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Updated: 31 min 44 sec ago

Water prices rise in California

Mon, 2015-07-20 02:00

Paying for utilities is fairly uncomplicated. If you turn off the lights and the air conditioner, your electricity bill is lower. So, you might assume that using less water would mean a smaller water bill. For residents of drought-hit California, that's not necessarily the case. 

Consumers have been told to cut back on their water usage. The state has instituted new regulations, but the companies that provide the water still have to pay for infrastructure.

Lori Anne Dolqueist, a partner at Manatt, Phelps & Phillips who represents water utilities, says when it comes to paying for water, consumers are also paying for "the cost of installing, maintaining, repairing, replacing the underlying infrastructure: the pipes, the pumps, the wells. The other facilities." 

Paying for water has always meant much more than simply paying for what comes out of the tap. And as people are required to use less water, utility companies raise prices to make up the difference.

Click the media player above to hear more.

Banks in Greece re-open

Mon, 2015-07-20 02:00

After three weeks of financial purgatory, retail banks re-opened in Greece on Monday. Withdrawal limits at ATMs remain, but more can be taken out at once. Plus, Greeks will finally be able to get into their safety deposit boxes.

Economist Vicky Pryce of the Centre for Economics and Business Research in London joined us to talk about what this means to Greek pensioners — Click the media player above to hear more.

And from our partners at the BBC:

Athens reached a cash-for-reforms deal aimed at avoiding a debt default and an exit from the eurozone.

But many restrictions remain and Greeks also face price rises with an increase in Value Added Tax (VAT).

Queues at ATMs have been a feature of life in Greece for weeks, with people waiting in line each day to withdraw a maximum of €60 (£41) a day, a restriction imposed amid fears of a run on banks.

From Monday, the daily limit becomes a weekly one, capped at €420 (£291), meaning Greeks will not have to queue every day.

An architect told the BBC that the banks re-opening will make only a small difference to his ability to operate.

"The key challenge is that we cannot pay our suppliers, which means that we will eventually run out of products to sell," Vassilis Masselos told the BBC World Service's Newsday programme.

Water price rise in California

Mon, 2015-07-20 02:00

Paying for utilities is fairly uncomplicated. If you turn off the lights and the air conditioner, your electricity bill is lower. So, you might assume that using less water would mean a smaller water bill. For residents of drought-hit California, that's not necessarily the case. 

Consumers have been told to cut back on their water usage. The state has instituted new regulations, but the companies that provide the water still have to pay for infrastructure.

Lori Anne Dolqueist is a partner at Manatt, Phelps and Phillips. She represents water utilities.

"The cost of installing, maintaining, repairing, replacing, the underlying infrastructure: the pipes, the pumps, the wells. The other facilities," Dolqueist says.

Paying for water has always meant much more than simply paying for what comes out of the tap. And as people are required to use less water, utility companies raise prices to make up the difference.

Click the media player above to hear more.

Gold takes a tumble

Mon, 2015-07-20 01:53
3 weeks

That's how long Greek banks will have been effectively shut down, re-opening on Monday after difficult negotiations regarding the country's debt. As reported by the BBC, the former $66-a-day cash withdrawal limit now becomes a weekly limit of $462. 

5 metric tons

That's how much gold was sold on the Shanghai Gold Exchange during early morning trading in Asia. It's a large amount to be sold in a two-minute window when you consider 25 tons is the normal amount traded in an entire day. Monday saw gold trading down 1.9 percent, falling to a low not seen since 2010. As the Wall Street Journal reports, analysts site a couple possible culprits: China's central bank issued data that show its reserves missed estimates by about half, and information that led some to believe that a big fund would be selling its holdings. Also cited was the expected rise in U.S. interest rates.

3 years

That's how long Mary Keith spent in medical school — as opposed to the customary 4 years — before starting her residency. Keith benefits from a program in Savannah, Georgia, that is aiming to attract more potential doctors to primary care by fast-tracking them through medical school, thereby lessening potential student debt.

37 million

That's how many users are on AshleyMadison, a website that helps cheating spouses arrange affairs. Services like these thrive on secrecy, which is why the news of a breach by a group calling itself "The Impact Team" could be potentially disastrous. As TechWorld reports, the group is demanding the service be taken offline, or else it will publish the names and account information of users of the site. 

