POACHEDonline

The myth of free banking

The joke is part of American comedian Emo Phillips’ stand-up. It is a papraprosdokian, Greek for ‘beyond expectation’; an ostensibly innocuous build up guides us in, a sinister punchline swings out of a shadowy corner. Known in comedy circuits as the ‘garden path gag’ its a favourite amongst satirists, and it seems, bankers.

For a decade since the last decade in which the economy imploded, as consumers we have been encouraged down ill advised financial paths to unmanageable debt. Meanwhile, well-dined bodies in bespoke suits have been racing from London’s Square Mile and New York’s Wall Street in Porsches for second homes in the country. Now, as the global economic down turn tightens its grip millions of people are choking on the credit spoon fed to them by high street advisors, credit mustered out of thin air by the big stock market players enjoying massive profits by risking our security to satisfy their own greed. Individuals eager to safeguard their futures with home ownership are suffering if not repossession crippling debt as banks demand contractual obligations be met regardless. But as the recent trend towards state bail outs of private lenders, and their insurers, is demonstrating, financial institutions are exempt from the accountability they impose on the rest of us. The grim reality is galling; we now have no choice but to pay the poison sellers for their antidote.

Do As We Say Not As We Do

Banks and the transactions that pass through them penetrate too deeply into our lives for governments able to prevent their bankruptcy not to do so, if it comes to that. Even if we are not in debt they hold our savings; cheques and debit cards are worthless if the bank whose name they carry can’t guarantee a release of funds. With that level of immunity, and therefore power, must come the highest level of responsibility. But banks are private corporations, not elected governments held accountable by voters. Despite assurances during the boom years that our power as consumers to tart around from one interest free credit card to another, transferring our steadily increasing negative balances, would act as the best, and only necessary, watchdog of financial practices, it seems the total power invested in banks was corrupting them totally. And we have to pay for their excesses. Interest on what were sold as low rate loans and mortgages has rocketed as lenders try to fill holes they have created by over speculation from our pockets. Millions have been wiped off the value of pension funds joined by the prudent, and gambled by the reckless. Money we have given up to the government as tax to educate, heal, rehabilitate, and keep us during old age is being sucked into state sponsored rescue packages and nationalisation.

Lucky for us we still have free banking.

Back in 2005 some British customers rebelled against the banks’ practice of charging up to £40 a pop for unauthorised overdrafts, failed cheques or returned direct debits, and demanded reimbursement. To silence these initial trouble makers, the banks gave in. By spring 2006 the media had got hold of the story. The resulting publicity encouraged tens of thousands of account holders to write to their banks asking for money paid in exorbitant fees back. Faced with the prospect of laying out billions in reclaims, the industry threatened that if campaigners were to succeed in their attempts to claim back up to six years of past charges it would spell the end of ‘free banking’.

Around the same time a similar, longstanding insurgence against the all powerful banking cartels was rising to a head across the Atlantic, and American account holders were also told they had never had it so good. Fritz Elmendorf, VP of Communications for the not-for-profit Consumer Bankers Association, (a US trade organisation representing financial institutions offering retail lending and services like credit cards, mortgages, student and small business loans) said: ‘Banking was never free because [prior to deregulation] consumers were not getting a market rate on their savings and were paying a lot more for loans.’ Elmendorf was quoted in 2002, in a CNN Money article highlighting fees as a product of the increased competition faced by US banks after deregulation. Fees, argued advocates, represent a fairer banking model; those who cost the bank money through unauthorised borrowing pay penalties, while everyone else enjoys current accounts at no cost.

Stephen Rotella, President and Chief Operating Officer of Washington Mutual, the largest savings and loans association in the US, disagrees. Speaking to USA Today in March 2006 he warned: ‘A lot of banks are claiming to have free checking. What you’ve found is there are a lot of barriers and hooks for consumers.’ Barriers like minimum balance requirements and hooks like temporarily low interest rates on overdrafts or balance transfers to their credit card; enticements to buy now and worry later, when whatever you bought is costing you significantly more in repayments than the price paid by people able to pay outright that day in cash.

Watch Your Pockets

For UK customers at least, Rotella’s concern has since been upheld by the British judiciary. Far from being intrinsic to the fabric of fairer banking, in late April 2008 a British High Court judge confirmed that UK banks’ penalty charges are subject to the same fair practice rules as the rest of their products, services, terms and conditions. The banks have been given leave to appeal the decision. Currently the UK Office of Fair Trading is determining whether the fees are actually unfair.

