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Who sues police departments the most? Police officers

Fri, 2014-06-20 13:24

Cassandra Smith worked for the Camden police department for 20 years. Smith is African-American, and she was the first woman on the force to be promoted to Captain. The same day she was promoted, Smith was assigned an unmarked car. She was excited, she says, so she got the keys and went outside to take a look. Inside the car, tucked in a door pocket, Smith found three bags of crack cocaine.

“This is big league. It’s hardball. Possession of cocaine is a criminal offense, I could have very well, not just ended up being terminated, but could have virtually ended up in jail,” she says.

“Either you leave police services, or you take a stand. And I took a stand," says Smith, who notes that she loved her job.

In New Jersey, millions of dollars are spent each year on legal fees and settlements for lawsuits involving police. And, while you might imagine that a small handful of bad-apple cops are behind the cases, a strange pattern starts to emerge when digging through the legal paperwork. While there are cases -- lots of them -- where civilians sue the police, there are more lawsuits where police are the plaintiffs. There are cases like Cassandra Smith’s, of discrimination and retaliation, as well as harassment cases against whistle blowers. Between 2009-2012, it cost New Jersey taxpayers $29 million for cases where police sued other officers, their police departments and the towns they work for. 

 

For Cassandra Smith, the cocaine in her car was just the beginning. After a series of similar incidents, conflicts and changes in command at the top, Smith ended up suing for sexual harassment and discrimination. Her case was eventually settled for $165,000. People involved with the case say there's a whole other side to the story, but sometimes it’s just easier and cheaper for all parties to settle. We found cases like Smith’s across the entire state. Cops accusing cops of harassment, retaliation, discrimination. But no one is trying to fix the problems that cause them.

The costs from these lawsuits are typically covered by insurance. Dave Grubb, executive director of the Municipal Excess Liability Joint Insurance Fund, part of the government entity that insures New Jersey towns, says many of the cases are petty.

“There was at least one case that we traced back to two individuals who couldn’t get along because of some school yard fights that they’d had probably in the third or fourth grade,” he says.

These cases, said Grubb, are wasting millions of dollars.

For Cassandra Smith, the only alternative would have been to go through internal affairs. But it turns out internal affairs answers to the chief of police. And, Smith says her problem was with the chief. 

“Chiefs gone wild” is how Antonio Hernandez, president of the National Coalition of Latino Officers, refers to the situation. He says he hears about cases like Smith’s all the time – not just in New Jersey, but also in New York and Pennsylsvania.

Hernandez says internal affairs should be monitored by the county or state, but it’s not. He notes that officers who commit real infractions and excessive abuses should be punished, and severely. But he says often times it’s the internal affairs system that’s abused, and as a result, innocent officers can be treated more like criminals than actual criminals.

“When we’re talking about an officer who misplaces a piece of equipment, getting suspended for 30 days, it’s a little excessive. Especially when the piece of equipment is an $8 slim jim,” he says.

A partial cause, notes Hernandez, is a lack of management training, which leads to deplorable treatment of police officers, combined with little or no oversight.

“I once had a lieutenant joke with me and said, 'You know, if internal affairs walks in here right now, tells you to dress in a pink tutu and to put on a dance, you’d better put it on, because if not, you’ll be fired,'” he says.

The number one reason for these lawsuits, says Lou Reiter, an ex-cop turned consultant and insurance auditor for police departments, is sloppily run internal affairs investigations.

"That's what gets you into trouble - when you don't do it right," he says.

“And so when they want to go after an officer who may have made a mistake or who may have engaged in misconduct they do it in a hasty manner and they forget to dot every i and cross every t. And when you do that you're opening yourself up to be challenged in some sort of a post agency appeal, whether it's arbitration or a grievance, or in a lawsuit,” he says. 

Reiter notes internal affairs investigators have to know the rules. Especially if they’re in a union department where knowing every nuance of collective bargaining is a requirement. He says often times the difference between a good department with no problems and ones with internal disputes comes down to the chief.

"At the end of three days we know who the thumpers are, the people who like to use force against people. We know who the skirt chasers are, the ones who are trying to use their positions of authority to work up dates. We know the people who are avoiding calls. If I know that, in three days of being on scene, everybody in that department should know the same thing," he says.

But look behind departments plagued by lawsuits, notes Reiter, and often times you'll find unions, likely to support officers in their cases. So, he says, states where officers are organized, like New Jersey, Florida, Ohio and California tend have more lawsuits. 