80 million

That's how many customers of Anthem Blue Cross Blue Shield had their personal information stolen in a hack earlier this year. It's why next year, the company will offer credit monitoring and fraud detection to most members. The new service comes with a hefty cost for Blue Cross Blue Shield, but some analysts point out that it will probably be less than having to pay for an inevitable class action law suit.

Changing the perceptions of conservative politics

Fri, 2015-07-17 13:00

The American Enterprise Institute is right at the top of the lists of influential conservative think tanks. In his new book, “The Conservative Heart: How to Build a Fairer, Happier, and More Prosperous America,” Arthur Brooks, the president of the American Enterprise Institute, has a lot of thoughts about modern conservative politics and how it can shed the stereotypes people usually have about right-wing politics.

“I’ve talked to a political conservatives, and their opening bid tends to be ‘Hey, conservative politics might not be so great for the poor, but it makes the whole country more rich and that will just lift everybody up,’ as if this were about money,” Brooks says. “It isn’t about money. It’s about dignity. It’s about freedom. It’s about work and all the things we really care about.”

Brooks thinks that the people damaging this are people and movements that perpetuate the idea that conservatives are not compassionate — namely,Donald Trump and the tea party. Brooks says, “The tea party is in the process of trying to transition from a protest movement to a social movement. And that’s going to require not just fighting against things but fighting for people.”

Brooks is less optimistic about candidate Donald Trump’s ability to bring good to the party. “Donald Trump is phenomenom of an election campaign that has a whole lot of media, people that want to build up what’s effectively a political side show into something else,” he says. “There’s nothing that I regret more than somebody calling himself a Republican who is effectively anti-immigrant. I think it’s destructive.”

Despite the stereotypes conservatives face, Brooks does not see this issue of politics exclusive to the perception of the right.

“It looks like it could be another election that’s about competing pessimism," he says. "It sounds like both parties are trying to convince their base that if they vote for the other side, it will be the zombie apocalypse,” he says. Brooks believes that there needs to be a greater change in the dialogue between the two parties. “I want conservatives — and liberals too, by the way — is to be more optimistic and compete with each other on the basis of optimism.”

Reddit proposes new rules

Fri, 2015-07-17 13:00

A lot of people know Reddit through its Ask Me Anything channel; even President Barack Obama has held a chat there.

David Pakman, a venture capitalist at Venrock, says Reddit’s footprint is enormous.

“It’s about a top 33 site on the internet globally. Top 10 in the U.S. It attracts, like, 165 million unique visitors a month," Packman says. "It is really one of the largest media properties on the planet,” he says.

But it has fewer than 80 employees, with thousands of unpaid volunteers who supervise the site’s content and message boards. That’s creating a challenge for the company.  

Internet entrepreneur Ben Huh says Reddit has been the place where you can find the seedy underbelly of human desire.

“You know you have people who have creepy predilections, or are racist or are sexist, or are just plain old troll-y and rude,” he says.

Last year, Reddit only brought in $8 million of ad revenue. So one of co-founder Steve Huffman’s top goals as the new CEO is to ditch the dirt and court the cash.

The trick, says Huh, is to attract advertisers while preserving Reddit’s brand as a place to have open, authentic conversations.

“When you do decide to change things for a site like this, you have the credibility of authenticity. You are not coming in saying, 'I’m doing this for my own benefit.' The users have to believe the greater good has to get done,” he says.

That’s why one of Huffman’s first steps as CEO was to host an Ask Me Anything Thursday with users. During that talk, he proposed new content policies, like banning bullying and illegal activity, and making it harder to find adult-only content on the site.

 

Chicago raises a glass to the end of a happy hour ban

Fri, 2015-07-17 13:00

If you're in Illinois, maybe you're a little happier this week. That's because happy hour is back.

After a 26-year ban and some serious lobbying by the state's hospitality industry, Illinois Governor Bruce Rauner reversed the ban Wednesday and was effective immediately.  

A bartender at Roots Handmade Pizza in Chicago. 

Nova Safo/Marketplace

Similar bans exist in 11 other states, and seven states have limits on happy hours. The aim of these laws, put in place decades ago, is to curb drunken driving and binge drinking. But advocates for ending the ban said it was outdated and cost the state tourism dollars.