Pre-emptive of an unfavourable decision, banks are now saying that if they can’t take money out of the pockets of those who exceed their agreed limits, often by as little as £5, via a series of hidden charges they will take money from all our pockets. The move seems designed to divide those in credit against those in debt (or who simply forgot to cancel a direct debit). What our financial institutions neglect to mention is that our global banking system is anything but free. And as usual the poorest pay the most.

There’s nothing funny about the current economic crisis, which is why we don’t let comedians make our financial decisions. Why then can bankers get away with telling us that we enjoy ‘free’ use of their services when the reality is that we pay them while we diligently look after their fabricated credit, and pay them even more when they piss our real money up a wall in the South of France? Bankers receive huge annual bonuses based on the number of deals they make, bonuses which are theirs to keep irrespective of how the market performs. And funding the extravagant lifestyles those bonuses afford are the family now living in at best in cramped temporary sheltered accommodation.

Crime And Punishment

‘Council War To Flush Out Benefit Cheats’. It is the front page splash of the Stratford and Newham Express, my local weekly. The article reports how a local man in his fifties has ‘received a suspended jail sentence for dishonestly obtaining nearly £14,500 in benefits.’ He must pay back the money, plus £350 in court costs. The man’s name and address are included next to his crime. Justice is done; taxpayers deserve to expect that while they support the welfare state through taxation, the system must not be abused for private gain. The Plaistow man got less than £15,000, which he has been ordered to return. When will we as taxpayers be reinbursed the £50 billion it cost to nationalise the mismanaged Northern Rock?

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Banking Crisis Timeline (source: BBC): http://news.bbc.co.uk/1/hi/business/7521250.stm

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‘Bank failures are caused by depositors who don’t deposit enough money to cover losses due to mismanagement.’

Dan Quayle, US 44th US Vice President under George Bush (1989-93). b.1947

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‘I hate banks. They do nothing positive for anybody except take care of themselves. They’re first in with their fees and first out when there’s trouble.‘

Earl Warren (US Republican Politician and Judge, 1891-1974)

Why can’t we mention that Sarah Palin’s daughter got preggers and isn’t getting rid?

This must be a liberal blog, you’re thinking; three lines in and there’s unequivocal indecisiveness. Well by that mark, the Republican Party are going liberal too. At least on some things. Like teen pregnancy. Conveniently. Tuesday’s papers reported how party supporters - dominated by the religious right who preach no sex before marriage - are rallying round Sarah Palin and brood, with some even going so far as to say that the revelation has endeared the Alaskan senator, a largely unknown figure before McCain’s endorsement, to voters who now see her as an ordinary American facing the everyday challenges of parenting teenagers. Amongst these Bristol Palin’s defence amounts to the ever handy conservative fall back refrain, ‘at least she’s keeping it’. This applause for heroic stoicism seems more than slightly superficial, however, not least because the ferociously pro-life Mrs Palin has stated publicly that even if her daughters became pregnant through rape she would force them to continue with the pregnancy, making it highly unlikely that abortion was an option for the seventeen year old, regardless of her own thoughts on the issue. As it stands, the soon to be father, Levi Johnston, a self-described “redneck” who doesn’t “want kids”, is due to marry Miss Palin in the near future (Mrs Palin herself eloped with her high school boyfriend, Todd). So that’s alright then. And, as my housemate pointed out, who cares anyway what her and her hick boyfriend got up to behind the moose sheds? According to both McCain and Democratic hopeful Barack Obama, nobody should. In fact we are being told that we shouldn’t even discuss it. The families of Presidential or Vice Presidential candidates, we are being told, are ‘off limits’. Begging the questions, where, and since when?

Answers: nowhere and never. Pressuring the media to keep mum over Bristol’s pre-wedding bump is especially absurd in a political scene that devotes huge amounts of energy, and disgusting amounts of money, to marketing their politicians as worthy of their office by virtue of their whole ’story’, from birth (or even before) to now. In speech after debate after speech the onus is on candidates leading from the front, by example. As an important indicator of the consequences of such leadership, according to the focus of the campaigns, their domestic harmony is an integral part of this. Obama, who has publicly condemned drawing Sarah Palin’s children into the political spotlight, parades his very young daughters around the Democratic circuit, most recently at the National Democratic Party conference, where one piped up ‘I love you daddy’ in front of a crowd of 75,000, luckily with microphone in hand. Obama is often criticised for failing to connect with ‘ordinary’ Americans. Perhaps instead of this saccharine display he would have been better off getting his youngest to whinge a bit about not getting her favourite Bratz doll on her birthday. As it was, the message was clear and deliberate; a well loved father (or mother), able to raise (train?) stable, confident, articulate, children will be able to translate that private success into a public one for the nation’s young and old alike. It is a model to which the Republicans traditionally adhere even more zealously than the Democrats, positing their candidate as the nation’s father and repeating the phrase ‘the importance of family values’ like a mantra, second in holiness only to the joint firsts of nationhood and a belief in god. Bill Clinton’s lack of concern for his family, demonstrated by his extra-marital affair, very nearly got him impeached, (not his laying waste to Serbia, or his failure to secure peace in the Middle East) and almost certainly helped grease George W. Bush’s path to the Presidency, on a platform of, yes, you’ve guessed it, bringing good old fashioned family values and god back to the White House.

