Fed issues rule on standards for debit card interchange fees

The Federal Reserve Board on Wednesday issued a final rule establishing standards for debit card interchange fees and prohibiting network exclusivity arrangements and routing restrictions. This rule, Regulation II (Debit Card Interchange Fees and Routing), is required by the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Debit card interchange fees are established by payment card networks and ultimately paid by merchants to debit card issuers for each electronic debit transaction. As required by the statute, the final rule establishes standards for assessing whether debit card interchange fees received by debit card issuers are reasonable and proportional to the costs incurred by issuers for electronic debit transactions. Under the final rule, the maximum permissible interchange fee that an issuer may receive for an electronic debit transaction will be the sum of 21 cents per transaction and 5 basis points multiplied by the value of the transaction. This provision regarding debit card interchange fees is effective on October 1, 2011.

The Board also approved on Wednesday an interim final rule that allows for an upward adjustment of no more than 1 cent to an issuer's debit card interchange fee if the issuer develops and implements policies and procedures reasonably designed to achieve the fraud-prevention standards set out in the interim final rule. If an issuer meets these standards and wishes to receive the adjustment, it must certify its eligibility to receive the adjustment to the payment card networks in which it participates. Comments on the interim final rule are due by September 30, 2011. The fraud-prevention adjustment is effective on October 1, 2011, concurrent with the debit card interchange fee limits. The Board will re-evaluate this adjustment in light of feedback received during this comment period.

When combined with the maximum permissible interchange fee under the interchange fee standards, a covered issuer eligible for the fraud-prevention adjustment could receive an interchange fee of up to approximately 24 cents for the average debit card transaction, which is valued at $38.

In accordance with the statute, issuers that, together with their affiliates, have assets of less than $10 billion are exempt from the debit card interchange fee standards. To assist payment card networks in determining which of the issuers are subject to the debit card interchange fee standards, the Board plans to publish by mid-July and annually thereafter lists of institutions that are above and below the small issuer exemption asset threshold. Also, the Board plans to annually survey the networks and publish a list of the average interchange transaction fees each network provides to its covered and exempt issuers. This information should enable issuers, including small issuers, to more readily compare the interchange revenue they would receive from each network.

The final rule prohibits all issuers and networks from restricting the number of networks over which electronic debit transactions may be processed to less than two unaffiliated networks. The effective date for the network exclusivity prohibition is April 1, 2012, with respect to issuers, and October 1, 2011, with respect to payment card networks. Issuers of certain health-related and other benefit cards and general-use prepaid cards have a delayed effective date of April 1, 2013, or later in certain circumstances.

Issuers and networks are also prohibited from inhibiting a merchant's ability to direct the routing of the electronic debit transaction over any network that the issuer has enabled to process them. The merchant routing provisions are effective on October 1, 2011.

Image courtesy of Wikimedia commons

Secretary Geithner Supports Christine Lagarde For IMF Managing Director

WASHINGTON – Today, the U.S. Department of the Treasury issued the following statement from Secretary Tim Geithner.

“I am pleased to announce our decision to support Christine Lagarde to head the International Monetary Fund. Minister Lagarde’s exceptional talent and broad experience will provide invaluable leadership for this indispensable institution at a critical time for the global economy. We are encouraged by the broad support she has secured among the Fund’s membership, including from the emerging economies. I also want to commend my friend, Agustin Carstens, on his strong and very credible candidacy.”

Fed and other banks announce extension of liquidity swap arrangements

Federal Reserve and other central banks announce an extension of the existing temporary U.S. dollar liquidity swap arrangements through August 1, 2012

The Bank of Canada, the Bank of England, the European Central Bank, the Federal Reserve, and the Swiss National Bank today announced an extension of the existing temporary U.S. dollar liquidity swap arrangements through August 1, 2012. The Bank of Japan will consider the extension at its next Monetary Policy Meeting. The swap arrangements, established in May 2010, had been authorized through August 1, 2011.

Palm Beach Owner of Three Precious Metals Firms Charged in $25 Million Precious Metals Investment Scheme

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, John V. Gillies, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, Henry Gutierrez, Postal Inspector in Charge, United States Postal Inspection Service, and J. Thomas Cardwell, Commissioner, State of Florida’s Office of Financial Regulation, announced that Jamie Campany, 47, of Palm Beach County, has been charged in a Criminal Information with multiple counts of mail and wire fraud. The Information charges Campany with five counts of mail fraud and four counts of wire fraud, in violation of Title 18, United States Code, Sections 1341 and 1343, respectively. Campany is scheduled to make his initial appearance in court before U.S. Magistrate Judge Lurana S. Snow tomorrow at 11:00 a.m. in federal court in Fort Lauderdale.

