Explaining Southern California's economy

Bullet Points: The utter pointlessness of banking fees

Wells Fargo is about do it. So is Bank of America. Huge financial institutions with billions in deposits are struggling with post-bailout legislation and passing costs on to their customers. People who've gotten used to swiping their debits cards for every imaginable transaction are about to see that service run them as much as $60 a month.

In the New York Times, Ron Lieber and Ann Carrns assess the pros and cons. But when you get right down to it, there basically are no pros. Here's why:

  • Credit unions offer branch deposits. Online banks get dinged for not having a physical place where you can hand over cash or checks to an actual human person. But they don't have a monopoly on old-school, bricks-and-mortar banking. Credit unions also have branch offices — and in many cases are members of networks, so you get a collection of branches that's comparable with the Big Banks.
  • Online banking is easy and technologically sophisticated. ING DIRECT, for example, offers a suite of checking accounts that actually earn interest. That's right, they pay you to hold your money. Setting up an account is a relatively simple process. And because money is pretty much just numbers flying around in the electronic ether, it really shouldn't be a problem to adapt yourself to this no-so-brave new world.
  • There's no risk to not using a Big Bank. Deposits at BofA are FDIC-insured. But so are deposits at online banks. Credit union deposits are also insured, by the National Credit Union Association (NCUA). 
  • Not using a Big Bank may actually be BETTER for the Big Bank. Back in late 2009, Arianna Huffington, along with a group of finance folks, got involved with a project called Move Your Money. The idea was to, in a manner of speaking, take from the rich and give to the poor. With in this case the poor being local banks. The upshot would be an surge in funding to "Main Street" banks, which might enable the kind of small-business lending that the country needs to recovery from the Great Recession. And the Big Banks would in turn be less likely to pose a massive risk to the entire system.

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Visual Aid: Is California too big to fail?

I just started reading Michael Lewis' big new Vanity Fair piece on California's precarious finances. More on that later. But for now, check out the chart, above, which tallies up the total debt of all U.S. states and breaks out California's contribution. Doesn't look too bad at first. But remember, there are 50 states. And every single one of them has less debt than Cali.

Taken together, the states have $1.045 trillion in debt. California has about $135 billion. New York is number two at $123 billion. Massachusetts is third, with a distant $75 billion. California isn't twice as high, but it's not far off (and these are 2009 numbers). And this situation is unlikely to improve any time soon. The most recent UCLA Anderson Forecast doesn't anticipate a turnaround in the state economy for another year, with no real sustained progress until 2017. 

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What is 'Occupy LA' really protesting?

Kevork Djansezian/Getty Images

Following in the footsteps of the Occupy Wall Street protest movement, a group called "Occupy LA" set up shop in front of City Hall over the weekend and have now begun to move around town. 

Back in New York, things had turned ugly, as the two-week protest saw a bunch of protestors arrested as they marched across the Brooklyn Bridge. From what I can tell, Occupy LA was rather more mellow. I asked a KPCC colleague who had visited the protest what the protesters were, you know, protesting. He wasn't sure, but he did say that "We are the 99%" signs were all over the place.

The LA Times explains:

The movement takes issue with corporate influence on government and the shift of wealth and political clout toward the richest 1% of the population. Many protesters carried signs with variations on the slogan "We are the 99%."

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Reportings: Big September for cars; boring iPhone; Solyndragate II; Michael Lewis

Are bailed-out and formerly bankrupt U.S. car companies now recession-proof? Both General Motors and Chrysler had a big September: "General Motors Co. said its U.S. sales jumped 20% to 207,145 vehicles compared with September 2010. Chrysler Group's sales surged 27% to 127,334 vehicles, marking the company's best September since 2007." (LAT)

Is the Apple iPhone too grown up to have a wow factor? "'Industrial design is important, but in these small packages we are starting to bump into the laws of physics,' said Tim Bajarin, a consultant with Creative Strategies Inc. 'You aren't going to do anything that I would consider radical in design and still get this feature set and function.'" (WSJ) 

Paul Krugman gets on China's case and highlights the massive U.S. trade deficit: "A return to economic health would look much more achievable if we weren’t spending $500 billion more each year on imported goods and services than foreigners spent on our exports." (NYT)  

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Enough with debit card fees! Give us a...Google Bank?

A month ago, I blogged about how Wells Fargo was preparing to increase debit card fees. We had asked for opinions via KPCC's Facebook page and gotten back…a reaction that was almost uniformly unhappy about Wells Fargo's move. 

Now Bank of America has followed suit. The consensus among observers of the banking business is that the practice is now here to say, after more than a decade of banks discounting their services or getting rid of fees altogether. I'm one of those people who's never paid a fee to use a debit card. And I use it for nearly every purchase I make.

But I don't bank with BofA, or Wells Fargo. I belong to credit union. Back in August, when we asked Facebook nation what it thought about Wells Fargo, the credit union option was repeatedly suggested. This time around, when I tweeted out my old post and made the credit union point, I received pretty positive feedback.

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