Congress' Rescue Package Should Be Tied to Reforms (10/12/2008)
The Bush Administration proposed to Congress a $700 billion bailout of
American financial sector. Congress voted to fund $25 billion in guaranteed
loans for auto industry. Uncle Sam is playing the role of good Samaritan again.
However, the distribution of the pork barrel is usually determined by who cries
most rather than who needs most. Business' future rely on the quality of the
product and service. For bank loans or credit card services, the government
should cap the maximum interest rate at 15 %. Greed, rip-offs, and the practice
of usury are not services and should not be encouraged in the banking industry.
If a credit card company charges a 25% interest rate, loosens its security
measures by allowing criminals to use other people's identities to get loans,
and then employs debt collectors or debt relief agencies to harass innocent
people to pay for their losses, then I do not think tax payers should rescue a
business engaging in rip-offs and harassment. A debt collector had yelled and
screamed for half a year on my answering machine. I do not give my personal
information over the phone. I only respond to written letters because I can keep
the records. The credit card lender or debt collector may not have my mailing
address, so I never receive their letters. One day I answer the phone, a debt
relief agency falsely told me that I owed a credit card lender $6000. In fact, I
did not owe any credit card company a penny. Then he transferred me to a
representative and asked me to wait on the line. I had to leave, so I hung up.
The debt collector and debt relief agencies called me every day. Sometimes they
called three times a day. Sundays would not even stop their calls. A single debt
relief agency would not cause much trouble, but there are scores of them
cooperating with each other and taking turns to harass people. Therefore, they
will never lose their patience. The barrage of harassing phone calls causes a
great turmoil to innocent people in our otherwise peaceful society especially
during these bad economic times. I wonder why the Department of Homeland
Security has not done something about it and why banks have such power to harass
innocent people. A bank, debt collector, or debt relief agency that wrongly
assigns debt to innocent should be prosecuted, or fined, or should have its
business license revoked. If a credit report company allows criminals to ruin
the records of innocent people, then we should not allow the credit report
company to exist.
In February 2001, I bought a new Chevy Cavalier. In less than six months, I
drove the car one evening and hit a pothole. It damaged the pan holding
transmission fluid. When the fluid was gone, the car could not move. I sent my
car to the dealer for repair. The dealer told me, "You need to replace the
transmission, but the warranty will not cover the repair cost because the pan
was hit by something." A car has only two costly parts. One is the engine and
the other is the transmission. In less than half a year, my car's value dropped
to half. We purchase cars for use, not as decorations. This was obviously
Chevy's fault: the car was designed with insufficient road clearance. In
order to protect the interests of consumers, I suggest every car model be able
to pass a test on a road full of 7-inch potholes. I called GM and said, "I paid
extra to have the comprehensive warranty." They said that warranty would not
cover either and that I had to call my insurance. The insurance company asked me
to report the incident. The accident happened in a dark drizzling evening. I had
to drive a couple of blocks to find a suitable place to pull over as soon as
possible before I lost all the transmission fluid, so I did not have time to
check the road condition at the spot of incident. After I sent my car to the
shop, I did not have a car and could not go to the spot to investigate the
pothole. I was anxious to get my car fixed, so I told the representative that
when I passed a dip, the dip damaged the transmission fluid pan. That was the
best information I could give to the representative of the insurance company at
that moment. What the insurance company did was to replace the damaged
transmission with a used transmission that had less mileage than mine had. That
transmission might be five years old. Why did I have to pay a new car's price
for a five-year-old car? Why didn't I just use the tax I paid to Kansas Revenue
Department for my new car to purchase a five-year-old car? Then it would be much
cheaper and simpler. I would not have to pay the premium for the full coverage
and I would not need to file a claim for repair. After a week for the
negotiation between the dealer and the insurance company, I finally got my car
back. I went to the spot where the incident had occurred and located the 4-inch
pothole. I went to the mayor's office (Manhattan, KS) and asked for the
compensation for my $500 deductible. I aid, "In Chicago, if a car was damaged by
a pothole, the city will pay the damage." The clerk told me that in Manhattan I
had to prove that it was the city's fault. I filed the complaint. Later, the
city's attorney wrote me a letter, saying that he completed the investigation by
calling the insurance company. He concluded that my car was damaged by a dip
instead of a pothole. How could an attorney complete an investigation without
calling the victim? The pothole was fixed but my request for compensation was
denied by the city. After I fixed my transmission, I immediately canceled my
purchased comprehensive warranty. After the factory warranty ended, GM asked me
to join the extended warranty program by bombarding me with phone calls and
mailings and e-mails. After I said no to a GM's representative, GM still sent me
at least 30 final notices for the extended warranty. I was fooled once, not the
second time.
We should learn a lesson from this economic crisis. Time Magazine says
that the economic crisis is due to greed and ignorance [1]. Alan Greenspan, a
former financial guru, has been blamed for his laisser-faire policies, and thus
down graded to a loser by the media [1]. Nouriel Roubini, a NYU economist, says
that the business model of our financial institution is fundamentally flawed. It
should be corrected as follows: our business model is morally flawed and our
school system is seriously in jeopardy. Nowadays schools only teach students how
to get rich quickly rather than how to become a good citizen. The unworthy
behavior of graduates should be attributed to the lack of ethical training in
school. Newsweek reports that JPMorgan hired graduates from MIT and
Cambridge to create a financial monster, the credit default swap, that ate Wall
Street [2]. Briefly speaking, CDS means "find a loophole in the law; take the
money and run; burden others with risks and consequences." Newsweek's
approach to finance is similar to Readers' Digest's to literature. It details
speculators' devices just like Readers' Digest describes the crimes that a
serial killer committed in great detail. The magazines arouse the readers'
curiosity to read the articles, but after they have finished, they wish they
hadn't. Who wants to put a criminal design into one's own head. All our
magazines care about is sales. They do not consider whether the consequence of
unhealthy thinking may corrupt our society. Now it is clear to us that the
United States does not need more greedy speculators to ruin our economy. All we
need is industry developers with a long term vision for growth. Money can
provide relief only temporarily. For a long term solution to solving economic
problems, we must resort to virtues and integrity. My solution to resolve this
economic disaster is to read Anthology of Chinese Literary Essays (visit
http://www.lcwangpress.com). Every essay in that collection
promotes virtue and is worth reading again and again. Our society worships the
dollars sign too much instead of virtue. This economic crisis should awaken
Congress. It is time for Congress to think about free higher education for young
Americans. European taxpayers' money is spent on free higher education so that
their young people can learn job skills to compete in the world market. Their
retirees can enjoy a good social security program. American taxpayers' money is
spent on building jails to accommodate an excess of criminals and filling
bottomless financial holes. Most of our people have to juggle two or three jobs
to make ends meet. Our retirees' retirement capital can barely earn any interest
if they put it in a bank or may shrink to half if they invest it in stocks. It
is obvious to tell whose investment is wiser. I hope Congress' rescue plan will
not be interpreted as the welfare program for the rich. That would be too costly
for American taxpayers.
References
1. "The Price of Greed", Time (September 29, 2008), pp.32-37.
2. "The Monster That Ate Wall Street", Newsweek (October 6, 2008), pp.
46-47.