Rick Scott’s Crusade to Preserve Fast-Food Healthcare

rickscottIs Rick Scott following the T. Boone Pickens playbook? Pickens is the notorious corporate raider who moved into the public policy arena with his advocacy of wind energy. Scott (photo) is the former chief executive of disgraced for-profit hospital company Columbia/HCA (now just HCA) who has inserted himself in the middle of the debate over healthcare reform.

Both men play down their controversial histories and claim they are driven by principle rather than personal gain. In the case of Pickens, the principle is laudable: he has been pushing the country to adopt renewable energy in a major way. Scott is playing a much less constructive role. He is on a mission to sabotage efforts by the Obama Administration and Congress to make affordable coverage available to all.

Scott is the public face of a new organization called Conservatives for Patients’ Rights, which has been spending heavily on TV ads to argue that the reform proposals being considered by Democrats would take away the ability of patients to make their own healthcare decisions, leaving them at the mercy of the “nanny state.” The group’s website is filled with testimonials from “victims of government-run healthcare” in Canada and Britain.

It’s tempting to laugh all this off. The problem with the reform ideas being considered by the Democratic leadership is that there is not enough government control. The most efficient alternative, single-payer or Medicare for all, has been taken off the table, and some leading Dems are even leaning toward the abandonment of a public option as one of the new coverage options that would be available to the uninsured.

Moreover, does a campaign that puts the now unpopular term “conservatives” in its name, focuses much of its media buys on Fox News and uses a tainted figurehead such as Scott really expect to win widespread appeal? Perhaps this is just another facet of the Right’s current tendency to rally only hardcore reactionaries.

Yet there is more to Scott’s crusade than ideology. He represents a portion of the commercial healthcare industry that is threatened not only by government involvement but even by measures that bring medical costs under control.

Since 2001 Scott has been involved in a privately held company called Solantic, which is a leading operator of “urgent care facilities” throughout Florida. These are standalone clinics located in shopping centers, strip malls and the Orlando airport. Some are in Wal-Mart Supercenters.

The existence of the company – whose president Karen Bowling used to be a Columbia/HCA marketing executive and before that a TV news anchor in Jacksonville – is predicated on the fact that traditional medical care is out of reach for a substantial portion of the population – both the uninsured and the underinsured. Its walk-in clinics treat care as an isolated and seemingly affordable purchase rather than an ongoing relationship between patient and doctor. Critics also charge that the clinics often serve mainly as a way to attract customers to the drugstores and retail outlets in which many of them are located, creating an incentive for them to prescribe medications that will be filled under the same roof.

While the clinics may be a convenient alternative for simple procedures, the industry will succeed only if its services are used also by people with a wider range of conditions, including ones that should involve ongoing monitoring. For those patients, the clinics are as distant from good medical care as fast-food joints are from healthy eating and payday lenders are from responsible banking.

The prospects for Solantic were appealing enough that private equity firm Welsh, Carson, Anderson & Stowe, which focuses on the healthcare and infotech sectors, agreed to invest $100 million in the company in 2007. Last year, Welsh partner Thomas Scully joined Solantic’s board. Scully previously served as head of the Centers for Medicare & Medicaid Services during the Bush Administration. He was at the center of a scandal for threatening to fire the chief actuary of the Medicare program if he told Congress that the industry-friendly drug benefit promoted by Bush would be much more expensive than the White House had acknowledged. After leaving the Administration in 2003, Scully first went to work as a lobbyist for the healthcare industry.

Scully, Scott and Solantic all have a strong vested interest in preserving the current system that deprives so many people of decent coverage and forces them to depend on walk-in clinics. It remains to be seen whether the Democrats are truly willing to create an alternative that frees everyone from fast-food healthcare.

