The report details deals worth $4.7 million in Texas this year, between Bank of America and Chase Bank, and alumni associations at the University of Texas, Texas A&M and Texas Tech.

FIA Card Services, the TV station reported, paid $22,958 to the University of Texas Pan American Alumni Association, and $2,364,754 to the UT aluni group Texas Exes received from FIA Card Services.

Since 1992, Texas Exes has sold information to Bank of America without offering notifying alumni. According to the report, “the contract also allows the Association to make money when account holders don’t pay off their credit card balance. So when a user defaults, Texas Exes makes money.” Texas Exes is guaranteed at least $6 million from the deal for providing the names and addresses of 368,767 alumni.

Other alumni associations making big money off of selling information include Texas A&M’s Association of Former Students, which has a 10-year, $17 million contract with Bank of America and recently provided 257,840 names and addresses of former students. The Texas Tech Alumni Association has a seven-year, $3.3 million contract with Chase Bank, providing the names, addresses, phone numbers, and email addresses of 193,000 students, faculty, alumni, and donors.

Tam Jackson, a graduate of Texas A&M with a bachelor’s degree and a doctorate in psychology, told the Texas Independent she was concerned about not being told ahead of time if her information was being sold. “I personally am not comfortable with my personal information is disclosed without my explicit permission,” said Jackson.

Beyond the privacy issues, Jackson also said that she had reservations about the involvement of Bank of America. She also has a son enrolled at Texas A&M, and said she’d advise him to “not even consider getting a credit card with Bank of America due to their predatory practices.”

“The Association is willing to sell out our student to a corporation, but isn’t willing to let their own departments contact them,” said another former student, who tried unsuccessfully to get a contact list to send a newsletter to other alumni.

If students or alumni would like to remove their names from mailing lists, Texas Exes and Texas A&M Association of Former Students suggested contacting their organizations directly.

Documents posted with the KENS story detail deals of 1,000 alumni associations and financial institutions across the country, as well as the Texas Exes Affinity agreement, Texas A&M Alumni Affinity agreement, and Texas Tech Alumni Affinity agreement.

As a sheriff’s deputy dumped the contents of Joy Uhlmeyer’s purse into a sealed bag, she begged to know why she had just been arrested while driving home to Richfield after an Easter visit with her elderly mother.

No one had an answer. Uhlmeyer spent a sleepless night in a frigid Anoka County holding cell, her hands tucked under her armpits for warmth. Then, handcuffed in a squad car, she was taken to downtown Minneapolis for booking. Finally, after 16 hours in limbo, jail officials fingerprinted Uhlmeyer and explained her offense — missing a court hearing over an unpaid debt. “They have no right to do this to me,” said the 57-year-old patient care advocate, her voice as soft as a whisper. “Not for a stupid credit card.”

The story notes that it is not illegal to owe anyone money or to be in debt, but judges are still issuing arrest warrants for people who have received summons or wage garnishments and still cannot pay:

In Minnesota, which has some of the most creditor-friendly laws in the country, the use of arrest warrants against debtors has jumped 60 percent over the past four years, with 845 cases in 2009, a Star Tribune analysis of state court data has found.

Not every warrant results in an arrest, but in Minnesota many debtors spend up to 48 hours in cells with criminals. Consumer attorneys say such arrests are increasing in many states, including Arkansas, Arizona and Washington, driven by a bad economy, high consumer debt and a growing industry that buys bad debts and employs every means available to collect.

Whether a debtor is locked up depends largely on where the person lives, because enforcement is inconsistent from state to state, and even county to county. In Illinois and southwest Indiana, some judges jail debtors for missing court-ordered debt payments. In extreme cases, people stay in jail until they raise a minimum payment. In January, a judge sentenced a Kenney, Ill., man “to indefinite incarceration” until he came up with $300 toward a lumber yard debt.

