So why, then, do Bank of America and Wells Fargo get the privilege of holding state dollars?  Why do they continue to get lucrative state banking contracts?  There is an alternative.  We can move our money.

In every corner of the state, there are community banks ready and eager to take deposits and perform banking services that are currently performed by the Wall Street banks.  These local lenders are hungry for steady deposits that they can turn around into local lending for small businesses in our state – local loans that will turn into local jobs.

My bill, House Bill 1325, will help steer state deposits and state contracting dollars away from the Wall Street banks that have hurt our consumers and into local lenders.  The bill has been featured in the Sun, the Wall Street Journal, and on Maryland Morning on WYPR.  The bill is currently being heard by the House Committee on Health and Government Operations - be sure to lend your support.

Even if the bank lobbyists succeed in killing the bill, they can’t tell consumers what to do.  Each of us has the power to move our own money away from banks that resist basic consumer protections, and into local lenders or credit unions that will put our money to local use.

http://www.baltimoresun.com/business/money/bal-bz.ml.ambrose07mar07,0,4991370.story

Click here to view the embedded video.

Unfortunately, Stein has a new starring role – ripping off consumers.  Stein now can be found on TV’s across our area as a pitchman for FreeScore.com, a site that urges consumers to obtain a “free” credit score from their website.  The problem is, it isn’t free.  FreeScore requires consumers to sign up for a credit monitoring service, at the bargain price of $29.95 a month.  Anyone that does not want to get this service – which, incidentally, no one needs – must take affirmative steps to cancel the agreement.

FreeScore, like FreeCreditReport.com, is an example of “negative option marketing.” These marketing schemes draw consumers in with “free” trials or products, but require consumers to enroll in paying subscriptions.  For decades, consumers have understood that a “3 month trial” of Sports Illustrated or HBO comes with an opt-out subscription to those products. Today, sophisticated scam artists lure consumers in with “free” credit reports or “free” shipping, which actually require enrollment in unwanted and costly programs.

It’s a pernicious and growing practice, one that has hit my own family several times.  Just google “MVQ Bizmax” or “MVQ Shopessplus” and you’ll see what we dealt with.  The MVQ Bizmax search result  begins with “Find out what MVQ*BIZMAX charge on your credit card means.”  MVQ Shopessplus has as its first “Frequently Asked Question” the question “What is ‘MVQ*Shopessplus’ doing on my credit or debit card statement?”

Here’s a little hint: if you have to explain why you are on a consumer’s credit card statement, you’re probably a scammer.

Delegate Sheila Hixson and I are sponsoring legislation that would require any negative option contract to fully disclose all terms, and provide that consumers specifically agree to the negative option feature, as shown by their signature.

If the General Assembly sees fit to pass the bill, the only consumers caught by Ben Stein and his fellow ripoff artists will be those that are willing to hand money over to keep scam artists in business.  Anyone?  Anyone?  Bueller?  Bueller?

Regrettably, the valuable information exchange among neighbors was disconnected from the way that the utilities and government agencies exchange information with citizens.  Someday soon, citizens and service providers may utilize a common network, such that we can crowdsource our response to future crises.

Logo for CitySourced

Already, a group of entrepreneurs has developed an iPhone application that permits residents to upload information about city problems, such as potholes or graffiti.  It’s not hard to imagine a platform that would could allow citizen reporting of real-time crisis conditions as well.  Citizens could have a single place to tell PEPCO, the State and the County about, for example, a tree that has taken down a power line and obstructs traffic.  The responders, in turn, could use the platform to communicate with residents – and one another – about the status of their remedies.  This would let the utilities and government agencies cooperate on critical path needs, and identify efficiencies in how their resources are dispatched.

Conceptually, this simply builds on the 311 program that Governor O’Malley utilized in the City of Baltimore, and it complements the StateStat concept beautifully.  It would enhance these ideas, by permitting real-time, two-way feedback between citizens and service providers.   Best, the technology for these systems exists and is relatively inexpensive.

As the state, counties, and utilities review the recent crisis, and consider ways we can improve our response to future events, I hope crowdsourcing will get some serious consideration.

Interchange fees work like this: when a merchant accepts a card payment, the cardholder’s bank – the issuer – withholds a fee, often 2% or more, from the purchase price that it pays to the merchant’s bank (the “acquirer”). The acquiring bank also takes a fee. Once the merchant receives its cash – at the end of the month – it has typically lost more than 2.5% of the price it would have received if the customer had paid cash. The Government Accountability Office has produced this graphical explanation:

Because of these enormous costs, merchants wind up having to increase prices to all customers. Accordingly, cash customers wind up subsidizing the purchases of card customers. And card customers ensure that their local stores cut huge checks every months to the bank networks, namely VISA and MasterCard.

The policy implications are enormous. The National Association of Convenience Stores has testified that card fees are more than double what the industry makes in profits. High gasoline prices are driven, in part, by the $7.6 billion that the industry has to pay to the banks, a cost that is rising in that industry faster than health care costs.

Regulating interchange fees at the state level is not feasible, since most merchants are national banks, and cardholders use their cards throughout the country. But just as Congress has addressed credit card rates for consumers, so too must it address the costs these cartels are imposing on American businesses and American consumers.