Stress Relief

dont_worry_clockTreasury Secretary Timothy Geithner kicked off his big day with the publication of an op-ed in the New York Times asserting that the Obama Administration has brought a “forceful response” to the “damaged financial system” it faced upon taking office. “We chose a strategy to lift the fog of uncertainty over bank balance sheets,” he added, and “help ensure that the major banks, individually and collectively, had the capital to continue lending even in a worse than expected recession.”

Then why does the announcement of the results of the stress tests applied to 19 large financial institutions by federal banking regulators seem to create an even denser fog of confusion? You only had to look at the differences between the front-page headlines in the Washington Post and the Wall Street Journal to see the absence of a coherent story line from Geithner, Federal Reserve Chairman Ben Bernanke and other top officials.

BANKS NEED AT LEAST $65 BILLION IN CAPITAL blared the Journal in reporting the somewhat inaccurate information that had been leaked to it, while the Post presented its leaks with a more upbeat STRESS TEST FINDS STRENGTH IN BANKS. Following the release of the actual results late Thursday, the Post website was going with STRESS TESTS FIND BANKS NEED $75B IN EQUITY, while the Journal cranked up the alarm level with FED SEES UP TO $599 BILLION IN LOSSES.

The divergence in headlines reflects the contradictory messages that the Treasury and the Fed began feeding the public last fall and that have continued under the new administration. We’ve been whipsawed between the idea that there was a pressing banking crisis that required urgent aid from taxpayers and the notion that things were not so bad as to justify a federal takeover of the ailing institutions.

Bernanke continued the equivocation with his statement: “The results released today should provide considerable comfort to investors and the public. The examiners found that nearly all the banks that were evaluated have enough Tier 1 capital to absorb the higher losses envisioned under the hypothetical adverse scenario. Roughly half the firms, though, need to enhance their capital structure to put greater emphasis on common equity, which provides institutions the best protection during periods of stress.”

Given that the report tries hard to make the “adverse scenario” against which the banks were tested seem like a remote possibility, it is significant that nine of the institutions were deemed to have sufficient capital for such an eventuality. Ten did not. Bank of America is said to require an additional $33.9 billion in capital, Wells Fargo $13.7 billion, GMAC $11.5 billion, Citibank $5.5 billion and Morgan Stanley $1.8 billion. Five regional banks need to raise a total of $8.2 billion. These numbers suggest substantial relative weakness, yet Bernanke counsels us to feel comfortable, and many mainstream observers seem inclined to take that advice.

Geithner and Bernanke’s “don’t worry, be happy” approach seems designed to lull the financial markets while making the case for additional use of taxpayer funds to prop up some of the banks. It also serves to blunt any calls for nationalization.

If anything, the case for federal takeover of institutions such as Bank of America is stronger than ever in light of the stress test results. One way that BofA and others are expected to improve the quality of their balance sheets is to convert the preferred stock that the federal government received in exchange for its capital infusions into common stock, thus making the feds a more dominant shareholder.

Rather than seeing this as an opportunity to influence bank business practices, the feds will maintain a largely hands-off stance, according to the Financial Times. So we will continue to have a double standard between the activist approach adopted by the Obama Administration with regard to the auto industry and its unwillingness to challenge the banking elite, for whom the stress tests turned out to be a form of stress relief.

A Blagojevich Senate?

singlepayer-protestPresident Obama and the Democratic leadership say they are serious about enacting health care reform this year, but if the current behavior of some leading Senate Democrats is any indication, we are headed for the weakest kind of change. Some of these senators seem more concerned about protecting the private health insurance industry than in creating a system that does the most to help the uninsured and the underinsured.

Having ruled out the best heath reform of all—the creation of a single payer or Medicare for All plan—the Democrats have been pushing a hybrid system in which everyone who does not already have coverage would be required to purchase it from either a private insurer (with subsidies for those with low income) or a new federal plan. The insurance industry is squawking about that public alternative, saying it would create unfair competition for their offerings.

That’s would you would expect to hear from an industry that wants to hold its long-suffering clients hostage, realizing that if people had the choice of a quality affordable public plan they would abandon the likes of UnitedHealth and Humana in a heartbeat.