The article notes that it generally isn’t the original cell phone company or utility aggressively seeking repayment from their delinquent customers. Often, debt collection agencies buy up delinquent contracts in bundles and then go after the debtors. These companies go to court to get a summons or wage garnishment, and then can ask the judge for a warrant for contempt if the debtors do not show up and pay up. Of course, it costs taxpayers to have police officers pick up debtors and house them overnight in jail. Often, that expense is greater than the debt itself.

“It’s just one more blow for people who are already struggling,” said Beverly Yang, a Land of Lincoln Legal Assistance Foundation staff attorney who has represented three Illinois debtors arrested in the past two months. “They don’t like being in court. They don’t have cars. And if they had money to pay these collectors, they would.”

Durbin’s amendment to the Senate financial regulatory reform bill prevents big card issuers like Visa and MasterCard from charging high “swipe fees” — which netted $48 billion for credit and debit cards in 2008 — even though the cost of processing transactions has decreased. The amendment is targeted at lowering swipe fees for small businesses.

Here is the full text of the letter:

Dear Mr. Saunders and Mr. Selander:

I write in regard to the unfortunate coordinated campaign your companies have launched distorting the impact of my recently-passed interchange amendment on small banks and credit unions.

It appears that, in an effort to frighten small banks and credit unions into opposing the amendment, your companies are threatening to make changes to your small bank interchange fee rates and to your network operating rules. These changes, which are not in any way required by the amendment, are unnecessary and would disadvantage small card-issuing institutions.

I ask you each to state unequivocally that you are neither threatening nor planning to take steps that would purposefully disadvantage small institutions, should the amendment become law. Further, I warn you that if your companies coordinate with each other or collude with your largest member banks to make changes to your fees and rules, it would raise serious concerns that you are engaging in an unlawful restraint of trade.

The amendment I offered, which was passed by the Senate in a bipartisan vote of 64-33, would establish a reasonable interchange fee standard for transactions involving debit cards issued by banks with assets of over $10 billion. The amendment would also prevent your companies from punishing merchants who provide discounts to customers for use of a particular card network (e.g., Visa vs. MasterCard) or a particular form of payment (e.g., cash vs. debit card vs. credit card), or who set minimum or maximum dollar thresholds for use of a credit card.

This language was carefully drafted in order to avoid creating any disadvantage for small banks and credit unions, and I went to great lengths to protect the ability of these small institutions to successfully compete with big banks in offering payment cards to consumers.

As you know, the amendment does not in any way require changes to the interchange fee rates that your companies have established for small banks and credit unions. In fact, 99% of all U.S. financial institutions are exempted from the amendment’s debit fee regulations.

Nor does the provision in any way permit merchants to discriminate against cards issued by small issuers. It does not touch your current network operating rules that require that cards be honored in the same way regardless of the identity of the bank that issued the card.

The only way that small banks or credit unions could experience interchange rate reductions or be discriminated against is if your companies decide to cut small bank interchange rates and rescind your operating rules that currently prohibit discrimination between card-issuing banks.  Sadly, it appears from your companies’ public statements and other communications that you are contemplating just such steps.

In a May 20 statement, Visa charged that the amendment “could especially harm community banks and credit unions that depend on interchange to offer competitive banking services to firefighters, police officers, teachers, veterans, congressional staffers and other customers.”  Also in a May 20 statement, MasterCard said the amendment will “punish banks on Main Street because the ‘carve-out’ for banks with assets below $10 billion is a sham.”  The simple fact is, however, that small banks would not be harmed or punished under the amendment unless your companies decide to harm or punish them.

If your companies were to coordinate such punitive actions in the same way that you appear to have coordinated your messaging tactics, serious concerns would be raised that you are engaging in an unlawful restraint of trade.  Further, I would caution you not to collude with your largest member banks to change your fees and rules in an effort to protect the big banks against competition from smaller card-issuing banks.  Such steps would also raise serious antitrust concerns.

I know that your companies strongly oppose the amendment that was adopted by the Senate, and I am not surprised by your opposition.  The provision would correct anti-competitive aspects of a system that has brought enormous revenue to your companies and to the largest banks at the expense of America’s small businesses and consumers.  Nevertheless, I urge you to commit that if this amendment becomes law, you will not take steps to purposefully disadvantage small issuers.  By making such a commitment, you will provide much-needed reassurance that you are not attempting to protect the biggest banks you serve by threatening the smallest.

