Today marks day four and counting without power in my house. Hurricane Irene passed through early Sunday morning and tore up the area’s electrical grid. Initial reports were that over 850,000 customers were without power in the immediate aftermath of the storm. I’m not sure how customers are counted. Is a customer just the account holder, or the actual number of people using that account? In our household we have one account holder, but a total of five persons living in the house. If on average each account holder represents about three electricity users than 3 x 850,000 or 2.55 million people are without electricity. That is almost half of Maryland’s 5.5 million people, and there is no firm timetable for complete restoration of services.
The primary causes of the power outages are fallen trees and tree limbs. For the most part the electric poles and wires withstood the winds. But the wires cannot withstand trees being dropped on them. Maryland, including Baltimore County and City (where I live and work) is heavily forested, so almost all power lines have nearby trees. Several years ago Baltimore Gas & Electric (BG&E) decided to be “proactive” about the hazards that trees pose and sent crews out to trim back tree branches along their right-of-ways. However, as is often the case, the corporate policy makers don’t think through the real-world consequences of their policies. On my property, BG&E’s policies have increased, rather than reduced, the hazards to their power lines. I’m certain that my property is not unique.
The back edge of my property is along a BG&E right-of-way for power lines that feed many of the houses in my neighborhood. Several years ago, I returned home to find BG&E workers high up in the large mature oak trees at the end of my yard, cutting off the branches jutting out in the direction of the power lines. I asked them immediately to leave which they did, but it was too late. The damage had been done.
The tree trimmers insisted that lopping off branches would not harm the trees. That might be true if the trimmers took proper precautions, but it was clear to me that was not the case. The workers simply moved along the right-of-way, from one tree to the next, and did not stop and clean their cutting tools after each tree. There is a fungus in the area that attacks oak trees, and I had already lost several large oak trees in my yard to the fungus. I had to have the remnants of these trees cut down and removed, which is very expensive. A sure way to spread the fungus would be to do exactly what these tree trimmers were doing.
I’m sure that when trimming thousands of trees it would be tedious and time consuming to thoroughly clean cutting tools after every tree. I’m sure that my dentist finds it tedious and time consuming to clean dental instruments after every patient. However, not doing so is guaranteed to spread disease. The large oak trees, clearly many decades old, that BG&E trimmed, caught the fungus and died within a couple of years.
The trees are far from my house and no threat to anything but BG&E’s power lines. I have left them up because it would very expensive for me to have them removed (thousands of dollars), and they were perfectly healthy trees before BG&E mangled them. Through the years the wind and rain have stripped off most of the branches and bark.
Early this summer I called BG&E to explain that the trees are likely to fall on their power lines and recommended that a crew be sent out to remove them. The person answering the phone asked if the trees were touching the power lines. I said no, but I explained that when the trees do fall the power lines would be brought down. The BG&E employee told me that the trees have to be touching and putting tension on the wires before action would be taken. That is BG&E’s policy for dead trees that pose a serious threat to power lines. In contrast, when these same trees were alive and healthy and little threat to the power lines, BG&E had work crews out hacking away at them.
The morning after the storm the first thing I looked at outside were the dead trees. They withstood Irene’s onslaught and are still standing. It will not be Irene, but some other storm in the future that will eventually take them and BG&E’s power lines down. However, thousands of trees throughout the area did fall. I can’t help but wonder how many of those fallen trees were victims not of the storm, but of BG&E’s inane tree trimming program. I also wonder if the tree trimming actually prevented any power outages. With so many people without power due to fallen trees, it is hard for me to imagine that BG&E’s tree trimming programing accomplished much of anything.
Trees are an important part of the environment in Maryland. Even if it were not prohibitively expensive, it would still be undesirable to remove every tree that threatens a power line. However, healthy trees are far less of a threat than dead trees. If BG&E wants to be better prepared for the next storm, they should focus removing the dead trees along their right-of-ways instead of creating more dead trees through careless tree trimming practices.
Wednesday, August 31, 2011
Sunday, July 17, 2011
My Suzuki Verona: Bait and Switch Warranty Repairs
One year ago I purchased a used 2005 Suzuki Verona with about 40,000 miles on the odometer. Because of the low mileage and less than seven-year age of the car, many of its parts remained under the power train warranty. However, I have discovered that getting Suzuki to perform a needed warranty repair is extremely difficult, very expensive, and has left me wondering if Suzuki is manipulating their customers in order to cover up serious safety issues arising from design flaws.
A risk in buying any used car is being saddled with someone else's lemon. My Verona is certainly a lemon. I understand now why Suzuki stopped making Veronas. The car has been nothing but trouble since I bought it. Over the past year, there has not been a period of longer than two weeks without the check engine light coming on and staying on for several days at a time. During those intermittent periods of engine trouble, the car hesitated when I stepped on the gas and then either suddenly accelerated or stalled. Needless to say it was challenging and dangerous to drive.
However, diagnosing and fixing the problem proved difficult. My mechanic did the obvious-replaced the spark plugs, located and replaced a defective ignition coil, changed an O2 sensor-but nothing solved the underlying problem of hesitation followed by either a sudden acceleration or a stall. My mechanic eventually realized that the problem was with the on board computer that controlled the operation of the engine. Every time the check engine light came on the diagnostic codes from the computer were different and contradictory.
