The Ohio Coalition for Responsible Lending lost one of its members this week as Rent-a-Center, a company that charges outrageous rental rates on furniture and owned a payday loan company told America's Second Harvest and its Ohio affiliates that Rent-A-Center would not honor its half-million dollar pledge to them unless Second Harvest withdrew from the coalition.

The Second Harvest affiliate withdrew, not wanting to endanger the promised donation, even though they had originally joined because companies like Rent-a-Center that take advantage of the poor are part of the reason that the poor need to go to food pantries.

Today, in the Wall Street Journal, generally firewalled, Jonathan Kellerman compares health insurers to the Mafia and concludes that the Mafia is better to do business with:

The health insurance model is closest to the parasitic relationship imposed by the Mafia and the like. Insurance companies provide nothing other than an ambiguous, shifty notion of "protection." But even the Mafia doesn't stick its nose into the process; once the monthly skim is set, Don Whoever stays out of the picture, but for occasional "cost of doing business" increases. When insurance companies insinuate themselves into the system, their first step is figuring out how to increase the skim by harming the people they are allegedly protecting through reduced service.

How do you save money when dealing with low-level service employees?

For more than 40 years, the Federal Government's response has been to outsorce certain service jobs under a 1965 law, called the McNamara-O'Hara Service Contract Act. It is supposed to guarantee equivalent pay, but there are loopholes and poor enforcement. After all, when it comes to service, the easiest and, often, only way to save money is to cut wages and cut benefits. The companies that are running the service expect to make money at it. Usually, the bigger companies do offer health care coverage because it is nominally required by their contract, unless the contractor can show that health care coverage is not normally provided in the sector, but many contractors, particularly smaller ones, who have contracts that require health care coverage fail to offer it or to pay the cash alternative of $3.16/hour.

The Wall Street Journal has an article about this problem today.

You may remember that a lot of people in America bought their homes using adjustable rate mortgages, even though fixed mortgages were near historic lows. Well, some local governments did the same thing, only worse. The worse is called auction-rate securities and they are becoming the newest disaster on Wall Street.

The process is simple:

• Local government borrows money long-term, 30 years is popular.
• Instead of paying fixed rate, the interest rate is bid on every 7 to 35 days by investors.
• Local government pays the interest bid, whatever it is.
• Repeat for thirty years.

Right wing talkers want a Democratic victory because it makes their jobs easier and, they think, they will make themselves richer. Proving that they don't actually care about conservatives or values or anything else but themselves, they have attacked McCain, by any rational standards a man who is a fairly conservative candidate, as not being sufficiently pure on their Conservative Hypocrite scale.

Mark Helprin, in an op ed in the Wall Street Journal figures that the Right-Wing Talkers are down on McCain, not because he isn't really a conservative, but because they expect to rise again, as they had in the '90s, if there is a Democrat in the White House.

It doesn't matter that Mitt Romney, suddenly their Reagan, became a conservative in a flash of light sometime last year, or that their other champion, a populist theocrat, is in many ways as conservative as Vladimir Lenin. The task is to stop the devil McCain.

The Wall Street Journal has a front page story (still firewalled?) about Nataline Sarkisyan tomorrow. While not terrible, one gets the idea that folks in the health insurance industry still think this is a PR problem, not a problem in the way health care funding impedes decent health care.

Today, the Wall Street Journal has a great front page article about the effect of subrogation on accident victims. The company grabbing the money from the accident settlement happens to be Wal-Mart, but they are not the only ones who do this, every health carrier has some sort of subrogation clause in their policy so you won't come out ahead after an accident. Wal-Mart has won in court and I would be surprised if they lost if the Supreme Court took the case.

"Employers are trying to make sure these plans run as efficiently as possible," says Jay Kirschbaum, a senior vice president at global insurance broker Willis Group Holdings. "They also have a fiduciary duty to the plan and the entire group of employees that are covered by it."

David Brooks discovers (firewalled) that the Brookings Institute is publishing articles from Heritage Foundation fellows and immediately endorses Evolving Beyond Traditional Employer-Sponsored Health Insurance by Stuart Butler. Since Brooks was gushing all over Butler and the proposal, I had to take a look to see what the proposal was and if Brooks had misunderstood any of it. As usual, Brooks was much more impressed than I am.

Bayou Investors went broke a few years ago because their founders defrauded the company. Some of the investors thought that they had smelled a rat in time. Yesterday, they found out that getting out isn't good enough. They couldn't take their profits and go home, because there were no profits to take. The judge said they had to put the money back so the creditors could get paid first (it appears they will now get about half of what they were owed, the investors are likely to get nothing).

Hedge fund managers have become increasingly powerful on Wall Street as they manage to run their investment funds with minimal regulation. A bankruptcy decision yesterday by Adlai Hardin, Jr., a judge in U.S. Bankruptcy Court for the Southern District of New York concerning Bayou Investors has to make every single investor in the hedge funds concerned whether the promise of great riches is worth the risk, when he said that the money that was cashed out by investors prior to bankruptcy had to be returned to the bankruptcy trustee as money received as a fraudulent conveyance under the bankruptcy statute.

The high court voted 5-4 to overturn the jury verdict, ruling it violated earlier high court decisions on limits to punitive damages. The decision could further curb the size of product liability awards against companies beyond new limits the high court outlined in its 2003 State Farm ruling.

