CFPB Files Lawsuit Against CashCall for Illegal Online Loan Servicing

The Consumer Financial Protection Bureau (CFPB) sounded the alarm about online loan services, filing a lawsuit against CashCall Inc., for collecting exorbitant amounts of money the bureau says consumers didn’t owe.

It is the first time the CFPB has sued an online loan service.

The CFPB alleges that CashCall Inc., tried to collect on loans made by Western Sky Financial that ranged from $850 to $10,000 and charged interest rates ranging from 90 percent up to 343 percent.  According to CFPB, CashCall illegally debited consumer checking accounts to collect on those loans, and violated lending laws in at least eight states.

The bureau says these loans included upfront fees and lengthy repayment schedules that resulted in consumers paying as much as $62,453 over seven years for a $10,000 loan.

“We are taking action against CashCall for collecting money it had no right to take from consumers,” CFPB Director Richard Cordray said in a statement. “Online lending is rapidly growing and deserves ample regulatory attention. The Consumer Financial Protection Bureau will take action against online lenders and servicers that engage in unfair, deceptive or abusive practices.”

States Join in Suit

Western Sky Financial’s owner was a Native American and the company was based on an Indian reservation in South Dakota. It had a national reputation for claiming that its ties to a reservation meant it did not have to follow state laws. Western Sky shut down its lending business in September after being sued by New York, one of eight states with laws that place caps on interest rates, require licenses to make short-term loans or both.

The other states include Arizona, Arkansas, Colorado, Indiana, Massachusetts, New Hampshire and North Carolina. Colorado and North Carolina joined the CFPB in filing suit against CashCall.

The CFPB said that CashCall violated lending laws in each of those states, removing consumers’ obligation to pay back the loans.

CashCall attorneys claim the CFPB has no right to enforce state laws regarding interest rates. The CFPB’s response was that the loans were made over the Internet to consumers in many states and must comply with the laws in those states.

Agency Wants Money Refunded

The CFPB lawsuit seeks a court order to require CashCall to refund money illegally collected from borrowers. It also asks for penalties against CashCall and an order requiring CashCall to follow all laws in collecting payments.

The website for CashCall displays quotes for consumer loans in amounts ranging from $2,600 to $25,000 with repayment terms spread between four and 15 years.

For example, the $5,000 loan, paid back over 7 years at $486.58 a month, would cost the borrower $40,872.72. The APR on that loan is 116.73 percent.

A $100,000 loan, paid back over 15 years at $2058.27 per month, would cost the borrower $370,488.60. The APR on that would be 24.08 percent.

By contrast, the typical $100,000 home loan at 6 percent from your local bank would cost $151,894.23. The APR on that loan would be 6.43 percent.

U.S. House Passes Budget Deal; Senate Likely to Follow Suit

Democrats finally scored a victory in the U.S. House of Representatives on Thursday, joining Republicans to pass the Bipartisan Budget Act by a stunning margin of 332-94.

The unanticipated truce in the neverending battle among House members pushes the bill to the Senate floor, where passage is likely and would avoid another tedious holiday budget crisis. President Obama is expected to sign the bill as soon as it reaches his desk, which would avoid a government shutdown in January.

It was a significant victory not just for Democrats, but also Republican House Speaker John Boehner, who crushed opposition to the bill from Tea Party members, then bashed the lobbying groups that support that side of the Republican Party.

Conservative Groups Prodded

“Frankly, I think (Tea Party lobbying groups) are misleading their followers,” Boehner said during his weekly news briefing. “I think they’re pushing our members in places where they don’t want to be. Frankly, I just think that they’ve lost all credibility.”

That was a direct swipe at conservative groups like Heritage Action for America, Americans for Prosperity, Freedom Works and Club for Growth, which all voiced loud opposition to the bill crafted by Republican Budget Committee leader Paul Ryan, R-Wis., and Senate Budget Committee leader Patty Murray, D-Wash.

The bill is a rarity in that it represents a compromise agreement that both sides can love and hate equally. Republicans supported the bill 169-62, while Democrats favored it 163-32.

Good and Bad for Both Sides

Some of the key parts of the bill include:

  • Discretionary spending is up slightly to $1.01 trillion, about $35 billion more than House Republicans wanted and $4 billion less than Democrats asked for.
  • There will be $63 billion in sequester relief over the next two years, half for Defense, half for non-Defense agencies. The relief will be paid for by raising fees on airline tickets about $6 a ticket; making federal workers pay more of their pension costs; and extending a 2 percent cut to Medicare.
  • The bill will reduce the deficit by $23 billion, which represents a pittance considering the federal deficit is now $17.3 trillion.
  • There will be no extension of jobless benefits to 1.3 million unemployed people whose benefits expire Jan. 1.
  • Cost of living adjustments (COLA) for some military retirees was reduced.

Senators Likely to Grumble, then Pass Bill

The deal may stumble for a day or two in the Senate, where Republicans already are grumbling about sequester cuts and Democrats are whining about failure to extend unemployment benefits. Republican Sens. Ted Cruz of Texas, Lindsey Graham of South Carolina and Marco Rubio of Florida already have voiced opposition to the bill.

