Notes 6-24-2009

Easy Money
The ECB conducted its first-ever auction of unlimited one-year funds today and the issue was well received.  The operation, which was open to non-euro zone banks with branches in the euro zone, saw total demand exceed expectations by almost half.  The ECB lent a total of EUR442 bln ($620 bln) to banks for 12 months, the largest ever allotted in an ECB auction.  The question is where the liquidity from the auction will be invested by banks and the answer suggests the policy will contribute to both monetary and fiscal policy.”

Perhaps these euros will be sold and the proceeds used to pump US markets??

JPMorgan Charges 5% on Credit-Card Balance Transfers
“The days of routinely using one credit card to pay off a balance on another have come to a close. JPMorgan is leading the way with the highest transfer fees of any of the major card companies.”

Makes sense, as why would banks want to take on more credit risk without charging for it?   The whole transfer balance for no interest offers was a train wreck waiting to happen. Also…

Moody’s: Credit Card Charge Off Rate Highest In 20 Years
No wonder JPM doesn’t want other issuers’ card balances…

“”No one is in a rush, lender-wise, to deal with the property,” he said. “If you have to sell at a loss, why rush?”

If the banks wanted the houses, they’d take the houses. They don’t want houses. They want nice numbers on their books. The sooner they take the houses, the sooner the numbers get less nice.

Nothing different than health care claims: claims are slow to process because the companies make more money that way. Most “incompetence” is policy.

The insurance company makes money off the float between payment of premium and payment of claim…perhaps coop/mutual health insurance could be a viable alternative.  Sort of like the mutual life insurers…the policyholders would be the shareholders and this would eliminate some of the agency issues maybe…

Speaking of health insurance…Use of faulty insurance data ‘pervasive’…”(AP) — Congressional investigators said Wednesday two-thirds of the U.S. health insurance industry used a faulty database that overcharged patients for seeing doctors outside their insurance network, costing Americans billions of dollars in inflated medical bills.  The flawed database — known as Ingenix — is owned by health insurer UnitedHealth, which agreed in January to pay $350 million to settle allegations that it deliberately kept rates low to underpay doctors, driving up expenses for patients. An investigation by Sen. John Rockefeller, D-W.Va., shows that nearly 20 regional and national insurers also used Ingenix data. An ongoing probe by New York Attorney General Andrew Cuomo previously focused on the use of Ingenix data by only a handful of top insurers, including Aetna, Wellpoint and Cigna. About a dozen insurers, including UnitedHealth, have already reached settlements with Cuomo.

Tuesday’s report arrives as President Obama and Democrats in Congress step up calls for a public health care option, “to keep health insurance companies honest.” The idea is vigorously opposed by Republicans and the insurance industry, who say a public plan would drive private companies out of the marketplace. More than 100 million Americans have plans that allows them to see doctors who are not part of their insurance network. For more than a decade, insurers submitted data to Ingenix to determine the typical cost for care received outside their networks. But congressional investigators say companies would deliberately skew data to underestimate the costs of medical services, leaving patients to pay more in out-of-pocket expenses. In one case, Aetna eliminated the highest 20 percent of medical charges before sending the data to Ingenix, according to the report. Once the data was handed over to Ingenix, officials there “scrubbed” the numbers again to further curb charges.”


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