Patting the wrists, rolling the eyes.

[Say_hello_for_me]

Originally posted by taxwonk
Before anyone other than Club gets a hernia worrying themselves over the poor credit card issuers who are losing money on bankrupt borrowers, let's inderstand one simple fact. Most of these issuers have already earned a huge profit on these borrowers; profit that dwarves the relatively small amount of the average writeoff.

Your average subprime credit card offer looks a lot like this:

The borower gets a "chance to rebuild their credit."

The credit limit on the account is around $250-500.

The card issuer charges an annual fee of about $40-50.

There is a $25-30 charge on each of the following: overlimits; late payments; bounced checks.

The issuer applies payments to these fees and interest before the first dollar of principal is paid.

There is a reason that the subprime segment of the market is the fastest growing and most lucrative segment, even after bankruptcies are factored in.

These assholes are even worse than insurance companies.

While I'm sure that's true, there is good reason that PVN traded down below $5.00 in the last few years. And that NXCD isn't publicly traded anymore. And that KRB hasn't had a steady ride to the moon. Nor COF. And in the subprime car business, someone once convinced the market that ACF was going out of business.

If nothing else, it taught me to buy subprimes when the U.S. economy is looking weak. WHen it invariably comes back, these companies do make money hand over fist. But when they start taking hits (e.g., late 2001-2003), the stock market convinces itself that they are all insolvent and not worth a dime. Funny that.

[bilmore]

Originally posted by taxwonk
I apologize if I offended you, old man. However, I have a bit of a bone to bite with an industry that collects whatever it chooses in premiums, then, when you make a claim on the policy they've been reaping in premiums for years from, they get to decide whether or not they will honor their commitment to pay the claim, and to what degree.

Case in point. The hospital charges me $X for a visit. The insurance company decides that only $X-Y is "reasonable" for the hospital stay. I don't get to do that; why should they? For that matter, why shouldn't I be able to say "I'm sorry, but a "reasonable" premium would be about 15% lower, so that's what I'm paying you for coverage.

And don't even get me started on how the insurance industry, with its "delay, delay, delay, and only then pay" strategy has created the "tort crisis" out of whole cloth.

Well, first, I make a big distinction in my own mind between liability insurers and health care orgs, since I know one industry and not the other, so, to the extent you address just the one, maybe I should beg off in ignorance.

But, to the extent that logic can fill in blanks in actual knowledge:

"The hospital charges me $X for a visit. The insurance company decides that only $X-Y is "reasonable" for the hospital stay. I don't get to do that; why should they?"

Because it's in the contract into which you (or your employer, more likely) entered. Same with auto insurers only paying a certain amount for a wrecked fender; they take known risks based on predictable costs, and aren't willing (understandably) to pay unreasonable amounts as part of their contractual duty. Why should an insurer send off a check for $3000 for a fender when they know that the same fender can be purchased for $300? Why should they pay $4000 for a hospital room when they know that the prevailing reasonable charge is $1200? Heck, this issue alone has probably done more to keep health care costs down from the provider than any other provision. Do you think hospitals and clinics and docs would keep their rates where they are if they knew they could simply pick any desirable charge and get it paid?

A contract for insurance isn't a promise of a blank check. It calls for a premium in exchange for a set of known benefits. Why would you not question your clinic as to the charge being too high, instead of questioning what you've explicitly contracted for from the insurer?

[Gattigap]

Originally posted by bilmore
A contract for insurance isn't a promise of a blank check. It calls for a premium in exchange for a set of known benefits. Why would you not question your clinic as to the charge being too high, instead of questioning what you've explicitly contracted for from the insurer?

This is probably far afield from your and Wonk's original discussion, but I'm still tempted to ask an Actual Question (arising from a parent's recent hospital trip):

Let's say that the insurer tells me that I can attend a given clinic (or hospital, or doctor, or whatever) and that for a given procedure I'm covered 100% (or my deductible is flat and already paid, etc.)

I go to the hospital, my bill comes, and I see that the hospital charged a zillion dollars, my insurer decided to pay only half a zillion dollars, and my amount to pay at the bottom is zero. WTF?

I'm sure part of this are contracts for services that the insurer negotiates with the applicable health provider about what the insurer will actually pay for procedure XYZ. Still, why are the numbers so out of whack, and why does the provided still choose to send those bills out if they're not at all related to what they actually get paid? Why, RT, why?