Please respond in writing to this letter by June 14.  I look forward to receiving your responses.

Sincerely,
Richard J. Durbin
United States Senator

“We can’t make a profit on 36% loans,” says Steven Schlein, a spokesman for the payday lending trade group, the Community Financial Services Association.

Leaving aside the somewhat hilarious moniker for a club of payday lenders and check cashers, the group insists that companies can’t make money charging people a 36 percent interest rate plus fees. With savings and most money market accounts paying less than 1 percent interest, stock market returns iffy and credit card companies making billions a year charging about 20 percent interest to its customers, either payday lenders are exceedingly stupid business people or their trade group thinks Americans are.

At least in terms of Congress, they’re right: Further payday lending regulation seems to be off the table after the group’s successful lobbying campaign against it.

What should you be watching for in your mail (and reverse if you fell for it)?

1. Opt out of opt-ins
Credit card companies — and banks that offer debit cards — aren’t supposed to approve charges if you are over your limit or your account will be overdrawn. Until recently, however, they would automatically allow an over-limit or overdraft charge go through without telling you, but with the extra fees attached to make as much money as possible. In other words, your credit limit wasn’t a limit — it was just an amount after which you would be charged a per-usage fee in the range of $35. Under the new law, you have to explicitly provide permission for them to charge you per-transaction fees for over-limit or overdraft use — so card issuers are asking cardholders to opt in to charges by making their practices seem all about their customers. I mean, you wouldn’t want to suffer the embarrassment of a declined transaction, but the Big Bad Government is going to force them to be mean unless you join in their shiny, happy fee-per-transaction program to spare yourself the humiliation of using a different card or paying cash!

2. Open every envelope, and read every page
Credit card companies aren’t stupid — they know you don’t read your mail. Under the new laws, they only have to inform you within 45 days that they are planning on raising your rates. But they don’t have to send a separate letter, or make it easy to understand! Regular Visa card users are likely used to the little legalese pamphlets that come with their statements, but American Express just prints changes to your terms and agreements on the back of the bill. And, although come August consumers can choose to not accept the terms of a new agreement and pay off the balance under the old terms of the agreement, August isn’t here for another six months. If the lead-up to February’s rule changes are any guide, the months prior to August will race by in a flurry of agreement changes while you don’t yet have the right to do anything about it other than pay off your card and close your account.

3. Don’t forget the fees!
Just like legislators who promise not to raise taxes but end up facing budget shortfalls, credit card companies are making up for revenue losses by raising fees since they’re often not covered by new regulations. From annual fees to paper statement fees to fees for non-usage, credit card companies are getting creative — and they’re hoping you’ll miss the fine print or forget to read your statement.

4. Watch out for the no-longer-fixed interest rate on some cards
It has been a time-honored tradition for banks to push consumers to take out adjustable rate mortgages, but credit card companies are just now getting into the game. Instead of just raising interest rates, they’re converting consumers to adjustable (called “variable”) rate cards from fixed ones. But whereas at least banks give you the impression that your rates might also go down when it adjusts, card issuers are creating cards with rates that only ever increase. The best part about variable rate cards is that, if the rate is pegged to the prime interest rate, they don’t have to notify you in the future when the rates go up. Handy for them, but bad for you.

5. Fees earn interest, so keep track of what you’re being charged
When companies charge fees to your account, if you forget to pay a card that you haven’t been using — but which comes with a fee — then the company gets to collect interest on the fee. One subprime card that carries a $75 annual fee for a $300 spending limit doesn’t require consumers to pay the fee to get the card: They simply issue the card with a $75 balance and, if the customer can’t pay it, start charging 59.9 percent interest on the fee. And, since analysts expect that some companies will charge consumers that fail to use their cards, the new fees you didn’t even see coming could come with hefty interest payments added.