"This law is a huge step forward for the entire hospitality industry," says Sam Toia, president of the Illinois Restaurant Association. "We've gotten overwhelming support from all over the state." 

Toia's group campaigned to lift the happy hour ban, which also covered food-and-drink specials, such as a New Year's Eve dinner package that might include unlimited champagne. 

"It's all about conventions, tourism and culinary tourism," he says. "And we feel this bill brought us into the 21st century."

Kelly and Jacob Blair, who moved to Chicago from Austin, didn't even know a ban was in place. But they did notice that things were different from Austin.

"In Austin, it was a big deal that you would chose restaurants and bars to go to based on their happy hour specials," said Jacob Blair, who was with his wife at Chicago's Roots Handmade Pizza not long after the ban was lifted. "When we moved here ... there just seemed like none of them had specials at all."

Scott Weiner, who is co-owner of Roots, says the restaurant depends a great deal on sports fans who come in to eat, drink and watch a game.

"Just doing a special during Monday Night Football, [was] something you couldn't do," says Weiner. "[The] happy hour law might be a way for us to keep business strong."

Fountains serve up craft and locally brewed beers at Roots Handmade Pizza. 

Nova Safo/Marketplace

But the new law has limits, meant to discourage binge drinking and reduce the potential for drunken driving. Happy hour specials can be offered for no more than four hours a day, 15 hours a week, and not after 10 p.m.; the specials must be advertised a week in advance; and no volume discounts are allowed, such as two drinks for the price of one.

In 2006, the Centers for Disease Control and Prevention said excessive drinking cost the state of Illinois $9.3 billion. The median for all states was $2.9 billion. Costs included losses in workplace productivity, as well as health care and criminal justice expenses.  

Chris Bisaillon, who runs several restaurants and bars in Chicago, supports the new law, but is aware of the pitfalls.

"I can remember, in college, quarter-beer nights, or dollar-pitcher nights. And frankly, it just wasn't a good environment. It really did encourage overconsumption," Basaillon says, adding that he is worried some businesses will not behave responsibly under the new law and will go back to those kinds of practices.

At Roots Handmade Pizza, Scott Weiner says such concerns miss the point of the law. "We're not trying to get people ... overly served or drunk. We are looking for ways to get more butts in seats," Weiner says.

And to that end, he plans to ramp up his marketing efforts, including happy hour specials.

Tesla offering upgrade with 'Ludicrous' speed

Fri, 2015-07-17 13:00

From the Marketplace desk of "Man, I'd really like to have one of those": Tesla announced a new feature for its Model S line Friday called Ludicrous mode. 

For a mere extra $13,000, you can get an electric car that not only looks good — because c'mon, they're pretty cars — but also one that goes from zero to 60 in 2.8 seconds.

That's an improvement of four-tenths of a second from the earlier model. 

Or $3,250 per tenth of a second.

Why are they offering that? Because they can. 

Hulu may offer ad-free TV, for a price

Fri, 2015-07-17 13:00

Anyone who subscribes to Hulu knows it never met an ad it didn't love. Its shows are crawling with them.  

"Too much ad clutter makes some people say, 'I don’t want to be exposed to all these ads,' and they go to a competitor," says Thales Teixeira, associate professor of marketing at Harvard Business School.

That's  a challenge for services like Hulu, because the ad-free-TV competition is growing: Netflix, Amazon and HBO, even YouTube, is working on a paid, ad-free model.

That's also one reason the streaming service may consider a new no-ad tier, which is more expensive than its current $7.99 monthly fee for the top service. 

But all this buy-your-way-out-of-advertising poses a problem for traditional advertisers.

"The people you are losing through opting out are some of the most valuable customers," says Lars Perner, an assistant professor at the USC Marshall School of Business.

People who have extra income. People in the market for say, a Lexus, or an expensive new gadget.

Steve Kazanjian, head of the television marketing organization PromaxBDA, isn't worried.

"You will be able to buy your way out of a 30 second spot, but you will never be able to buy your way out of being marketed to," he says.

Kazanjian says marketers are getting smarter about targeting ads and making them more relevant. 

They’re working on making their brands part of the show. And the data you turn over when you opt out: they can use that too, to get a better idea of how to market to you somewhere else.  