According to the Information, Campany was the owner of three investment firms specializing in purported gold, silver, platinum, and palladium bullion purchases on behalf of individual clients. Among his companies were Global Bullion Exchange, LLC (“Global”), in Lake Worth, Florida, and various affiliated licensee businesses throughout Palm Beach, Broward and Miami-Dade counties and other locations outside of Florida. In addition to Global, Campany owned and operated two predecessor firms, Barclay Trading Group, Inc. (“Barclay”) and The Bullion Group, Inc., both with offices in West Palm Beach.

As alleged in the Information, Campany’s three businesses conducted a sophisticated telemarketing operation to solicit investors to purchase precious metal bullion using purported “leverage” financing. These same investors were led to believe that they would need only to provide a fraction of the total cost of the purchased metals, with the remainder of the purchase price to be covered by margin-type financing, which would purportedly be extended to the investor by a purported “clearing firm.”

As further detailed in the Information, from about September 2006 to April 2007 when Barclay was succeeded by Global, the purported “clearing firm” with which Barclay had initially associated began delaying and ultimately ignoring requests by Barclay’s customers to sell their precious metals investments. As a result, the unsatisfied clients began to complain and threatened Barclay with litigation. In addition, the clearing firm’s failure to sell the clients’ holdings left Barclay insolvent.

As further alleged in the Information, in an attempt to prevent further complaints, litigation, and possible governmental enforcement action, Barclay began to satisfy its clients’ requests for liquidation of their investments by making payments to these clients using funds it had received from newer investors. After Global succeeded Barclay, Global continued this same Ponzi strategy. Global thereafter used Diversified Investment Group, Inc. (“Diversified”), a shell company controlled by defendant Campany, as its purported “clearing firm.” In fact, however, the Information alleges that no bullion was purchased, even though clients paid substantial commissions and fees totaling approximately 18% of the total purported value of the metal allegedly purchased.

According to the Information, Campany also misrepresented to the investors that their holdings had been financed through so-called “margin” credit. Thus, the investors were charged substantial interest on these non-existent “loans” and were subjected to periodic false “margin calls” during market declines. A margin call required investors to supply additional funds upon demand to increase their account equity levels. Moreover, investors who could not comply with such “margin calls” were informed that their investment positions had been forcibly liquidated and taken by Diversified as a secured creditor.

In a recent litigation filed in Miami-Dade Circuit Court by a court-appointed assignee, it is estimated that more than 1,400 investors were defrauded by Campany’s scheme out of more than $25 million.

Campany faces a maximum sentence of twenty years’ imprisonment and a maximum $250,000.00 fine for each of the Information’s nine counts.

Mr. Ferrer commended the investigative efforts of the FBI, U.S. Postal Inspection Service and Florida’s Office of Financial Regulation. In addition, Mr. Ferrer thanked the Commodity Futures Trading Commission and National Futures Association for their assistance in this case. The case is being prosecuted by Assistant U.S. Attorney Peter B. Outerbridge.

An Information is only an accusation, and a defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.

A copy of this press release may be found on the website of the United States Attorney’s Office for the Southern District of Florida at www.usdoj.gov/usao/fls.  Related court documents and information may be found on the website of the United States District Court for the Southern District of Florida at www.flsd.uscourts.gov or pacer.flsd.uscourts.gov.

Sound Financial Advice!

By Zach Foster

“Congress should act to remove taxpayer support from the housing GSEs before the bubble bursts and taxpayers are once again forced to bail out investors who were misled by foolish government interference in the market.”

--Ron Paul, September 10, 2003 (four years before the housing bubble burst)

It is clear that Ron Paul understood economics better than most, if not all, members of Congress, and following his advice probably would have averted many of the terrible economic situations many Americans find themselves in today.  Congressman Paul knew that excessive spending, dishing out artificial credit, and government manipulation of free market practices led to the current economic recession which many are calling the Second Great Depression.

Dr. Paul’s extensive knowledge of solid economics, driven in part by his partnership with great economists like Ludwig Von Mises and Murray N. Rothbard[1], can help the country get back to a solid financial footing.  His solutions will not be overnight remedies as promised by the current administration and even some of the Republican contenders.

As President, Ron Paul would veto any unbalanced budget Congress sends him.  This practice would put in check the recent trend reflected both in the federal and various state governments of legislatures passing budgets with huge deficits.  Deficit is merely a nicer word for incurring extra debt and without a plan for paying it off.