John Shane, a professor at the John Jay College of Criminal Justice and a former Captain in the Newark, New Jersey Police Department, says another part of the problem has its roots deeply embedded in the way police are hired and promoted. Shane says bad police departments can be run like kingdoms where officer’s loyalty to superiors is valued over ability. He says that plus an out of date, draconian rule book causes problems.

“In the hands of an autocratic manager that rulebook can become oppressive and I can use it anyway I see fit," says Shane. "Because there’s a rule for everything and I know that I’m going to be supported on the inside by my bosses. So I just then open up the page and find you without your hat, your shoes aren’t shined, you’re three feet out of your sector and I’ll charge you for it and so goes the wheel of internal justice in the police department.”

In the wrong hands, internal affairs, says Shane, can be used as a weapon.

“The executive level of the organization wields the power over who gets investigated and who doesn't and how the investigation is going to play itself out. And, many times, when an investigation doesn't find what someone wanted it to find, then the investigator's punished for not finding in favor of the organization.”

Joanna Schwartz, a professor at UCLA who studies lawsuits involving police, says another reason for the spate of cop-on-cop lawsuits is that most police departments don’t pay settlements costs out of their own budgets.

“There is no financial pressure on those departments to take proactive measure to reduce the numbers of settlements and judgments,” she says.

In the business world, these lawsuits would be a huge problem, but no one in New Jersey’s government even seems to be tracking the cost. When something goes wrong in the state, police departments answer to their county prosecutors. The county prosecutor offices are overseen by the New Jersey Attorney General’s office, which writes the internal affairs guidelines for the state. The attorney general’s office says it is concerned about the issue, but only focuses on police conduct that leads to lawsuits from the public, and that lawsuits brought by police should be bumped back to the municipalities.

Schwartz says police departments should be tracking them. If an officer has a problem with a colleague, or a civilian, departments could use the data as an early warning system. But she says most police departments don’t even know how many lawsuits are opened against an officer.

“The next incident, or the next interaction that that officer has with someone, could become that high profile case," says Schwartz. "So if you’re interested in resolving little problems, before they become big problems, it’s very important to assess that information in a proactive way instead of waiting for the next catastrophe.”

Produced with help from Damiano Marchetti.

This story also ran on WNYC under the headline: "Good Cop, Bad Cop: How Infighting is Costing New Jersey Taxpayers".

How Monet ends up on a mousepad for $10.95

Fri, 2014-06-20 13:23

When one of Monet’s iconic “water lilies” paintings goes up for auction at Soetheby’s on Monday, bids will start at $33 million. But a nice cocktail shaker can be had for just under $26.  

This would never happen to Matisse.Anyone wanting to put one of his famed paper cut-outs on a coffee mug— or an Andy Warhol, or a Jackson Pollock— will have to have to talk with Ted Feder, or one of his employees.

“We’re going to say no, but you have to talk with us,” he says. Asked why the answer will be no, he answers succinctly: “Because of the schlock factor.”

Feder runs the Artist Rights Society, which represents the estates of many of 20th-Century art’s greatest hit-makers, including Picasso, Rene Magritte, and Georgia O’Keefe.

But not Monet. Copyright in the U.S. expires 70 years after the artist dies. Monet died in 1926, so his work has been public domain since 1996. Since then, says Feder, “People are free to commit mayhem on his work and do whatever they want.”

Much of that mayhem is done by Art Plates.  “We do switch plates, mousepads, coffee mugs,” says the company’s sales director, Mike Mason. “And our travel mug, which is our famous Mugzie.”

In any museum gift shop, Mason says, the set of Monet drink coasters on offer was probably made in his company’s California factory. The shop’s twenty workers and their 14 machines can turn out up to 5,000 pieces a day.

Van Gogh has been the hottest seller for the last year, he says, but some things are evergreen. “Monet does very, very well. The brighter and more vivid the color, the more it shows up on different items.”  

At the online gift shop operated by the Metropolitan Museum of Art, a search for “Monet” yields 72 results. Mason says some are his, but this slim-fit t-shirt isn’t one of them. “That we don’t do,” he says. “No clothing.”

Staff from the Metropolitan could not be reached for comment on the shop’s Monet-themed items.

The first microchip goes on auction, no one buys it

Fri, 2014-06-20 13:14

A major auction house had a big ticket item up for sale earlier this week. It was not a painting by the father of French Impressionism. It was however, a work of art in its own right: The prototype for the world's first integrated circuit. The first microchip, mounted on a piece of glass.

