By Jacob Goldstein

Some day, the Senate will finally unveil its big finance-reform bill. Until then, we'll have to survive on the endless stream of leaks about what's likely to be in it.

Like, for example, the $50 billion trust fund that may be created to wind down big, failing financial institutions. The proposed pool, described in this WSJ story, would come from fees levied on financial firms.

In the current system, there's no good way to deal with big financial institutions that are about to go bankrupt and don't fall under the umbrella of the FDIC, which oversees some banks. Exhibits A and B for why this is a problem are Lehman Brothers, whose bankruptcy sent the economy into panic, and AIG, which received a gargantuan government bailout.

Continue reading "A $50 Billion Fund For Failing Finance Firms" >

By Jacob Goldstein

Bank of America says it's getting rid of overdraft fees on debit-card purchases.

The move comes a few months before new federal rules will make it much harder for banks to charge the fees, which have become a big source of revenue.

In the current system, when a customer doesn't have enough money in his account to cover a debit-card purchase, the purchase goes through and the customer gets charged an overdraft fee of $35 or so. In the new system, purchases will be denied if the customer doesn't have enough money in his account.

Last fall, Bank of America started allowing customers to opt out of overdraft protection on their debit card -- to voluntarily change the settings on their account, so purchases are denied if there's not enough money in the account.

But some people who wanted to change their account settings said B of A tried to talk them out of it. (B of A said it was just trying to explain the implications of opting out.) I wrote about this issue a couple weeks ago.

Continue reading "Bank of America Ends (Some) Overdraft Fees" >

By Jacob Goldstein

The recession has left some state and local governments desperate for new sources of money. That's giving a boost to an idea public-health types have been pushing for a while now: taxing sodas and other drinks with added sugar.

New York's governor has called for a penny-per-ounce tax on sugar-sweetened beverages, and Philly's mayor wants one that's twice that high.

Some public-health experts argue that taxes like these could slow the rise in obesity rates. The beverage industry has called it "a money grab, pure and simple," and says it's a "myth" that taxing one type of product will affect obesity rates.

For both sides, there's a fundamental economic question here: How much would a tax drive down consumption?

Continue reading "Would A Soda Tax Be A Big Deal?" >

We bought. (David Kestenbaum/NPR)

On today's Planet Money:

Remember toxic assets? Those insanely complicated bonds that almost brought down the financial system?

We bought one.

We thought it would help us figure out how the housing bust is playing out. So we pooled our own money, about $1,000 in total. We sent David and Chana out to Kansas City, where a former Wall Street guy named Wit Solberg who evaluates toxic assets for his clients and sometimes buys the assets himself.

Wit sold them a sliver of a toxic asset he'd bought for $36,000. It was marked down from the pre-crash price of $2.7 million.

Of course, it's marked down for a reason. About 15% of the homes in the bond are in foreclosure, and nearly half are behind on their payments. The foreclosures will continue to mount, and at a certain point our asset will be wiped out. But until then, we'll get monthly payments. If we make it to Thanksgiving, we could double our money. (We'll be giving any profits to charity, by the way.)

We'll have a lot more on this later this week, including a radio story and some Web tools that will let you see how our asset is doing.

Download the podcast, or subscribe. Music: Kenny Loggins's "Highway to the Danger Zone." Find us: Twitter/ Facebook/ Flickr. Note: Some information in the photo was intentionally blurred.

By Jacob Goldstein

The Better Business Bureau just put out a tally of the customer complaints it received in 2009. Complaints about banks were up by 42%, to nearly 30,000. That put banks third on the list, behind the cell phone industry (37,477) and cable & satellite TV companies (32,616).

But to really appreciate how many things can go wrong in this world -- how many goods and services there are to complain about -- take a look at the BBB's 82-page list of all the complaints and inquiries it got from around the country last year:

An arbitrary sample from the low end of the list turns up complaints about:

• Gazebos (four complaints)
• Literary agents (six complaints)
• Crane service (two complaints)
• Oil well drilling (one complaint)
• Fraternal organizations (nine complaints)
• Boxes - corrugated and fiber (two complaints)
• Greenhouse builders (three complaints)
• Support groups (eight complaints)
• Lobbyists (five complaints)
• Ice (three complaints)

By Jacob Goldstein

Productivity growth means U.S. businesses are getting more efficient, wringing more value from each hour of labor. But the flip side is that companies don't need so many workers, leaving more people out of work.