If it does get through, it will end the possibility of another government shutdown. The 15-day shutdown in October cost the economy $24 billion and lowered public support for Washington politicians even more.

Murray and Ryan, who arrived at an accord in surprisingly quick fashion, said they expect their peers in the Senate to follow suit.

This agreement breaks through the recent dysfunction to prevent another government shutdown and roll back sequestration’s cuts to Defense and domestic investments in a balanced way,” Murray said. It’s a good step in the right direction that can hopefully rebuild some trust and serve as a foundation for continued bipartisan work.”

“I’m proud of this agreement,” Ryan said. “This bill doesn’t go nearly far enough, but in a divided government, you don’t get everything you want. You have to work with the other side and when you get the chance to take a step forward — however small — you take it.”

Federal Government Reopens, Cloud of Uncertainty Passes for Now

The cloud of financial ruin threatening the U.S. and world economy floated away Wednesday, but it will be back.

President Barack Obama and Congress made sure of that when they approved a measure to raise the debt limit and reopen the federal government, but put a time limit on both.

The debt ceiling, which allows the U.S. to borrow money by issuing Treasury bonds, will be raised through Feb. 7, 2014. The money borrowed between now and then will help fund government agencies at their current levels through Jan. 15 when the whole mess will be revived in Congress for the fourth time since budget battles and raising the debt ceiling were joined together in the summer of 2011.

The most recent measure calls for a congressional conference committee to come up with a long-term fiscal solution for the stalemate between deeply divided Democrats and Republicans. Three temporary compromises have been reached in the past 24 months and each one has called for joint committees to find a permanent solution.

None has been found and there is little optimism that the new committee, headed by Rep. Paul Ryan, R-Wis. and Sen. Patty Murray, D-Wash., will have one before Jan. 15.

“We’ve got to get out of the habit of governing by crisis,” Obama said at a press conference Wednesday. “We could get all these things done, even this year, if everybody comes together in a spirit of ‘How are we going to move this country forward?’”

Sen. Mitch McConnell, R-Ky. said in a press release that “this is far less than many of us had hoped for, but it’s far better than what some had sought.”

 

“This deal is yet another promise to work on the problem tomorrow,” Sen. Mike Enzi, R-Wyo. said in a statement.

Failure to Reach Agreements

While Wall Street rejoiced – stocks gained ground on all three major indexes – the rest of America could only sigh heavily at the continuing game of “kick the problem down the road” between Democrats and Republicans.

The two sides have been unable to agree on a compromise solution that addresses the Democrats’ desire to raise the government’s spending limit with the Republicans’ desire to curb federal spending.

The agreement Wednesday temporarily calmed worldwide fears that the U.S. government would default on its debt obligations, which are many.

If the debt ceiling had not been raised, economists were predicting global panic that would have affected virtually every aspect of the American economy in some way. Some of the crises temporarily averted were:

  • The U.S. government’s inability to meet looming obligations. The Treasury Department has $363 billion in payments due by Oct. 31 for bonds it issued. There is another $12 billion in Social Security payments due next week and $58 billion due in payments for Medicare, Social Security, military salaries and other expenses. It would have been like you trying to make monthly mortgage, credit card and student loan payments off what you get for unemployment.
  • Decisions by the government on who to pay first with the money they did have. About half the U.S. debt is held by foreign governments, central banks and other overseas investors. Would the U.S. government pay creditors like China, which holds $1.28 trillion in U.S. debt and Japan, which holds $1.1 trillion or use the money to pay Social Security retirees and federal employees, including the military? Now, both will be paid, at least temporarily.
  • Another banking failure. When Lehman Brothers defaulted on $517 billion in debt obligations in 2008, it triggered major collapses in the U.S. and worldwide banking systems. The U.S. government has $12 billion in debt obligations – 20 times what Lehman Brothers had. Those government debts will be covered, temporarily.
  • Rising interest rates. Most interest rates are tied to the U.S. Treasury bill. If the government could not pay its obligations on those bills, it would cost them even more to borrow against them in the future. That means higher interest rates for mortgages, credit cards, business loans, car loans — just about anything across the board. Interest rates should remain stable, at least temporarily.
  • Stock prices likely would have plummeted. The market lost almost half its value in the five months following the Lehman Brother’s default. That includes the two top losses in market history: 777 points on Sept. 29, 2008 and 733 points two weeks later. Some investment funds are barred from holding anything less than AAA debt and with rating systems ready to drop U.S. Treasury bills from their AAA rating, there would have been a huge sell off that would have had a negative effect on the market. Stocks, definitely, ignored the whole thing.

Consumer Financial Services Affected by Government Shutdown

The continued U.S. government shutdown, now entering its fourth day, means that myriad services for consumers remain at a standstill.

The Small Business Administration (SBA), the Federal Trade Commission (FTC), and the Department of Education are among the agencies closed or partially shut down because of the congressional gridlock.

