Government

TASC: FTC Proposal Would Hurt Finance Industry

2009-11-20T08:50:56-07:00

MADISON, Wis.—The Federal Trade Commission’s proposed changes to the Telemarketing Sales Rule (TSR) would not only adversely affect consumers in debt but creditors as well, The Association of Settlement Companies (TASC) announced today.

The FTC is seeking to create an amendment banning advanced fees that TASC believes could effectively eliminate debt settlement as a viable option for consumers struggling with unsecured debt as well as for creditors (e.g. banks) that need to repay the federal government. The ban would make settlement companies in essence work for free for the better part of what is normally a three-year program. Last year, the debt settlement industry settled $2.2 billion worth of debt.

“Without the debt settlement industry, many consumers who lack the courage to admit an overloaded debt condition and the willingness to do something about it will lose their conduit to a better tomorrow,” Carmine Dorio, Senior Vice President of Progressive Financial, said. “These consumers will then simply dissipate into credit’s black hole commonly referred to as bad debt.”

This bad debt would stem from consumers who cannot afford credit counseling or have to file for bankruptcy, the so-called alternatives to debt settlement if the industry was eliminated. According to a study conducted by consumer advocacy group Credit Karma, credit card debt increased 14 percent nationally from September to October, so the need for a viable option such as debt settlement also is increasing, TASC noted.

At the same time, debt settlement has grown as an increasingly useful financial tool for creditors. The publication insideARM reported recently that “accounts receivable management companies are shifting their collection strategies to include more settlement offers … as debtors struggle through a recession that shows little sign of letting up.”

“Debt settlement provides a useful medium for consumers in debt and their creditors,” Dave Leuthold, Executive Director of TASC, said. “During this tough economic climate, debt settlement is even more valuable for more consumers and creditors and should not be eliminated by the FTC.”

About The Association of Settlement Companies
The Association of Settlement Companies (TASC) promotes fair business practices, consumer protection and industry standards for the debt settlement industry. TASC, founded in 2005, serves to protect consumers through an organization seal that represents best practices and standards of reputable companies. The organization also protects its member companies through lobbying efforts at the state and national levels, as well as awareness initiatives to educate consumers on debt settlement as a financial solution. All TASC member companies pledge compliance to strict association bylaws governing business practices and ethics. For more information, visit www.tascsite.org.

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Collection Agency Settles Class-Action Lawsuit for $2.55 million

2009-11-04T08:13:58-07:00

A California check collection firm Monday agreed to a $2.55 million judgment to settle a class action lawsuit in Pennsylvania. It is the first in a series of lawsuits against the company.

American Corrective Counseling Services (ACCS), based in San Clemente, Calif., agreed to the settlement Monday in a Delaware bankruptcy court, according to the Associated Press. The company did not admit any wrongdoing.

ACCS filed for bankruptcy protection in January of this year.

The lawsuit said that the company sent out letters to citizens that had bounced checks at various businesses. The letters appeared to come from district attorney offices around the state of Pennsylvania, warning the recipients that they were under criminal investigation for bouncing checks. ACCS said that they could clear up the matter if the consumer paid the debt with a penalty and attending a one-time education course.

Although ACCS was contracted with 20 different district attorneys in the state and the letters were legal, the civil lawsuit noted that it was a deceptive and unethical practice to threaten consumers with criminal action when none was likely to be forthcoming.

Approximately 15,000 Pennsylvanians were represented in the lawsuit by the Community Justice Project in Pittsburgh, according to the AP. Since ACCS cannot pay the $2.55 million settlement, the Project hopes to get the money from the company’s insurer.

ACCS faces more class-action lawsuits in California, Florida and Indiana.

In late 2007 and early 2008, ACCS lost a series of cases that exposed it to civil lawsuits. The firm argued that it was shielded from civil cases due to its business relationships with public offices (“ACCS Defends ’Sovereign Immunity’ Case as Public Citizen Mulls Class Action Suit,” Feb. 11, 2008). But after the company lost two cases where it was ruled that they were subject to lawsuits, consumer attorneys began to amass classes to go after ACCS.

Officials with ACCS could not be reached Wednesday for comment. But an ACCS official told insideARM last year that district attorneys were on their side in the matter.