Dirty Nappy Democracy

Yet never before in this fight to champion family values have the Republicans, or the Democrat Party for that matter, found so much compassion for unwed teenage mothers. It is painfully clear that for both parties this sudden rush of empathy has nothing to do with moving their ideological goalposts, and everything to do with their quest for power, making current displays of understanding particularly putrid in their hypocrisy. The Republicans, traditionally vociferous in their opposition to any domestic situation outside the order of marriage, kids, then death, come off worse by saying it doesn’t matter because it instantly seems they are saying that it doesn’t matter because she’s one of ours. Would Sarah Palin and her daughter be treated so well by the GOP if they were poor anonymous Latinas (who have the highest teen birth rate of all major ethnic groups in the US)?

That is not to say that Bristol and Levi should be hounded or humiliated by anyone at all, least of all politicians and the media (who finger wag at other people’s children enough). Or that Sarah Palin should be vilified as a terrible mother because her daughter has disregarded her right-wing, fundamentalist Christian stance on sex, and children - even if Bristol and Levi marry before the birth, Mrs Palin’s pro-life position affirms life begins at conception - before marriage. And arguing that if you can’t convince your immediate family of the merits of your political beliefs how are you going to convince a nation of 305 million, is not only too simplistic, it seriously misses the point. Just as the Palins should not suffer unduly because of this revelation, neither should the Alaskan governor gain political capital out of what can not have been anything other than a mistake, however much joy, as Mrs Palin was quick to point out during her speech on Wednesday night, that mistake might eventually bring. Every developed nation in the world is trying to cut its teen pregnancy rate, including the United States. While the latest figures show that the number of American teenagers becoming pregnant dropped 38% from 1990 to 2004, the US still has by far the highest teen pregnancy rate amongst industrialised nations.

But what’s wrong with being a young mum? Lots according to The National Campaign To Prevent Teen and Unplanned Pregnancy (NCPTP), a privately funded organisation, founded and operating in the US, that monitors sex education programs. Its website states, ‘if more children in this country were born to parents who are ready and able to care for them, we would see a significant reduction in a host of social problems afflicting children in the United States, from school failure and crime to child abuse and neglect.’ Kids Having Kids, a 1996 report by the Robin Hood Foundation, an organisation targeting poverty in New York City, showed that compared to their non-pregnant peers teen mothers were 60% less likely to complete high school, with only one-third receiving a high school diploma. Included in this report are findings from another paper (Jacobsen and Maynard 1995) highlighting the fact that ‘80% of young teen mothers received welfare during the 10 years following the birth of their first child; 44% of them for more than 5 years.’

Poverty - Keep It In The Family

These depressing statistics have barely changed in the decade since they were published. The vast majority of America’s teen mothers currently end up living on state handouts. The cost of this situation is three fold. Firstly to the parents (although generally this equates to the mother singly), who, with only a basic education and a child to raise, are subject to severely restricted job prospects, consequently limiting their chances of professional fulfilment or financial independence. Secondly to the child. ‘The poorer outcomes associated with teenage motherhood also mean the effects of deprivation and social exclusion are passed from one generation to the next.’ This is the assessment of Nottingham City Council, which in 2006 had the third highest teenage conception rate in the UK. That ’special relationship’ between America and Britain sees the two countries interests dove-tailing again; the UK has the worst rate of teen pregnancy in Western Europe.

The final cost of teen pregnancy is to society. In the US the costs incurred by the state because of teenage fertility - including welfare and food stamp benefits, medical care expenses, lost tax revenue (teenage childbearing affects the parents’ work patterns), incarceration expenses, and foster care - runs to an estimated $6.9 billion dollars annually. And even after all this the full price of becoming pregnant too early (generally defined as before the age of 17, the same age as Bristol Palin) isn’t fully calculated unless the increased physical risks to both mother and baby are also taken into account. Research by Dr Heather Dryburgh for neighbouring Canada’s National Statistics Agency cites a 1999 report stating that, ‘[c]hildren of teenagers are more likely to have low birth weights, and to suffer the associated health problems.’ Dr Dryburgh’s report continues, ‘[p]regnant teens themselves are also at greater risk of….anemia, hypertension, renal disease, eclampsia and depressive disorders. As well, teenagers who engage in unprotected sex are putting their own health at risk of sexually transmitted infections.’