These agencies are instrumental to students and educators, small-business owners seeking loans, and consumers encountering financial concerns involving business practices. All these individuals may experience delays in service and funding as they wait for the impasse to end.

Government records show about 800,000 workers — or 40 percent of the nation’s more than 2 million federal employees — are still furloughed. The shutdown started after the U.S. House of Representatives attempted to halt Obamacare. That led to Democrats and Republicans in Congress failing to reach a compromise on how to fund the U.S. government.

But things can get much worse: The nation is closer to facing a catastrophic default as the $16.7 trillion debt limit creeps nearer to its Oct. 17 deadline. Default would raise the nation’s borrowing costs, meaning pricier mortgages, car loans and corporate borrowing costs. It also could delay Social Security checks, military pay and doctor payments.

SBA Not Accepting Most New Loan Applications

The majority of SBA operations are frozen and the agency’s website states information and news relating to that agency may not be up to date. An SBA press release showed that 62 percent of the 3,500 employees would be furloughed.

There are a few exceptions to the suspension. The SBA’s Disaster Loan Program and the Inspector General operations, including disaster funded and investigatory activities, will stay uninterrupted.

All existing loans will continue to receive backing, but new loan applications will not be approved or processed, keeping some small-business owners and entrepreneurs from access to significant funding, such as 7(a) and 504 loan programs.

The SBA issued a statement on the matter, published by ABCNews.com, “Due to the government shutdown, America’s 28 million small businesses will be unable to access an average of $96 million in capital supported by the U.S. Small Business Administration (SBA) per day.”

FTC Complaints on Hold, CFPB Remains Open

Consumers visiting the FTC website, a valuable resource for consumers seeking to understand rights and regulations preventing businesses from unfair or deceptive acts, are greeted by the message: “Unfortunately, the Federal Trade Commission is closed due to the government shutdown…We hope to be open soon.”

The homepage shows that consumers cannot file complaints or register for the Do Not Call list. Although consumers can request federal records as provided by the Freedom of Information Act, none of those petitions will be processed.

Meanwhile, the CFPB, an agency under the FTC, was spared from the government shutdown. The authority handles consumer complaints and takes measures to protect consumers from banks, credit unions, debt collectors and other institutions that may be involved in unethical and deceptive practices.

The agency remains open because it’s funded by tax payer money in the Federal Reserve, not Congress. However, that could change. U.S. House Republicans proposed a plan that would allow Congress to reduce funding for the CFPB, which could bar consumers from another government safeguard in the event of future federal shutdowns.

DOE Loans Are Safe for Now

More than 90 percent of the 4,225 workers at the U.S. Department of Education remain furloughed. If the shutdown continues, certain education grants, and disability and disadvantaged student programs will face limited funding.

Other federal aid programs, like Pell Grants and Federal Direct Loans, should continue with minimal impact, as these are part of permanent and multi-year funding. Since the shutdown happened after much of fall tuition was already processed, students were protected from any initial delay of federal aid operations.

But if the shutdown continues for at least four more days, the department expects to have difficulty conducting essential operations — processing FAFSA applications, managing federal grants and paying student loans — and will need to furlough more workers, according to a report by USAtoday.com.

Justin Draeger, president of the National Association of Student Financial Aid Administrators, told Inside Higher Ed brief government shutdown is “pretty minimal,” but warned that a prolonged impasse means “the ability of schools and the department to work on complex student or borrower issues would be a problem.”

JP Morgan Chase Slammed for Debt Collection Fraud

Is the bank that issued your credit card dunning you for money it says you owe it? It’s possible.

There’s nothing wrong with them trying to get it, as long as they do it in an orderly, transparent and lawful way. However, when evidence of wrong-doing occurs, the legal system is obliged to act.

That’s why California State Attorney General Kamala Harris last week filed suit against JPMorgan Chase, accusing the financial giant of widespread fraudulent practices, illegal misconduct, and other debt-collection abuses against approximately 100,000 California credit card borrowers between 2008 and 2011.

The lawsuit, filed in Los Angeles Superior Court, alleges that at every stage of the collection process, Chase “cut corners in the name of speed, cost savings, and their own convenience, providing only the thinnest veneer of legitimacy to their lawsuits.”

Allegations against Chase

  • Robo-Signing – Employees routinely and automatically signed affidavits, court documents that stand in for the actual account contracts and statements as proof of a borrower’s debt in a lawsuit, without methodically reviewing the relevant files, bank records, or in some cases, reading the documents at all. That’s how the bank filed 469 lawsuits, based on illegitimate documents, in a single day.
  • Sewer Service – The law requires banks to serve notice of debt collection lawsuits on debtors so they can contest the charges in court. Chase frequently failed to serve these notices and then filed false affidavits, claiming the notices were properly served. When the borrowers don’t show up in court to challenge the accuracy of the bank’s claims, courts issue summary judgments in favor of the bank, giving it the right to garnish borrowers’ wages or freeze bank accounts  to withdraw money it says it’s owed.
  • Filing Irregularities – Chase recklessly assembled its official legal filings, exposing some borrowers to possible identify theft by not redacting certain personal information from attachments to files. The bank also lied on numerous occasions by suggesting that certain borrowers were not on active military duty, which provides service members some protections against debt collection, when, in fact, it never checked their military status.