Christie's tried to sell it yesterday; Auctioneers called it, "virtually the birth certificate of the modern computing era." They estimated it would sell for more than a million dollars.

In the end, no one wanted it -- or no one was willing to pay enough for it.

It didn't sell.

Introducing: "Brought to you by..."

Fri, 2014-06-20 12:49

Did you know Doritos were born in a Disneyland dumpster? Or that the Slinky was the happy accident of a naval engineer?

At Marketplace, we’re always curious about the brains behind the products that have become synonymous with American life, so we’re starting a new series called “Brought to you by…”

We’ll track down the innovators and inspirations behind the stuff you use every day and tell those stories on the radio and our website.

Since the solstice is on the horizon, we’re starting with stuff that Americans buy up and bring out every summer, from sunscreen to pool noodles to popsicles.

So what do you want to know about?

Tell us your favorite summer products in the comments below, and we’ll track them back down to their start.

For-profit schools, loan defaults and the federal ATM

Fri, 2014-06-20 11:24

The type of school you attend can determine how likely it is you will default on your loans. The graphic below looks at students who began repaying their loans in 2010.  It compares the percentage of students with loans at a given type of school, with the three-year default rate for that type of school.

 

The second chart looks at 2,057 for-profit schools grouped by the percentage of revenue they get from federal grants and loans:

You can check out individual for-profit schools at the full federal report here.

Hold up on aid threatens for-profit college

Fri, 2014-06-20 11:20

The U.S. Department of Education is tightening the screws on Corinthian Colleges Inc., the parent company of Everest, Heald and WyoTech for-profit colleges.

The federal body charges that Corinthian is evading questions about improper marketing to prospective students and allegations that some schools changed students' grades and altered attendance reports.

Corinthian will be prohibited from accessing any federal financial aid funds for 21 days, a sharp blow to a company that relies on those funds for the majority of its income. In a report filed with the S.E.C, Corinthian said "...the company's cash flows will not be sufficient to meet its obligations as they become due, which would cause the company to be unable to continue as a going concern."

If the company shutters schools, Corinthian's approximately 72,000 students, who are enrolled in everything from degree programs to trade schools, will need backup plans. It's not clear just yet what their options will be.

Bobbleheadmania hits Dodger Stadium

Fri, 2014-06-20 11:04

When it comes to the Los Angeles Dodgers' performance on the field this season, it’s been a disappointment; the team is playing barely above .500.

But if you take attendance, the Dodgers are clear winners, leading the majors with an average 46,088 attendance.  As it turns out, the biggest draw for fans has nothing to do with who’s playing on the field.

When looking at the most-attended Dodger games of the season – excluding Opening Day – they all have one thing in common: Something is being given away, whether it be a zip-up hooded sweatshirt, a mother’s day clutch, or the most popular item of all, a bobblehead.

“The bobbleheads are worth more than a ticket,” Tony Manrique exclaimed a few weeks ago, as he walked through a turnstile on the upper deck of Dodger Stadium after picking up his bobblehead honoring ace pitcher Clayton Kershaw.

The cheapest seats on Stubhub for the Kershaw bobblehead night were $32, more than five times what tickets went for the night before even though the opponent remained the same (the Philadelphia Phillies).

When the Dodgers offered a package selling just tickets to games where bobbleheads were given out, it sold more than every other package combined. The popularity of the giveaway isn't surprising to Stephanie Rosil, who stood on the upper deck of the stadium with her Kershaw bobblehead still safely in its box.

“Everyone collects them," said Rosil. "It’s like bringing a little player home. Who wouldn’t want to take Kershaw home with them?”

Like many fans, Rosil says she chooses which game to go to months in advance based solely on the giveaway.

“If you come to a game you pay the money, you pay for parking, you might as well get something that you like,” said Rosil.

Dodgers look beyond baseball to attract fans

Major League clubs handed out 2.59 million bobbleheads in 2013, twice as many as they did five years ago, according to Sports Business Journal.

No team gives away as many bobbleheads as the Dodgers. David Siegel, vice president of ticket sales, says when it comes to getting people in seats, giveaways are as close to a sure thing as there is in baseball.

“Regardless of how popular the team is, there could be as much as a 15,000-20,000 seat bump depending on what we’re giving away,” said Siegel.

Siegel won’t disclose how much the Dodgers spend on giveaways, which get more elaborate every year. Some of the cost is defrayed by sponsorships. Regardless, he says the money is well-spent.

The Dodgers field the most expensive sports team in the world, but a roster of stars provides no guarantee of winning. Siegel says that means the Dodgers try to to think beyond baseball.

