits on a quarterly basis to meet Wall Street expectations. This pressure has led to more movement of facilities overseas, more efforts to keep wages down, more anti-union crusades and more cuts in benefits. ...
Social Security in the Crosshairs. The financial crash and the ensuing bailouts also set the stage for another assault on Social Security, the most enduring legacy of the New Deal. With unemployment still unconscionably high, federal revenues are down, leading to growing concern about deficits. Of course, the sane solution would be to put America back to work and pay for job creation with taxes on Wall Street's renewed profits. But sanity is not Washington's strong suit. Instead, deficit hawks want the richest country in history to take an axe to "entitlements" that supposedly are unsustainable. ...
Congressman Paul Ryan, a devout follower of the late Ayn Rand, is resurrecting the failed Bush-era scam to turn Social Security into private investment accounts so that everyone can play in the Wall Street casino. You would think that the recent crash would have killed that idea. But Ryan feels a moral obligation to unshackle the super rich and eliminate government support for the aged.
The bureau has one purpose: to shield consumers from unfair, misleading and deceptive lending. The purpose of the Republican bills is twofold. One is to deprive the agency of the power to fulfill its mission. Another is to attract campaign money. As long as the Senate and White House are controlled by Democrats, the bills are unlikely to become law. But by advancing them in the House, Republicans can demonstrate how thoroughly they would dismantle reform if they controlled Washington and, in the process, rake in Wall Street donations.
What do the banks want in exchange? For starters, they want even stricter constraints on the agency than those that were written into the law last year — and that were expressly included to address banks' objections to the agency. ...
Unless the administration offers a quick, full-throated defense, the agency may never fulfill its promise. And the process by which Congress is bought and sold — and consumers and taxpayers are hung out to dry — will be, once again, on full display.
Income inequality in the United States is actually higher than at any other time in modern history since the Great Depression. There is also a tremendous amount of inequality even in life expectancy, with the American Human Development Index reporting in 2010 that there is now a 6 year gap in average life expectancy between Mississippi, in the Deep South, and Connecticut, in prosperous New England." As ThinkProgress previously reported, one of the major factors in this hike in income inequality has been the decline of unionization in America.
"Remember when teachers, public employees, Planned Parenthood, NPR and PBS crashed the stock market, wiped out half of our 401ks, took trillions in bailout money, spilled oil in the Gulf of Mexico, gave themselves billions in bonuses, and paid no taxes?"
Then he added,
"Yeah, me neither."
Yet, it's teachers, the middle class, the poor, the elderly, the environment, and the idea of public service that GOP Congress critters and governors want to punish for the destructive deeds of Wall Street banksters and corporate elites. For example, the GOP's widely ballyhooed budget plan doesn't just "end Medicare as we know it" – it ends it, period. Instead of extending this efficient and effective health care program, they would toss the elderly under the bus of insurance profiteers. Goodbye and good luck.
How's this for bitter irony? Last year, tea party Republicans got elected to Congress by falsely claiming that Obama's universal health care program would require "massive Medicare cuts." And now, those same tea partiers are not merely voting to cut Medicare, they're killing it.
They're also trying to gut Medicaid, taking three-quarters of a trillion dollars out of this essential health care program for poor families. Would this "savings" help reduce the deficit, as they claim? No. It would merely be redistributed to the superrich in the form of a trillion dollars in new tax giveaways.
The GOP budget plan shows who they are and whom they serve. As one observer says, "it's a measure of just how far off the deep end Republicans have gone." That's former President Ronald Reagan's budget director speaking. And we all remember what a leftie Reagan was.
Republican budget whackers use the phrase like a war cry as they slash Medicare, education, and every other public program they hate. President Obama, too, has taken to uttering the phrase as he surrenders to the contrived wisdom in Washington that every American must give up even essential government benefits in order to balance the budget. But guess who's not sharing? The corporate powers, which use their lobbyists, lawyers, campaign cash, tax havens, and other tools to avoid giving up anything in the call for national sacrifice.
For example, while hundreds of thousands of schoolteachers are being dumped and our school children shortchanged in sacrifice to the Deficit Gods – it was recently revealed that General Electric is a sacrifice-free corporation. With more almost 1000 tax lawyers and other specialists in its tax department, this infamous polluter and job-cutter has paid exactly zero in income taxes since 2006, despite raking in $26 billion in profits. Indeed, its army of sacrifice avoiders produced a $4 billion tax refund for GE in those five years. Meanwhile, it continues to be rewarded with billions of dollars a year in government contracts.
In a concise report titled, "The Artful Dodgers," a watchdog group named Public Campaign uncovers the flagrant tax avoidance scams of a dozen hugely-profitable corporations, including oil giants and bailed out banks, as well as such outfits as FedEx, and Carnival Cruise Lines.
When your local, state, and national politicos mouth platitudes about sacrificing for the national good, tell 'em to start at the top, then get back to you. To download "The Artful Dodgers" report, go to www.publicampaign.org.
Listening to Bharara, one could easily think that prosecutors were finally — finally! — getting tough on the bad behavior that helped bring about the financial crisis. Alas, it was mainly an illusion.
Upon closer inspection, it turns out that the main target of Bharara's wrath was MortgageIT, a smallish division that Deutsche Bank bought in 2007 — eight years into an alleged fraud that ended in 2009. In the complaint itself, not one MortgageIT executive was singled out as a wrongdoer; it was as if this faceless corporation had somehow defrauded the government without human help.
Most stunningly, despite concluding that MortgageIT executives had "knowingly, wantonly and recklessly" lied to federal officials, Bharara's office had decided that none of them deserved jail time. It had brought a civil, not a criminal, case, meaning the only punishment prosecutors could seek was money — more than $1 billion in this instance. That sounds like a lot until you realize that Deutsche Bank's 2010 revenues were more than $42 billion. In other words, a tap on the wrist. ...
As for the big fish, they're all walking away unscathed. The Securities and Exchange Commission got a $67.5 million settlement out of Angelo Mozilo, the former chief executive of Countrywide. (Mozilo paid only $22.5 million; the rest was picked up by Countrywide's owner, Bank of America.) But prosecutors on the West Coast dropped their criminal investigation.
The Justice Department spent several years trying to build a case against Joe Cassano, the former head of A.I.G.'s Financial Products division. It gave up. Richard Fuld, the former chief executive of Lehman Brothers, approved a bookkeeping scam that hid billions of dollars of Lehman's debt from investors. Recent reports suggest that not only will he not be charged with a crime, he isn't even likely to face civil charges.
The MortgageIT executives are hardly in the same rank as Fuld or Mozilo, but the facts laid out in Bharara's complaint are truly shocking. Given special status by the F.H.A. to make loans to low-income Americans, which the government would then insure, the company flagrantly lied about the underwriting it had done. Loans would often default in a matter of months. Independent auditors who reported problems saw reports stashed in a closet, unread. To make a criminal case, prosecutors need to show that executives knowingly intended to deceive. If 10 years of this behavior doesn't qualify as intentional deception, it is hard to know what would.
I know that these are difficult cases to win. The one time prosecutors brought a criminal case involving the financial crisis — against two Bear Stearns hedge fund managers whose fund collapsed in the summer of 2007 — they lost. But so long as prosecutors resist bringing criminal cases against financial executives, they are sending a message.
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