Congressional oversight committee chairwoman Elizabeth Warren told reporters today that the government’s hands are tied without the consumer protection agency for which Sen. Chris Dodd (D-Conn.) has sought a Republican backer, to no avail.

“[The Credit Card Accountability, Responsibility, and Disclosure Act] is a good first step but it isn’t enough alone,” said Warren on a conference call with reporters hosted by the U.S. Public Interest Research Group. “The credit card industry and the entire consumer credit industry is broken. We need an agency, a cop on the beat that is flexible and responsive.”

Unfortunately, too many senators seemingly disagree with her.

Ed Mierzwinski of the U.S. Public Interest Research Group does not. He thinks the fact that the Fed refused to take tough action against credit card companies’ regulatory evasions last year indicates they don’t have consumers’ best interests at heart and never will.

“The Fed could have had a broader anti-evasion provisions as well, which we all asked for in our comments and didn’t get,” said Mierzwinski. “The Fed gave us obvious protections against a couple of provisions but they should have given us a big hammer and they didn’t.”

But with the folks at the Fed seemingly set to cede some authority to the Treasury Department over banks as part of the larger financial oversight council, don’t bet on them agreeing to give authority to a new agency just because some people think consumers deserve protection. That’s not their job, and they prefer that it not be anyone else’s, either.

But just as if given enough monkeys, typewriters and time, one will get Shakespeare, give the credit card companies enough lawyers, money and contempt for their customers, and they’ll find a way to avoid regulation.

At the forefront, as James Kwak reports, is Citi. Since they will soon no longer be allowed to raise interest rates immediately, permanently or for no reason, Citi is raising its rates for all customers to its bad-creditor rate of nearly 30 percent. Customers who had been paying lower rates will be made eligible for a “program” that lowers the standard interest rate back down to the rate they were paying, but if they miss a payment, the rate shoots up immediately and retroactively — one of the very things the new credit card regulations were designed to prevent. In Citi’s case, since it’s a “program” rather than a rate, they think it’s legal, and that it will allow them to continue their current interest rate games despite regulations designed to stop them.

Oh, and Citi’s clear about one other thing: As a customer, your only two options are to play along or to pay off your balance, cancel the card and try your luck elsewhere (not that you’re likely to have any). It’s kind of a twofer: Citi can show its contempt for the law and its customers, all in one fell swoop.

“The industry has tried to make one last grab at their customers’ pocketbooks,” Dodd said, just before asking for the consent of Republicans to pass the bill unanimously.

No dice. Sen. Thad Cochran (R-Miss.) objected “on behalf of several senators on this side of the aisle.” There’s no word yet which other lawmakers he was referring to.

House Democratic leaders have already passed even stronger legislation that would expedite all the credit card reforms in the previously passed bill — not just the ban on hiking rates for existing balances. Dodd hasn’t signed on to the Senate version of the bill.

It’s worth mentioning that the Democrats — folding to pressure from the banks — were themselves responsible for delaying those reforms, which were initially proposed to go into effect much earlier  this year.

Did you know that since 2003, when the subprime market really took off, April has been Financial Literacy Month? Now you do. But in an age where financial expertise seems so discredited what qualifies someone to be financially literate?

It’s a fair question. Unfortunately, the answers aren’t reassuring. First, as Konczal notes, “financial literacy” as a course of study doesn’t exactly exist in the economics field. There’s no incentive to get published on it; there’s little academic research as a result. What fills the gap? As we pointed out, subprime lenders align themselves with mainstream financial literacy groups and fund their efforts as a way to distract from the controversies surrounding their products. Konczal explains the problem goes even further, with unqualified “experts” dispensing their alleged personal finance wisdom.

There’s little academic backing, there’s no money for journals, research grants, conferences, the development of theory and expertise that is deployable into policy. That leaves the field wide open to be funded by credit card companies, subprime lenders, and others with a vested interest in certain modes of thought becoming the norm. And for expertise to be filled by people who come from motivational speaking backgrounds, and theory to end up as a mess of common-sense adages and low-level morality plays. The theme of Financial Literacy Month for 2008 was “Financial Responsibility Begins with Me”; why didn’t they call it “caveat emptor”?

