Page One

Privatizing Unemployment: Bank of America’s Sacramento Coup

By Gar Smith
Tuesday August 16, 2011 - 11:18:00 AM

In a letter dated August 9, California’s Employment Development Department (EDD) announced it was discontinuing the practice of mailing unemployment claim checks to EDD recipients. Instead, the letter explained, the EDD was introducing “electronic benefit payments” that could be tapped via an EDD Debit Card. 

EDD cited only one argument for the change: “You will no longer be waiting for checks in the mail.” 

What the EDD’s letter did not fully explain was that, under the new system, in order for the state’s 2.2 million unemployed to retain access their all-important EDD checks, they must first agree to become customers of Bank of America. 

Many people take pride in not entrusting their money to corporate financial behemoths like Bank of America (BofA), preferring to store their savings in local banks and federally protected credit unions. The reasons have everything to do with BofA’s history and practices. BofA currently is the subject of a class-action lawsuit stemming from its alleged mishandling of home foreclosures and separate lawsuits claiming predatory lending practices. 

The Bank of America is emblematic of the reigning kleptocracy that has come to define the prevailing domestic and global financial model. In 2010, the Charlotte-based BofA reported $10.4 billion in revenues and (for the second year in a row) paid no taxes. By claiming $2.2 billion in losses and invoking a $12.4 billion “goodwill impairment,” BofA actually qualified for a $1 billion “tax benefit” payment from the IRS. (BofA might not have run up such huge losses if it hadn’t doled out $2.2 million in campaign contributions to politicians and their PACs. But, in fairness, if it hadn’t been for those political payoffs, BofA might not have received a $45 billion government bailout, courtesy of the US taxpayers.) 

“Bank of America takes its role as a corporate citizen very seriously, and pays taxes in accordance with all applicable laws and regulations,” BofA’s Jerry Dubrowski maintains. But the DC-based activist group US Uncut calls BofA an “aggressive tax dodger” and raises the obvious question: “We pay our taxes. Why don’t they?” One answer to this question is strategic: Unlike the average taxpayer, BofA maintains 115 offshore tax havens around the world in the Bahamas, Cayman Islands, Hong Kong, Ireland, Luxembourg, Singapore, the US Virgin Islands and elsewhere.) 

Invasion of Privacy: Your Money or Your Meds 

Activating the new EDD/BofA Debit Card requires that users establish a new account with BofA and, in the process, provide the bank with a host of personal information items not required by EDD. According to an enclosed US Consumer Privacy Notice, before EDD clients can claim their benefits, they must first provide BofA with “Social Security number and employment information,” “credit information,” and “medical information.” 

“We collect your personal information… when you open an account or perform transactions,” BofA states. “We also collect your personal information from others.” 

If you don’t want BofA to be calling you at home with commercial offers, you have to take the proactive step of asking to be placed on the bank’s Do Not Call list. Even that may not fully protect you since, as BofA notes: “We do not solicit via phone numbers listed on the state of federal Do Not Call lists, unless the law permits.” [Emphasis added.] Residents of California are specifically assured: “We will limit sharing among our companies to the extent required by California law.” [Again, emphasis added.] And, if you call BofA to complain, bear in mind that “If you communicate with us by telephone, we may monitor or record the call.” And you better remember this because, as the Agreement, notes “We need not remind you of our recording or monitoring before each call.” 

BofA lists eight “reasons we can share your personal information.” These include: “For marketing purposes,” “For joint marketing,” “For our affiliates’ everyday business purposes — information about your transactions and experiences.” 

Can you limit this “sharing” of personal information? In a word, “No.” 

Thanks to the EDD deal, BofA promises to “begin sharing your information 45 days from the date we sent this notice.” And even when “you are no longer our customer, we continue to share your information as described in this notice.” 

The EDD’s New ‘Agreement’: User Fees for BofA 

EDD Debit Card users must agree to allow BofA and other “financial companies” to “share customers’ personal information.” BofA’s “financial affiliates” include: Merrill Lynch, Fleet Credit Card Services, US Trust and General Fidelity Life Insurance Company. BofA’s contract also requires that customers’ personal information can be shared with a host of “nonaffiliates,” broadly defined as including “retailers, travel companies and membership organizations [and] other companies such as nonprofit organizations.” 