Chase isn’t the only bank that may be guilty of these transgressions, but it’s the first one that’s officially charged.

Noach Dear, a civil court judge in Brooklyn, told the New York Times in 2012 that companies like American Express, Citigroup and Discover Financial file nearly 100 credit card lawsuit daily. About 90 percent of those cases are just as flawed, with the plaintiffs not being able to prove that a borrower actually owes the debt the bank claims is overdue, Dear said in the report.

Face It: Banks Want Their Money

Not everyone pays their credit card bills in a timely manner and you may be one of them.

Equifax, one of the nation’s three big credit bureaus, shows American borrowers are about $18.7 billion behind on paying off their credit card debts.

While banks are trying to collect their money, the federal government has long imposed strict standards of fairness regarding the way debt collection may be carried out in this country.

In 1977, for example, Congress passed the Fair Debt Collection Practices Act (FDCPA) in order to eliminate deceptive, threatening and abusive practices by the debt collection industry – the third-party collectors who purchase banks’ and lenders’ charged-off debts at a discount and then attempt to collect as many of them as possible in order to make a profit.

And even though a first-party creditor, like your bank, is not subject to the rules of the FDCPA, the Dodd-Frank Act, various state laws and Section 5 of the Federal Trade Commission (FTC) all prohibit banks and other first-party lenders from engaging in unfair, deceptive or abusive practices in their own collection activities.

Jail Time for Bank CEOs

It seems that the nation’s big banks have learned absolutely nothing from the penalties imposed on them for the illegal practices they engaged in – like robo-signing documents – during the recent foreclosure crisis. Although they were ordered to repay billions of dollars to harmed customers, their illegal behavior continues unabated, only now, in a different part of their business.

Since big fines don’t seem to prevent unlawful behavior – the banks pay them off as the cost of doing business and then go about their dishonest ways – maybe it’s time to put some CEOs in jail. After all, any other person pulling off the same scams and shams that these banks have allegedly perpetrated would be looking at doing some serious hard time.

Why are bank executives, who knowingly allow these crimes under their direction, be the only class of Americans immune to the punishments afforded by the country’s penal system?

Attorney General Harris should not be satisfied with a mea culpa and a monetary penalty. It’s time to switch some grey flannel suits into prison stripes.

If you suspect that your bank is unfairly or unlawfully trying to collect money from you that it says it is owed, know that you have protection under the law. Contact your State Attorney General’s Office or the Federal Trade Commission and make your voice heard.

Nobody Winning Partisan Budget Battle in Congress

Before the ink dries, there will be at least six budget resolutions offered and voted on in the House of Representatives: The Paul Ryan budget, a budget crafted by moderate House Democrats, another from Senate Democrats, a fourth from the House’s Congressional Progressive Caucus (CPC), a fifth from its Congressional Black Caucus (CBC) and a sixth from the House’s ultra-conservative Republican Study Committee (RSC).

And yet none of these budgets will go anywhere. They are all dead on arrival.

Whatever passes in the House will not make it through the Senate and vice versa, meaning that not one of these fiscal blueprints will ever become law.

They are valuable only in that they represent different wish lists emanating from Congress’s disparate political ideologies. As such, they offer the citizenry six contrasting visions of the country’s future.

So let’s look and see what each has to offer.

The Ryan Budget

The Ryan budget has gotten the most attention, by far. It passed through the House on a 221-207 party-line vote last week. Congressman Ryan’s (R-WI.) 2014 proposal is similar to budgets he authored over the past few years, and his latest iteration doubles down on the economic ideas he introduced in the 2012 presidential race.

He proposes, among other things, to repeal Obamacare, turn Medicare into a voucher program for those born after 1959, cut funds for food stamps and Medicaid and lower taxes for the wealthy and corporations by $7 trillion while upping outlays for the Pentagon.

His plan also aims to create only two tax rates – 10 and 25 percent – making up lost for revenue by closing tax loopholes and eliminating tax expenditures. Just as he did when he was the vice-presidential candidate, Ryan declines to specify which of those money sieves he would target for repair.

Yet he insists his budget will balance in 10 years, and he makes that budget balancing the preeminent objective of his proposal. It is a major tenet of modern Republican orthodoxy to eliminate deficit spending at all costs: a curious retrenchment considering that for many years, and particularly during recent Republican administrations, the party’s rank and file did not consider deficits an overly important issue.

Apart from the fact that many liberal economists believe that balancing the budget shouldn’t be Congress’s overriding aim, especially during a time when government spending is seen as the best last resort to stimulate a struggling economy,  Ryan’s critics maintain that his budget won’t achieve its stated goal.

In fact, a recent analysis by the Center of Budget and Policy Priorities suggests it will not result in any major deficit reduction at all.

Another analysis by the Economic Policy Institute had a darker prediction. It estimated that the Ryan plan would cost some 2 million jobs, shrink the U.S. economy by 1.7 percent and perhaps push the country back into recession.