Try to wrap your mind around this vote:

Chief Justice John Roberts Jr. and Justices Anthony Kennedy, David Souter and Samuel Alito were in the majority. Justices John Paul Stevens, Clarence Thomas, Ruth Bader Ginsburg and Antonin Scalia dissented.

In 2003 the Supreme Court put clear limits on punitive damages in State Farm Mut. Automobile Ins. Co. v. Campbell, 538 U. S. 408, since then, questions have arisen about what the limits need to be. Today's decision in Philip Morris USA v. Williams gives us a better idea, and does it in such a way that I think we will see a major improvement in the uses of punitive damages in civil cases.

Apparently, it's okay to lie if you are the RNC Chairman:

They call it their 'slow-bleed' plan. Instead of supporting the troops in Iraq, or simply bringing them home, the Democrats intend to gradually make it harder and harder for them to do their jobs. They will introduce riders onto bills to prevent certain units from deploying. They will try to limit the President's constitutional power to determine the length and number of deployments. They will attempt to keep the Pentagon from replacing troops who rotate out of Iraq. They may even try to limit how our troops operate by, for example, prohibiting our armed forces from creating and operating bases in Iraq.

For those of you with access to Times Select, there is another excellent essay from Judith Warner letting us know that the Department of Labor is evaluating proposals to reconsider the Family and Medical Leave Act.

If you think there is a chance that the review will be nothing but cover to gut it, and Warner certainly is in that camp, you can contact the Department of Labor through February 16 through this page. This was an extension from the original request that would have ended on February 2. There was a diary about this back in December by shirah, but this is the last week to comment. If you haven't yet encouraged the Department of Labor to expand FMLA, to support American families, now is the time to do it.

The Wall Street Journal reported behind its normal firewall today on a rising problem, and how nice the banks are being in dealing with it.

As the number of borrowers falling behind on their mortgage payments climbs to the highest level in five years, the mortgage industry is trying new strategies to help bail them out.

Much of the attention is on homeowners who in recent years took out adjustable-rate mortgages, a popular way to finance a home when interest rates were low. Now, with rates having moved up, many of these borrowers have recently seen, or soon will see, their mortgage rates adjust higher for the first time.

Oh, is that a problem?

Food is cheap in the United States. The percentage of U.S. disposable income spent on food prepared at home decreased, from 22% in 1950 to 7% in 2000, even if we add back the roughly 7% of our income that we spend on average on restaurant food in the US, we can see that the cost of food to us is relatively small.

For all of our food dollar, the farmer continues to get a smaller share as we buy our food more heavily processed. Even bread, which really hasn't changed in the past half century, has become notably more expensive compared to wheat. According to the census bureau a pound loaf cost between twenty and twenty-five cents in the sixties, while the farmer got about a buck sixty a bushel for wheat. Now the farmer gets about four dollars for a bushel (well below the inflation rate) while a pound of bread is generally two dollars or more. Corn prices have fared worse.

Meanwhile, sugar is so relatively expensive, compared with other sweeteners, that commercial businesses now do as much of their sweetening with high fructose corn syrup as they can. Still, it's no surprise that there are sugar farmers complaining about the price of sugar in the US, they just don't happen to be American sugar farmers.

That is the federal debt as of December 14, 2006. Your share is almost $30,000. You can check on it every day if you like at the Bureau of the Public Debt's The Debt to the Penny and Who Holds It. It's disappointing reading. Of course, that number is almost 50% greater than it was at the beginning of Bush's first budget (9/28/2001). Apparently Bush could not believe that St. Ronald of Reagan was wrong when he proved with his own disastrous deficits that tax cuts do not pay for themselves and that Arthur Laffer is a successful con man, but not a good economist. The real surprise is that despite the towering debt and the substantial deficit being run by the federal government, long-term bond rates are relatively low.

Federal Reserve Chairman Ben Bernanke had some remarks today about the costs of paying for the retirement of the Baby Boom generation. Apparently he discovered that a whole bunch of the people he grew up with were going to be retiring in a decade or two or three and that the Bush Administration's totally irresponsible pattern of spending and borrowing is going to cause problems. How nice of him to notice. Well, not really. He may be starting to warm up for the Bush Administration's new and improved version of "Gut Social Security" called "Gut Social Security and Medicare".

The National Association of Realtors reported that sales of houses fell less than expected in August, but the median home price dropped $5,000 from July and 1.7% from August 2005, for the first year-to-year price dip in 11 years and the worst since 1990. Volume sales didn't decrease as much as expected. falling 0.5% to an annualized rate of 6.3 million homes sold, not as bad as the 6.2 million concensus projection. It's no surprise that mortgage rates have been slowly sinking over the past three months.

The Wall Street Journal has reported that Pinnacle Development Partners LLC is being investigated for its ads by California securities regulators. The Post-Gazette has also picked up the story. Basically, the company is promising 25% returns in 60 days based on their ability to buy distressed property, clean it up and sell it. Apparently, Pinnacle is the only business in America that isn't being affected by the slowdown in real estate. Of course, if they were really doing what they say, they would be able to borrow money for far less than the imputed 100% interest that they are offering in their ads.

So, what's special about this one? Nothing much. Barry Minkow, the once infamous child-star of fraud who knows a thing or two about fake refurbishing of buildings, appears to be one of the folks pushing regulators into examining what Pinnacle is doing. In the "it takes one to know one" category, Minkow now runs the Fraud Discovery Institute and it's quite likely that he is correct in his assessment of the actions of this company.