 

For some, family history can be traced through a bank

Fri, 2015-07-17 12:59

Judith Alter Kallman has a fancy New York City address with fancy art in fancy gold frames on the walls. On a recent visit to see her, Andy Anderson, Wells Fargo chief historian  spread documents and maps of countries that no longer exist across her coffee table.

“This is the ship manifest for the passenger ship S.S. Kroonland,” he says, pointing out the name of Kallman’s father-in-law, Hirsch Kallman, who went by Harry after moving to the U.S. He came through Ellis Island in 1904 in his late teens or early 20s, a baker with brown hair and gray eyes.

“That was the beginning of the family story here in America,” Anderson explains. 

The S.S. Kroonland was in service from 1902-1927, Anderson says. It was built by the Red Star Line. (Image via ancestry.com)

Kallman had only $20 with him when he first arrived, according to the manifest. Six months later, he and his brother had made enough to send for other family members. Fast forward a century. The family members now have enough wealth to be considered among Wells Fargo’s top clients, which is how they came to work with Anderson.

Wells Fargo employs a team of historians to research and document the family histories of its top clients, those with the potential of doing at least $25 million dollars’ worth of business with the bank. While it doesn’t charge for the service, Anderson says these histories more than pay for themselves.

“In particular with multigenerational families, it’s not uncommon to see a doubling of assets under management after we do this,” he says.

Anderson says documenting this history for the Kallmans helped deepen the family's relationship with the bank, but he also works with new and potential clients, even some companies. Genealogy has become an increasingly popular pastime for many Americans. Ancestary.com and its affiliated websites brought in $620 million in revenue last year, nearly triple 2009 figures.

The ship manifest page on which Hirsch and his brother Simon are listed as arriving on the S.S. Kroonland, according to Anderson. (Image via ancestry.com)

However, for Alter Kallman, this was more than just a hobby. She lost her parents and two siblings during the Holocaust and used Anderson’s research to aid in the writing of a memoir, “A Candle in the Heart.”

“I needed that sense of belonging, knowing where I came from,” she says. “I had to pass this on to my children: ‘Don’t get involved with the wrong crowd, with the wrong people. You come from a wonderful foundation; you come from a heritage that is special.’ ”

Anderson says helping clients teach the next generation where the family’s money came from and the hard work it took to create it is a big motivator for Wells Fargo. After all, it’s in the business of building and preserving wealth — they don’t want that money going anywhere. The more they manage, the more they make.

He tells customers to consider your past to plan your future.

“History is always about the future,” he says. “If you just take a look at the reasons why you were successful previously, they’re the best signpost you’ll ever have about how to be successful going forward.”  

For tips on how to start researching your own history, check out the document below: 

Weekly Wrap: Trading one financial meltdown for another

Fri, 2015-07-17 12:59

Joining us to talk about the week's business and economic news are Leigh Gallagher of Fortune and the Wall Street Journal's John Carney. The big topics this week: Greece and the EU kicked the can, the potential looming meltdown in China, Google's earnings and the Fed.

If you look hard, housing data offers good news

Fri, 2015-07-17 12:59

Housing starts rose 9.8 percent in June, the U.S. Commerce Department reported Friday. Yet behind that big monthly number is some economic noise. Almost all the building increase came in apartments and condos, which creates fewer jobs than the single-family house market and can be a volatile statistic month to month.

Still, economist Stephanie Karol of IHS Global Insight notes a broader set of numbers that reflect what she calls a housing recovery gaining steam: building permits are at their highest in eight years; single-family housing starts, on an annualized basis, were up 43 percent in the second quarter; and first-time home buyer purchases rose nearly 30 percent over last year.

"That's new blood entering the marketplace," Karol says. "That frees up some of the older buyers to then turn around and say 'Hey, I want a new house. I want to build the house that I've always wanted.' "

Analyst Daniel Hyman at Pimco notes the housing market is fueled by an improving labor market. He says the economy has created 10 million jobs in the last five years, and the jobless rate has dropped more than four percentage points.

"People have jobs, a little more money in their pocket," Hyman says. "They form households."

Banks may hold a key to the next level of recovery, says Morgan Stanley managing director Vishwanath Tirupattur. He says mortgages are affordable, they just aren't available to enough people.

"While we are getting better, better than last year," Tirupattur says, "we are quite far from what would I consider to be a more normalized housing market."