Although unemployment claims in California max out at 99 weeks (less two years), the EDD mailing instructs the out-of-work that: “You should keep you card for the three-year period for which it is valid.” 

The EDD letter that accompanies the unsolicited BofA Visa Debit Card instructs recipients to “Activate Your Card Immediately” and recommends that desperate job seekers “Read your California Employment Development Department Debit Card Deposit Agreement.” On closer inspection, however, it turns out that this document was not written or printed by the EDD. It was written and printed by BofA [“Effective Date November 1, 2010”]. 

The eight-page Agreement spells out (in a blur of small, narrow type) further BofA “benefits” — including a section on “Bank Fees.” Yep, under the EDD-BofA deal, the unemployed are now liable to paying “user fees” to the BofA. “Bank fees associated with your Card are listed in the Fee Schedule. These fees are imposed by us and retained by us,” BofA stipulates. “Fees will be taken from the balance of your [EDD] Account as they apply.” 

The Agreement gives the BofA the right to “cancel your right to use your Card at any time.” So dismiss any thoughts that the Debit Card is a device designed to further the social support mission of the EDD. The BofA Agreement is very clear: “Your card remains our property.” 

Most people already have an account at a preferred bank, savings and loan or Federal Credit Union. Most people will be out-of-luck. 

Not only has the EDD decreed that job-seekers must sign up with the BofA, the Agreement specifies that any attempt to use the new EDD card at any non-BofA ATM will soon be costing you $1 per transaction. And BofA will be collecting those fees directly from the money set aside for your EDD claim. 

Although the Debit Card arrives in an envelope bearing the name of the EDD, the enclosed cover letter bears a discrete BofA logo. The letter makes it clear that the overall goal is not to assist the unemployed so much as to promote consumerism. 

“Your unemployment and state disability insurance benefit payments will be faster, easier and more secure,” the BofA cover letter begins. But the very next sentence commands: “Make purchases everywhere Visa® debit cards are accepted” including “grocery stores, gas stations, medical offices, utility payments, restaurants, retail stores, phone payments, online payments.” 

The cover letter contains only seven sentences devoted to “Important Information from the California EDD.” The last sentence reads: “It is advisable to keep your card for at least three years after it has been issued.” There is no explanation why this is advisable. 

From Sacramento to Possum Hollow, Tennessee 

How did it come to pass that a State agency entrusted with assisting the unemployed has struck a deal that would force millions of desperate Californians into the arms of a private bank? Staff at the Berkeley Cooperative Federal Credit Union at the corner of Shattuck and Ashby were caught by surprise when shown the EDD/BofA documents. “Can they do that?” one accounting officer asked in disbelief before rushing off to photocopy the letters. 

The firewall that is supposed to separate Bank and State has clearly been breached in this instance, allowing a widely distrusted and criticized banking monolith to force California’s unemployed into becoming corporate vassals in exchange for access to benefits that previously came from Sacramento—without fees or invasions of privacy. 

It is especially vexing that Sacramento has allowed BofA to parade its wares under the banner of the EDD. This indignity is underscored by a comparison between two return addresses. The August 9 letter advising of the coming change arrived in an envelope mailed from EDD’s Sacramento address. However, the return address on the envelope containing the bank’s Visa Debit Card and Agreement reads: “EDD, State of California, PO Box 8488, Gray, TN 37615-8488.” 

The Planet could find no listings for a Bank of America facility in Gray, Tennessee. Phone calls to EDD’s Sacramento office went unanswered. A Google search for the Tennessee address does pinpoint a specific site. On Google Earth, it appears as a pinpoint in a stretch of woods off Possum Hollow Road that is identified as the home of the “US Army National Guard Recruiting.” At this point the trail runs cold. 

It’s time to put some heat on Sacramento and demand to know who is responsible for creating the EDD’s ghost operations in Gray, Tennessee. And who decided the State should act as a business partner and recruiting agent for a profiteering, private, commercial bank. 

Gar Smith is a Berkeley-based writer and the winner of a half-dozen Project Censored Awards.