Ron Paul would eliminate reckless and unconstitutional government departments.  If anything, this would achieve a major pillar of Republican ideology by SHRINKING the size of the federal government. Not all sections of various departments of various branches of government are necessary for running the country, and many of these departments serve only as red tape that either hinder economic growth or restrict individual liberties, or even both.  The last two Presidential administrations have been growing government faster than underground farmers grow marijuana in Humboldt County.  Even George W. Bush, the so-called maverick conservative, added 7,000 pages of new federal regulations over business and the economy, and even began opposing free trade by imposing tariffs on various imports.[2]

Ron Paul will not raise the debt ceiling.  He understands that raising the debt ceiling only furthers the country’s already out of control debt and puts the country in an even more precarious position should any of its creditors come knocking (ever heard of China?).  Government spending must be limited just the way credit card companies limit spending of careless clients who can’t pay their credit card debt.  The average credit card delinquent’s debt is in the tens of thousands.  The federal government’s debt is in the ball park of FOURTEEN TRILLION.[3]

Ron Paul would work to fully audit and then abolish the Federal Reserve.  The basic fact that damn the institution is that the Federal Reserve is only a quasi-governmental institution that can manipulate interest rates and the value of money without consulting any government authority.  Furthermore, every dollar that the federal government wishes into existence is PRINTED by the Federal Reserve and LOANED to the federal government with INTEREST FEES.  Basically, every dollar the federal government creates, it’s already in debt for.  Does anyone see a problem with this???  Congressman Paul makes an initial case for this in his 2008 book The Revolution, and outlines an excellent plan to end the Fed and restore the value of American currency in his book End the Fed.  These ideas are justified and the economic theories confirmed by celebrated economist Murray N. Rothbard in his books The Origins of the Federal Reserve, The Case Against the Fed, and What Has Government Done To Our Money?.

Ron Paul would oppose all unnecessary regulations on small businesses and entrepreneurs.  He knows that, unlike the careless and parasitic mega-corporations and huge banks that have stained the good reputations of capitalism and the free market, small businesses and entrepreneurs are the lifeblood of the American economy.  By creating jobs for themselves and others, small businesses and entrepreneurs leave other jobs open for other people and raise the number of employed citizens who work, earn, save for their retirement so they don’t have to sponge off the public coffers, and best of all, they spend most of their earnings on consumer goods like housing, cars, and food, thus stimulating the local and national economies.

Ron Paul would fight for lower taxes.  He strongly believes that hard workers should be able to keep what they earn rather than have the money robbed from their paychecks when only some of it will actually go to good things like roads and schools, while most of it will be blown on fruitless multi-billion dollar domestic programs, the wars in Iraq, Afghanistan, Libya (and Yemen too?), and generous foreign aid packages.  The author wrote in an earlier article:

“Walter E. Williams, distinguished Professor of Economics at George Mason University and syndicated columnist, explains how tax cuts on big business benefits the middle class.  ‘If a tax is levied on a corporation, and if it is to survive, it will have one of three responses, or some combination thereof. One response is to raise the price of its product, so who bears the burden? Another response is to lower dividends; again, who bears the burden? Yet another response is to lay off workers. In each case, it is people, not some legal fiction called a corporation, who bear the burden of the tax.’  What this also means is that when big businesses are taxed less, profits are higher and more disposable, therefore jobs are created, prices don’t rise, and wealth is spread more liberally and plentifully…”[4]

Ron Paul is the candidate who has a solid voting record and solid qualifications in virtually every sector of political issues Americans are debating about.  Ron Paul’s Presidency can lead the country back to prosperity[5] while protecting and preserving civil liberties and abiding strictly by Constitutional law.  Visit RonPaul2012.com for more details on his platform.

Image courtesy of Wikimedia Commons

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[1] Paul, Ron. End the Fed. Chapter 3.  Grand Central Publishing.  September 2009.

[2] Tanner, Michael.  Of Course That Implies He Has Principles. Cato Institute. http://www.cato-at-liberty.org/of-course-that-implies-he-had-principles/

[3] Federal Debt Limit (Debt Ceiling). The New York Times. June 2011. http://topics.nytimes.com/topics/reference/timestopics/subjects/n/national_debt_us/index.html

[4] Foster, Zach. The Failure to Vote on the James Zadroga 9/11 Health Bill. The Political Spectrum. December 2010. http://political-spectrum.blogspot.com/2010/12/failure-to-vote-on-james-zadroga-911.html

[5] Restore America’s Prosperity. http://www.ronpaul2012.com/wp-content/uploads/wpsc/product_images/RP-Economy-SJim.jpg

President Obama Launches the Advanced Manufactur​ing Partnership

Good morning,

Last week, President Obama visited Pittsburgh, Pennsylvania where he toured Carnegie Mellon University’s National Robotics Engineering Center (NREC) and delivered remarks announcing the launch of the Advanced Manufacturing Partnership (AMP), a $550 million dollar project to bring together industry, government, and higher education.