How millennials live, in four charts

Fri, 2015-07-17 12:13

Nearly a third of millennials still live with their parents, and about four in ten older millennials have children, according to the Census Bureau’s data released this week. Millennials — the oft-marketed-to 18- to 34-year-olds — make up a third of the labor force, and they're a generation in transition. How do millennials live? And with whom? Let’s do the numbers:

Many more millennials have lived with their parents since the financial crisis. Many millennials can’t work out the math to become a homeowner. There are also remaining nightmares of underwater mortgages. These seem to be big challenges especially for men. A lot more of them remain at their parents’ homes than women do.

 

Much fewer millennials are choosing to live with non-related roommates compared to a decade ago. Picking random roommates or living with friends has fallen out of fashion as more young people live with their relatives or opt to live alone.

"Will you marry me?" "No, I won't." "Will you reside with me? Yes, I do."

More younger millennials are choosing to live with their significant other without being married. That's a marked difference from just a decade ago, and older millennials are on the same path, although their rate of marriage is declining more slowly.

Americans are taking fewer vacation days

Fri, 2015-07-17 10:34

Though summer can conjure images of vacations, resorts and road trips, fewer Americans are actually taking time off from their jobs to go on those vacations. 

Katie Denis is senior director at Project: Time Off, an organization that researches paid time off in the U.S and its effects. The company is powered by the U.S. Travel Organization, which represents many companies in the travel and tourism industry.

In a recent report, Project: Time Off found that the declining American vacation is actually a relatively new problem. "When you look at how much vacation we've taken historically, there's this idea of the storied American work ethic, and that's always been part of the fabric of our country. But we looked at data from the Bureau of Labor Statistics that starts back from the '70s to about 2000, we have this really static trend line of taking about 20.3 days vacation."

Courtesy of Project: Time Off

"And then we start to drop off. And the drop off has not slowed. In just the last 15 years, not even 15 years, we've managed to lose almost a full work week of vacation," Denis says. "Most people when we talk about this say, 'Well, you know, we're not going to be France.' No one says we have to be France. We can be the U.S. 15 years ago. It doesn't have to be a massive, massive overhaul of everything we can consider normal."

Denis mentions that the traditional thinking that as hours worked goes up, productivity must follow, is also an inhibitor to why we don't take time off.

"I was actually looking at the typical hours per week that [people in Organisation for Economic Co-operation and Development] countries worked. Germany has one of the lowest hours-per-week-worked countries out there. And I think everyone really highly regards their economy— Greece in particular. They're highly productive, but they're on the lower end of hours. 

"I think that if you're overworked, your productivity drops off. There's tons of studies that show that. It's one of those things. I know I went through that when I had my first child. I put way more hours before, but day care does not care about your work life. My productivity, if anything, went way up."

Most people who eschew taking time off worry that work is going to pile up if they leave the office or that they don't want to be seen as replaceable. 

Denis, though, says this is the wrong mindset. "As much as we've talked to employees, we've also talked to company leadership, managers, [human resource] leaders, trying to get a sense of what they think about the issue. And what we're finding is they are overwhelmingly positive. They know all the benefits and taking time off. They know it's good for their employees, but they don't talk about it. When we ask employees, 'OK, what do you hear from company leadership, management, about this issue?' two-thirds say, 'I don't really hear anything.'"

The skydiving destination that sells adventure

Fri, 2015-07-17 10:33

In a small plane climbing quickly to 12,500 feet, 20 skydivers are packed like sardines, waiting to jump.

At Skydive Perris in Perris, California, this is one of many planes to take off today, packed with professional skydivers and first-timers looking for a thrill.

Divers line up to board a plane at Skydive Perris. (Bill Lancz/Marketplace)

Skydive Perris is a destination for skydivers: it's one of the largest skydiving facilities in the country, one of only two with a wind tunnel. The facility operates seven of its own planes, runs it own tiny airport and is home to a well-known skydiving school. On the ground, there is a pool, a restaurant and a bar (no drinks before jumping, only after). 

The Redbull is flowing freely, and Perris is full of skydivers wearing brightly colored flight suits and heavy parachute packs. Seasoned pros land at high speeds, chutes flapping behind them, and sprint in to swap packs and hop on the next plane. Behind them come first-time jumpers, legs still wobbling a little from fear or adrenaline, beaming and hardly able to speak. 