Shortly after it passed the House, Ryan’s budget was rejected in the Senate, 59-40. Two moderate Republicans voted against it because of its safety net cuts and three Tea Party Republicans joined every Democrat to kill the measure because it included $620 billion in tax increases enacted in January.

The Republican Study Committee Budget

Intending to wield an even sharper austerity scalpel, the RSC’s “Back to the Basics” budget had plans for deeper cuts in entitlement programs to balance the budget in just four years. Medicare would become a voucher program by 2019. Meanwhile, Social Security benefits would decrease by changing the method by which they are calculated, and its eligibility age would increase to 70.

The RSC plan hoped to cut discretionary spending to 2008 levels and then freeze them until 2017 — the date the budget should balance. While the Ryan budget had 49 backers in the House, the RSC budget had considerably fewer. It existed mainly as a way to shore up the Party’s far right flank.

The House rejected it, 132-104, with 171 Democrats voting “present” — not voting for or against. The Democrat’s plan was to force the House into passing it as a way to highlight the extremism of the Republican conference. When the G.O.P. didn’t rise to the bait, the RSC budget died.

Three House Democratic Budget Plans

Before disposing of the RSC budget, the House also voted down three Democratic plans. The mainstream Democratic budget proposed closing tax loopholes on corporations and wealthy Americans, adding $200 billion into infrastructure and education projects in 2014 and turning off the $1.2 trillion worth of sequestration cuts. It was defeated 253-165.

The party’s left wing offered two proposals. The CPC’s “Back to Work” budget started with the assumption that the unemployment crisis is far more important than balancing the budget and hoped to generate nearly seven million jobs in the coming year with massive spending on the country’s decrepit infrastructure plus the rehiring of teachers, police, and firefighters laid off during the Great Recession.

The CPC plan embraces just about every major program the GOP disdains and whacks the ones the Republicans love. It protects Medicare, Medicaid and Social Security and aims to strengthen Obamacare by adopting a public option to compete with private insurance companies, among other health care reforms.

It slashes Pentagon spending, revokes subsidies for oil, gas and coal companies, closes down corporate tax havens, repeals the Bush tax cuts for families earning more than $250,000, levies a financial transaction tax for Wall Street traders, promotes a tax on carbon pollution and raises the income tax rate on millionaires (to 45 percent) and on billionaires (to 49 percent).

Because of the proposed tax hikes, the CPC budget planned to bring in $4.2 trillion in new revenue while increasing spending by nearly $3 trillion. The proposal failed big: 327 to 84.

The Congressional Black Caucus budget put the blame for the current deficit squarely on the Bush tax cuts and the recent fiscal cliff deal. It aimed to raise revenues by:

  • Cancelling the sequester
  • Limiting the deductions of corporate debt interest
  • Closing tax loopholes and incentives that move American jobs overseas
  • Taxing capital gains and dividends as ordinary income
  • Levying a financial speculation tax of .25 percent
  • Imposing a 5.4 percent surcharge on incomes over $1 million
  • Repealing the Bush tax cuts for incomes over $250,000, and
  • Ending the mortgage interest deduction for vacation homes and yachts.

It proposed to spend billions on infrastructure, education and jobs and to increase funding for almost every social service program of the federal government. It failed 305 to 105.

The Senate Budget

Most recently, the Senate on Friday debated the plan put forward by its Democratic majority. Budget committee chair Patty Murray (D-WA.) said: “The highest priority of the Senate budget is to create the conditions of job creation, economic growth, and prosperity from the middle out, not the top down.”

Thus, it aims to spend $100 billion on an infrastructure repair package to create jobs.

It also hopes to bring down the deficit slowly while protecting safety net programs for the poor and popular domestic programs that fund education, health research and law enforcement agencies. Tax revenues would increase by $975 billion over the coming decade, while spending will be cut by a similar amount. It promises a $693 budget deficit in 2014, dropping to the $400 billion range by mid-decade.

While the $3.7 Senate plan passed early Saturday morning on a 50-49 vote after long hours of voting on various amendments, its fate in the House is a fait accompli. It will die there soon – the sixth budget to go down to defeat.

What’s Next?

Regardless of all the time, money, work and energy expended on these competing budget proposals, Congress is essentially back to square one.

And over the next few months, we’re likely to witness Washington’s continuing inability to govern as intelligent compromise eludes the various factions wedded to their parochial points of view.

Also likely is the probability that the White House will have to offer its own budget proposal, the seventh in the series. Even if it does, it too is fated to go down to defeat in the House.

The box score then will show 0-for-7 — and the year is only three months old.

If 0-7 was your favorite team’s spring training record, what would you expect during the regular season?

We do know one thing, however. At some point, there will be a “1” at the start of that Congressional record. The question is how many more partisan-crafted plans does Congress have to go through to get there?

