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November 26, 2009 CNN

REV. BILLY TALEN, "THE CHURCH OF LIFE AFTER SHOPPING": Well, we celebrate buying nothing day. Black Friday changes. It's a miracle to buy nothing day. We urge people to slow down their shopping.

JOHNS: A lot of people are going to buy nothing this year, given the economy and all.

TALEN: Well, sadly, there's a lot of pain and suffering out there. But some of those people that are jobless and broke and so many of us are finding new ways to celebrate Christmas, Hanukkah and Kwanza this year.

JOHNS: And, you know, there are people out there who would say the responsible thing to do would be to tell people to go shopping, go ahead, spend your money. I think the president sort of has suggested that before. Why not tell people in a bad economy, spend your money, get the economy revved up and going again.

TALEN: I agree with what you just said. It is a bad economy. It can't be a shopping economy. Not 70 percent. And that's what it's been for the last several years. And that's just not working. We're trying to shop our way out of this economy to a new level of shopping. That's not working. We can't just be a debtor nation anymore. We can't just be full of cheap stuff everywhere made in sweat shops thousands of miles away with fossil fuel everywhere, plastics everywhere, and credit cards and everybody in debt. We can't continue that. So we're looking for an alternative.

JOHNS: So what's the relevance, though, really? If you're telling people stop shopping, and they've already stopped, what's your point, I guess?

TALEN: You stop shopping, but start giving. That's what the holidays are for. The good way to do that is to find your gift locally. Walk to your gift this year and buy it there. Buy it from an independent shop on your main street, in your neighborhood, in your community.

Okay, let's see if I'm following this. The administration is talking about lending money to small businesses because the banks to which they've already funneled billions didn't do the thing all that money was supposed to do: make them open up the taps and lend working capital to businesses.

Are we clear now?

The Obama administration is developing an initiative to take money from the $700 billion program for the banking system and make it available to millions of small businesses, which officials say are essential to any economic recovery because they employ so many people, according to sources familiar with the plan.

The new effort -- which would represent a striking shift from the rescue program's original mandate -- would direct billions of bailout dollars toward a program that aims more at saving jobs than righting the financial system.

A proposal being floated by senior Treasury Department officials calls for using the bailout funds to expand an existing government program that helps small companies borrow money from banks a low rates to keep their businesses going, the source said. These "working capital" loans would come with few restrictions and could be used for buying inventory, holding onto employees and paying off short-term debt.

The initiative would expand a Small Business Administration lending program called 7(a), the agency's most popular lending program. Lines of credit for small companies could greatly increase in size. If the firm failed despite receiving this help, the government would cover most of the losses on the federal loan, perhaps as much as 90 percent. Lines of credit act like the credit cards for companies -- short-term revolving debt used to pay a variety of immediate expenses.

Discussions about the plan have reached the highest levels of the administration. In a meeting at the White House last week, Treasury Secretary Timothy F. Geithner expressed support of his staff's proposal, while National Economic Council director Lawrence Summers was more skeptical. Neither has made up his mind, officials said.

"Larry has supported every small business idea we have implemented so far," said Gene Sperling, a counselor to Geithner, who has been working on small business issues. "When we have a brainstorming session on new ideas, Larry as always asks the toughest questions in the room."

The debate over the proposal has centered on whether taxpayers would be protected and whether banks that make these loans would lower their standards if the government promises to cover most of any loan losses, according to participants present or briefed on the discussions. The spoke on condition of anonymity because the conversations were considered private.

On one hand, administration officials want to prevent healthy small businesses from closing their doors and adding their workers to the growing ranks of the unemployed. But small companies have poorer record of repaying loans compared to large corporations and would be the riskiest investment made under the bailout program to date.

The officials said the discussions are in the early stages and that no plan is expected before the fall. Ideas currently on the table may evolve or be scrapped altogether, they said.

Anything that creates or maintains jobs is good, but I wonder if this will really do that. I think too many of those small businesses are already gone.