What’s amazing is to read in the New York Times that supposedly liberal Sen. Chuck Schumer of New York is proposing to placate the insurers by creating a “level playing field” between the public and private plans. That would mean adhering to “principles” such as the following:

  • The public plan should be self-sustaining, meaning that it would pay all claims from premiums and co-payments.
  • The public plan should pay doctors and hospitals more than the discounted rates now provided by Medicare; and
  • The government should not compel doctors and hospitals to participate in the public plan just because they participate in Medicare.

Is Schumer out of his mind? His proposals would saddle a social insurance program with the drawbacks of a for-profit carrier.

Why stop with those few principles? To make it really fair, Schumer should insist that the public plan spend the same large sums on wasteful administrative costs as the private insurers and be equally ruthless about denying coverage whenever possible. He should also demand that the public plan set its rates high enough to allow lavish compensation packages for its top officials and generate surpluses equal to the billions in profits taken in by its private counterparts. And then, for good measure, the public plan should be made vulnerable to class action suits by participants and have to pay out hundreds of millions of dollars in compensation the way that industry leader UnitedHealth Group did earlier this year.

Perhaps then the public plan would be sufficiently inefficient, unresponsive and dysfunctional to provide the level playing field Schumer seeks.

Given the fealty of Democrats like Schumer to the insurance giants, it was satisfying to see him and the rest of the Senate Finance Committee, including its chairman Max Baucus of Montana, put on the spot by activists who repeatedly interrupted a roundtable discussion on expanding health coverage to protest the fact that there was not a single proponent of single payer among the 15 speakers.

Before being removed by Capitol police (photo), one of the protesters accused the committee of listening only to the views of big corporate contributors. Referring to the former governor of Illinois accused of running a pay to play administration, he asked Baucus: “Is this a Blagojevich Senate? Are you the Blagojevich Chairman?” At least Blagojevich had the decency to compromise his principles behind closed doors; Baucus and Schumer do it in plain view.

Note: The protesters represented groups such as Healthcare-NOW, Single Payer Action, and the Maryland chapter of Physicians for a National Health Program.

The Partial Coup d’Etat at Bank of America

bofaBank of America seems to be in a state of denial about the partial coup d’etat that was just carried out by the company’s shareholders, who took the remarkable step of ousting Ken Lewis from the chairman’s job.  BofA put out a press release with the vague title “Bank of America Announces Results from Annual Meeting” that never mentions the demotion of Lewis, who was kept on as chief executive. It simply announces that non-executive director Dr Walter E. Massey, president emeritus of Morehouse College, had been selected for the chairman’s post.

Moreover, as of this writing, the About page on the BofA website contains a box headlined Leadership with a quote from Lewis, who is still identified as chairman. The quote reads: “Bank of America helps build strong communities by creating opportunities for people — including customers, shareholders and associates — to fulfill their dreams.”

As I described in my previous post, Lewis spent four decades at BofA and its predecessor companies fulfilling his dream — or more strictly, that of his mentor Hugh McColl — of conquering a long list of competitors and creating a financial leviathan that today has the dubious distinction of being  deemed to be too big to fail. Now his personal part of that dream is crumbling before him.

As hard as BofA’s p.r. people may try to downplay it, the company’s investors have just presented Lewis with a resounding vote of no confidence. Although the attempt to kick Lewis off the board entirely did not succeed, his loss of the chairmanship is a humiliating defeat and may make it untenable for him to remain in the CEO post.

What was a sad day for Ken Lewis was a remarkable victory for shareholder activism and a serious setback for those top financial executives who seem to think they can avoid any personal consequences from mismanagaging their banks to the point that they need to be propped up with vast sums of taxpayer money. The uprising of the BofA shareholders should also send a strong message to the largest owner of large banks — the federal government — that the time has come to get tough with the banking barons.