His recommendation to replace the computer was both good news and bad news. The bad news: it is a $1000 part. The good news: it is still under warranty. However, my mechanic cannot perform warranty repairs, those can only be done by Suzuki dealers. My trip to a Suzuki dealer turned into an expensive and time-consuming odyssey that raised troubling questions about the company and its products.
The closest Suzuki dealer to my house in Reisterstown, Maryland, is Adams Suzuki, located in Fallston, Maryland, about 40 miles away. After a hair-raising drive-the car stalled at most of the red lights along the way-I arrived and explained that my mechanic had recommended a new computer installation to solve the engine problems. The service manager received the car and told me that I would be called after they did their own diagnostics.
The next day I was told that the wiring harness needed to be replaced. This is an expensive part ($597.15) and labor-intensive repair ($227.50), for a total of $876.38 after taxes and waste disposal fees were included, and the warranty does not cover the parts and labor. The engine and computer are warranted, but conveniently for Suzuki, not the wires connecting them. The dealer said the computer worked properly. I asked the service manager how she knew that the computer worked. She said that the computer would not generate diagnostic codes at all if it didn't work, an assertion my mechanic says is false. However, the dealership provided me with no other option but to replace the wiring harness. I reluctantly agreed, although I said that if a wiring harness replacement did not fix the car's problem I would expect my money back.
In the mean time I rented a car so that I could commute to work. Two days later on a Thursday, the dealer called me back to say that Suzuki had sent them the wrong wiring harness and that the repair would be delayed another two days. I said that I would be out of town for the next week, and I would pick up the car on the next Thursday morning (one week later).
The following Thursday morning I called, only to find out the repaired had just been started. The car would be ready Thursday afternoon, which forced me to spend more money on a rental car so that I could get to work. I asked for a 10% discount on the repair to offset the added expense. The service manager's reply was no. She said that it was not her fault that Suzuki shipped the wrong part the week before.
I picked up my car that Thursday evening and paid the $876.38. The car continued to hesitate and then lurch forward, although no stalls occurred. The check engine light came back on before I arrived home. I returned to complain. This time the computer diagnostic codes indicated a vacuum leak that the dealership claimed to have repaired about 30 minutes later. I again asked about the reliability of the computer, and I was assured that it worked. I was not charged for the repair because the manager said moving parts around during the wiring harness repair could have caused the leak.
I drove away and traveled about 3 miles before the check engine light came on again. I returned and this time the computer diagnostic codes indicated a problem with an O2 sensor, a part that I knew had been recently replaced. This time I spoke directly to the service technician who told me that O2 sensors fail frequently on Veronas, even relatively new ones. But, when I asked what was wrong with the O2 sensor, he discovered that the computer codes kept changing. First the O2 sensor was completely dead, then it was good, then it was sensing a "lean" mixture, then a "rich" mixture. I argued that a computer spitting out bad codes was a more likely explanation for the problem than an O2 sensor cycling between all four possible states.
But, the service technician told me that Suzuki's instructions were not to replace computers, even when that appeared to be problem, but instead to replace wiring harnesses. I asked why Suzuki was so convinced that the wiring harness was bad. He explained that the original wiring harness had design flaws that caused the wires to corrode and form intermittent connections that could cause the same kind of problems as a malfunctioning computer.
The technician said that the service department would provide an estimate for a new O2 sensor. But, I said I wanted the computer replaced before I agreed to spend any more money. If the computer spits out bad codes, I could replace parts one at a time forever. After all, there are hundreds of possible diagnostic codes the computer can generate. Reluctantly, the dealership agreed to order a new computer and replace it under the warranty agreement.
I returned a fourth time when the new computer arrived to have it installed. I have not had any problems with the car since the computer was replaced. The O2 sensor appears to work fine. Needless to say the $876.38 I spent on the wiring harness repair has not been refunded. The dealership argues that it was still necessary, and since the car did not stall afterward, the new wiring harness resulted in some improvement.
However, the experience raises some deeply troubling questions about Suzuki. If the original wiring harness design is indeed defective, it should be recalled. There is no question my car was dangerous to drive given its propensity to either lurch forward or stall when pressing the gas pedal. It appears that rather than issue a recall, Suzuki is instructing its dealers to replace the wiring harness and bill the customer for the expense, before doing needed warranty repairs.
I would not have traveled to a dealer 40 miles away for a non-warranty repair. My mechanic could have replaced the wiring harness cheaper, faster, and closer to my house. I would not have had to make four round trips (320 miles total) to the dealer and spend a total of $235.55 on rental cars to get to work. But my mechanic correctly diagnosed the problem as a bad computer and recommended that I have it fixed under the warranty. Between the repairs, rental cars, and travel expenses, I spent over $1100 on what should have been a no-cost warranty repair.
The car definitely needed a new computer. I still don't know if the car needed a new wiring harness, but if Suzuki is correct that it did, that raises deeply troubling questions about the safety of Suzuki products and integrity of its management. If it did not need a new wiring harness I should get my money back.
