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BANK OF AMERICA NEW MONTHLY FEES: IS THE GOVERNMENT FORCING NEW FEES BY FORCING BANKS TO PAY FOR MORTGAGE BAILOUTS?
TRACY BYRNES: How could you not blame the government, Cheryl? My goodness! First, they need to stay out of the way. The most recent 26 billion dollar foreclosure-mortgage bailout garbage; who do you think is paying for that other than us because it's all going to be passed on to us? The regulations; the fees; the banks have to find a new source of income these days and believe it or not, it's going to be fees on you and I.
JONATHAN HOENIG: Well, we've been hearing this for the better part of four years now, Cheryl. I mean, the government is strangling the banks with these regulations and of course the cost is passed on to the consumers. The regulations were supposed to fix the banking system, but like housing, like the plan to fix the job market, it's really only made things worse and I'll tell you, I didn't see Senator Dick Durbin out there protesting with the occupiers, but he might as well have been because here was the U.S. senator telling people to move their money out of Bank of America. It's happening all over. Even JP Morgan this week said they can't make money serving customers with less than 100K because of the regulations. Blame the government for that.
CHRISTIAN DORSEY: No we shouldn't be surprised, and look, banks are not as profitable as they used to be, but it's not just because of regulations and mortgage bailouts as you call them, which by the way, are their own doing because of their own illegalities and malfeasance, but it's also because they're over-exposed in Europe, which is battering their balance sheets. Also because traditional banking business is slowed by having a very weak United States recovery, but you know, bankers are a whiny bunch because in the middle of all of this, they're still able to deliver bonuses at the same rate that they did before. Bonuses! So this is not all about how bad they're doing. It's about the choices that they're making.
WAYNE ROGERS: Well, I think it's more complicated than that. It's the fault of Washington, but it's the fault of the Congress because the Congress has allowed four banks; we've got four banks in the United States that control over 54 percent of the banking assets in this country. That's a monopoly. That's a violation of the free market. We do not have competition; otherwise the Bank of America could never do this. None of them could because there would be competition. I could go across the street if I don't like what this bank is doing for me, but the government has fixed that by allowing these banks to amalgamate enormous amounts of capital and they're controlling and it's a monopoly and they should be broken up.
JOHN LAYFIELD: Correct and you're not going to get many new customers. In fact, you're going to get the poor being thrown out of the system, which is exactly what is happening with these regulations; this Durbin amendment specifically. One point six trillion has been taken out of the credit markets because of this regulation; a good part of it because of that. Banks do not have the ability to re-price risk. You have gone unbanked in this economy from one in four to one in three, so banks are now looking at this and saying you can't price risk, we're just going to take these people out of the system completely and now these people, this is what's bad, are going to these payday lenders and to debit cards and to check cashing services where they are getting raped on these fees.
EMINENT DOMAIN BATTLE HEATS UP: SHOULD GOV'T BE ABLE TO TAKE PRIVATE PROPERTY FOR ECONOMIC DEVELOPMENT?
JONATHAN HOENIG: Well life, liberty, property and the pursuit of happiness, Cheryl. Those are the basics of American individual rights. Without property rights, no other rights are even possible and for the government to take people's private property and hand it over to another citizen for the so-called public good is criminal behavior. There's no other word for it. I'm glad to see this case was overturned.
WAYNE ROGERS: Well, it's not a question of fair. Jonathan is right. As a general theory, I agree with that. However, under certain circumstances a community decides what it wants to do. It has a referendum; they vote for it. If they vote for it, and there is an area that, let's say a bunch of abandoned buildings, that are worthless, nobody is paying taxes, nothing has happened with them, then take that area and redevelop it. Form a redevelopment agency; sell bonds; acquire the property, by the way, buy appraisal so it's appraised and you can contest that and a fair value is paid for that property and it's for the benefit of the whole community. So, there are exceptions to that rule that do make sense.
CHRISTIAN DORSEY: We already have eminent domain for things like public stadiums for example and if you can't tell me why that's allowed, you know it's allowed because it creates jobs, it diversifies the tax base and that can be considered a public good and the Congress really has no room to be playing referee in these local, land-use decisions. Jonathan, you always talk about how Congress messes things up, and now you want them involved in local, land-use decisions? That is best dealt with at the local level, not coming from Congress in this case, but Congress does have a role to make sure that people do not have their property taken without being compensated, not just fairly, but a premium above-and-beyond fairly for that.
TRACY BYRNES: I mean, I think it's a really scary thought to know that potentially something could be taken away from you without you having much say. This notion that we have this big brother government; it's just everywhere and I'm sorry, it is a continual step to socialism. Taking over and taking away our rights and liberties is not why we live in the United States of America.
JOHN LAYFIELD: Look, you're not talking about a railroad here. You're not talking about a highway that's necessary for markets or economies. You're talking about potentially something like a waterslide, and I don't care if it's local politicians or if it's politicians in Washington, D.C. I don't want them making decisions on a home that I may have grown up in and had my dog buried in the backyard for a water park. I think it is stupid, I think it is an overreach and it is completely contrary to everything this country stands for, for taking my home for private economic development because it leads to corruption.
GOOGLE: DON'T EXPECT ANY PRIVACY ON THE INTERNET
WAYNE ROGERS: Well, I think that as long as there is a market for your privacy, you're going to be the object of all of these people trying to get that information and you shouldn't give it away. You should be very careful about what is your private information. You fill out forms all the time. People have access to those. They lose them. We've seen the abuse of this over and over again; both in private and in public ways and you've got to be very careful and protect yourself; so all of these companies should back off. We're protected by the constitution for privacy. We should enforce that.
CHRISTIAN DORSEY: Well, you know this is always part of the deal even if we didn't realize it. Google's going to make money from advertising and that's only going to come from advertisers being able to target you specifically and that's only going to come from the information that you provide online. People have got to stop thinking that just because they can use the internet behind closed doors that they're going to get the same privacy that they get when they're behind closed doors.
TRACY BYRNES: You know what Cheryl? I think it's buyer beware as we said. You are out there; you're putting yourself out there. If you're willing to put your credit card information and your address in some cyber space website, whatever, you're out there and it comes with the territory I think these days, these guys have to figure out have to monetize and make money and you know the legalities of trying to rein this in; good luck with that.
JOHN LAYFIELD: We are beating up on Google too much, there's no doubt in my mind. Look, the aggregation of information has gone on in the retail business since back when people still used libraries and you gave them your library card. They would make a record of what you're reading. You go into a retail store or they keep up with what you're spending or where you're looking at; what you're buying; what you're not buying. This is just more of the same. If you don't like it just stay off the internet it's that simple. Don't put information out there that you're scared is going to be stolen.
JONATHAN HOENIG: Well I'm thankful for Google, Cheryl. Here's a service that I use, I don't know, five times a day? I've never paid a dime for and I'm thankful for it. They offer a trade and as the panelists pointed out, folks can either choose to use it or not, and maybe who knows? There might be a market for a search engine that specifically protects your privacy. Maybe this is Ask Jeeves big comeback here, but I'm thankful for Google and for all that they do in helping make information more accessible and more available for all.
WHAT DO I NEED TO KNOW?
TRACY BYRNES: French presidential candidate pushing for 75 percent tax rate.
JOHN LAYFIELD: Bet on (ETP) as it bets on oil and gas in the U.S.
WAYNE ROGERS: Get great returns by returning to quality, buy (F).
JONATHAN HOENIG: Watch profits rise with rising interest rates, buy (FLOT).