"If we’re guilty, the DA’s office wouldn’t have been there arguing on our behalf,” ACCS Senior Vice President Kirk Barrus told insideARM, referring to a "friend of the court" brief filed on behalf of ACCS by an attorney with the California District Attorneys Association.

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Senator Defends IRS Private Debt Collectors After GAO Report

2009-11-02T08:15:15-07:00

The Government Accountability Office late last week released a report on IRS debt collection efforts detailing the agency’s failing in properly notifying delinquent tax payers. A prominent Senator publicly noted that the IRS is floundering after cancelling its private debt collection initiative.

A report issued last week by the GAO, “TAX DEBT COLLECTION: IRS Needs to Better Manage the Collection Notices Sent to Individuals,” noted that the “IRS lacks documentation for and evaluations of its business rules for notices to individuals to assure that the collection notice phase is achieving desired results.”

The GAO was evaluating how efficiently the IRS uses the notification phase of its collection process, the first phase in the process.

Senator Charles Grassley (R-Iowa), Ranking Member of the Senate Finance Committee, said in a statement Monday, “The IRS and some members of Congress rushed to cancel the private debt collection program, arguing that the IRS can do the job. Meanwhile, the tax gap is $345 billion a year. Today’s report shows the IRS’ ways of collecting taxes are wasting money and not getting the job done.”

The IRS in March of this year, with the backing of many members of Congress, opted against renewing the contracts of two debt collection agencies that were helping to recover back taxes (“IRS Kills Private Debt Collection Program,” March 6). A popular argument at the time was that the IRS could more efficiently collect taxes using internal resources, rather than relying on private sector expertise.

Grassley was a longtime supporter of the IRS private debt collection program; one of the firms collecting on the contract, CBE Group, is headquartered in his state.

The report issued last week by the GAO was written at the request of the Senate Finance Committee and was addressed to Grassley and committee chairman Max Baucus (D-Mont.)

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Bernanke Tries to Push an Unpopular TALF Program

2009-10-01T07:02:07-07:00

Federal Reserve Chairman Ben Bernanke last Friday touted the benefits of continuing the Term Asset-Backed Loan Facility (TALF), but the program has been largely unused to date.

“In response to the financial crisis that began more than two years ago, the Federal Reserve has introduced various programs to improve the functioning of key financial markets, with the goal of helping to restore the flow of credit that our economy needs. Usage of many of these programs has been winding down as markets improve, but one program for which an ongoing need still clearly exists is the Term Asset-Backed Securities Loan Facility, or TALF,” Bernanke told the Congressional Black Caucus Foundation's Annual Legislative Conference. “This program, which was implemented this year, has helped restart the securitization markets for various types of consumer and small business credit. Securitization markets are an important source of credit, and their virtual shutdown during the crisis has reduced credit availability for many borrowers. Since its inception, the TALF has indirectly financed nearly 3 million loans to households (excluding credit card loans) and nearly 400,000 loans to small businesses.”

However, the actual use of the TALF, now at about $40 billion, is a far cry from the $1 trillion available in the program, said Dan North, chief economist at Euler Hermes ACI, a trade credit insurance firm.

“I’m puzzled that there hasn’t been greater participation,” North said. “The asset-backed securities in the TALF should go up over time. And if they fall, the government absorbs a significant portion of the loss. Other loans are far more risky because they don’t have this government backstop.”

Investors participate in the TALF by receiving loans from the Federal Reserve to finance purchases of asset-backed securities. TALF was designed from the start to be available to a diverse set of participants: TALF loans to purchase asset-backed securities are available to virtually any U.S.-domiciled firm, and firms can participate with investments as low as $500,000. There have been 121 borrowers so far, including investors of all sizes, according to Bernanke.

But with chargeoffs continuing to rise, lenders are unlikely to participate in the program until there is a clearer picture that the economy is well into a recovery stage, North said.

John Jay, senior analyst at Aite Group, agreed, saying that lenders won’t feel comfortable with various credit granting programs until there is a sign that job losses have stopped and companies are hiring again. The latest monthly unemployment figures come out Friday, with many economists expecting the figure to inch nearer to 10 percent.

“Banks are still grappling with credit card losses,” Jay said. “They are still rationalizing the credit that they give. So they are not granting credit to people, which puts the kibosh on the growth of the TALF.”