Feds’ Handling of Big Banks Means Unequal Justice for All

If anyone in America still has faith in the quaint notion, enshrined in the Pledge of Allegiance, that we live in a country where there is “justice for all,” it should have been put to rest last week. That’s when U.S. Attorney General Eric Holder, the country’s chief law enforcement officer, admitted to a Senate banking committee that the Justice Department now believes that too-big-to-fail banks are also too-big-to-jail:

“The size of some of these institutions [is] so large that it does become difficult for us to prosecute them . . . [and] if you do bring a criminal charge, it will have a negative impact on the national economy, perhaps even the world economy.”

Holder’s admission came just a few weeks after Lanny Breuer, the recently departed assistant attorney general for the Justice Department’s criminal division, admitted that even though large British Bank HSBC confessed that it broke several U.S. laws by laundering money for parties in Iran and Libya on behalf of Mexican drug lords, it too will escape criminal prosecution:

“Had the U.S. authorities decided to press criminal charges, HSBC would almost certainly have lost its banking license in the U.S., the future of the institution would have been under threat and the entire banking system would have been destabilized.”

The Justice Department Tosses in the Towel

So there you have it: tacit confirmation from the government’s top two law enforcers that if you are one of the planet’s major money movers, you can ride roughshod over any law, regulation or legal limit to your activities.

The big banks are now the new “Untouchables,” their very size insulating them from any repercussions for criminal behavior.

No matter that the financial collapse and the economic crisis that started in 2007 largely because of the reckless actions of these same Wall Street banks will cost the country more than $12.8 trillion between 2008-2018. Don’t take my word for it, that’s according to a report by the non-profit, non-partisan organization, Better Markets.

No matter that an “epidemic of fraud” (the FBI’s words) created a giant sinkhole in the American economy, taking millions of John and Jane Does down with it.

No matter that the big banks engaged in schemes and scams, peddled mortgage securities they knew were garbage, gamed the interest rates for their own profit, laundered drug money, traded with sanctioned countries in contradiction to U.S. statute and illegally threw people out of their homes.

None of it seems to matter – not one CEO, CFO, bank president or financial officer has been jailed, much less arrested or indicted.

In fact, in the five years since the economy imploded, virtually nothing has changed: big banks are getting bigger and executive bonuses have also metastasized — all while millions of Americans lost homes, jobs and likely their faith in the nation’s laws and institutions.

Big Banks Will Continue their Bad Behavior

What’s next from the banksters of Wall Street? Well, once you have that get-out-of-jail-free card in your wallet, you’re pretty much incentivized to engage in the same criminal activities that tanked the economy in the first place, aren’t you?

And to add insult to injury, not only will you not be held responsible for your crimes, chances are just as good that if you screw up again — which you will, since nothing has really changed — you will get bailed out once more by a government that has evidently ceded its moral authority to the pursuit of your profligacy.

Two Systems of Justice

The Justice Department’s abdication of its main reason for existing — the enforcement of the law without prejudice — cements the conviction that there are two systems of justice in America: one for the bankers and another one for the rest of us.

So much for justice for all.

Recently, Senator Elizabeth Warren (D-MA) laid bare the yawning gap between who gets busted for crime in America and who gets to walk, when she asked a panel of banking regulators — officials from the Treasury Department, the Federal Reserve, and the Office of the Comptroller of the Currency — why they all failed to shut down crooked banks.

Their answer was that their hands were tied. The Justice Department, they said, has not convicted any bank of a crime.

In response, the frustrated senator then pointed out the discrepancy between law enforcement’s vigorous prosecution of drug offenses as opposed to its lax pursuit of white collar criminality.

“If you’re caught with an ounce of cocaine, the chances are good you’re going to go to jail. If it happens repeatedly, you may go to jail for the rest of your life. But evidently if you launder nearly a billion dollars for drug cartels and violate international sanctions, your company pays a fine and you go home and sleep in your own bed at night. . . . [T]hat’s fundamentally wrong.”

Yes, senator, it is fundamentally wrong that breaking the law in America is OK for some and not for others.

It is fundamentally wrong that certain individuals who commit criminal acts can hide behind the corporate skirts of the big financial institutions that employ them and thereby escape punishment.

It is fundamentally wrong, and it spells the end of equality under the law in America.

Congress, White House Make Sure Sequestration Proves Murphy’s Law

It seems the only law Congress can get its head around these days is Murphy’s. You know, the one that states that: “If anything can go wrong, it will!”

Consider: we’ve just weathered the first few days of the sequester, the $85 billion “self-inflicted wound” (in President Obama’s words) that Washington was supposed to have avoided at all costs but did not because there wasn’t a large enough quorum of adults in the Capitol capable of rising above their picayune pettifoggeries.

All the dire predictions of economic Armageddon are now being downplayed, with Minority Leader Mitch McConnell calling the across-the-board spending cuts “modest” and House Speaker John Boehner calling them “silly.”

Boehner added: “I don’t think anyone quite understands how the sequester is really going to work.”

Regardless, these austere budgetary contractions couldn’t have come at a worse time.

No matter how silly and non-understandable sequester has become in the newly muted language of its perpetrators – “Sorry, officer, tee-hee, I didn’t know the gun was loaded, but, anyway, it’s a very, very small bullet” – even the most brazen of minimizers can’t deny that this act of running around with the safety off won’t cause the country some real pain.