Today, the President travels to Bettendorf, Iowa, to visit the Davenport Works factory of AMP participant Alcoa. The factory is a state-of-the-art aluminum rolling mill that serves as the manufacturing hub for Alcoa's $3 billion aerospace business. You can watch the event live at 2:05 PM EST on Whitehouse.gov/live.

 

The Advanced Manufacturing Partnership (AMP) is a national effort that brings together industry, universities and the federal government to invest in emerging technologies that will create high quality manufacturing jobs and enhance our global competitiveness. As President Obama remarked in Pittsburgh:

“We’ve launched an all-hands-on-deck effort between our brightest academic minds, some of our boldest business leaders, and our most dedicated public servants from science and technology agencies, all with one big goal, and that is a renaissance of American manufacturing. Throughout our history, our greatest breakthroughs have often come from partnerships just like this one.

American innovation has always been sparked by individual scientists and entrepreneurs, often at universities like Carnegie Mellon or Georgia Tech or Berkeley or Stanford. But a lot of companies don’t invest in early ideas because it won’t pay off right away. And that’s where government can step in. That’s how we ended up with some of the world-changing innovations that fueled our growth and prosperity and created countless jobs -- the mobile phone, the Internet, GPS, more than 150 drugs and vaccines over the last 40 years was all because we were able to, in strategic ways, bring people together and make some critical investments.”

The President’s plan, which leverages existing programs and proposals, will invest more than $500 million to jumpstart this effort. These investments will build domestic manufacturing capabilities in critical national security industries and reduce the time needed to make advanced materials used in manufacturing products. Additionally, we will invest in next-generation robotics, increase energy-efficiency in the manufacturing process and develop new technologies that will dramatically reduce the time required to design, build, and test manufactured goods.

Former Massachusetts Scientist Convicted of Fraud Scheme Involving a Multi-Million Dollar Federal Research Grant

BOSTON, MA—A federal jury in Boston has convicted Christopher D. Willson, a former Massachusetts scientist and businessman, in connection with a fraud scheme involving a multi-million dollar federal research grant.

On June 21, Willson was found guilty of one count of conspiracy to defraud the United States and to commit wire fraud, six counts of wire fraud and four counts of false claims.

Willson was the chief scientist and senior vice president of EV Worldwide, LLC (EVW), a Pittsfield, Mass. company. From 2000 through 2005, United States Congressman John Olver arranged for an earmark directing the Federal Transit Administration (FTA) to transfer approximately $4.3 million to EVW through a regional transit agency called the Pioneer Valley Transit Authority (PVTA).

According to Congressman Olver’s testimony, he intended the earmarked funds to be spent by EVW to develop an electric battery that would be used to propel public transit buses. The federal grant required EVW to match the federal funds, dollar-for-dollar, with its own resources. For every dollar EVW spent on the project, the company could seek up to 50 percent reimbursement from the FTA.

Evidence presented at trial showed that, from 2004 through 2005, Willson submitted 10 fraudulent invoices in which he falsely claimed that EVW was matching the FTA funds, when in fact, EVW was millions of dollars in debt and had nearly no other non-public source of funds. Willson repeatedly contacted and met with Congressman Olver and grant officials at the FTA and PVTA to discuss the company’s claimed progress and federal grant funding, but he never informed them of the company’s financial problems. As a result of this deception, Willson fraudulently obtained more than $700,000 in federal funds for EVW.

Willson used the money to pay EVW’s CEO, Michael Armitage, approximately $250,000, paid himself approximately $100,000, and to provide approximately $110,000 to fund a separate Canadian research company, Hydrogen Storage Media, Inc., which he and Armitage had founded.

U.S. District Judge Rya Zobel scheduled sentencing for October 6, 2011. Willson faces up to 20 years in prison for each of the six counts of wire fraud, up to five years in prison for each of the four counts of false claims and up to five years in prison on the conspiracy count. Willson also faces maximum fines of $250,000 per count.

United States Attorney Carmen M. Ortiz; Assistant Attorney General Lanny A. Breuer of the Criminal Division, United States Department of Justice; Theodore L. Doherty III, Special Agent in Charge of U.S. Department of Transportation, Office of Inspector General, Office of Investigations; William P. Offord, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation in Boston; and Richard DesLauriers, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Office made the announcement today.

The case is being prosecuted by Assistant U.S. Attorney Steven H. Breslow of Ortiz’s Springfield Branch Office and Trial Attorney Edward J. Loya, Jr. of the Criminal Division’s Public Integrity Section. The case is being investigated by the Department of Transportation, Office of Inspector General, IRS-CI, and the FBI’s Boston Field Office, with assistance from the Defense Contract Audit Agency.