One of the biggest hurdles facing the creation of legitimate and useful financial literacy programs will continue to be funding for non-biased, professional counselors.  It’s not a great time to push the government to provide more money to the nation’s Cooperative Extension System — but that national educational network remains a valuable source of credible personal finance research. And as we said, some corporations are beginning to incorporate financial literacy into their human resources responsibilities, given the problem of employees burdened with distracting financial problems.

In the end, that may really be what it takes to get untainted financial literacy education going — the overwhelming debt crisis facing American consumers. Maybe the government and the private sector will come to realize that partnering with credit card companies and subprime lenders isn’t going to get the job done. As Calculated Risk has repeatedly asked, why aren’t consumers being educated on the perils of not paying their credit card bills off in full every month? Probably because, in the absence of untainted financial literacy advice, a company like Visa is backing a high-profile financial literacy initiative. It seems unlikely advising people to pay off their credit cards is the focus of that effort.

As credit tightens, so will the need for legitimate financial literacy education. And as consumer debt becomes something harder to ignore, maybe the unholy alliance of creditors with a stake in the game and financial literacy education programs often aimed at younger borrowers in particular, will finally come to an end.

“You don’t have to wait to use plain language in your dealings with consumers,” Obama said. “You don’t have to wait for legislation to put the 2009 bonuses of your senior executives up for a shareholder vote. You don’t have to wait for a law to overhaul your pay system so that folks are rewarded for long-term performance instead of short-term gains.”

Felix Salmon at Reuters particularly liked this explanation of the need for a Consumer Financial Protection Agency:

Consumers shouldn’t have to worry about loan contracts designed to be unintelligible, hidden fees attached to their mortgages, and financial penalties – whether through a credit card or debit card – that appear without warning on their statements. And responsible lenders, including community banks, doing the right thing shouldn’t have to worry about ruinous competition from unregulated competitors.

Opponents of such an agency argue that it will limit consumer choice and financial innovation, but Salmon says Obama countered that argument well in his speech, by arguing that in the past a lack of rules has meant “innovation of the wrong kind,” like the firm that could make its products look best by “doing the best job of hiding the real costs.”

For example, we had “teaser” rates on credit cards and mortgages that lured people in and then surprised them with big rate increases. By setting ground rules, we’ll increase the kind of competition that actually provides people better and greater choices, as companies compete to offer the best product, not the one that’s most complex or confusing.

Derek Thompson at The Atlantic, however, has a different take. Obama, he said, channelled his inner Jennifer Aniston in the speech.

I have an running observation about Obama, inspired by this article in The New Republic, that the president likes to remind audiences that he would prefer to tweak their incentives than have the government mandate reform. He and Treasury, you remember, wanted private investors to choose to buy the toxic assets. He continues to ask private insurers to choose preventative care, end underwriting and cut it out with rescission.

This instinct reminded me of a famous scene from Aniston’s movie The Break-Up, where her character famously tells her live-in boyfriend (Vince Vaughn), not that she wants to do the dishes for him; nor that she wants to force him to do the dishes: She wants him to want to do the dishes.

Reading Obama’s speech with my Rom-Com glasses on, the message is strikingly familiar. Obama doesn’t want to run Wall St. He wants Wall St. to re-learn how to run itself.

In the movie, Aniston’s wish for her boyfriend to want to do the dishes doesn’t exactly come true. Thompson isn’t sure Obama will fare any better.

I swear, it’s not just me watching too much TBS. Tim Fernholz remarks that “his call for financial sector players to act voluntarily in the public interest immediately rather than waiting for reform to pass” sounds like “health care tactics all over again.” It’s true! This is a very standard rhetorical tactic for Obama. Whether it works for him better than the threat worked for Aniston’s character, however, remains an open question.

And that’s the question that remains, as the Lehman anniversary passes, Obama heads back to Washington, and the fate of financial regulatory reform remains up in the air.