Obama and Bankers Peacocking on Capitol Hill

Obama’s meeting on this week with the CEOs of most of the major banks in the US was nothing more than political posturing from both sides – peacocking for Joe the Plumber by the financial services industry and Obama. A day before, Obama called bankers “fat cats” and after the meeting, the CEOs claimed there is a ‘disconnect’ between their personal wishes and the actions of the lobbyists their firms spent $300 million on to fight proposed regulatory reform.

The inherent conflict of interest between the financial services industry and that of the government is inevitable. For profit businesses exist to make money and consumers’ best interest is not always the most profitable route. The banks will continue to fight new regulations and Obama's reform plan, introduced earlier this year, will continue to be watered down as it finishes its cycles in the House and Senate.

It is time for the US to sever its ties with Israel

United States’ Parasitic Ally Has Become a Costly Distraction

It is sad to see the current healthcare overhaul debate between Democrats and Republicans take such a nasty turn. We are all Americans, right? Shouldn’t we provide for our own? The crux of the disagreement is cost, yet we spend more money per capita on Israeli citizens than we do on our own. Israel has become a costly distraction that we can no longer afford, not to mention that the relationship does not have the same geopolitical value it once did when Israel was our only Middle East foothold.

Let’s be honest. Israel is a selfish nation that is only interested in expanding its wealth, military power and geographical footprint. It will and can only do so at the cost of others. Consider a couple recent examples:

Israel consistently treats the civilian population in Gaza inhumanly, as documented by many sources, denying Gaza contact with the outside world by imposing blockades to stop humanitarian aid from entering the region. Israel’s 2009 Gaza invasion is probably the most sickening example - even Zionist Richard Goldstone, who led the United Nations Human Rights Council investigation, expressed shock over the “gross violations of the laws of war”.

On top of the atrocious crimes against humanity, think about how this affects the US taxpayer… We foot the bill for Israel’s invasion of Gaza by providing it with the military technology (i.e. planes, missiles, weapons, etc.) and financial and political backing. Using US planes and tanks, Israel crushed Gaza stone throwers and innocent civilians, then left the US to clean up its mess – which will now cost the US taxpayers an additional $900+ million USD on top of the usual $6 billion or so that we send annually.

From a geopolitical perspective, the US now has control of other Middle Eastern assets in Iraq and Afghanistan. Anyway you look at it, Israel is a bad ally and a bad investment. It is clearly time for the US to drop Israel from our ‘friends and family circle’.

Credit & Debit Card Processors Are Losing Your Data But May Not Be Liable For Your Personal Losses

While it is unlikely you have ever heard of Heartland Payment Systems or RBS WorldPay or any other of the dozens of networks your credit and debit card transactions travel through to process your morning latte purchase, hackers are all too aware of these treasure chests. Processors are likely to be the top targets for mass data compromise and identity theft in the coming years yet surprisingly, these back office firms may not be responsible for your losses.

According to Ronald Mann, a professor and co-chairman of the Charles E. Gerber Transactional Studies Program at Columbia Law School, payment processors that experience data losses may be protected against class action lawsuits if they can prove PCI compliance. This may be the case with the massive Heartland Payment Systems breach, which may have lost data on over 100 million transactions. Stop to think about the size of this breach – it roughly equates to a transaction a person for 1/3 of the US population!

There have already been three class action lawsuits filed against Heartland, but Mann says it would be very difficult for plaintiffs to prove negligence since Heartland should be able to prove it met the industry’s PCI (Payment Card Industry) standard. PCI is arguably ineffective at stopping, let alone detecting today’s sophisticated cyber attacks. Avivah Litan, distinguished analyst at Gartner, recently said that card processors are more vulnerable to attacks because while payment industry rules dictate that credit card data is encrypted while being stored at retailers, processors and banks it does not have to be encrypted while being transferred on private networks. While banks and retailers can also communicate on private networks, the attacks against processors is a much newer phenomenon and can produce the biggest number of transactions since processors by nature are consolidating activities across many retailers and banks.

Take for example, a simplified card transaction: You go to your favorite coffee shop and order a latte. You swipe a credit, debit or gift card at the register. In sub-second speed the transaction goes from the retailer to the processor, to your bank to check funds and to the retailer to approve the purchase. Once approved, the processor queues your transaction in a batch process to transfer the funds from your bank account to the retailer’s bank account, usually within 24 hours.

There are dozens of major processors across the US that handle transactions from millions of vendors and banks. Processors are a major hub of the system and are therefore a lucrative target for fraudsters. Currently if a processor complies with the PCI standard, which is clearly not tight enough to protect all network vulnerabilities, that processor should not be held accountable for current and future fraud against compromised accounts. In most cases the card issuer or banks protect the consumer, but always. Debit and gift cards shift some or all liability to the consumer and any future fraud perpetrated against an individual on different account may be hard to tie back to one particular data loss event, especially since processors and banks will not generally tell you when your information has been compromised!

So what’s the moral of the story – even if you are very careful with your own information, your identity can still be stolen. Protect yourself where you can, and be cognizant of all public data breaches.

(The following were sourced for this article: Defense Seen for Heartland vs. Suits; Cardline; February 10, 2009 and Credit Card Hackers Find New, Rich Targets; MSNBC; Bob Sullivan; January 23, 2009)

“People really hate you, and they are starting to hate us just for hanging out with you”

House Financial Services Committee Chairman Barney Frank this week outlined his plan for financial reform. While his plan was, as we may have expected, a little vague and non-committal, he did make a comment that clearly shows his concern about his own public perception and re-electability. He said he has been telling bankers:

"Here's the problem: People really hate you, and they are starting to hate us just for hanging out with you. And you have to help us deal with it. You have to avoid being stupid."

Hey Barney, not only will the American public continue to think you are a nimrod for your part in the financial crisis and delayed response with the first bail-out package, now the bankers are going to hate you too for calling them stupid.

(Quote sourced from American Banker, Fed First as Hill Tackles Reg Reform in 2 Parts, Feb 4, 2009)