One area of TALF that may see some growth when the next quarterly numbers are released, according to Jay, is auto loans due to the “Cash for Clunkers” program. Many dealers saw delays in finalizing the paperwork for the very popular program, so the actual participation in this part of the TALF may not show up as soon as expected, due to delays in reporting the numbers. But other credit accounts -- for student loans, credit cards and mortgages -- are likely to remain low at least until next year, according to Jay.

David Lavine, director of valuation and litigation at Kaulkin Ginsberg, said TALF is also suffering from a limited pool of collateralized securities for which it can be used. Despite many discussions about the possibility, the TALF has yet to include commercial mortgages, even though many economists point to this as a continuing danger area for the economy.

Lenders are also concerned that some of the rules for the TALF could change quickly and unexpectedly, according to Lavine. “After the first tranche of the Troubled Asset Relief Program (TARP) was awarded, the government changed the deal. Lenders are afraid about that happening with the TALF.”

Beyond the credit issues Jay mentioned, another problem with TALF-based financing is that the program’s rules require a lot of time to fulfill, meaning it takes a long time to put a deal together. This delay puts another dampener on the usage of the program.

“The program hasn’t been a demonstrable success,” Lavine said. “It’s a not a panacea. It was only one of three or four things the government did to attempt to stabilize the credit markets. It’s more political than a lot of people would like to admit.”

North added that Bernanke’s most recent comments about the TALF should also be taken in the political context in which they were given. He cited Bernanke’s following remark:

“Since TALF is open to all investment firms, we needed agents to work with potential borrowers. In March, I participated in the TARP/TALF Access Summit that you organized. At that summit, we heard that a more diverse set of TALF agents would help bring in a more diverse set of TALF borrowers. Acting on that good suggestion, we recently announced the inclusion of four new TALF agents, selected to increase the diversity of TALF borrowers. Three of the four are owned by African Americans.”

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Pioneer and Premiere Credit Dominate ED Collection Contract in August

2009-09-29T08:05:12-07:00

Pioneer Credit Recovery and Premiere Credit of North America in August enjoyed comfortable victories in their respective categories in the Department of Education’s monthly student loan debt collection performance competition.

Pioneer was the leading collection agency on ED’s unrestricted contract, reserved for larger companies. Pioneer dominated the competition by bringing in $17.4 million in the month and posting a near-perfect performance score. A tightly-clustered group including Van Ru Credit Corp., NCO Group and CBE Group vied for a distant second for points accumulated in the third quarter through August.

ED’s performance scores are based on a weighted average of performance metrics, including total dollars collected, total accounts serviced and administrative resolutions. The scores are released each month, but compiled for internal scoring on a quarterly basis. Final quarterly rankings determine bonuses and account placement levels.

Through August, Pioneer has brought in $44.75 million in the second quarter, with Van Ru in second with collections of $36 million.

On the small business set-aside contract, Premiere Credit also posted a near perfect performance score in August. Overall small business leader Continental Service Group (ConServe) was in second place with the remaining three small business collection agencies far behind.

Premiere led the way in dollars collected in August with $6.8 million, followed closely by Account Control Technology with $6.6 million and ConServe with $6.4 million.

The 17 collection agencies on ED’s current contract have brought in $6.33 billion for the government in the 54 months of the contract. Pioneer leads all companies with $825 million collected while ConServe leads the small business contractors with $216.5 million collected.

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State Lawmakers Seek Legislative Solutions to Health Care Reform Mandates

2009-09-28T08:51:53-07:00

Some Republican legislators are looking into ways to sidestep a federal health care reform effort that mandates insurance coverage, a proposal that could lead to the possibility of a single-payer system.

Specifically, lawmakers in eight states have filed a resolution or bill that would limit, alter or oppose a single payer mandate or mandates requiring individuals or employers to buy insurance. Supporters hope their proposals will lead to state constitutional amendments, said Richard Cauchi, spokesman for National Conference of State Legislatures. Four other states have discussed taking similar action.

However, the efforts may be moot, even if voters approve the measures. Like the Employee Retirement Income Security Act (ERISA) and Health Insurance Portability and Accountability Act (HIPAA) laws, legal experts say federal health care reform would supersede any state law.

Even if a federal law allows some exemptions, the states must still comply with federal regulation, said Loyola University Chicago Law Professor John Blum. “Even then, states would have to meet federal standards.”