“Obviously, we are tied to that and this is our core business, but we want people to come out here regardless of how the team is playing,” said Siegel.

The toy in the box of crackerjacks 

The key to the giveaways is uniqueness: There are only 50,000 or so made, you can’t buy them in the shop, and like the little toy buried in the crackerjack box, there’s no underestimating the value of free prizes. There’s also the nostalgia factor, says Irving Rein, a professor of communications at Northwestern and author of the book "The Elusive Fan: Reinventing Sports in a Crowded Marketplace."

"It almost reminds me of a carnival, getting the Kewpie doll," said Rein.  “I think it invokes memories. Those giveaways mark relationships. You can say 'I remember three years ago when I took  Jimmy to the game for the first time and we got this bobblehead doll.' You can look at the bobblehead in the house and it ties up the brand identity.”

The person credited with inventing sports souvenirs is Danny Goodman, a marketing executive who was hired by the Dodgers owner Walter O'Malley soon after the team moved to Los Angeles. Dodgers team historian Mark Langill says under Goodman, the team hosted batting glove and cap nights in the 1960’s.

"And it’s just evolved over the years," said Langill. "As people are drawn more to watching the game on television it’s important for teams to say, 'Let’s get the people out here.' Nowadays you don’t hear people say they want to see the Phillies or the Giants. It’s 'I want to go Hello Kitty Night.' They don’t care who we play, what time, or what day of the week it is.”

The rise of the bobblehead craze

Ceramic bobbleheads have been sold at ballparks for decades, but before the late 1990’s usually the only figurines available were historic or simply a generic version for each team. There were fears that featuring one active player would be bad for clubhouse chemistry.

The Dodgers' rivals, The San Francisco Giants, are credited with hosting the first modern bobblehead giveaway in 1999, handing out 35,000 plastic Willie Mays statues. 

The Dodgers hosted their first bobblehead nights in 2001 with three team legends: Tommy Lasorda, Kirk Gibson, and Fernando Valenzuela.

Langill says it wasn’t until a bobblehead promotion five years ago featuring a popular active player, Manny Ramirez, that he truly saw the power of the giveaway.

"It was a Wednesday afternoon game with the Pittsburgh Pirates, and normally at that type of game you’d be lucky to get 20,000 people," said Langill. "It was just packed. And that really shows you the impact of the right promotion at the right time. It doesn’t matter if you play the game at six in the morning on a Tuesday, people are going to want their prize.”

There have been some notable misses over the years, including a baseball giveaway in 1995 that sold out Dodger Stadium -- The game had to be suspended when fans threw their free baseballs on the field as a protest to then manager Tommy Lasorda and right fielder Raul Mondesi being ejected from the game for arguing a call. 

It was the first National League game to be forfeited in 41 years. And all because of a giveaway gone wrong.

Yo, stop making a big deal out of the Yo hack

Fri, 2014-06-20 09:57

Maybe it's because summer is almost here, or maybe it's because the Amazon Fire phone did not blow anyone's mind this week, but Yo has officially blown up. The App, which through the right lens could almost be considered tech industry self-parody, works like this: You and your friends sign up, and then with a click of the button trade one singular message. "Yo." And that's it. It's reportedly raised $1 million in funding, and it's already cracked the top five apps in Apple's App Store.

Here's the other way Yo has blown up: it has also had its security flaws exposed. Three students told TechCrunch today that they were able to mine the app for user phone numbers. Other developers seem to have backed that up, also saying that Yo can allow non "yo" messages to be sent.

But hold on. If this sounds truly scary to you, then you might need a reality check. Security flaws in popular apps are a serious issue, no question. But..."major security flaws" ? Ehhh. Just remember: getting random people's phone numbers and sending people messages that don't consist of the word "yo" is something you can do with a phone book. Any 7th grader with a taste for prank calls knows that.

I asked one of our Marketplace Tech regulars, Chester Wisniewski of Sophos, to characterize just how big of a deal the yo hack was, and he quoted the Bard. "Much ado about nothing." What Wisniewski did say was that Yo's security flaws are demonstrative of a larger problem: the low barrier to entry in the app universe for thrown-together software that doesn't have proper security. That's a bigger challenge for the app world, and Yo is a pretty low-priority example. 

So until this particular issue turns into something more serious--like access to your credit card data, or delivering your phone a virus--remember that like apps, not all "hacks" are created equal. Anyone still worried about this should look at the app permissions screen: 

 

 

This narrative can change of course, but it's not time to go Chicken Little on Yo just yet. If you want to see a list of app/web hacks that you should pay more attention to, look below:

6 notable tech hacks

The Tweetdeck Dictionary.