Even in the summer, Skydive Perris' low season, you might see 80 first-time jumpers on a weekend day. Full-time skydivers frequent the facility too, paying $26 per jump once they have their own equipment, a steep discount from a $199 first-time tandem jump.

"We are a recreational facility the same way a ski slope would be ... a tennis club, a golf course," Skydive Perris Manager Dan Brodsky-Chenfeld says. "There are people here from 18-85 years old, from every conceivable walk of life, every economic background, every different kind of job, every ethnicity — quite a wide range of people."

Brodsky-Chenfeld has seen whole families come in to jump and even hosted a man jumping for his 100th birthday who came back for his 101st. 

Keeping the busy facility running takes a lot of work. According to Brodsky-Chenfeld, "about 100 people earn their living at Skydive Perris." That includes instructors, pilots, parachute riggers and a full-time maintenance crew for the planes. The restaurant, bar and wind tunnel have full-time staffs, and freelancers travel to Perris to teach lessons. 

The business of adventure isn't always lucrative. "You're not necessarily going to buy a Mercedes or a mansion," says pro diver and instructor Lawrence de Laubadere, "but, you're going to be happy, and when you wake up, you're happy and you get to make people happy."

De Laubadere makes money teaching people to dive. He got hooked during college and has been with Perris for four years, ever since he left work at the United Nations for what was supposed to be a three-month skydiving vacation. 

Wingsuit skydivers hang out the window of the plane preparing to perform a trick jump. Two divers will fly together, one on the other's back, while a third diver films. (Bill Lancz/Marketplace)

Professional skydivers like de Laubadere make money doing demonstration dives, jumping into stadiums and for big events. They can also make money coaching, teaching new jumpers or, if they invest their own time and money, honing their skills to the point where they can instruct wingsuit skydivers and teach more skilled specialties. 

Most of the instructors at Skydive Perris make $40 to $50 per jump. Most of them say it's not really about the money — one wingsuit diver, a tourist from Iceland, says his goal is to make enough money teaching skydiving to support his own skydiving.

De Laubadere agrees. "The other day I jumped onto Santa Monica beach, and I got 200 bucks for it," de Laubadere says, "and frankly, I would have paid 500 bucks to make that jump, because it was awesome."

Repeat skydivers, whether or not they're making their living jumping from planes, seem to be chasing something other than a thrill. The real reason so many of them keep jumping? Flight, freedom and the sense of complete focus and calm they feel right when they exit the plane. 

Skydivers parachute down towards the landing strip at Skydive Perris. (Bill Lancz/Marketplace)

"People think that skydivers are just here for the adrenaline rush, but I've got over 26,000 jumps," Brodsky-Chenfeld says. "If I still had the same adrenaline rush as I did on my first jump, I'd have had a heart attack by now. It's not about that ... you learn to fly ... and it's that sensation that we're all in love with, and there's nothing like that feeling at all." 

Where do you find financial shelter?

Fri, 2015-07-17 09:45

Next week on the Marketplace Weekend, we'll be looking at the places where we seek shelter in our cities, lives and in our wallets.

We want to hear from you! Where do you seek financial shelter? Tell us your story.  

Write to us! Reach out on Marketplace's Facebook page, send us an email or reach us on Twitter, @MarketplaceWKND.

New monthly reports distill consumer beefs about banks

Fri, 2015-07-17 07:04

This week the Consumer Financial Protection Bureau published its first monthly report highlighting trends in consumer complaints about financial services companies.

The agency was born out of the Dodd-Frank Wall Street Reform and Consumer Protection Act and was launched in 2011. Handling consumer complaints related to issues like debt collections and banking services is a key part of its mission. The CFPB says in its four years of existence, it has handled 650,000 consumer complaints, and its enforcement work has resulted in more than $10 billion in relief for more than 17 million consumers. 

Consumer advocate Ed Mierzwinski with U.S. Public Interest Research Group says the CFPB's new monthly report provides a kind of dashboard summarizing complaints.

“So every month, the CFPB is going to say which are the worst companies, and then it's going to drill down into a specific kind of company, and finally it's going to look at geographical trends,” he says.