Blum said it’s ironic that state lawmakers are considering looser standards for health insurance, when large corporations traditionally have turned to less restrictive federal ERISA laws for relief from state laws.

The movement by states to try to stave off federal mandates for health care coverage began with actions taken by Arizona lawmakers who passed, along party lines, Resolution HCR 2014 in June, which will appear on the November 2010 ballet.

That prompted lawmakers in Florida, Indiana, Minnesota, New Mexico, North Dakota, West Virginia and Wyoming to propose their own constitutional amendments. While the language differs, they share a similar goal, “to block a single payer provision and a requirement that individuals or employers would have to purchase insurance,” Cauchi said.

The bills either died in committee or do did not pass by the end of the session in six of the eight states. But some lawmakers in Kansas, Louisiana and Georgia told the Associated Press that they plan to file similar proposals despite steep odds of winning enough votes among their state lawmakers and voters, who won’t be able to vote on any ballot proposals before 2010, Cauchi said.

Pass or fail, the proposals may benefit politicians seeking re-election by a constituency opposed to health care reform that mandates individual mandates or a public option. However, such proposals could affect their relationship with small businesses, Blum said.

“Some small businesses might be relieved there is some federal guidance they can follow,” he said.

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Bruce Cummings Joins Gila Corporations Board Of Directors

2009-09-28T07:13:13-07:00

Austin, Texas - Gila Corporation, through its two business units, Municipal Services Bureau (MSB) and Gila Group, is pleased to announce the election of Bruce Cummings, President, to its Board of Directors.

“Bruce is a tremendous asset to the Company’s Executive leadership team. As President he has fostered innovation throughout the organization while also capitalizing on opportunities for continued growth,” said Patrick J. Swanick, Chief Executive Officer of Gila Corporation and Board member. Bruce currently leads the Company’s sales, marketing and business development efforts, as well as the MSB government collections business and the Information Systems and Support (ISS) organization.

“Bruce brings significant value to the Company and we are privileged to have him join our Board of Directors and expand his influence,” Swanick added.

Bruce joined the Company in 2007 as Vice President of Marketing and Business Development. He was later named Chief Marketing Officer, followed by his promotion to President in 2008. He earned an MBA Degree from Syracuse University and Bachelor of Science Degrees from the University of Arizona and the State University of New York at Fredonia. Bruce also serves as Vice President to the Texas chapter of ACA International’s Board of Directors.

About Gila Corporation
Founded in 1991, Gila Corporation is a leading nationwide provider of receivables management and business process outsourcing solutions. Headquartered in Austin, Texas, the Company offers outsourced collections, payment processing and call center services to governmental entities, financial services clients and higher education institutions across the country. Through its strategic business units, Municipal Services Bureau (MSB) and Gila Group, the Corporation empowers more than 350 talented employees with advanced technology, data management tools, and leading edge business practices to exceed the expectations of its clients. MSB collects delinquent court fines, fees and debts for a wide variety of governmental entities. Gila Group specializes in outsourced collections and customer service functions for financial institutions.

Gila Corporation distinguishes itself based on its Experience, Execution, and Ethics; the firm has also achieved ACA International’s Professional Practices Management System (PPMS) certification. For more information, please visit www.GilaCorp.com or call # 1-800-568-7004.

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Women Legislators Support USOBA Debt Settlement Services Act, Reject Advance Fee Ban

2009-09-25T07:10:23-07:00

Washington, D.C. – The National Foundation for Women Legislators’ (NFWL) National Policy Committee on Business, Housing & Economic Development passed a resolution this week in support of the United States Organizations for Bankruptcy Alternatives’ (USOBA) Debt Settlement Services Act. The NFWL has called for state and federal regulation of the debt settlement industry based on the provisions of the Act, which provides strong consumer protection while preserving the rights of ethical debt settlement companies.

USOBA, a trade association dedicated to the advancement of consumer protection in the debt settlement industry, developed the Debt Settlement Services Act to provide nationwide and uniform transparency to the debt settlement industry. The Act mandates a registration or licensing of debt settlement providers within each state and encourages certification in one of two debt settlement trade associations. It also requires specific fee disclosures, designed to ensure that consumers are empowered with information about the programs offered, and rejects any “advance fee ban” in favor of more reasonable limits on fee collection.