Via Creative Commons/Flickr/Sean MacEntee

 

1. Tweetdeck

 

The social media managing program briefly shut down after a "security issue" which caused bizarre tweets to show up in users' feeds. Twitter user @Firoxl, who uncovered the issue, later tweeted to CNN that his discovery "was some sort of accident."

The WhatsApp icon on an iPhone home screen.

Via Creative Commons/Flickr/Jan Persiel

 

2. WhatsApp

 

A group called KDMS Team took credit for defacing the website of the popular messaging app. The group left a message that simply appeared to raise awareness about Palestine, saying "Palestinian people has [sic] the right to live in peace." WhatsApp said in a statement that "no user data was lost or compromised" while their website had been hijacked.

Spotify HQ.

Via Creative Commons/Flickr/Sorosh Tavakoli

 

3. Spotify

 

Though the security breach only appeared to affect one unlucky user, Spotify decided it wasn't taking any chances. It pushed out a new version of the app to Android users that prompted users to uninstall the previous version, and asked users to re-enter their login details. As for the one user who was hacked, the company blog said "this did not include any password, financial or payment information."

Via Wikimedia Commons

 

4. Pinterest

 

Pinterest couldn't catch a break--it was hacked twice in the span of four months. The first time, users reported spam images of women in underwear, usually accompanying a weight loss spam message. The second time around, users' feeds were littered with messages advertising a strange Asian fruit purported to burn fat. Pinterest put affected accounts into safe mode, and encouraged its users to use "unique and strong passwords" to prevent another episode.

 

Skype's booth at SXSW 2012.

Via Creative Commons/Flickr/1000heads

5. Skype

 

2014 got off to an auspicious start for Skype when it became the latest victim of a hack attack from the Syrian Electronic Army. Skype's Twitter and Facebook pages, along with its company blog, were hijacked with identical messages calling for an end to government spying. The messages were quickly removed, and Skype tweeted the following day that no user information had been compromised.

 

Via Wikimedia Commons

6. Snapchat

 

Out of all the hacks on this list, Snapchat probably got hit the worst. Early in January 2014, hackers exploited a security flaw in the app's "Find Friends" function that was used to download the usernames and phone numbers for 4.6 million accounts and later posted the data online. Though the company had previously acknowledged that this was possible, they later released an updated version of the app that came with an option to opt out of Find Friends.

 

Pudding you in the mood for chocolate

Fri, 2014-06-20 08:01

Here's an extended look at the Marketplace Datebook for the week of June 23:

On Monday, the National Association of Realtors tells us how many existing homes were sold in May.

But hey, what about new homes? You only have to wait until Tuesday. That's when the Commerce Department gives us those numbers.

Then of course you have to fill your house with appliances. On Wednesday the Commerce Department reports on durable goods orders, including appliances.

The House Committee on Science, Space, and Technology discusses the future of human space exploration.

Next, let's go back in time and stand in a supermarket checkout line in Troy, Ohio. Come on, it'll be fun. Hear that beeping sound? Forty years ago on June 26 a pack of Wrigley's gum made history when it became the first purchase scanned using a bar code.

Thursday is National Chocolate Pudding Day. Seriously, I'm not making this up. Someone else did.

On Friday, fashion designer Vera Wang turns 65. She's famous for those gorgeous wedding gowns.

And since it's summer it's time to get out of the house. "Transformers: Age of Extinction" explodes onto the big screen.

The Gray Market: An invisible $2 trillion economy

Fri, 2014-06-20 07:37

When jobs are tough to find and salaries remain stagnant, sometimes people turn to something else to make ends meet. Maybe they start playing poker, or stripping or even selling Tupperware under the table to pay their bills — not necessarily illegal, but not necessarily mainstream.

According to Edgar Feige, economics professor at the University of Wisconsin-Madison, unreported income totals $2 trillion in the U.S. That includes illegal activities like drug dealing, but it also includes side jobs like nannies and eBay sellers.

We want to hear stories of the little and big things you did for money in this gray area. Email us or leave a comment.

Dan Szematowicz, Senior Producer of Marketplace Weekend, shares his story of how he pulled through leaner times early in his career:

A group of friends and I went to the local casino for an evening of shenanigans and tomfoolery. Next thing I know, I’m sitting at a poker table playing VERY low stakes Texas hold’em.