[Spanky]

Mr. Wonk - I don't loose sleep over the credit companyes either, but the people I do feel that do get screwed over are the small businessman who have a ninety day invoice period with wealthy purchasers and they get screwed by a bankruptcy. I see it with these palaces in the Silicon Valley. The people go out and hire all sorts of contracters to build stuff, buy items for their house, etc and then declare bankruptcy.

I don't know if you read the last few lines of the Economist article but it said: "Other quirks of the legislation make one wonder why credit-industry groups are so keen on it. One loophole allows rich debtors to go on shielding assets in special trust accounts that are legal in a few states. And debtors' fancy homes in Texas and Florida will still be off-limits to creditors. The bill's backers say that fear of trampling on states' rights stopped them closing such loopholes. But it smells rather pervasively like special treatment for the rich."

I believe it is these areas where the reform is needed most and the bill doesn't cover these areas. I believe small businesses are the key to the success of the US economy and they are very fragile.

Originally posted by taxwonk
Before anyone other than Club gets a hernia worrying themselves over the poor credit card issuers who are losing money on bankrupt borrowers, let's inderstand one simple fact. Most of these issuers have already earned a huge profit on these borrowers; profit that dwarves the relatively small amount of the average writeoff.

Your average subprime credit card offer looks a lot like this:

The borower gets a "chance to rebuild their credit."

The credit limit on the account is around $250-500.

The card issuer charges an annual fee of about $40-50.

There is a $25-30 charge on each of the following: overlimits; late payments; bounced checks.

The issuer applies payments to these fees and interest before the first dollar of principal is paid.

There is a reason that the subprime segment of the market is the fastest growing and most lucrative segment, even after bankruptcies are factored in.

These assholes are even worse than insurance companies.

[bilmore]

Originally posted by Spanky
The people go out and hire all sorts of contracters to build stuff, buy items for their house, etc and then declare bankruptcy.

No way. Even the least sophisticated home contractor knows how to file and perfect a mechanic's lien. Secured debt - that's the way to go. Bankruptcy? No prob - take their house.

[ltl/fb]

Originally posted by bilmore
No way. Even the least sophisticated home contractor knows how to file and perfect a mechanic's lien. Secured debt - that's the way to go. Bankruptcy? No prob - take their house.

Maybe he's worried about decorators?

Spankme, you fucking moron, none of us here (or, none of the people saying bankruptcy bill sucks, which is pretty much everyone who has commented on it) is in favor of letting people who don't need bankruptcy and have money and shit use the bankruptcy loophole for homestead exemptions to shield themselves from the consequences of their obnoxious actions, so I don't know what purpose your little speech had. I mean, it's like having a little speech on how it's bad to sodomize toddlers, because children are our future. Duh.

[bilmore]

Originally posted by ltl/fb
Spankme, you fucking moron . . .

Be fair. Aside from an unfortunate choice of examples, his point is a valid one - that, while we talk about bankrupting out of debt owed to the big bad credit card companies, which goes a long way to curing that nagging "well, they DO owe the money" feeling, more debt is actually wiped out that is owed to small businesses. They're the ones operating on slim margins, with poor financing options, and are the least able to weather the hit of the accounts receivables going poof.

It's fun to work hard to get your client's divorce and custody battle done right, at a discounted price because you feel sympathy for her financial straits, and for which you didn't demand the full fee up front because you knew she didn't have it, and then get the bk filing served on you a few months later. (It's even more fun when you find out through mutual friends that, while you were being a softie, her plan was to BK out of your bill from the start.) It's fun to extend credit to a small retailer, in the form of shipping them an order of your small import company's goods without demanding COD or payment up front, and then getting the filing notice. It's fun to keep on taking those Smith kids in to your home day care, even though Ms. Smith is now three months behind on her bill - heck, it's hard to tell them to stop coming, 'cuz you're a softie at heart - and then get the bk filing.

I still don't like this bill at all - but BK does have a very personal cost for many individuals. It's not just the big companies that get bitten by BK.

[Adder]

Originally posted by Spanky
Any group that is organized around a self serving issue or set of issues. A good indicator is if they have hired a lobbyist. Examples. They place the interest of the group above the welfare of the country as a whole.

At your average state legislature, you describe everyone in the room.