“The NFWL’s support confirms the important balance that the Debt Settlement Services Act strikes,” said USOBA Executive Director Jenna Keehnen. “The USOBA and NFWL recognize that debt settlement is an important and viable option for consumers facing considerable financial hardship, and one that needs transparent operations and government-supported standards.”

The NFWL expressed its support of the Act as a response to current economic constraints, including the unprecedented debt challenges many American families are facing due to unemployment, unexpected health emergencies and other financial struggles.

"Consumer protection is incredibly important, and our elected women want debt settlement to remain an option for their constituents,” said Robin Read, President of NFWL. “They understand the need for different options based on personal circumstance, and the importance of legislation that doesn’t limit those options."

About USOBA
USOBA is dedicated to providing its member companies with important, industry-related information, including compliance requirements, as well as advocating on behalf of its membership for fair and appropriate industry regulation that maintains the utmost in consumer protection. USOBA members are provided a USOBA State Law Summary guide, the only one of its kind in the industry, to better ensure and promote national compliance. This guide contains the laws and regulations, state by state, and has been reviewed by regulators and legislators. For further information, please visit www.usoba.org.

About the National Foundation For Women Legislators, Inc. (NFWL)
Through annual educational and networking events, the National Foundation for Women Legislators supports women legislators from all levels of governance. As a non-profit, non-partisan organization, NFWL does not take ideological positions on public policy issues, but rather serves as a forum for women legislators to be empowered through information and experience.

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FTC Slaps $1 million Fine on Internet Lender Over Collection and Loan Practices

2009-09-22T06:35:03-07:00

A UK-based Internet payday lender will pay $1 million to settle charges brought by the state of Nevada and the Federal Trade Commission that it failed to disclose key loan terms and used unlawful debt collection tactics.

The FTC announced Monday that a network of companies operating under many names had been targeting U.S. citizens from the United Kingdom. Consumers were led to believe that the online payday loans were originated from and the lender was based in Nevada. The initial terms stated in marketing copy were straightforward: repay the loan by the next payday with a fee ranging from $35 to $80.

But authorities say that if a borrower missed the repayment, the companies employed venomous collection tactics. The FTC alleged that they falsely threatened consumers with arrest or imprisonment, falsely claimed that consumers were legally obligated to pay the debts, threatened to take legal action they could not take, repeatedly called consumers at work using abusive and profane language and improperly disclosed consumers’ purported debts to third parties.

The $1 million settlement will be split by the FTC and Nevada, with $970,125 going to the Feds and $29,875 to the state. The defendants must also change their collection and lending practices to comply with federal and state laws.

According to the FTC’s statements, the defendants also allegedly failed to make required written disclosures to consumers before consummating a consumer credit transaction, such as the amount financed, the annual percentage rate, payment schedule, total number of payments and any late payment fees in violation of the Truth in Lending Act (TILA) and Regulation Z.

The settling corporate defendants are Cash Today, Ltd., and The Heathmill Village, Ltd. (both registered in the United Kingdom); The Harris Holdings, Ltd. (registered in Guernsey, an island between England and France); Leads Global, Inc., Waterfront Investments, Inc., ACH Cash, Inc., HBS Services, Inc., Rovinge International, Inc.; and Lotus Leads, Inc. and First4Leads, Inc. (both now dissolved); each also doing business as Cash Today, Route 66 Funding, Global Financial Services International, Ltd., Interim Cash, Ltd. and Big-Int, Ltd. The settling individual defendants are Aaron Gershfield and Ivor Gershfield.

The FTC dismissed from the case Jim Harris, who was named in the complaint. He operated a site in Nevada for the companies and he has voluntarily entered into a separate agreement with the State of Nevada that governs his future conduct under state law and provides that he will pay the state a civil penalty.

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President's Focus Shifts Back to Financial Reform, Consumer Protection

2009-09-16T07:11:43-07:00

President Barack Obama used the occasion of the one-year anniversary of the Lehman Brothers collapse to renew calls for an overhaul of the regulatory structure that governs the nation’s financial system.

“Instead of learning the lessons of Lehman and the crisis from which we're still recovering, they're choosing to ignore those lessons,” Obama said. “I'm convinced they do so not just at their own peril, but at our nation's. So I want everybody here to hear my words: We will not go back to the days of reckless behavior and unchecked excess that was at the heart of this crisis, where too many were motivated only by the appetite for quick kills and bloated bonuses. Those on Wall Street cannot resume taking risks without regard for consequences, and expect that next time, American taxpayers will be there to break their fall.