And just when things were starting to look up. Really.

Good Economic News Was Coming

Don’t take my word for it. Here are some snippets from The Wall Street Journal on March 1, the day the cuts took hold:

  • “Americans late last year took on more debt for the first time since the throes of the recession, a sign consumers are feeling more comfortable borrowing after years of cutting debt to fix their finances.”
  • “Freddie Mac, buoyed by the housing market’s rebound and an improving economy, reported an $11 billion annual profit for 2012 on Thursday – its largest ever annual gain and first profitable year since 2006.”
  • “Among the positive signals for the economy, consumer spending advanced at a seasonally adjusted 2.1 percent rate, a more robust gain than in the third quarter . . .”
  • “The housing market, including spending on home improvements, advanced 17.5 percent in the fourth quarter, and business spending grew 9.7 percent.”
  • “Households spent money, business invested, and the housing market surged . . . indicat[ing] the core of the economy was in good shape.”
  • “Blue chips charged to within striking distance of their record.”

That’s a lot of positive press – and in just one day – distilled from the Journal’s normally half-empty cup of journalistic ethos.

Congress Can’t Handle Good News

But then, there’s always Murphy’s Law, the lodestar that always seems to pull Congress into its maw.

Even the sequester minimizers — who once screamed “wolf” but recently bleated “lamb” — agree that the sequester could slash 750,000 jobs if not repealed. That certainly has to count as “anything that can go wrong.”

Wrong: the Federal Aviation Authority stands to lose $600 million in funding over the next six months, and may have to furlough air traffic controllers in as many as half of the nation’s airports.

Wrong: U.S. Navy officials said they would begin planning furloughs for civilian employees and delays to maintenance contracts.

The National Science Foundation expects to cut 1,000 research grants. The National Park Service may have to close some areas to the public. Education, child care, health services, emergency responders — all will take a hit.

Wrong, wrong and more wrong.

More Digging to Come

America has been trying to dig itself out of the economic doldrums for half a decade now. Many believe that the federal government hasn’t done enough to help.

And just when it appears we’re getting back to level ground, our leaders in Washington have decided to give us exactly what we don’t need: more shovels so that we can dig ourselves a little deeper.

Because in our nation’s capital, Murphy’s Law is the only one that gets passed.

Sequestration Cuts Likely Will Increase Airport Wait Times and Delay Tax Returns

If you are like every elected politician in Washington and have successfully ignored sequestration for the last 19 months, button up. The effects of the federal government’s disastrous financial policy are beginning to kick in.

Worse yet, another round of horrendous financial news is waiting on March 27, when the “Continuing Resolution” that currently funds government operations, expires. If that happens, it could mean shutdowns for all government offices.

More on that in a moment. Let’s start with today’s crisis: Sequestration.

As of March 1, the government is going to have to live on 98 percent of what it used to spend. That means 2 percent fewer services, contracts and aid for Americans who work for, work with or depend on the U.S. government to make their way in life.

Two percent may not sound like much, until you realize it amounts to $85.3 billion, which can fund a lot of jobs and programs. It means, among other things, longer delays trying to get through airports, fewer people available to do food inspections, suspended research in lots of scientific fields, and the release of hundreds of illegal immigrants from detention centers.

A Problem without a Solution

Those detainees actually were released earlier this week. Homeland Security said it didn’t have the money to house 300 or so detainees because of anticipated budget cuts, so they it them leave the centers with the promise they’d come back when it was time for their cases to be tried.

Republicans screamed loudly that this was an unnecessary political stunt done to embarrass them. Democrats screamed back that the Immigration and Customs Enforcement’s hands were tied because Republicans wouldn’t do anything about the budget cuts that sequestration is forcing.

And that’s how government works these days: Both sides blames each other for problems neither one wants to work at resolving.

Sequestration was part of the deal President Obama and Congress agreed to in August 2011 to start the process of reducing the budget deficit by $1.2 trillion over 10 years. Since then, they haven’t been able to agree on how to make it happen without simply cutting every program across the board.

Obama met March 1 with House Speaker John Boehner, House Minority Leader Nancy Pelosi, Senate Majority Leader Harry Reid and Senate Minority Leader Mitch McConnell to discuss the subject. Boehner described it as a “listening session,” meaning no one expected much to come from it.

In the meantime, most government agencies are scrambling to figure out what to do with 2 percent less funding.

Some areas – Social Security, Medicaid, Pell Grants, VA benefits, Defense Department spending on wars and military pay and benefits – are exempt from being cut. A few others, the Small Business Administration, Government Accounting Office, the Agency for International Development and Smithsonian Institution, anticipated the problem, reduced their spending well in advance and won’t need to impose layoffs or furloughs to make budget.

Who’s Affected the Most?

The rest of the government, however, is going to feel the pinch. So are the people who rely on those departments and agencies, most noticeably the people involved with the Federal Aviation Authority and Transportation Security Administration. Those two agencies provide the manpower that runs control towers and security screenings in the nation’s airports.