The urge to blame "special interests," from both sides of the aisle, is a pet peeve for me. There are people and groups on both sides of most issues. Whichever side wins, we denegrate as a "special interest."

The truth is, at the state legislature level anyway, that these lobbyists are often the only people that know anything about the issue at hand - the part-time legislators surely don't. Most are there because they believe in the issue for which they advocate, or at least their employers do. Believe it or not, they can actually believe that what they want is in the overrall "best interest" of the country as a whole.

Let me give you an example. When I was in college, a group of fellow student, whom I joined toward the end, spent a lot of their personal time lobbying the state legislature for a change that would benefit student (it cost nothing). The whole thing was handled without any budget, and with only the effort of less than a dozen students.

Were we one of your dreaded "special interest groups?" Were the faculty members who ultimately thwarted our efforts?

For the most part, there is an interest group on every side. With only very few exceptions, it is simplistic of us to dismiss any legislative decision as only the result of the pressure from "special interests" (mostly because we only have this complaint when we disagree).

The united ice cream makers association: wants higher tariffs on imported ice cream and lower tariffs on mild, cream and whatever else the use to make their product.

What about the People for Ice Cream Choice? Are they a special interest as well?

Classic special interest groups:
1) Telecom industry
2) Corporate agricultural interests
3) Unions: want to keep their members jobs even it sacrifices other jobs from being created or reducing prices for the american consumer
4) Trial lawyers

You really just think these people are evil? You think they don't sincerely believe that its important to we create good (i.e. union) jobs, and not dead-end, low-wage service industry jobs? Or that its in the counrty's best interest to protect injured victims instead of negligent businesses? Is your test really anything other than group with whom you disagree?

[Adder]

Originally posted by bilmore
Well, first, I make a big distinction in my own mind between liability insurers and health care orgs, since I know one industry and not the other, so, to the extent you address just the one, maybe I should beg off in ignorance.

How is Bob at Progressive these days anyway? Still givin' ya hell about the bills? Or is he finally okay with your $75/hr rate?

[Adder]

Originally posted by Gattigap
I go to the hospital, my bill comes, and I see that the hospital charged a zillion dollars, my insurer decided to pay only half a zillion dollars, and my amount to pay at the bottom is zero. WTF?

That's what they charge the uninsured.

[ltl/fb]

Originally posted by bilmore
Be fair. Aside from an unfortunate choice of examples, his point is a valid one - that, while we talk about bankrupting out of debt owed to the big bad credit card companies, which goes a long way to curing that nagging "well, they DO owe the money" feeling, more debt is actually wiped out that is owed to small businesses. They're the ones operating on slim margins, with poor financing options, and are the least able to weather the hit of the accounts receivables going poof.

It's fun to work hard to get your client's divorce and custody battle done right, at a discounted price because you feel sympathy for her financial straits, and for which you didn't demand the full fee up front because you knew she didn't have it, and then get the bk filing served on you a few months later. (It's even more fun when you find out through mutual friends that, while you were being a softie, her plan was to BK out of your bill from the start.) It's fun to extend credit to a small retailer, in the form of shipping them an order of your small import company's goods without demanding COD or payment up front, and then getting the filing notice. It's fun to keep on taking those Smith kids in to your home day care, even though Ms. Smith is now three months behind on her bill - heck, it's hard to tell them to stop coming, 'cuz you're a softie at heart - and then get the bk filing.

I still don't like this bill at all - but BK does have a very personal cost for many individuals. It's not just the big companies that get bitten by BK.

I know that. Jesus. But no one is saying here that defrauding people is good. They are saying that the bill doesn't address the valid concerns. And his example was utter crap. And don't extend credit. I mean, if you let someone get three months behind on their bill, do you really think you are going to get paid? If they really don't have any money? And weren't even making small, good-faith payments? Why should we protect people who are too stupid to get secured debt?

That last sentence was tongue-in-cheek.

[Spanky]

You would not believe how many wealthy people use bankruptcy to avoid debts. Estate planning attorneys and financial advisors recommend it as an option like its a tax shelter. As far as mechnics liens, I have come across many of them but I have never seen a forclosure date set by a mechanics lien. I just wasn't sure if you could actually forclose on a six hundred thousand dollar house with a two thousand dollars mechanics lien.