“And that’s why we need strong rules of the road to guard against the kind of systemic risks that we've seen,” Obama continued. “And we have a responsibility to write and enforce these rules to protect consumers of financial products, to protect taxpayers, and to protect our economy as a whole.”

The President has proposed:

The creation of a Consumer Financial Protection Agency (CFPA) to protect consumers from predatory financial products
Providing the Federal Reserve with greater power to regulate financial firms that pose a systemic risk to the financial system. There would also be an oversight council to police gaps in regulation and to share information among different regulators.
Global reform of financial oversight

Many of the proposed regulations will focus on complicated financial instruments, such as derivatives, and will have a very narrow application. But the accounts receivable management industry is closely monitoring the power of the CFPA, as it may be the collection industry’s new regulator (“Proposed Consumer Financial Protection Agency May Oversee FDCPA Enforcement,” June 25).

The American Bankers Association supports many of the proposals.

“Since last fall, in Congressional testimony and elsewhere, ABA has called for comprehensive regulatory reform including many issues covered in the Administration’s proposal,” the ABA said in a prepared statement. “We believe regulatory reform is badly needed, and Congress should move to adopt such reforms. ABA has testified in favor of creating a systemic regulator, providing a mechanism for resolving troubled firms deemed ‘too big to fail,’ closing gaps in the regulation of non-banks and improvements in consumer protection. We will continue to strongly advocate for legislation that focuses on these critical issues.”

However, the ABA did offer some cautionary sentiments about system oversight: “Among the recommendations ABA is making are to avoid an expansive new bureaucracy for consumer issues that would conflict with the prudential regulator, maintaining the thrift charter and strengthening the resolution mechanism.”

Offering a slightly different view was the Independent Community Bankers of America, Washington, D.C., which represents the nation’s smaller banks – representing a majority of the nation’s more than 8,000 banks, though most have assets under $500 million.

“ICBA urges Congress to undo the policies that allowed for the creation of a privileged class of financial firms that are larger and more powerful than the agencies that regulate them,” said Camden Fine, president and CEO, in a prepared statement. “The managers of many Wall Street financial firms are now paying themselves millions in bonuses and their investors are profiting as well, while dozens of community banks and their investors are being wiped out.

“Already some on Wall Street are acting as if the last two years didn’t happen,” Fine cautioned. “Many on the ‘Street’ are acting as if it was their skill and acumen that guided their firms through this financial forest fire -- not the taxpayer.

Fine asked Congress to avoid hurting the smaller financial institutions “with staggering new restrictions and regulatory burdens. We urge Congress to end too-big-to-fail once and for all.”

John Jay, senior analyst at Aite Group, said that the first response of Congress is likely to be very tight legislation, citing responses to similar crises.

“Usually, the first response to a blowup is to become very restrictive,” Jay said. “Remember that the first response to the TARP (Troubled Asset Relief Program) was that everyone was objecting to the bailout. But as far as I’m concerned, it will all depend on the execution of the enforcement. Regulators have to hire people who understand the markets.”

Jay explained that some of the blame for the Bernie Madoff scandal becoming as large as it was was that the Securities Exchange Commission had staff and senior officials who didn’t understand how the markets work.

The judiciary is taking a more critical look at federal regulators as well. On Monday, a federal judge rejected a proposed $33 million settlement between Bank of America and the SEC over bonuses paid to Merrill Lynch executives. Calling the settlement a “contrivance” between the bank and the SEC, the judge ordered a trial to start early next year. It is thought that individual bank executives will be charged with crimes.

Another difficulty with the Administration’s proposals, according to Jay, is that global markets don’t come under U.S. jurisdiction, but are impossible to separate from what happens in U.S. markets. A CNBC documentary, House of Cards, discusses how a small Scandinavian city is suffering its own economic woes due to the default of U.S. mortgage-backed financial instruments.

So investors will want much clearer explanations of any credit instruments that they are buying, Jay explained. “Some of this probably makes sense from a best practices standpoint. They [sellers] were giving mediocre information to investors. Now the buy side will better be able to understand how [sellers] got x price for a security.”

