High Altitude Thinking

My gosh, does the current administration think we are a bunch of knuckleheads?  They just can’t tell it like it is.

Earlier this week, FDIC Chairman Sheila Bair commented to the American Bankers Association that she was frustrated at perceptions that U.S. taxpayers (or could be read as “us taxpayers”) are on the hook for the cost of bank failures.  Does she believe that the impact of advanced and increased FDIC insurance premiums will not be passed on to customers and depositors through higher fees, higher interest rates on loans or lower interest rates on deposits?

It was further enlightening today in Secretary Geithner’s testimony to the House Financial Services Committee.  I’ve lifted a segment from his written testimony below:

“The third element of effective reform is making sure that taxpayers are not on the hook for any losses that might result from the failure and subsequent resolution of a large financial firm.

The government should have the authority to recoup any such losses by assessing a fee on large financial firms. These assessments should be stretched out over time, as necessary, to avoid adding to the pressure induced by the crisis.”

Maybe they are just being clever with their words, but I have a hard time separating my roles as a taxpayer, customer and consumer in these matters.

I’m not against the FDIC program, in fact, retail banking would be completely disfunctional without it.  However, when I read Secretary Geithner’s comments I fear that they are parolized to tackle the “too big to fail” issue along with the other G20 nations.  It is hard to see how a postmortem fee on large institutions would be carried out successfully.  Are they going to ask them to sign-up to this today?  Is it going to be a “sign-up or break-up” ultimatum?  Does it imply that the composition of the large financial institutions wouldn’t change over time through natural market forces?

The questions that must be answered are difficult and complex in today’s global economy. This is on top of regional and community banking sectors that are still a long way from being sorted out. I don’t envy their tasks under a political microscope.  But let’s put mid-term elections to the side and just tell it the way it is.

Don’t let them fool ya.  Ultimately, “us taxpayers” will pay.

BA

p.s. Thanks to Bob Marley for some borrowed words this week.

A few weeks ago I wrote a blog concerning prioritizing health insurance in the healthcare debate.  I recently had my own experience with the confusing world of health insurance and service providers.

After suffering through a marathon in the summer of 2004 and watching my foot swell like a balloon, I decided to visit my doctor and learnt that I had developed gout.  Probably not unusual for a 40-something male and I came to learn that my father had developed gout at about the same age.  At that time I decided to go on medication.  Allopurinol – good stuff – been around since the early ’60s.

Upon returning to the US this spring, my doctor wanted to do some blood work prior to renewing my subscription.  Made sense to me.  Over the course of the next few months I received several notices from my insurance company detailing the medical service received and reminding me that “This is Not a Bill”.  In general, I ignored them.

Come mid-September, I finally do get an invoice from the service provider explaining that I owed $300 for the service and indicating that the insurance company had paid nothing for this “routine” service.  Seemed a little surprising to me since I remembered the automatic withdrawals every month paying my premiums, so I decided to give them a call.

Now I don’t claim to follow the details of my coverage but was somewhat surprised when I was advised that the coding of these “routine” services were not covered under my policy.  I was further advised that I should request the service provider to re-bill the services to the insurance company as medical expenses and they would be covered.  Seemed helpful enough at the time.  The next call was to the local service provider (who is part of a national network).

I explained the conversation I had and was sternly advised that it was not possible to re-bill the service, in fact, maybe even illegal.  I was promptly advised however that the person on the phone was pre-authorized to offer me a 40% discount from the invoiced amount.  Had the service been provided after September 1, they could offer me a 45% discount.

While I thanked her for her offer – and accepted – I was surprised by the cavalier business practice.  I hadn’t even asked for the discount.  I guess healthcare providers like to negotiate against themselves.  That said, I recall someone telling me about buying a car from a close friend who owned a dealership.  Regardless, you still walk-out feeling like you’ve been had.

Lessons learned?  1) The healthcare industry has issues for a reason.

2) Always ask for a discount.  Hey Steve, can you knock 10% off that iPhone?

BA