The sequence of events leads me to believe that I was a victim of a bait and switch. I brought the car to a Suzuki dealer for a needed warranty repair. But, before Suzuki would honor the warranty, the company insisted on selling me an expensive non-warranty repair. If the wiring harness repair was necessary because of possible design flaws, the part should be recalled. Suzuki should not be insisting that customers pay for its replacement before agreeing to do necessary warranty repairs.
A risk in buying any used car is being saddled with someone else's lemon. My Verona is certainly a lemon. I understand now why Suzuki stopped making Veronas. The car has been nothing but trouble since I bought it. Over the past year, there has not been a period of longer than two weeks without the check engine light coming on and staying on for several days at a time. During those intermittent periods of engine trouble, the car hesitated when I stepped on the gas and then either suddenly accelerated or stalled. Needless to say it was challenging and dangerous to drive.
However, diagnosing and fixing the problem proved difficult. My mechanic did the obvious-replaced the spark plugs, located and replaced a defective ignition coil, changed an O2 sensor-but nothing solved the underlying problem of hesitation followed by either a sudden acceleration or a stall. My mechanic eventually realized that the problem was with the on board computer that controlled the operation of the engine. Every time the check engine light came on the diagnostic codes from the computer were different and contradictory.
His recommendation to replace the computer was both good news and bad news. The bad news: it is a $1000 part. The good news: it is still under warranty. However, my mechanic cannot perform warranty repairs, those can only be done by Suzuki dealers. My trip to a Suzuki dealer turned into an expensive and time-consuming odyssey that raised troubling questions about the company and its products.
The closest Suzuki dealer to my house in Reisterstown, Maryland, is Adams Suzuki, located in Fallston, Maryland, about 40 miles away. After a hair-raising drive-the car stalled at most of the red lights along the way-I arrived and explained that my mechanic had recommended a new computer installation to solve the engine problems. The service manager received the car and told me that I would be called after they did their own diagnostics.
The next day I was told that the wiring harness needed to be replaced. This is an expensive part ($597.15) and labor-intensive repair ($227.50), for a total of $876.38 after taxes and waste disposal fees were included, and the warranty does not cover the parts and labor. The engine and computer are warranted, but conveniently for Suzuki, not the wires connecting them. The dealer said the computer worked properly. I asked the service manager how she knew that the computer worked. She said that the computer would not generate diagnostic codes at all if it didn't work, an assertion my mechanic says is false. However, the dealership provided me with no other option but to replace the wiring harness. I reluctantly agreed, although I said that if a wiring harness replacement did not fix the car's problem I would expect my money back.
In the mean time I rented a car so that I could commute to work. Two days later on a Thursday, the dealer called me back to say that Suzuki had sent them the wrong wiring harness and that the repair would be delayed another two days. I said that I would be out of town for the next week, and I would pick up the car on the next Thursday morning (one week later).
The following Thursday morning I called, only to find out the repaired had just been started. The car would be ready Thursday afternoon, which forced me to spend more money on a rental car so that I could get to work. I asked for a 10% discount on the repair to offset the added expense. The service manager's reply was no. She said that it was not her fault that Suzuki shipped the wrong part the week before.
I picked up my car that Thursday evening and paid the $876.38. The car continued to hesitate and then lurch forward, although no stalls occurred. The check engine light came back on before I arrived home. I returned to complain. This time the computer diagnostic codes indicated a vacuum leak that the dealership claimed to have repaired about 30 minutes later. I again asked about the reliability of the computer, and I was assured that it worked. I was not charged for the repair because the manager said moving parts around during the wiring harness repair could have caused the leak.
I drove away and traveled about 3 miles before the check engine light came on again. I returned and this time the computer diagnostic codes indicated a problem with an O2 sensor, a part that I knew had been recently replaced. This time I spoke directly to the service technician who told me that O2 sensors fail frequently on Veronas, even relatively new ones. But, when I asked what was wrong with the O2 sensor, he discovered that the computer codes kept changing. First the O2 sensor was completely dead, then it was good, then it was sensing a "lean" mixture, then a "rich" mixture. I argued that a computer spitting out bad codes was a more likely explanation for the problem than an O2 sensor cycling between all four possible states.
But, the service technician told me that Suzuki's instructions were not to replace computers, even when that appeared to be problem, but instead to replace wiring harnesses. I asked why Suzuki was so convinced that the wiring harness was bad. He explained that the original wiring harness had design flaws that caused the wires to corrode and form intermittent connections that could cause the same kind of problems as a malfunctioning computer.
The technician said that the service department would provide an estimate for a new O2 sensor. But, I said I wanted the computer replaced before I agreed to spend any more money. If the computer spits out bad codes, I could replace parts one at a time forever. After all, there are hundreds of possible diagnostic codes the computer can generate. Reluctantly, the dealership agreed to order a new computer and replace it under the warranty agreement.
I returned a fourth time when the new computer arrived to have it installed. I have not had any problems with the car since the computer was replaced. The O2 sensor appears to work fine. Needless to say the $876.38 I spent on the wiring harness repair has not been refunded. The dealership argues that it was still necessary, and since the car did not stall afterward, the new wiring harness resulted in some improvement.