The FAA stands to lose $600 million in funding between now and Sept. 30, which could affect staffing in as many as 50 percent of the nation’s control towers. Big airports, like Chicago O’Hare, are preparing for flight delays averaging 44 minutes.

The TSA expects to furlough 50,000 officers and eliminate overtime for employees. Homeland Security Secretary Janet Napolitano, whose department includes the TSA, said wait times at airport checkpoints could be as long as four hours during the busy summer travel season.

Research firms – studying everything from cancer to new weapons programs – will take a huge hit as well. The Department of Defense estimates it will cut $300 million in projects between now and Sept. 30. NASA indicated it will cut $726 million.  The National Science Foundation said it would cut 1,000 research grants; and the National Park Service expects to hire fewer seasonal workers and close some areas to the public.

If you aren’t feeling the impact from all that, you will when you start looking for a refund on your tax return. The IRS likely is going to have to furlough some employees next month in order to absorb its share of the 2 percent cuts. Fewer people poring over the 240 million tax returns Americans will file this year, means a longer wait for those getting refunds.

Maybe worse news: There is another “fiscal” deadline approaching. Because the Senate has failed to pass a budget the last four years, the federal government is operating under something called a “Continuing Resolution.”

That resolution, or spending bill, provides the funding to all departments and agencies. It has to be renewed by March 27 or it could trigger a shutdown of all government offices.

Depending on how things go with sequestration between now and then, that might not be such a bad thing.

Obama, We Need President Who Can Lead and Not Blame

Government services, teaching positions, research projects and hundreds of thousands of jobs are about to be cut in another self-inflicted crisis in Washington – The Great Sequester – and what are the country’s leaders doing about it?

House Majority Leader John Boehner says it’s the Senate’s job to make it right. Senate Majority Leader Harry Reid says he’s thinking about it, but gee, don’t rush him. Senate Minority Leader Mitch McConnell says it’s the president’s problem to solve. House Minority Leader Nancy Pelosi says nothing on the matter, which might be a blessing by itself.

Sequestration is the end game (we hope!) of a series of financial calamities that have been going on since the summer of 2011. The sequester follows Debt Ceiling II, which followed Fiscal Cliff, which followed Debt Ceiling I in what is now 19 months of wasted opportunities for President Obama or some member of  Congress to stand up and lead.

Not one of them has the guts to step forward.

This is particularly galling behavior by Obama. Senators were elected to lead their state. Representatives were elected to lead their districts. Obama is the only one elected to lead the whole country, and he is shriveling so fast he’ll be crawling at roach level by the end of the week.

He started the series of hand-wringing messes back in July 2011 when he told Republicans he would veto any attempt to get rid of automatic spending cuts as part of the Budget Control Act. He wanted “cuts across the board” to force Congress into submitting reasonable spending cuts to go along with all the tax hikes he was getting.

Best Congress Can Do Is Punt

They didn’t submit spending cuts. In fact, they did what Congress has become really, really good at the past few years: They punted the ball.

They punted in the summer of 2011 when Debt I started this mess; punted again when the Fiscal Cliff deadline hit last Dec. 31; punted a third time when Debt Ceiling Crisis II came up Jan. 31 and are in punt formation again as the March 1 deadline approaches.

Clearly, Congress doesn’t want the ball.

Amazingly, earlier this week McConnell and other Republicans offered Obama the ball and told him to write up the rules for the game as he went. They wanted to give him full responsibility for choosing exactly what programs would be cut and to what extent. They essentially laid down and asked him to run over them.

He couldn’t have asked to be in a stronger position to lead! He is serving his final term. He can do whatever he wants and never worry that he won’t be re-elected. Want to take out a huge chunk of Defense spending? Have at it! Want to whack spending on Homeland Security or education or first responders or any of the thousands of other domestic programs? Whack away!

He could have changed his title to Emperor Obama, and the Republicans couldn’t say a word because they were the ones willing to give him power over all the money.

The Guy is a Wimp

Instead, he seized up like some terror-stricken 6-year-old. He ran out on the campaign trail and blamed Congress for the coming losses of teachers’ jobs and childcare programs and military cuts and long lines at airport security and on and on and on.

The term my high school buddies use for this sort of timid behavior is wimp, but that is being way too polite. Obama is a coward.

He has been catered to at every single stage of this 19-month journey, and we are no closer to a solution. Congress raised the debt ceiling and agreed to mandatory spending cuts for Obama in 2011. They gave him $600 billion in tax hikes on Jan. 1. They extended the debt ceiling again on Jan. 31, and offered him the knife to make discretionary cuts instead of across-the-board cuts in time for Friday’s March 1 deadline.

The best response Obama could come up with is to ask for some more tax money (or “revenues,” as he wimpishly calls it) and more time. Trimming $85 billion from a $3.5 trillion budget means cutting about 2 percent, and that can’t be done overnight. Or in 19 months.

Try convincing anyone that there isn’t 2 percent of fat everywhere in the federal budget. Only a coward would run from that kind of opportunity.