The Many Sins of Ken Lewis

lewisIt always helps to put a face on one’s adversary in a protest campaign, and whether he likes it or not, Kenneth Lewis’s mug has become the lightning rod for criticism of the ongoing bailout of Big Finance. This post is being written on the eve of the most challenging day in Lewis’s 40 years as a banker. There is a chance that the shareholders of Bank of America, where Lewis has been chairman and chief executive since 2001, will oust him from the board or take away his chairmanship.

Lewis’s scalp is being sought by many. The Service Employees International Union, which has made removal of Lewis the centerpiece of its “Bad for America” campaign against BofA, this week joined forces with Moveon.org to press the issue. Major institutional investors such as the California public pension funds CALPERS and CALSTRS announced they had voted their millions of shares against Lewis. Muckraking filmmaker Robert Greenwald issued a video to further the crusade.

Those calling for Lewis’s ouster have mainly been focusing on his recent misdeeds: his still unclear role in the takeover of failing Merrill Lynch and the fat bonuses received by Merrill employees just before that deal took effect; his decision to jack up interest rates on credit card accounts; and BofA’s role in corporate organizing against the Employee Free Choice Act.

Yet Lewis has a lot more to answer for. In fact, his entire career, which has been spent exclusively at BofA and its predecessor companies, symbolizes what has gone wrong with the U.S. banking system over the past three decades.

When Lewis graduated from Georgia State University in 1969, he went straight to work as a credit analyst for a regional financial institution called North Carolina National Bank (NCNB). He rose through the ranks and eventually came to the attention of Hugh McColl, a brash ex-Marine who took over as chief executive of NCNB in 1983 and set out to transform the bank.

McColl launched an aggressive campaign to become a financial superpower. Taking advantage of the weakening of longstanding restrictions on interstate banking, he engineered a series of takeovers, first in Florida and then among big players in Texas crippled by the 1980s real estate meltdown in the Lone Star State. In 1989 McColl was rebuffed in his attempt to acquire Citizens and Southern, Georgia’s largest bank, which instead merged with Virginia-based Sovran Financial.

Two years later, after C&S/Sovran was hit with a sharp increase in its volume of bad loans, the combined company could not resist a new takeover effort by McColl. The deal turned NCNB into one of the country’s most powerful “superregional” banks, an achievement that McColl celebrated by grandiosely changing his company’s name to NationsBank.

As McColl made his various conquests during the 1980s, it was usually Ken Lewis who was sent in as a viceroy to run the newly acquired institution and integrate it into McColl’s empire. As Fortune once put it, “Lewis achieved stardom in the late 1980s and early 1990s by parachuting in to impose consistent sales and expense practices on the hodgepodge of banks that NCNB was acquiring.”

By 1993 Lewis was president of NationsBank and McColl’s heir apparent as the two men continued their relentless consolidation drive, which culminated in the 1998 purchase of California’s Bank of America and the adoption of its name. Three years later, McColl stepped down and Lewis took the reins, using them to carry out what was widely seen as a reckless deal to acquire Boston’s Fleet Bank.

BofA also got itself involved in a series of scandals—such as the one involving the Italian company Parmalat—which seemed to be an outgrowth of a need by the behemoth bank to increase revenues any way possible. It was later tied to the misdeeds of the major corporate villains of the early 2000s, paying, for example, $69 million to settle a lawsuit over its role as an underwriter for Enron and $460 million to settle an action brought by investors in WorldCom. The controversies continue into the present, not to mention the dubious business practices that would force taxpayers to provide $35 billion in capital infusions.

The history of BofA over these past few decades, including Lewis’s own trajectory, epitomizes the dangerous consolidation of power and spread of venality that have overtaken much of the banking industry. Removing Lewis would not be a matter of slaughtering a sacrificial lamb but rather a long overdue move against one of those most responsible for the financial mess we are in.