However, the experience raises some deeply troubling questions about Suzuki. If the original wiring harness design is indeed defective, it should be recalled. There is no question my car was dangerous to drive given its propensity to either lurch forward or stall when pressing the gas pedal. It appears that rather than issue a recall, Suzuki is instructing its dealers to replace the wiring harness and bill the customer for the expense, before doing needed warranty repairs.
I would not have traveled to a dealer 40 miles away for a non-warranty repair. My mechanic could have replaced the wiring harness cheaper, faster, and closer to my house. I would not have had to make four round trips (320 miles total) to the dealer and spend a total of $235.55 on rental cars to get to work. But my mechanic correctly diagnosed the problem as a bad computer and recommended that I have it fixed under the warranty. Between the repairs, rental cars, and travel expenses, I spent over $1100 on what should have been a no-cost warranty repair.
The car definitely needed a new computer. I still don't know if the car needed a new wiring harness, but if Suzuki is correct that it did, that raises deeply troubling questions about the safety of Suzuki products and integrity of its management. If it did not need a new wiring harness I should get my money back.
The sequence of events leads me to believe that I was a victim of a bait and switch. I brought the car to a Suzuki dealer for a needed warranty repair. But, before Suzuki would honor the warranty, the company insisted on selling me an expensive non-warranty repair. If the wiring harness repair was necessary because of possible design flaws, the part should be recalled. Suzuki should not be insisting that customers pay for its replacement before agreeing to do necessary warranty repairs.
Saturday, April 30, 2011
The Republican Party: In The Twilight Zone
The ability to assert two mutually exclusive statements, as both being true, has been a requirement in politics for some time. But the cognitive dissonance within the Republican Party has gone off into the twilight zone.
The Republicans have threatened to not raise the federal debt limit unless the Democrats agree to substantial cuts in spending. This is equivalent to threatening to end a hostage standoff with a nuclear weapon. Obviously the United States government cannot default on its debt obligations because the worldwide economic catastrophe that would result would make the 2007-08 financial crisis look insignificant in comparison. A threat that can never be executed isn’t much of a threat at all.
Actually, it’s interesting to track where the federal largess that the Republicans so bitterly complain about goes. A USA Today article on April 25 ranks states in order of government benefits received. Heavily Republican states that voted for McCain in the 2008 presidential election tend to rank high on this list, meaning that they receive more government benefits than most states. For example, West Virginia ranks number 2. Some followers that voted Republican, with their rankings in parenthesis, are Kentucky (8), Mississippi (11), Arkansas (12), Alabama (14), and Louisiana (17). Why are the Republicans in those states so opposed to the benefits that they receive? Maybe they should be careful what they wish for.
On that note, I wish Ayn Rand were alive and giving interviews on her economic and philosophical theories. She is a cult figure in the Republican Party, especially among the Tea Party wing, for her advocacy of unfettered capitalism and ethic of rational self-interest. A new movie has just been released based on her novel Atlas Shrugged in which the capitalists are the heroes.
Actually, Ayn Rand, a Russian Jew who emigrated to the United States at the age of 21, was a committed atheist who opposed all forms of religion. To her, valid knowledge arose only from sense perceptions and human reason. She rejected all claims of knowledge obtained outside of the senses, such as divine revelation. It’s hard to imagine her going very far in today’s political climate as a Republican or a Democrat.
Although, some Republicans simply ignore inconvenient historical facts about their heroes. Maybe Republican Congresswoman and Tea Party favorite Michele Bachmann could re-write Rand’s biography in the same way that she re-wrote American history in a recent speech. She stated in regards to the U. S. Constitution that: “the very founders that wrote those documents worked tirelessly until slavery was no more in the United States.” Actually, many of the founders, such as George Washington and Thomas Jefferson, owned slaves. Not until after the Civil War, nearly 100 years later and long after the founders were dead, was slavery abolished.
On the other hand, if Ayn Rand did endorse Republicans her religious views might not matter. The Reverend Franklin Graham in an interview with Christine Amanpour says that Donald Trump could become his “candidate of choice” for president because “the more you listen to him, the more you say to yourself, you know, may be the guy’s right.” This was said in the same interview that Graham questioned Obama’s Christian faith. There was no discussion of Trump’s faith. Franklin Graham has since been clarifying his comments. I would advise him not seek help from John Kyle’s press agent for issuing clarifications.
John Kyle stated on the Senate floor that “well over 90% of what Planned Parenthood does” relates to abortion. When called out on that obvious falsehood, his office released a statement that “his remark was not meant to be a factual statement.” I checked the definition of the noun “lie” at dictionary.com and found this definition: “a false statement made with deliberate intent to deceive; an intentional untruth; a falsehood.” In other words, according to John Kyle’s office his statement on the Senate floor was a lie. Evidently John Kyle must have realized this too because he clarified his clarification by stating that he “misspoke.” As to the earlier statement released by his office, he said: “"That was not me - that was my press person.”
The upcoming presidential contest should be a great event for comedy writers. Unfortunately it’s going to be a very bad contest for the electorate who will have to listen to all this nonsense.