Over the next few hours, the stack of chips in front of me grew. Beginner’s luck, right?

I enjoyed the game, so I went back the next weekend. Same result. I studied the game, constantly practiced and steadily moved up in stakes. After a few months, I was making significantly more money from playing poker than I was from my more respectable job. That extra money allowed me to bridge the gap between what I was pulling down from my entry-level radio job, and the bills that needed to be paid. In turn, that gave me the feeling of security that I needed to concentrate on growing my radio career.

What does pain have to do with econ? Oh, everything

Fri, 2014-06-20 04:25

A pain clinic is a strange place to think about economics.

And to be honest, I wasn’t at the time. I was thinking of myself. My abdomen, freshly scarred from two surgeries to remove endometriosis. My pants, which didn’t fit. The pain and numbness that ran down my right leg. My hand, which wouldn’t hold a pen. I’m a reporter. I have to hold a pen.

The GW Pain Center was on my road back.

The waiting room was full of people with their own pain. Diabetics who’d lost a limb. Older men and women in wheelchairs. Restless kids dragged along, too loud for the small, tense space. Veterans willing themselves to walk a few steps, knowing a punishing set of parallel bars and weights was just inside the clinic doors.

We were not always kind to one another. How can you prioritize one person’s pain over another? Is my set of stairs worth more than your heavy purse? Does your 7 on the 1-10 scale look anything like mine?

Ruth Graham wrote a spectacular story in the Boston Globe about how pain, and our subjective responses to it, can exacerbate inequality. I feel like I saw this a million times over. The skeptical eyebrow at a patient, sometimes me. Were they seeking drugs? Really hurting? How do you know?

I’ve been thinking about pain a lot as we build our new show, Marketplace Weekend. In part because my experience was so formative to who I am now, both physically and emotionally. But more because of pain’s subjective nature. And the necessity to recognize that no matter what you’re experiencing, someone else is living a different experience. Even if you can’t quite grasp it.

But you can ask. And that, to me, is the essence of reporting.

How are you? What was that like? Tell me how it felt.

The author Leslie Jamison wrote a gorgeous and searing book, "The Empathy Exams." I recommend the whole thing, but the first essay, on her time making money as a medical actor, just nails this. “Empathy isn’t just listening,” she writes, “it’s asking the questions that need to be listened to.”

Or even if I’m stumbling around and stabbing at the wrong questions.

“Empathy requires knowing you know nothing.”

That’s how it is with money, too. It pushes you, shapes you. Your 1-10 scale of losing a job is utterly different from mine. That framed first dollar over the bar? Tell me why it’s special.

Our show certainly won’t be perfect, and there will be times when we know nothing. But we’ll aim to ask, with humor, curiosity, and, I hope, empathy.

GE Capital ordered to pay quarter of a billion dollars

Fri, 2014-06-20 04:00

The Consumer Financial Protection Bureau has announced the largest federal credit card settlement over discrimination in U.S. history. GE Capital Retail Bank, now known as Synchrony Financial, was ordered to pay $228.5 million in refunds to customers.

The CFPB says the bank told credit card customers certain services were free when they were not; signing people up and charging them without their consent, and even charging people who weren’t eligible to receive the service.

The largest chunk of the settlement ($169 million) is over allegations GE Capital Retail Bank declined to offer debt relief to people if they asked for service in Spanish, or if they had mailing addresses in Puerto Rico.

“These kinds of practices are amazingly common,” says Jill Fisch, professor of law at the University of Pennsylvania. “Historically credit cards have been an area where the credit card companies are able to identify lower income and less educated consumers and take advantage of them and we’ve seen that over many years.”

GE Capital self-reported the incidents and says it regrets its error. In April, Bank of America paid $727 million over similar practices, and over the past two years American Express, Capital One, Chase, and Discover have all been ordered to refund customers more than $700 million dollars total. 

PODCAST: Why Russia is allegedly anti-fracking

Fri, 2014-06-20 04:00

More on the news that NATO is accusing Russia of giving money to anti-fracking environmentalist groups. Plus, Detroit is implementing new pension plans for some of its residents, the implications of which have other states nervous. Also, Minessota will be the next state to offer businesses the option of classifying as b-corporations, a title which allows the equal prioritization of social missions and profit.

Silicon Tally: YO YO YO

Fri, 2014-06-20 03:00

It's time for Silicon Tally. How well have you kept up with the week in tech news?