One of my early legislative tasks was to participate in a joint House-Senate hearing on textbook prices, one that was mandated by a bill passed in the 2007 regular session.  At the hearing, we heard testimony about ways the publishing industry ensures that students buy new textbooks and how it undermines used booksellers.  One particularly effective tactic is to frequently issue new editions of textbooks, so that texts are deemed obsolete after only one or two semesters.  In some instances, these new editions consisted of few changes other than the art on the cover.

The hearing made painfully clear that professors serve as the unwitting accomplices of the profiteering publishers.  Academics were accustomed to simply selecting the “best” texts, without regard to whether the incremental benefits of certain texts outweighed the incremental expense to students. 

In 2009, the legislature passed a new bill, one that required Maryland universities to take certain steps to ensure that the textbook selection process would take cost into account, and would facilitate competition among booksellers. 

It’s great to read, then, this comment:

P.J. Hogan, associate vice chancellor for government relations for the University System of Maryland and a former senator,  described this change in the faculty’s mindset as “cultural.”

“Now the faculty has to think about, ‘Is this the best thing at the best price to deliver the content of the course?’” Hogan said. “Students now have a lot more options, and are getting more options as time goes on.”

In a time when many students are incurring debt and struggling to find work, it’s great to see that our efforts to keep costs down for students are having decisive and early success.

In a quirk of timing, however, the Supreme Court today handed down a momentous campaign finance law ruling on the same day.  That hightly anticipated ruling comes in the case Citizens United v. FEC. 

Prior to today, it was “firmly embedded” in US law that Congress and the states could prohibit corporations and labor unions from using their treasuries to finance campaigns to elect or defeat candidates.  Individuals, however, could make such independent expenditures as a form of First Amendment expression.  In the Citizens United decision, a 5-4 majority rejected that distinction, and elevated a corporation’s right to engage in direct expenditure electioneering over the public’s interest in level playing field.

For a full analysis, I recommend SCOTUSblog, the blog published by my friend and law firm colleague Tom Goldstein, one of the nation’s most preeminent Supreme Court practitioners.  But a short analysis comes from Justice Stevens’ dissent:  the majority is ”gutting campaign finance laws across the country.”

It’s a new world now, one in which a candidate’s own campaign account may be irrelevant compared to the treasuries of interested industries.

Col. McGee unfailingly buys a table of seats to the Alpha Phi Alpha breakfast held to celebrate Martin Luther King Day, and I often am among his guests.  This privilege does not come from any political status – rather, it is because I am a close friend of his grandson, Damon Smith, and I get a seat along side the rest of the family.

It’s a position of honor.  Many of the guests – particularly Alphas – bypass me and the rest of the politicians and seek out handshakes and photographs with Col. McGee, and well they should.  McGee and his colleagues are inspirational figures, airmen and mechanics whose love of country and tremendous talent superseded bias and discrimination.

The nation-wide tributes and memorials to Dr. King are richly deserved and are an important vehicle to keep civil rights on the minds of our citizenry.  For me, the best part is my chance to visit and pay tribute to a personal hero (and constituent), “Papa ‘Gee.”  I would offer more of the details of this exceptional man’s story, but I doubt a blog post could do him justice.  To learn more about Col. McGee, you can read a short online bio here, or buy his biography, written by his daughter, here.

He’s Ray Rice‘s cousin.

The ethics committee might need to issue a rule on trading votes for Super Bowl tickets.

For me, the start of session marks a transition in my life as a lawyer.

Years ago, before I joined the legislature, my friend and mentor Brian Frosh and I were talking about how service in the General Assembly differs from service in Congress.   I lamented how difficult it must be to work on complex legislative questions without the large professional staff that members of Congress enjoy.  Frosh responded with a comment that still remember, because it struck me as starkly self-contradictory.  And perhaps a little crazy.

“You have to do a lot of the work yourself,” he conceded.  ”It’s fun.”

As a law firm associate and political activist, I failed to understand how doing more work would be thought of as fun. Now, as a freshman delegate, I completely understand – and agree – with Frosh’s observation.

Let me be very clear – we have talented, hard-working professionals working for the Department of Legislative Services, in committees, and in members’ offices.  But in the frenzied pace of our 90 day session, these staff are overloaded with the essential tasks of drafting bills and amendments, preparing fiscal notes, and supporting committee hearings and constituent service.  When it comes to learning new fields of the law, or understanding how state and federal regulatory powers are allocated in various industries, we are often on our own.  This is particularly true for junior members like myself.

For the intellectually curious, particularly attorneys, it is fun.  Tonight, I’ve been researching the extent of state and local authority over cable television franchisees.  My morning reading is likely to cover unemployment insurance and highway safety.  My day-to-day law practice does not permit such intellectual spelunking.  Every minute counts in a law firm, where time is currency.  But for 90 days, I get free reign to try and master new legal disciplines, and look for ways that we can improve how our laws work for our citizens.

Unlike many of my colleagues, I won’t be moving to Annapolis, and my paying clients don’t disappear for 90 days.  But the first day of session does mark a transition into a whole new adventure in lawyering.  The fun has begun.