The Republicans have threatened to not raise the federal debt limit unless the Democrats agree to substantial cuts in spending. This is equivalent to threatening to end a hostage standoff with a nuclear weapon. Obviously the United States government cannot default on its debt obligations because the worldwide economic catastrophe that would result would make the 2007-08 financial crisis look insignificant in comparison. A threat that can never be executed isn’t much of a threat at all.
Actually, it’s interesting to track where the federal largess that the Republicans so bitterly complain about goes. A USA Today article on April 25 ranks states in order of government benefits received. Heavily Republican states that voted for McCain in the 2008 presidential election tend to rank high on this list, meaning that they receive more government benefits than most states. For example, West Virginia ranks number 2. Some followers that voted Republican, with their rankings in parenthesis, are Kentucky (8), Mississippi (11), Arkansas (12), Alabama (14), and Louisiana (17). Why are the Republicans in those states so opposed to the benefits that they receive? Maybe they should be careful what they wish for.
On that note, I wish Ayn Rand were alive and giving interviews on her economic and philosophical theories. She is a cult figure in the Republican Party, especially among the Tea Party wing, for her advocacy of unfettered capitalism and ethic of rational self-interest. A new movie has just been released based on her novel Atlas Shrugged in which the capitalists are the heroes.
Actually, Ayn Rand, a Russian Jew who emigrated to the United States at the age of 21, was a committed atheist who opposed all forms of religion. To her, valid knowledge arose only from sense perceptions and human reason. She rejected all claims of knowledge obtained outside of the senses, such as divine revelation. It’s hard to imagine her going very far in today’s political climate as a Republican or a Democrat.
Although, some Republicans simply ignore inconvenient historical facts about their heroes. Maybe Republican Congresswoman and Tea Party favorite Michele Bachmann could re-write Rand’s biography in the same way that she re-wrote American history in a recent speech. She stated in regards to the U. S. Constitution that: “the very founders that wrote those documents worked tirelessly until slavery was no more in the United States.” Actually, many of the founders, such as George Washington and Thomas Jefferson, owned slaves. Not until after the Civil War, nearly 100 years later and long after the founders were dead, was slavery abolished.
On the other hand, if Ayn Rand did endorse Republicans her religious views might not matter. The Reverend Franklin Graham in an interview with Christine Amanpour says that Donald Trump could become his “candidate of choice” for president because “the more you listen to him, the more you say to yourself, you know, may be the guy’s right.” This was said in the same interview that Graham questioned Obama’s Christian faith. There was no discussion of Trump’s faith. Franklin Graham has since been clarifying his comments. I would advise him not seek help from John Kyle’s press agent for issuing clarifications.
John Kyle stated on the Senate floor that “well over 90% of what Planned Parenthood does” relates to abortion. When called out on that obvious falsehood, his office released a statement that “his remark was not meant to be a factual statement.” I checked the definition of the noun “lie” at dictionary.com and found this definition: “a false statement made with deliberate intent to deceive; an intentional untruth; a falsehood.” In other words, according to John Kyle’s office his statement on the Senate floor was a lie. Evidently John Kyle must have realized this too because he clarified his clarification by stating that he “misspoke.” As to the earlier statement released by his office, he said: “"That was not me - that was my press person.”
The upcoming presidential contest should be a great event for comedy writers. Unfortunately it’s going to be a very bad contest for the electorate who will have to listen to all this nonsense.
Thursday, March 10, 2011
Closing My Bank of America Account: The Parable of the Ungrateful Servant
"Therefore the Kingdom of Heaven is like a certain king, who wanted to reconcile accounts with his servants. When he had begun to reconcile, one was brought to him who owed him ten thousand talents. But because he couldn't pay, his lord commanded him to be sold, with his wife, his children, and all that he had, and payment to be made. The servant therefore fell down and kneeled before him, saying, 'Lord, have patience with me, and I will repay you all!' The lord of that servant, being moved with compassion, released him, and forgave him the debt.
But that servant went out, and found one of his fellow servants, who owed him one hundred denarii, and he grabbed him, and took him by the throat, saying, 'Pay me what you owe!' "So his fellow servant fell down at his feet and begged him, saying, 'Have patience with me, and I will repay you!' He would not, but went and cast him into prison, until he should pay back that which was due. So when his fellow servants saw what was done, they were exceedingly sorry, and came and told to their lord all that was done. Then his lord called him in, and said to him, 'You wicked servant! I forgave you all that debt, because you begged me. Shouldn't you also have had mercy on your fellow servant, even as I had mercy on you?' His lord was angry, and delivered him to the tormentors, until he should pay all that was due to him." Matthew 18:23-35
I thought about this parable from the Gospel of Matthew as I closed my Bank of America account at the start of the New Year. I had a long-time checking account (for more than a decade) in which I had dutifully kept the $750 minimum balance to avoid a monthly maintenance fee. In December I received a statement that showed $14 missing. At that point I read more carefully the letter I had received from Bank of America on new fee structures. It explained that to avoid a $14 monthly fee I now needed a $1500 minimum balance. I did not like either choice-paying the $14 per month or adding another $750 to the minimum balance.
