Tag Archives: economics

Banking Regulations

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Are they anti-bank?  They’re certainly in the way of getting new organizations into the banking business.  The total number of banks in the US has fallen from a peak over 18,000 to under 6,900 this year.  The first new bank to be Federally chartered since December 2010 [sic], the Bank of Bird-in-Hand in Bird-in-Hand, PA, opened last week after spending 7 months in charter Hell working on getting permission to open.  Here’s a sample of what BiH had to go through to be allowed to operate as a private business.

  • [T]he backers behind the Bird-in-Hand group raised about $17 million from investors.
  • Brent Peters, Bank of Bird-in-Hand CEO, estimated the group spent about $800,000 in preparing its application for a new charter
    • consulting and legal fees
    • rent on a temporary office
    • salaries of top managers, four of whom were on the payroll one month before the bank won FDIC approval
  • [L]ay out internal policies and procedures in detail
  • [S]pecify the systems in place to, for example, guard against cyberattacks
  • Paid consultants analyzed the local lending market and the feasibility of opening a bank there
  • The FDIC interviewed senior management and contacted banks competing nearby

All that because the feasibility of doing business and that business’ internal practices are for government to determine, not that business.

Government asks competitors what they think because competitors get a voice in whether a new bank should be allowed to operate in their territory.

Sounds pretty anti-bank to me.

Union Leadership Greed in Illinois

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Details of a plan reached last week appear to show [Illinois] state legislative leaders are attempting to solve Illinois’ $100 billion pension crisis in part by changing workers’ retirement age, reducing automatic pension increases, and limiting their collective-bargaining privileges.

Public union leadership disagrees with this, though, and they’re turning on that Democratic Party leadership.  These union leaders consider carefully selected and targeted Democrats to be “persuadable,” and these unionists are going to do some “persuading.”

Never mind that the plan will save roughly $160 billion over 30 years, according to Governor Pat Quinn (D) and the leaders of the Democrat-controlled State Assembly.

Illinois’ public sector union leaders object to their unions paying their fair share.  They have theirs, and to Hell with anyone else, to Hell with the fact that Illinois is bankrupt in every way but the filing.  Pay up, suckers.

How Does This Work?

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The CMS has a Request for Proposal out [emphasis added]:

Solicitation Number: RFP-CMS-RMADA-2014
Notice Type: Modification/Amendment
Synopsis: Added: Nov 20, 2013 1:17 pm

The purpose is to develop a Research, Measurement, Assessment, Design, and Analysis (RMADA) IDIQ [Indefinite Delivery, Indefinite Quantity contracting/procurement type] to respond to expanded needs of the Patient Protection and Affordable Care ACT (ACA) and Health Care reform ACT (HCERA).  The work awarded under the RMADA will involve the design, implementation and evaluation of a broad range of research and/or payment and service delivery models to test their potential for reducing expenditures for Medicare, Medicaid, CHIP, and uninsured beneficiaries while maintaining or improving quality of care.

Section C of this RFP has this expansion [emphasis added]:

…the [CMS] will award task orders (TOs) for a wide range of analytic support and technical assistance activities that support models and demonstration programs created or derived under the auspices of the Patient Protection & Affordable Care Act (ACA), and future health reform legislation where new delivery and payment reform models are enacted.  The demands of new reforms created under ACA have redefined the way CMS approaches and conducts research activities and demonstrations affecting Medicare, Medicaid, CHIP, and uninsured populations.  The role of state and private sector payers is also redefined as many of the new models include multiple payers working in collaboration with CMS to reform the care delivery system.  The RMADA will provide CMS with a robust tool to meet those challenges.  Some of the major activities this umbrella contract will address include the following: designing, maintaining and refining model/demonstration design and operations; monitoring model site implementations; designing and carrying out surveys and other data collection activities; obtaining and analyzing secondary data sources including Medicare, Medicaid and Children’s Health Insurance Program (CHIP), and private payer sources that support model design and evaluations.  Some other evaluation activities envisioned under the RMADA include reporting on formative and summative analyses, providing rapid cycle quarterly evaluation feedback to all model participants and CMS, and the creation of summative annual and final program findings.

Aside from only just figuring out that “The demands of new reforms created under ACA have redefined the way CMS approaches and conducts research activities and demonstrations affecting Medicare, Medicaid, CHIP, and uninsured populations” and “The role of state and private sector payers is also redefined…,” they’ve also just discovered HHS, or its CMS ObamaMart Project “Integrator,” hadn’t thought about doing these things from the jump.

As a result, now they want to spend an additional $7 billion of our money on their failure.  Probably, it’s too much to hope for any of these billions being committed to saving pennies will be committed to reducing the costs of all that added reporting and paperwork.  Or even that the entire $7 billion could be saved (and sent over to Treasury to reduce our national debt) with withdrawing this foolish RFP.

Another Failed Government Farm Policy

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The US government is being forced to support sugar companies even though taxpayers are already footing a $280 million bill stemming from loans the companies can’t repay.

The loans are all part of the Feds’ farm policy of propping up sugar prices.  So 300 million American sugar consumers can pay artificially high prices to benefit a few sugar farmers.

All told, Alexandra Wexler wrote in her Wall Street Journal article at the above link,

processors defaulted on $171.5 million in 2013, even after the USDA spent $106.7 million buying sugar to boost prices.

Wexler quite properly decries the matter, but she lays it off to a government problem.  No.  This failure, and these bankruptcies, in fact aren’t costing the US government anything, and the US government isn’t at all being “forced to support sugar companies.”  This failure is costing American citizens—us taxpayers—those of us who fund the government—all this money.  This failure is a part of we American citizens’ being “forced to support sugar companies.”

Wealth Redistribution, Industrial Style

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…additionally, with industry as helpless victim, a taxpayer bailout.  It’s an Obama two-fer: spreading the money around and bailing out an industry.

Built in to Obamacare, it turns out, is another form of wealth redistribution.  In order to guarantee every insurance company a profit (as opposed to, more properly, engendering an economic environment within which every insurance company has an opportunity for a profit), Obamacare has embedded in it something called a “risk corridor.”  Here’s Power Line‘s description of what this corridor is:

The risk corridor program, by its design, is basically a risk sharing program among insurance companies, administered by the government.  Companies that make out better than expected provide funds for companies that make out worse.

Wealth redistribution on an industrial scale.  But wait—there’s more:

If essentially all insurance companies make out much worse than expected, as may well be the case, the risk corridor concept won’t work as intended.  It will work only if reinvented to force taxpayers to subsidize the industry.

The Obama bailout.