I've been following this for a while, and it's encouraging news if the commodities regulators follow through. These guys have been driving up the cost of oil with the same sort of shady tactics used in the financial markets. Good for the Obama administration if they take this aggressive approach:

WASHINGTON — Reacting to the violent swings in oil prices in recent months, federal regulators announced on Tuesday that they were considering new restrictions on “speculative” traders in markets for oil, natural gas and other energy products.

The move is a big departure from the hands-off approach to market regulation of the last two decades. It also highlights a broader shift toward tougher government oversight under President Obama.

Since Mr. Obama took office, the Justice Department has stepped up antitrust enforcement activities, abandoning many legal doctrines adopted by the Bush administration.

The Obama administration is also proposing an overhaul of financial regulation that would include tougher capital requirements for big banks, tighter regulation of hedge funds and a new consumer protection agency with broad power to regulate credit cards, mortgages and other consumer lending.

In the case of oil and gas trading, regulators made it clear that they were willing to move, without waiting for Congress to act on Mr. Obama’s overhaul, invoking their existing powers.

I have to laugh at this transparent ploy: Let us keep our usurious interest rates, Senator, or your American Express card is gonna get it! Apparently the fine folks of the credit card industry seem to believe they have an inherent right to obscene profits. Uh, ixnay, fellas. Usury is not only a sin, it's bad economic practice. Legislators have a right to control your out-of-control industry because credit has become something akin to a necessary public utility - especially when people can't even get a job due to a poor credit rating.

Seems to me it's time these companies learned to trim their expectations to fit current reality. I wonder if credit card executives have been asked to take off one day a week to save their company a day's pay?

Credit cards have long been a very good deal for people who pay their bills on time and in full. Even as card companies imposed punitive fees and penalties on those late with their payments, the best customers racked up cash-back rewards, frequent-flier miles and other perks in recent years.

Now Congress is moving to limit the penalties on riskier borrowers, who have become a prime source of billions of dollars in fee revenue for the industry. And to make up for lost income, the card companies are going after those people with sterling credit.

Banks are expected to look at reviving annual fees, curtailing cash-back and other rewards programs and charging interest immediately on a purchase instead of allowing a grace period of weeks, according to bank officials and trade groups.

[...] As they thin their ranks of risky cardholders to deal with an economic downturn, major banks including American Express, Citigroup, Bank of America and a long list of others have already begun to raise interest rates, and some have set their sights on consumers who pay their bills on time. The legislation scheduled for a Senate vote on Tuesday does not cap interest rates, so banks can continue to lift them, albeit at a slower pace and with greater disclosure.

“There will be one-size-fits-all pricing, and as a result, you’ll see the industry will be more egalitarian in terms of its revenue base,” said David Robertson, publisher of the Nilson Report, which tracks the credit card business.

People who routinely pay off their credit card balances have been enjoying the equivalent of a free ride, he said, because many have not had to pay an annual fee even as they collect points for air travel and other perks.

Of course the banks are up in arms about any legislation that would turn off the usury spigot they've milked for decades. Ann Logue at Popdose points out just one example:

...my credit card limit is $20,000. I could use the card to fly first class to Paris and go on a spree at Le Bon Marche yet pay no interest if I paid it off in full the first month it was due. But take $140 from an ATM and hold the balance for 20 days or so, and the total fees and interest work out to about $24, an annual interest rate of 208%.

Another crazy practice is late fees: I've received a credit card statement showing my payment as posted (they got my money in time to print it on my paper statement) but because they posted it one day after their "due date" they tried to charge me $29.00 in late fees. I called and complained (which works more often than you might think, do try it) and they reversed it, but how many $29.00 payments do you think got added to their balance sheets this year from people "afraid" to call a creditor?

Obama's bill does not go far enough, and doesn't start soon enough (one year for most of its provisions IF the Senate passes it) but it's a start.