It is bad enough that the interest banks pay on deposited money is negligibly small. Now you must provide the bank with large amounts of free capital or your deposited money will be appropriated. Prior to the 2008 financial crisis, institutions such as Bank of America generated large amounts of revenue from usurious interest rates on credit cards and hefty fees for overdrafts and late payments. However, new laws forbidding some of the more egregious practices have sharply curtailed that revenue stream, so banks are instituting new fees to make up the difference.
I decided to shop for a new bank and I was struck by some advice given while conversing with a local businesswoman. "Never do business with a bank that has more than three branches. Banks with three or less branches are too small to be of much value to bigger banks, so there is little risk of a buyout." On hearing this advice, I remembered that I had never opened an account at Bank of America. I opened an account at a large regional bank that was bought by Bank of America. The same is true of another bank I do business with-M & T. I originally opened an account with First Maryland Bank, which was bought by All First, which then disintegrated in a currency trading scandal and was acquired by M & T.
I went to Farmers and Merchants, a small community bank with only three branches, all in northwest Baltimore County. They offered me totally free checking with no minimum balance. I opened a new account and the next day went to Bank of America and closed my account before any additional fees could be assessed.
There are, of course, some tradeoffs with switching to a small local bank. I can only visit the bank when I'm near my house, not anywhere in the country, which was the case with Bank of America. I can only have free use of an ATM machine at one of those three branches, anywhere else I have to pay a transaction fee. But, with proper planning and use of the Internet-even small banks offer online banking-these inconveniences should not be much of an issue. I have to ask myself, is $14 x 12 months, or $168 per year worth it for the additional accessibility Bank of America offers. I would never have the need to use ATMs far away from my house often enough to justify paying $168 per year to access Bank of America's nationwide ATM network. If I have to do that occasionally, I'll pay the $2 transaction fee.
When I closed my account at Bank of America, the manager noted that I had been a long-time customer and asked my reason. I told her that I was unhappy with the new fees being imposed. I said that it reminded me of the parable of the ungrateful servant. She didn't seem to understand the biblical reference. She handed me the cash for the remaining funds in my account and had me sign for it. No counter offer or apology for the new fee structure was made.
Bank of America and the other large banks created an unsustainable business model that generated revenue from high fees and usurious interest rates on high-risk loans. When the model failed they were shielded from the market consequences with billions of dollars in taxpayer bailouts on the condition that they end many of the practices that caused the failures. But it appears that rather than comply with the intentions of the new law, Bank of America is looking for loopholes in order to revive their old business model.
Of course, the large banks insist that even though they are exempt, all their customers should abide by the rules of the market place. That being the case, I think we the customers need to shop more for banking and ignore much of the slick marketing. We also need to overcome our inertia and be willing to change banks when market conditions change. It is easy to close an account and open a new one at another institution.
Ask yourself, if I were shopping for a bank today and considering all the available options, would I choose the bank that I currently have? If the answer to that question is no, then it is time to change banks. Look around and you will find many community banks and credit unions that offer excellent services at fair prices.
When I think about it, there is really no reason for Bank of America and its ilk to even be in business. In fact, if not for the billions of dollars in bad debt forgiven by the taxpayers, they would not be in business. But, Bank of America was not about to forgive the new fees they were imposing on me. It is time for customers to stop paying for all the lunacy and take their business elsewhere.
But that servant went out, and found one of his fellow servants, who owed him one hundred denarii, and he grabbed him, and took him by the throat, saying, 'Pay me what you owe!' "So his fellow servant fell down at his feet and begged him, saying, 'Have patience with me, and I will repay you!' He would not, but went and cast him into prison, until he should pay back that which was due. So when his fellow servants saw what was done, they were exceedingly sorry, and came and told to their lord all that was done. Then his lord called him in, and said to him, 'You wicked servant! I forgave you all that debt, because you begged me. Shouldn't you also have had mercy on your fellow servant, even as I had mercy on you?' His lord was angry, and delivered him to the tormentors, until he should pay all that was due to him." Matthew 18:23-35
I thought about this parable from the Gospel of Matthew as I closed my Bank of America account at the start of the New Year. I had a long-time checking account (for more than a decade) in which I had dutifully kept the $750 minimum balance to avoid a monthly maintenance fee. In December I received a statement that showed $14 missing. At that point I read more carefully the letter I had received from Bank of America on new fee structures. It explained that to avoid a $14 monthly fee I now needed a $1500 minimum balance. I did not like either choice-paying the $14 per month or adding another $750 to the minimum balance.
It is bad enough that the interest banks pay on deposited money is negligibly small. Now you must provide the bank with large amounts of free capital or your deposited money will be appropriated. Prior to the 2008 financial crisis, institutions such as Bank of America generated large amounts of revenue from usurious interest rates on credit cards and hefty fees for overdrafts and late payments. However, new laws forbidding some of the more egregious practices have sharply curtailed that revenue stream, so banks are instituting new fees to make up the difference.