Bayer Fights Safety Board “Terrorists”

bayerblastCorporations will go to great lengths to avoid close scrutiny of their operations, but Bayer CropScience reached a new height of brazenness in its behavior following a massive explosion (photo) last year at its chemical plant outside Charleston, West Virginia. Company chief executive William Buckner admitted in testimony the other day before the House Energy and Commerce Committee that Bayer managers invoked a 2002 law designed to protect ports from terrorists to justify their initial refusal to share information about the accident with the federal government’s Chemical Safety and Hazard Investigation Board.

Apparently, what Bayer did not want the “terrorists” from the board to learn was that the company’s safety procedures were a mess. Video monitoring equipment had been disconnected, and air-safety devices were not operating. What made this disarray more disturbing was that the accident came close to causing the release of a large quantity of methyl isocyanate (MIC), the same pesticide component that killed several thousand people near a Union Carbide plant in Bhopal, India in 1984. The explosion at the West Virginia plant (which was run by Union Carbide until 1986 and taken over by Bayer in 2001) resulted in two deaths and injuries to half a dozen emergency responders.

Shortly after the accident, Bayer managers dropped the preposterous idea that they did not have to cooperate with the safety board, but they came up with other forms of obstruction. They provided thousands of pages of documents but labeled them “security sensitive” so that they could not be disclosed by the safety board. They also claimed that the plant was under the jurisdiction of the Coast Guard, given its use of barges on the Kanawha River, and thus it was up to that agency to decide which documents could be released.

Beyond Buckner’s qualified admissions, the House Energy Committee issued a report charging that “Bayer engaged in a campaign of secrecy by withholding critical information from local, county, and state emergency responders; by restricting the use of information provided to federal investigators; by undermining news outlets and citizen groups concerned about the dangers posed by Bayer’s activities; and by providing inaccurate and misleading information to the public.” Among the company documents obtained by the committee was a “community relations strategy” for dealing with a local activist group and the newspaper that diligently followed the story: “Our goal with People Concerned About MIC should be to marginalize them. Take a similar approach to The Charleston Gazette.”

All this may come as a surprise to consumers who think of Bayer Corporation as a purveyor of aspirin and other benign products such as Aleve, Alka-Seltzer, Flintstones Vitamins and Phillips’ Milk of Magnesia. But the company’s ultimate parent, Bayer AG of Germany, has one of the most shameful histories of any major corporation: During the Second World War, it was part of the notorious IG Farben conglomerate that made use of slave labor to serve the Nazi war machine and produce the lethal gas used in the death camps.

What Bayer did in West Virginia does not begin to approach its war crimes during the Nazi era, but it shows that the company still has a lot to learn about corporate ethics.

Note: For more material on Bayer’s checkered environmental record, see the website of the Dusseldorf-based Coalition Against Bayer Dangers. Charleston Gazette reporter Ken Ward Jr., who has written extensively on the Bayer explosion, also contributes pieces about the accident to the paper’s Sustained Outrage blog.

Barofsky’s Bailout Bible

sigtarp-logoRejecting the evasion and obfuscation that has characterized most official pronouncements about the federal bailout of the financial and auto industries, Neil Barofsky has a talent for cutting through the crap. The Special Inspector General for the Troubled Asset Relief Program (or SIGTARP) speaks plainly and makes no compromises in his pursuit of accountability.

Barofsky’s aggressive watchdog style is in full display in a document he just submitted to Congress and released to the public. Despite having the unassuming title of Quarterly Report, it is actually the most lucid and comprehensive analysis of the bailout program published to date.

The part of the report that has received most press attention is the warning that the Public-Private Investment Program promoted by Treasury Secretary Geithner to deal with toxic bank assets is quite vulnerable to fraud. This is just one of a slew of ways that Barofsky argues that the TARP program lacks adequate safeguards. To help make up for these limitations, the SIGTARP office is proceeding with half a dozen audits and is coordinating its efforts with various federal law enforcement agencies.