This week we're joined by Marketplace's own Sabri Ben-Achour. Ben-Achour reports on Wall Street, finance, and anything New York and money related. var _polldaddy = [] || _polldaddy; _polldaddy.push( { type: "iframe", auto: "1", domain: "marketplaceapm.polldaddy.com/s/", id: "silicon-tally-yo", placeholder: "pd_1403265357" } ); (function(d,c,j){if(!document.getElementById(j)){var pd=d.createElement(c),s;pd.id=j;pd.src=('https:'==document.location.protocol)?'https://polldaddy.com/survey.js':'http://i0.poll.fm/survey.js';s=document.getElementsByTagName(c)[0];s.parentNode.insertBefore(pd,s);}}(document,'script','pd-embed'));

Central bankers clear the way for stock gains

Fri, 2014-06-20 02:00

Markets around the world are riding high as the end of the financial quarter approaches next week. Michael Hewson, chief market analyst at CMC Markets (UK), joins Marketplace Morning Report host David Brancaccio to explain what's behind the surprising strength.

Click on the audio player above to hear Michael Hewson in conversation with Marketplace Morning Report host David Brancaccio. 

Watchmaking revived by at-risk youth

Fri, 2014-06-20 02:00

Behind the heavily secured doors of Tourneau’s New York workshop, watchmakers work on repairing the world’s most expensive timepieces, worth tens, even hundreds of thousands of dollars. With all the Rolexes inside, one expects to find an elderly Swiss man in a milking jacket in charge.

But the luxury watch seller’s technical director is American Terry Irby, a third generation watchmaker. His gentle Arkansas accent and pristine white lab coat give him the air of a country doctor; one with a magnifying eye loupe around his neck instead of a stethoscope. He’s running something of a teaching hospital for watch repair; an unusual program that combines students from tough backgrounds with the fantastically pricey watches that wrap the wrists of billionaires and celebrities. It’s a bid to save a threatened profession, while bettering the lives of some at-risk young people.

During a recent class, Irby leans over the workbench of 20-year-old Justine Hernandez, showing her how to delicately take the hands off a watch -- a tricky thing to do without scratching its face. The tools she uses include some of the smallest tweezers you’ve ever seen, because many watch parts are the size of gnats.

Like others in the class, Hernandez comes from Manhattan Comprehensive Night & Day High School. It’s for older students -- those whose progress may have been held up by poverty, homelessness, or run-ins with the law. The timepieces they work with come from a whole different world.

“We were looking at all the beautiful watches and there’s this one watch that stands out -- costs like $40,000, which is like a car, probably a couple of cars,” Hernandez recalls.

The skills she’s learning could lead to a stable job with solid pay. Irby says qualified watchmakers start at $50,000 and are in demand around the world. Students who do well in the class can move on to paid internships at Tourneau, which can lead to full-time jobs.

This program isn’t just corporate goodwill. Wristwatches are fashionable again and the company needs people.

“I have often said that I would take ten watchmakers today if I could find them,” Irby explains. “Our biggest complaint is that we can’t do the job fast enough.”

Irby’s office overlooks the floor where the watchmakers work, quietly hunched over benches tending to the world’s finest timepieces, some new and others passed through families over the decades. Among those at work is Edwin Larregui, a recent graduate of the program. Irby speaks highly of his talent and dedication and expects him to be in watchmaking a long time.

Fresh from wrapping up work on a handsome Cartier worth several grand, Larregui recalls a time when he got so wrapped up in his work that he unwittingly went home wearing his eye loupe. He giggles as he recounts the funny looks people gave him on the train home. Then he turns serious, speaking with the calm satisfaction of a young man who has finally found something he loves, something he’s great at.

“It’s a part of me now,” Larregui says.

B-corporations can put social purpose over profits

Fri, 2014-06-20 02:00

Come January, when companies in Minnesota can officially register as benefit corporations, Sunrise Banks hopes to be one of the first in line.

This new class of company lets firms declare that a higher social purpose is as important as profits. The idea has only been around for a few years but a growing number of states now offer the classification.

Sunrise Banks is a Twin Cities-based, family-owned firm. Chief executive David Reiling says the company has always had a social mission to help unbanked and underbanked people get better access to capital.

“What the means from a local standpoint is over 60 percent of our loans are made each year in low and moderate income communities,” he says.

Reiling thinks that's consistent with the idea of a benefit or b-corporation. The concept involves putting a goal, like improving the community or environment, on equal footing with profit-making.

Patagonia is one of the best known examples of a benefit corporation. It sells outdoor gear while trying to limit its environmental footprint.