I decided to shop for a new bank and I was struck by some advice given while conversing with a local businesswoman. "Never do business with a bank that has more than three branches. Banks with three or less branches are too small to be of much value to bigger banks, so there is little risk of a buyout." On hearing this advice, I remembered that I had never opened an account at Bank of America. I opened an account at a large regional bank that was bought by Bank of America. The same is true of another bank I do business with-M & T. I originally opened an account with First Maryland Bank, which was bought by All First, which then disintegrated in a currency trading scandal and was acquired by M & T.
I went to Farmers and Merchants, a small community bank with only three branches, all in northwest Baltimore County. They offered me totally free checking with no minimum balance. I opened a new account and the next day went to Bank of America and closed my account before any additional fees could be assessed.
There are, of course, some tradeoffs with switching to a small local bank. I can only visit the bank when I'm near my house, not anywhere in the country, which was the case with Bank of America. I can only have free use of an ATM machine at one of those three branches, anywhere else I have to pay a transaction fee. But, with proper planning and use of the Internet-even small banks offer online banking-these inconveniences should not be much of an issue. I have to ask myself, is $14 x 12 months, or $168 per year worth it for the additional accessibility Bank of America offers. I would never have the need to use ATMs far away from my house often enough to justify paying $168 per year to access Bank of America's nationwide ATM network. If I have to do that occasionally, I'll pay the $2 transaction fee.
When I closed my account at Bank of America, the manager noted that I had been a long-time customer and asked my reason. I told her that I was unhappy with the new fees being imposed. I said that it reminded me of the parable of the ungrateful servant. She didn't seem to understand the biblical reference. She handed me the cash for the remaining funds in my account and had me sign for it. No counter offer or apology for the new fee structure was made.
Bank of America and the other large banks created an unsustainable business model that generated revenue from high fees and usurious interest rates on high-risk loans. When the model failed they were shielded from the market consequences with billions of dollars in taxpayer bailouts on the condition that they end many of the practices that caused the failures. But it appears that rather than comply with the intentions of the new law, Bank of America is looking for loopholes in order to revive their old business model.
Of course, the large banks insist that even though they are exempt, all their customers should abide by the rules of the market place. That being the case, I think we the customers need to shop more for banking and ignore much of the slick marketing. We also need to overcome our inertia and be willing to change banks when market conditions change. It is easy to close an account and open a new one at another institution.
Ask yourself, if I were shopping for a bank today and considering all the available options, would I choose the bank that I currently have? If the answer to that question is no, then it is time to change banks. Look around and you will find many community banks and credit unions that offer excellent services at fair prices.
When I think about it, there is really no reason for Bank of America and its ilk to even be in business. In fact, if not for the billions of dollars in bad debt forgiven by the taxpayers, they would not be in business. But, Bank of America was not about to forgive the new fees they were imposing on me. It is time for customers to stop paying for all the lunacy and take their business elsewhere.
Sunday, January 30, 2011
Political Posturing: Misdirection with Numbers
I've written a lot about misdirection with numbers in consumer advertising. But, the political posturing seen in Congress over the past two months takes misdirection with irrelevant numbers to a whole other level.
Consider all the indignation mustered on the Senate floor last month over the $8 billion in earmarks in a proposed bill. Let's put that number into perspective. The federal budget deficit hit a record $1.4 trillion last year. Eliminating the $8 billion in earmarks trims the deficit by 0.6%. While earmarks might be an unseemly practice, the dollar amounts are insignificant.
President Obama's federal pay freeze will save $60 billion. It's great political theater to require federal workers to tighten their belts along with the rest of the citizenry. But, that number is only 4.3% of the deficit.
In the mean time, Congress reached a painful "compromise" with a bill in which each side got what they wanted and no one had to pay. Republicans got their tax cuts while Democrats got their spending programs. In other words, voters have a choice between tax-and-spend Democrats or borrow-and-spend Republicans. It is no wonder that voters are angry. Most of us think that the word "compromise" means that each side has to give up something. This isn't a compromise at all.
To solve the government's fiscal problems will require looking at the numbers that matter, in particular the large numbers. As large it might sound, $10 billion is no longer a large amount of money in Washington. In fact $100 billion is no longer that large an amount. The significant amounts are measured in trillions of dollars and saving that kind of money requires overhauling programs that no one wants to touch.
The Bowles-Simpson commission made a sincere effort to propose significant deficit reduction, and few politicians of either party have embraced their proposals. Notice that their proposal will not eliminate deficits, just stabilize the problem. Their recommendations include:
* Reducing the yearly increases in Social Security
* Increase the retirement age
* Raise the Social Security contribution ceiling
* Eliminate the home mortgage interest deduction
* Raise the federal gas tax
* Increase Medicaid co-pays
These are just a few examples from a long list of recommendations, but what they all have in common is that no politician would ever dare support any of these actions. Unfortunately, these are the programs that soak up most of federal expenditures. I think Peter R. Fisher said it best in a 2002 speech when he was Under Secretary of the Treasury.
"Think of the federal government as a gigantic insurance company (with a side line business in national defense and homeland security) which only does its accounting on a cash basis - only counting premiums and payouts as they go in and out the door. An insurance company with cash accounting is not really an insurance company at all. It is an accident waiting to happen."