Rankings are based on volume of complaints. The credit reporting agencies Equifax and Experian had the most over a three-month period earlier this year. Bank of America came in third. 

“They're basically in the shaming of banks business by providing what I call a ‘David Letterman Top 10 List’ of complaints,” says Richard Hunt, president of the Consumer Bankers Association.

Hunt is dissatisfied with the CFPB's methods of substantiating consumers’ beefs. And he says the largest institutions will naturally rack up the most complaints.

“I could’ve saved the CFPB a lot of taxpayer money deducing that,” he says.

In written remarks yesterday, CFPB Director Richard Cordray said the agency is assessing how it can "'normalize' complaint data for size and volume, among other things.'"

PODCAST: The battle for branding

Fri, 2015-07-17 03:00

After the week's turmoil in Europe, we'll check in on the U.S. economy. Plus, we'll talk to U.S. Secretary of Education Arne Duncan about the Senate's vote to revise No Child Left Behind. And we just got more details on the biggest apparel deal in college sports history: Nike is agreeing to pay the University of Michigan $169 million to be the school’s official athletic brand.  It’s a sign of the battle between Nike, Adidas and Under Armour to own college campuses.

The problem with Puerto Rico's debt

Fri, 2015-07-17 02:00

On Wednesday, one of Puerto Rico’s government agencies failed to transfer a debt payment of $93.7 million to a trustee. Failure to make an additional payment on August 1st could constitute a default. Now, if this same scenario were happening in a state, that agency would probably restructure what they owe — just look at the city of Detroit last year. But Puerto Rican agencies can’t do that.

"What's really weird about Puerto Rico is that the commonwealth has been excluded from the Chapter 9 provisions of the bankruptcy code," says John Pottow, a professor at the University of Michigan Law School. "Now what's weird about Puerto Rico's omission from the bankruptcy code is that no one can really defend it. It appears to be a technical error. In fact, if you go back through the legislative history it looks like Congress tried to fix it and was unsuccessful. So, the clear text of the Federal Bankruptcy Code for mysterious reasons precludes Puerto Rico from letting its entities file for Chapter 9."

There's a bill in Congress that would allow Puerto Rican agencies to file for Chapter 9, but it has stalled. And Federal Reserve Chair Janet Yellen said Wednesday that she thinks the Fed "can't and shouldn't" get involved in the commonwealth's debt crisis. The commonwealth itself even drafted legislation to try to restructure its debt. "It passed and then got struck down as unconstitutional for, ironically, violating Chapter 9 of the Federal Bankruptcy Code, which they say preempts it," Pottow says. 

Steven Walt, a bankruptcy law specialist at the University of Virginia Law School, says even if Puerto Rican agencies continue to miss payments, bond holders aren't in a very powerful position because everyone will just have to wait and see what happens in Congress before creditors can go about collecting. "Realistically speaking, okay, so there's a default. What are the collectors going to do? Yes, they're entitled to payment and even to accelerate their debt but they're going to have a very hard time realizing on any assets in Puerto Rico."

Walt says the complicated, multi-faceted debt restructuring scenario for Puerto Rico puts them between a rock and a hard place. "They can't restructure, without unanimous agreement, and that's not forthcoming. At the same time they don't have entry into the bankruptcy code. They can't enter it directly as a municipality, obviously. And secondly, Chapter 9 somehow preempts them from enacting legislation that would allow for restructuring. So, it leaves them out in the cold, doesn't it?"

Iran wants new U.S. planes

Fri, 2015-07-17 02:00

Iranians are flying around in airplanes that are at least 25 years old. There have been crashes, and many near-crashes.

“The plane is struggling, going up and down and side to side,” says Hooshang Amirahmadi, a Rutgers professor and President of the American Iranian Council, a nonprofit working to improve U.S.-Iranian relations, recalling a flight in Iran about a dozen years ago. “The plane almost crashed.”

That was an old Russian plane. But Iran can’t get new parts for its aging western-made planes because of sanctions. Western companies were briefly allowed to apply for licenses to export things like spare airplane parts to Iran. 

“This is a relatively small market,” says Joel Johnson, an aerospace trade analyst at the Teal Group. 

He says, for example, Boeing has a backlog of orders for new planes.

“There’s a limit to how much enthusiasm you bring to the table when you have a very strong backlog already,” he says.

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