Dummies, Or Pacifiers?

Naturally governments and health professionals are keen to prevent this horror reel of consequences perpetuating. The vast majority of experts agree that the best, most reliable way to avoid teen pregnancy and its many associated problems is by delivering a comprehensive sex education and by the provision of contraception. What does Sarah Palin support? Teaching abstinence-only in schools. An extensive study authorised by the US Congress in 1997 and published last year revealed that abstinence-only sex education programmes failed to keep children from having sex. On contraception, its effects at encouraging teens to take pre-cautionary measures before having sex are zero, although the report goes on to say that an abstinence-only education did not decrease condom use amongst sexually active young people. Talking about the study’s findings to American newspaper The Washington Post Sarah Brown, executive director of the NCPTP, said the results support those of previous studies. “The most effective programs are those that say abstinence is the best choice but birth control and protection are also worth knowing about.” Martha Kempner, an official at the Sexuality Information and Education Council of the United States, echoed the need for more that just an abstinence-only syllabus. “Comprehensive education means teaching about abstinence and a myriad of other topics [including] contraception, critical thinking, one’s own values and the values of your family and your religious community.” Kempner’s final assessment is unequivocal: “Abstinence-only was an experiment and it failed.”

Palin is not alone in her support of this failed programme. Placing her in the second most powerful seat in US government would serve to galvanise those in favour of continuing this dangerous experiment in ineffective education on America’s children. Of course, Governor Palin can afford to ensure that her daughter and future grandchild receive the best medical care available at all stages during and after pregnancy. Bristol Palin will not be forced to live on meagre handouts from the state, and with money for home tutors and child care it is unlikely that having a child will stop her from continuing her education or pursuing a career, if she wishes. Nor will she watch her child enter into a cycle of poor opportunities and future poverty. As much as they try to sell it to voters, pregnant or not the Palin’s comfortable lifestyle does not represent that of the majority of the American public, least of all teen mothers. Instead of trying to gag discussion about Bristol Palin’s unintended pregnancy, the annoucement should be used as an opportunity to grill politicians on what they intend to do to stem this growing problem amongst the general population. In the immortal words of Salt ‘n’ Pepper, its time for Americans to demand of their politicians, ‘Let’s talk about sex, baby.’

Rain Man needs more fire

OK, so it was opening night, making nerves as natural as overpriced drinks at the theatre bar. The crowd could not have been more supportive, though. Laughter and applause interrupted Dan Gordon’s stage version of Barry Morrow & Ronald Bass’ 1988 Oscar winner Rain Main in places it perhaps really shouldn’t have, as the (overwhelmingly female) audience rushed to make Hartnett feel appreciated in his theatre debut . Unfortunately, he rarely seemed able to translate this encouragement into a confident portrayal of wheeling dealing self-centred yuppie, Charlie Babbit. Despite always looking as though he was trying hard, somehow things just didn’t come together for the film actor; a lack of chemistry between him and Mary Stockley, playing the character of his on/off girlfriend Susan, (who looked both at ease on stage and in her role), didn’t help. Probably neither did a few line problems early in the first half, one of which resulted, bizarrely, in Hartnett name dropping ‘Brad Pitt’ mid rant. The Apollo is hardly cavernous, but while subtle shifts in tone and volume work fine on film, more projection is needed for a packed house, and to impact on the nose bleed section of the balcony. None of this is to suggest that Harnett has over-reached, however. His performance strengthened steadily throughout the second Act, and the scenes set in Las Vegas, where the emotional barrier between the Babbit brothers becomes thinnest, were touchingly acted by both Harnett and Adam Godley, who plays tooth-pick counting autistic savant Raymond Babbit. Godley’s perfomance was credible throughout, even if his movements bent too much towards that of a shuffling geriatric. The play’s laughter lines, most of them from Godley, consistently hit their deadpan mark, and an energetic supporting cast of doctors, hookers, waitresses and policemen hint at societal pressures beyond the immediate relationship between Charlie and Raymond. Arguably it is the strength and on stage experience of the rest of the cast which puts Hartnett’s lack of it into sharp relief. If anything he seemed just too much of a nice bloke right from the start. No doubt as the play’s run progresses and Harnett’s confidence grows - and he starts to suffer the wrath of a rain soaked British winter - that will all change.

Rain Man is at The Apollo until 20 Dec 2008. http://www.apollo-theatre.co.uk/