-Peter R. Fisher
Under Secretary of the Treasury
Remarks to the Columbus Council on World Affairs
Columbus, Ohio
November 14, 2002
Meaningful deficit reduction can only occur if we make an honest appraisal of where the bulk of the money actually goes. It isn't spent on the programs that Congressmen complain loudest about. In Peter Peterson's book Running on Empty: How the Democratic and Republican Parties Are Bankrupting Our Future and What Americans Can Do About It
, he wrote: that the parties have mortgaged our future "with reckless tax cuts, out-of-control spending, and Enron-style accounting." He wrote that warning in 2004- six years ago-and the problem has only gotten worse.
In Peterson's moral structure, it is unconscionable to leave this enormous debt to our children. Each generation should pay for its own expenses and excesses. Actually, I find it the height of hypocrisy that the attitude of our political leaders towards money goes against everything financial principle we seek to instill in our children. Lessons on delaying gratification in order to save and invest, so that resources will be available for unforeseen problems, are apparently lost on politicians.
The real problem is the constant framing of political debate in terms of absolutes. In today's hyper-partisan climate you are either for or against Social Security, for or against Medicaid, for or against taxes. Actually you can be for and against all of these things. There is no reason that we can't have Social Security, Medicaid, and taxation, as long as all the costs are within reason. In other words, we need to make real compromises, not fake compromises for the sole purpose of political theater.
Joseph Ganem is a physicist and author of the award-winning The Two Headed Quarter: How to See Through Deceptive Numbers and Save Money on Everything You Buy
Consider all the indignation mustered on the Senate floor last month over the $8 billion in earmarks in a proposed bill. Let's put that number into perspective. The federal budget deficit hit a record $1.4 trillion last year. Eliminating the $8 billion in earmarks trims the deficit by 0.6%. While earmarks might be an unseemly practice, the dollar amounts are insignificant.
President Obama's federal pay freeze will save $60 billion. It's great political theater to require federal workers to tighten their belts along with the rest of the citizenry. But, that number is only 4.3% of the deficit.
In the mean time, Congress reached a painful "compromise" with a bill in which each side got what they wanted and no one had to pay. Republicans got their tax cuts while Democrats got their spending programs. In other words, voters have a choice between tax-and-spend Democrats or borrow-and-spend Republicans. It is no wonder that voters are angry. Most of us think that the word "compromise" means that each side has to give up something. This isn't a compromise at all.
To solve the government's fiscal problems will require looking at the numbers that matter, in particular the large numbers. As large it might sound, $10 billion is no longer a large amount of money in Washington. In fact $100 billion is no longer that large an amount. The significant amounts are measured in trillions of dollars and saving that kind of money requires overhauling programs that no one wants to touch.
The Bowles-Simpson commission made a sincere effort to propose significant deficit reduction, and few politicians of either party have embraced their proposals. Notice that their proposal will not eliminate deficits, just stabilize the problem. Their recommendations include:
* Reducing the yearly increases in Social Security
* Increase the retirement age
* Raise the Social Security contribution ceiling
* Eliminate the home mortgage interest deduction
* Raise the federal gas tax
* Increase Medicaid co-pays
These are just a few examples from a long list of recommendations, but what they all have in common is that no politician would ever dare support any of these actions. Unfortunately, these are the programs that soak up most of federal expenditures. I think Peter R. Fisher said it best in a 2002 speech when he was Under Secretary of the Treasury.
"Think of the federal government as a gigantic insurance company (with a side line business in national defense and homeland security) which only does its accounting on a cash basis - only counting premiums and payouts as they go in and out the door. An insurance company with cash accounting is not really an insurance company at all. It is an accident waiting to happen."
-Peter R. Fisher
Under Secretary of the Treasury
Remarks to the Columbus Council on World Affairs
Columbus, Ohio
November 14, 2002
Meaningful deficit reduction can only occur if we make an honest appraisal of where the bulk of the money actually goes. It isn't spent on the programs that Congressmen complain loudest about. In Peter Peterson's book Running on Empty: How the Democratic and Republican Parties Are Bankrupting Our Future and What Americans Can Do About It
, he wrote: that the parties have mortgaged our future "with reckless tax cuts, out-of-control spending, and Enron-style accounting." He wrote that warning in 2004- six years ago-and the problem has only gotten worse.In Peterson's moral structure, it is unconscionable to leave this enormous debt to our children. Each generation should pay for its own expenses and excesses. Actually, I find it the height of hypocrisy that the attitude of our political leaders towards money goes against everything financial principle we seek to instill in our children. Lessons on delaying gratification in order to save and invest, so that resources will be available for unforeseen problems, are apparently lost on politicians.
The real problem is the constant framing of political debate in terms of absolutes. In today's hyper-partisan climate you are either for or against Social Security, for or against Medicaid, for or against taxes. Actually you can be for and against all of these things. There is no reason that we can't have Social Security, Medicaid, and taxation, as long as all the costs are within reason. In other words, we need to make real compromises, not fake compromises for the sole purpose of political theater.
Joseph Ganem is a physicist and author of the award-winning The Two Headed Quarter: How to See Through Deceptive Numbers and Save Money on Everything You Buy
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