Barofsky’s 250-report also contains what amounts to a textbook and statistical abstract about the bailout. He reminds us that TARP is not one but a dozen different programs with various objectives. (Citigroup, for instance, has gotten three different forms of assistance.) He carefully explains each one and provides a wealth of quantitative as well as qualitative detail. There’s even a tutorial on securitization. Among the data that I believe are being made public for the first time are a table showing the dividends paid by banks receiving capital infusions and an eleven-page appendix providing the status of every one of the common stock warrants the Treasury Department received from TARP recipients.

Also included are details of the administrative and operational costs incurred by the Treasury Department in connection with TARP, including $6.9 million to PricewaterhouseCoopers, $5.7 million to Bank of New York Mellon and $2 million to Ernst & Young as well as about $10 million to various law firms.

This single SIGTARP document, produced by an entity with a staff of only 35, does more to clarify the bailout than the combined efforts of the Treasury Department, the Federal Reserve and other banking regulators over the past seven months. This is not a case, however, in which clarification creates greater confidence. One comes away from Barofsky’s report with the sense that the bailout is a vast Rube Goldberg contraption that requires careful monitoring. Fortunately, Neil Barofsky is on the case.

Note: Another useful new resource on TARP is the website just launched by Bailout Watch, an initiative led by the Center for Economic and Policy Research, Economic Policy Institute, OMB Watch, OpenThegovernment.org, Project On Government Oversight, and Taxpayers for Common Sense.

Geithner’s Own Stress Test

geithner-obamaTreasury Secretary Timothy Geithner and federal bank regulators have been conducting what they call “stress tests” of the nation’s 19 largest banks. Yet the biggest test is the one confronting Geithner himself and ultimately President Obama: Are they willing to abandon the ruinous policy of propping up major institutions that should be dismantled while simultaneously spending large sums of taxpayer funds to buy stakes in healthier banks that don’t need or want that government involvement?

The sad truth is that Obama’s financial policy is as incoherent as that of the previous administration. It veers between tough talk and complete coddling of the banks. In the case of the stress tests, the results of which are expected to be released early next month, Geithner has put himself in an impossible bind. If all the banks are deemed to have passed the test, the exercise will be seen as meaningless. If any fail, there will be pressure on the Administration to take them over—something Geithner seems dead set against.

And how will Geithner’s desire to use yet more public money to shore up the banks—whether through subsidized purchases of their toxic assets or additional capital infusions—play against a backdrop of rebounding earnings in the financial sector? JPMorgan Chase just announced a healthy profit of $2.1 billion in the first quarter, which followed a $3 billion posting by Wells Fargo and $1.7 billion by Goldman Sachs. Even struggling Citigroup managed to net $1.6 billion for the three-month period.

Like his predecessor Henry Paulson, Geithner believes that in order to avoid stigmatizing truly needy large banks the federal government has to give assistance to all of them. Sticking to that position has made Treasury look foolish as institutions such as Goldman and JP Morgan loudly proclaim their intention to buy back the federal government’s stakes in their firms, as some smaller institutions have already done. Large banks are reported to be urging the Administration to curtail new aid linked to stress test results.

To make matters worse, evidence continues to emerge that the fundamental objective of the bank bailout—freeing up credit for households and businesses—is not being met. Loan volume by the big bailed out banks continues to decline, while large institutions such as Bank of America are boosting their credit card interest rates. It is also telling that within the financial results just announced by JPMorgan, the sector of its business with the most dramatic profit growth was investment banking. In other words, it is making a lot more money from deals and securities than from lending. The same held for Citigroup.

If the “teabag” protestors who rallied around the country this week had any sense, they would have focused on the bank bailout rather than mounting a pointless attack on the validity of the income tax. The question is whether liberals and progressives, who may support Obama on many other issues, will seriously challenge his wrong-headed approach toward the financial crisis.

Note: If you are looking for a handy guide to the bewildering list of federal handouts to the financial sector, check out Pro Publica’s new Eye on the Bailout website.