In any case, I had a man approach me to help him refinance. One of my researchers found him because he had received a notice of default. He has a ten million dollar home. He showed me his file and he must have had three hundred to four hundred bills he had not paid. From carpet cleaners, to gardners etc. I am just sure he told all these people to bill him and they saw the size of the house and were sure they would get paid. He is now in bankruptcy and everything is cleared. I talked to his bankruptcy attorney and he told me he does these type of bankruptcies all the time.

I have personal experience with this so lighten up francis.

Originally posted by ltl/fb
I know that. Jesus. But no one is saying here that defrauding people is good. They are saying that the bill doesn't address the valid concerns. And his example was utter crap. And don't extend credit. I mean, if you let someone get three months behind on their bill, do you really think you are going to get paid? If they really don't have any money? And weren't even making small, good-faith payments? Why should we protect people who are too stupid to get secured debt?

That last sentence was tongue-in-cheek.

[Spanky]

As far as Unions are concerned, if they are in support of a bill then I know the consumers are taking it in the derrier. The worst is the public service unions. Particularly the California Teachers Association. Anytime anyone has proposed legislation that would allow incompetant teachers to be dismissed they freak out like you are asking them to take a seventy five percent pay cut. It seems so ubsurd to me that you can't get rid of incompetance but they think job secuirty is some sort of divine right. In LA they have what is called the "dance of the lemons". At a high school, when enough parents complain about a principle, they just move him or her to another high school. They just keep moving them around. They do the same thing with teachers. If you question this policy you are accused of attacking eduction. The prisons union in California is also completely out of hand. Prisoners are getting killed and beat up all the time by correctional officers, but if any legislator even hints at having an investigation why so many prisoners in california end up in hospitals (or why so many female inmate end up pregnant or with veneral disease) the prison unions claim they are soft on law enforcement and siding with the criminals. In San Franicsco the transit union has insured that the average transit worker earns six figures and they get four months off a year.

There are always people on every side of an issue, but there are people that have a vested financial interest and that is all they care about.

Originally posted by Adder
At your average state legislature, you describe everyone in the room.

The urge to blame "special interests," from both sides of the aisle, is a pet peeve for me. There are people and groups on both sides of most issues. Whichever side wins, we denegrate as a "special interest."

The truth is, at the state legislature level anyway, that these lobbyists are often the only people that know anything about the issue at hand - the part-time legislators surely don't. Most are there because they believe in the issue for which they advocate, or at least their employers do. Believe it or not, they can actually believe that what they want is in the overrall "best interest" of the country as a whole.

Let me give you an example. When I was in college, a group of fellow student, whom I joined toward the end, spent a lot of their personal time lobbying the state legislature for a change that would benefit student (it cost nothing). The whole thing was handled without any budget, and with only the effort of less than a dozen students.

Were we one of your dreaded "special interest groups?" Were the faculty members who ultimately thwarted our efforts?

For the most part, there is an interest group on every side. With only very few exceptions, it is simplistic of us to dismiss any legislative decision as only the result of the pressure from "special interests" (mostly because we only have this complaint when we disagree).


What about the People for Ice Cream Choice? Are they a special interest as well?


You really just think these people are evil? You think they don't sincerely believe that its important to we create good (i.e. union) jobs, and not dead-end, low-wage service industry jobs? Or that its in the counrty's best interest to protect injured victims instead of negligent businesses? Is your test really anything other than group with whom you disagree?

[bilmore]

Originally posted by ltl/fb
And don't extend credit.

There are businesses that exist to make a profit out of being rather hard-hearted towards people and enforcing simple good business practices. Credit card companies, for example. We're calling them evil whoremasters throughout most of these posts, but then your suggestion to my extending credit to a hard-luck story is, be more like them?

[bilmore]

Originally posted by Spanky
You would not believe how many wealthy people use bankruptcy to avoid debts.

I made this point earlier, when I was speaking about the impact of this bill - how primarily it is aimed at the lower-income debtors, and has big, sweeping, explicitly-aimed exceptions carved out that benefit only the high-net-worth bankrupts. The point is, this bill is bad because it makes BK harder for those that truly need it (and who can BK with the least impact on society) and it makes it easier (or at least, not harder at all - I still need to read the trust provisions) for the true abusers. It's a purchased favor for the credit industry, but with the caveat that "our friends" will be protected.