So it makes sense that last year's surge in productivity may be tied to a larger-than-expected rise in unemployment.

A rule called Okun's law says there should be a one percent rise in the unemployment rate for every two percent that GDP growth falls below its usual trend. But that didn't hold true last year, according to a new paper from the San Francisco Fed.

Okun's law would have predicted a 1.5 percent increase in the unemployment rate last year. But the increase was actually 3 percent. The paper looks at different possible reasons for this, and concludes that productivity growth was the "main driver." The authors write:

Continue reading "Why Productivity Growth Is Bad For The Unemployed" >

Yvrose Jean-Baptiste, photographed last month. (Chana Joffe-Walt/NPR)

By Adam Davidson

I'm back in Port-au-Prince, doing more reporting on what it's like to create an economy practically from scratch.

The second I landed, I called Jean Paleme Mathurin, economic advisor to Haiti's prime minister. He had introduced me in February to Yvrose Jean-Baptiste, a woman who was desperately trying revive her fragile micro-business and pay back her creditors.

Yvrose had lost everything in the earthquake, but her microlending bank was still demanding she make her $100 monthly payments. The loan sharks she borrowed from wouldn't give her a break, either.

She wasn't generating much income because nobody had any money to buy whatever goods she had. Planet Money did a podcast and story for Morning Edition, and we wrote about her on the blog.

The audience response was incredible. People wrote in asking how they could help, and NPR set up an account for her at a Haitian microfinance institution, Fokonze. So far, about $3,500 in donations have come in. That's a transformative amount of money for an impoverished Haitian. It could move Yvrose from miserable and insecure poverty to what could become a stable life with a cushion for bad times

Jean Paleme and I agreed that we should meet Yvrose in person to tell her the news. We picked her up outside of her tent encampment and drove her to a pizza place.

Continue reading "What $3,500 Means For A Poor Woman In Haiti" >

By Jacob Goldstein

AIG, which got one of the biggest bailouts of all time, says it will be able to pay back some $51 billion after it sells two subsidiaries.

That's not nearly enough to pay off what the company owes.

The size of the bailout is often put at around $180 billion, but it's more complicated -- and more fluid -- than that single number suggests. Here are some key figures based on the most recent public information:

Continue reading "The AIG Bailout Now: A Planet Money Tally" >

By Jacob Goldstein

Here's a post-bubble indicator: 11.3 million U.S. homes are underwater -- the value of the home is less than what's owed to bank.

In some cases, the least bad option for both banks and homeowners is a short sale. The owner sells the house for whatever the market will bear, and the bank agrees to take less than it's owed on the mortgage. Short sales can sometimes be a preferable alternative to foreclosure, because they can be less costly for the bank and do less damage to the seller's credit.

To that end, a government program that starts next month will actually pay certain homeowners and banks to work out short sales.

Continue reading "Getting Underwater Homeowners Out The Door" >

Athens at the barricades. (Thanassis Stavrakis/AP)

On today's Planet Money:

Could the Greek crisis spell the end of the Euro? No way, Berkeley economist Barry Eichengreen says on today's podcast.

Imagine, he says, that the Greek parliament were to even discuss the possibility of going back to Greece's old currency, the Drachma:

Your parliament is debating whether to reinstate the Greek Drachma precisely in order to print a whole lot more of it and push the Drachma down against the Euro ... What would you do with your money under those circumstances? Answer: You'd wire all of it to a German bank where it would be more likely to hold its value. ...

Everyone who owned a Greek bond would sell it and buy a German bond on the first day they got wind of the possibility that the Greek parliament was going to talk about this. ...

They have to figure out a way to make life with the Euro work. And their Euro partners are going to have to help them. ... They're stuck with the euro. I was going to say almost certainly, but let me say certainly. I don't see how it's feasible to wriggle out.

Eichengreen's got plenty more to say about the Euro. He argued recently that European countries should put in place a system for Euro-zone bailouts, complete with "temporary control of the national budget by a committee of 'special masters' appointed by the European Union." (Somehow, this idea seems unlikely to gain much traction with European governments.)

And he wrote a while back about the massive logisitical hurdles a country would have to clear to exit the Euro.

Download the podcast, or subscribe. Music: The Big Pink's "Dominos." Find us: Twitter/ Facebook/ Flickr.