Reforming Whose Entitlements?

private-healthAside from the dubious continuation of bank-coddling bailout policies, perhaps the most dissonant domestic policy theme expressed by President Obama is “entitlement reform.” He just used the phrase again in a speech on the economy at Georgetown University. In fact, he went so far as to equate it with health care reform.

Surely, the President knows that the concept of entitlement reform has long been used by fiscal conservatives as a euphemism for making substantial benefit reductions in Medicaid, Medicare and Social Security. Time and time again, these “reformers” have used overheated rhetoric and misleading projections to try to steamroll the country into gutting these vital social insurance programs. Their effort in 2005 to privatize Social Security—fronted by George W. Bush—was met with a firestorm of opposition.

It remains unclear whether the Obama Administration plans to travel along the same path or is appropriating the rhetoric about “fiscal responsibility” to serve a more progressive agenda. It is encouraging that the Administration is willing to spend heavily on social programs as part of the Recovery Act plan for addressing the recession. But health care policy is still an open question.

Obama’s effort to unite health care reform and entitlement reform is rooted in the idea that large cost savings are possible in the medical system. In the past, it was assumed that cutting costs went hand in hand with limiting treatment or reducing the income of doctors and hospitals. Obama offers a different paradigm. He wants us to believe that investments in health information technology, such as those contained in the Recovery Act, will bring down costs by raising efficiency.

Computerization of medical records may solve the problems caused by poor penmanship among physicians, but it is hard to see it bringing down costs to any great extent. On the contrary, it has all the makings of an expensive boondoggle benefitting big service providers such as McKesson Corporation.

What President Obama and other Democratic Party leaders seem unwilling to acknowledge is that the most effective way to cut costs is to take the profit out of health coverage. A single-payer or Medicare-for-All system, such as that proposed in Rep. John Conyers’ HR 676 and promoted by groups such as Healthcare-NOW, would save hundreds of billions of dollars by eliminating the vast and oppressive bureaucracy of the private insurers. That would be real entitlement reform.

Credit Card Companies Punish their Best Customers

credit-card-squeezeThis blog has not exactly been kind to the big banks receiving billions in federal bailout funds, so when a letter arrived in my mailbox this week from Bank of America I couldn’t help but wonder if they were getting back at me. The letter said that BofA, which manages my Visa card, had decided to jack up the interest rate from a somewhat tolerable (by today’s standards) 9.99% to a more usurious 14.99%. “We are making this change,” it said, “due to a change in our business practices, and due to the pattern of payments and Annual Percentage Rates on the account.”

The fact that I always pay my bills on time and typically send in much more than the required minimum made me all the more suspicious. When I called to complain I got no clarification. Then I opened the Wall Street Journal and read that BofA had sent similar letters to several million cardholders who, like me, carry a balance from month to month. It used to be that credit card issuers encouraged people to follow that practice, since that is how the interest charges pile up. Now it seems that anyone who fails to immediately pay in full is a credit risk who must be punished with a higher rate—no matter how good their payment record.

BofA’s move is part of a pattern among credit card issuers to boost rates before restrictions on increases instituted by bank regulators last year take effect in July 2010. Similar moves have been made in recent months by the likes of Citigroup, JP Morgan Chase and American Express. AmEx went so far as to offer cardholders some several hundred dollars if they paid off their balance and closed the account.

I was angry at being treated as a potential deadbeat by a bank that contributed greatly to the near meltdown of the financial system and had to be propped up by $35 billion in federal capital infusions. Yet when I called customer service I was told that, not only could I terminate my old Visa and gradually pay off the balance at the existing rate, the bank was prepared to offer me a new card at that same interest rate—and transfer the unused credit line from the old card.

I don’t know how many of the millions of people affected by BofA’s new policy were also offered an identical replacement account. In my case, at least, all that BofA has accomplished is incurring additional costs from administering a second card. With a business model like this, taxpayers should probably kiss our $35 billion investment in BofA goodbye.