But lenders will likely try to push back some fearing that divulging too much information will eradicate any competitive advantage they may have vis-à-vis their peers, according to Jay.

Other analysts who discussed the Administration’s proposals over the last few days have pointed out that the current focus on health care means that little is likely to happen on the financial services reform front until the earlier issue is resolved.

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Obama says he wont Back Down on Public Plan as Choice for Affordable Health Care Coverage

2009-09-10T08:14:32-07:00

President Obama took to the airwaves Wednesday night to detail his plan for health care reform and denounce claims that his plan is a government takeover of the health care system.

During a near-hour long speech before Congress, Obama told lawmakers and the American public that his plan provides more security for people who have coverage, more affordable coverage for people who don’t, and slows the growth of health care costs in future years.

Hoping to show how his plan will benefit consumers, Obama said no one with health care coverage will be required to change their coverage or doctor, and insurers will no longer be allowed to terminate or deny coverage to policy holders who become sick or have pre-existing conditions. Obama said his plan also limits out of pocket expenses, while eliminating insurer caps on annual and lifetime coverage.

For people and small business owners without insurance, Obama said his plan includes a health care exchange and tax credits that will help pay for coverage based on their need. Obama said the exchange, which would include plans offered by private insurers, wouldn’t become available for four years. However, for those people who can’t get coverage now, the government would immediately offer low-cost coverage to protect against financial ruin if you become seriously ill, a proposal Obama said was offered by Senator John McCain during his presidential campaign.

The speech came a few hours after Senate Finance Committee Chairman Max Baucus announced that he intends to unveil a bill from his committee next week and move ahead with the legislative process with or without Republican support. The Senate Finance Committee is the last of five congressional panels needed to approve health care legislation before the full house and senate can work towards a final bill.

The Senate Finance Committee plan is said to include provisions that sidestep requirements currently in other bills, and that Obama mentioned in his speech, that companies would be forced to offer coverage to their employees or pay a penalty of up to 8 percent of their payroll to fund a public plan.

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According to the Washington Post, the Senate Finance plan would require firms with more than 50 full-time employees to pay if they hire people who are eligible for government subsidies. In the case of the Senate Finance Committee, that includes people who earn between 133 percent of the federal poverty level and 400 percent of the poverty level, or about $88,000 a year for a family of four.

Obama said he wants to see a public plan included in the health care exchange to keep private plans affordable. But he said the public plan would only be an option for people who don’t have insurance.

“No one would be forced to choose it and it would not impact those of you who already have insurance. In fact, based on Congressional Budget Office estimates, we believe that less than five percent of Americans would sign up,” he said.

Most Americans, however, would be required to get coverage and employers who can afford it would be required to provide coverage or pay a fee to help pay for health insurance for their employees. Waivers would be granted for individuals and small businesses who can’t afford insurance and don’t qualify for assistance.

Of the four bills voted on in the house and senate, Obama said there is agreement on about 80 percent of what has been proposed. And while he’s open to suggestions that a non-profit co-op administer the public health plan or that the public plan be made available only in markets with limited competition, he did not abandon its use in health care reform.

“I will not back down on the basic principle that, if Americans can't find affordable coverage, we will provide you with a choice,” Obama said.

Obama insisted that his plan doesn’t allow bureaucrats to cut senior care or pay for health care for illegal immigrants as critics have suggested. And he said he’d pay for the $900 billion plan over 10 years by eliminating wasteful spending in government health care plans like Medicare and charging insurers a fee for their most expensive policies. Even mandating other spending cuts if the plan costs more than anticipated.

“I will not sign it if it adds one dime to the deficit now or in the future. Period. And to prove that I'm serious, there will be a provision in this plan that requires us to come forward with more spending cuts if the savings we promise don't materialize,” he said.

Obama even offered to launch demonstration projects that would lead to medical malpractice reform.

The Republican rebuttal however, delivered by Louisiana Congressman Dr. Charles Boustany reiterated the party’s position that the President scrap his plan and start anew. Boustany, a cardiac surgeon with 20-years of experience, again claimed that Obama’s plan would replace Americans’ current plan with government run insurance and that Obama’s plan cuts Medicare by $500 billion.

Obama acknowledged that he’s not the first person to tackle health care reform, but he said he is determined to be the last.

“I will not accept the status quo as a solution. Not this time; not now.”