David Reiling thinks the designation could boost Sunrise Banks' brand -- and profitability.

"We see it actually increasing and expanding because we're a b-corporation," he says.

B-corporation status also affords some legal protections. They'd apply less to a firm like Sunrise, where Reiling and his parents are majority owners, and more to publicly held companies.

If shareholders sue because social goals overtake profit goals, management has a defense: the company was set up with a social mission.

Critics of benefit corporations still expect plenty of lawsuits.

"Because ultimately there will be disputes between shareholders and management on the appropriate course,” says Charles Elson, a corporate governance expert at the University of Delaware. “[It’s] fabulous for the courts. Lousy for the investors."

Elson thinks firms that fail to turn a profit could hide behind their social missions, or unethical companies could masquerade as do-gooders. 

"I think it's one of these things that sound great, but when it's developed it creates a lot more problems than solutions," he says.

Right now it's a problem a growing number of companies are willing to have. Twenty-two states have adopted laws allowing b-corporations, and legislation is sitting on the governor’s desks in three more.

Detroit's revamped pension plan may set new precedents

Fri, 2014-06-20 02:00

The pension system that contributed to Detroit’s bankruptcy is changing. Current city workers will be switched to a new pension plan at the end of the month – one in which they’ll shoulder more risk in the future.

But that still leaves an elephant in the bankruptcy courtroom: the judge’s opinion that pensions people have already earned can be modified in bankruptcy.

That's "despite the fact that pensions cannot be modified outside of bankruptcy under the Michigan Constitution,” says law professor Laura Bartell of Wayne State University. “That is the provision that has been the source of all the consternation in the pension community.”

California’s state pension system CalPERS has been particularly vocal. CalPERS is huge, with 1.7 million members.

It's also an interlocked system, says bankruptcy lawyer and UCLA professor Ken Klee. He says CalPERS invests payments from a number of municipalities.

“And so when somebody can’t pay in their share because they’ve gone into bankruptcy, it puts a burden on the rest of the pension system,” he says.

Not every state authorizes municipal bankruptcies, but California has had a bunch of them.

 

Foreign investors may be behind your paycheck

Fri, 2014-06-20 01:30

Foreign-owned U.S. businesses employ 5.6 million American workers, according to a new report from the Brookings Institution. 

The report says more than a third of those jobs are in manufacturing, with an increasing share in the service sector, banking, high tech, and even pharmaceuticals. 

The foreign investment isn’t just clustered in a few big cities, says Devashree Saha, a Brookings senior policy analyst who wrote the report. Saha notes that in Raleigh, N.C., more than half of pharmaceutical jobs are in what's known as the foreign direct investment sector. 

She says FDI in the U.S. fell by more than half from 1999 to 2012, because of competition from developing countries. But that competition is falling off.  

“There are very few opportunities and the US seems like the better of several not-so-great options,” says Moyara Ruehsen, who teaches international finance at the Monterey Institute.

Ruehsen says now, foreign investment is picking up again, because investors see the U.S. as a safe haven.

 

 

 

No, companies don't usually fire their founders

Thu, 2014-06-19 13:37

Chopping off the head of the person who started it all is risky, so boards and investors are often slow to oust the founders of their companies.

"Almost always the decision is made to oust a founder when it just becomes intolerable," says Dave Logan, a management consultant who also teaches at USC's business school, "The amount of evidence, the amount of risk just reaches that overwhelming point."

Even so, it's not easy to fire a founder.

"Usually the founder owns a lot of the company's stock. Usually the founder has a lot of people who are still loyal to him or her at the company. So it's not something to be undertaken lightly," says Chris Yeh, a Silicon Valley startup investor. "There are all these fallouts that come out of ousting a founder: bad publicity, dirty laundry, potentially even lawsuits."

The company's profits and reputation have to be at great risk for a company to ax a founder. In the fashion world, American Apparel and Men's Wearhouse did so, for different reasons. But those perhaps most at risk: Young tech company founders, backed by venture capital. Dartmouth management professor Sydney Finkelstein says investors don't play around.

"They're looking for quicker returns and if they're not gonna get it, they're gonna make the tougher move, and so founder CEOs are [going to] be at bigger risk," says Finkelstein, "But it comes with the territory. If you're willing to take their money, that's part of the deal."

Groupon founder Andrew Mason learned that, but took the bullet with humor in a remarkable public goodbye letter. He started with the standard leaving to spend time with family bit and then, "Just kidding - I was fired today."

By Shea Huffman/Marketplace

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