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Comment: Re:is anyone really surprised here (Score 3, Interesting) 198

by danheskett (#48005941) Attached to: The Secret Goldman Sachs Tapes

"Throwing people in jail" also isn't a very good solution. The financial collapse was a result of mistakes, not crimes. We don't arrest people for making bad investments. Ironically, the biggest company betting against mortgage backed securities, was Goldman Sachs. Yet they have probably been demonized more than any other company. That makes no sense.

There were endless amounts of laws that broken all the time. Daily, in fact. We'll never even know about them because most were not investigated, and now we've just decided that jailing people isn't good policy. Throwing people in jail and taking all their stuff is the way to fix white-collar crime.

Banning revolving door employment deals isn't a good solution either. The government already has enough trouble attracting good people. If you want people that know how the system works, you need to hire people that have worked in the system. After their stint in government is over, those people expect to continue in their profession.

This is very easy to solve with good policy:

1. After leaving government employment, your private sector salary above your top government salary is taxed a 100% the first year, declining by 10% each year thereafter.

2. Pay after bonuses for regulated industries is tied to the pay of the regulators. Pay and bonuses and equity in excess of the government regulator salary is taxes at a rate of 90%.

As a matter of fact, this will solve just about 99% of all problems in the financial services industry, because it will remove the absurd profit motive that drives bankers to take massively inappropriate risks. We'll end up with a nice, respectable, small, non-dynamic, stable financial services industries, doing things like encouraging savings, and lending out money that is accumulated through savings at a reasonable rate of interest.

Comment: Re:And thus the balance shifts. (Score 1) 353

by danheskett (#48005155) Attached to: FBI Chief: Apple, Google Phone Encryption Perilous

Not to my knowledge. The problem comes down to two things:

a. No one has standing. If the person is blown to smithereens, there is no standing. You can't get a write of habeus corpus, as there is no person left to produce.

b. Actions that have been filed get killed by the States Secrete privilege, the government can produce no evidence, can make no response because doing so would reveal state secrets.

It's a perfect kangaroo court. Kill someone, can't face accountability because doing so would expose how you killed them.

Comment: Re:What is the net effect? (Score 1) 904

by danheskett (#48001857) Attached to: Miss a Payment? Your Car Stops Running

If subprime auto lending is really so profitable why aren't there more people doing it?

It is a huge business. On the very bottom end, there are Pay-Here car lots. In low-wage areas, they on every steet corner. Big auto lenders like GMAC have started to push down into that business, thanks to these devices. The profit is too irresistible- access Fed funds at 1%, lend at 14.99%.

Given the small amounts of money that are involved any tiny bank or hedge fund could get into. At the prices you're talking about even a small investment club could make these loans.

Yes, hedge funds are involved in auto-lending now. There are now securitized car loan instruments, much like REIT's and all that before the housing crash. I am sure some of the local car lots in the country are operated that way, by upper-middle and investment class people floating the cash.

Take your first example. How much do you think it costs to repossess a car? Of course there are legal fees and court fees. Then you have to pay a guy to go and get the car to some holding area (which you also have to pay for). Then you need to arrange to sell it and unless the bank is going to open it's own used car lot (which costs money) they need to pay someone to sell it for them (which costs money).
Well, generally, repo'ing an older car if you know where it is costs a few hundred bucks. In most states, there is non-judicial repossession, which means you have to provide notices, but not go to court. Then you sell it to a wholesaler who will take it to auction. The spread is there, but it's not nearly as much as you would imagine. The difference is that on these cars, most of the value is already gone. To a prime buyer, there is a huge difference between a car with 0 miles on it, and one with 20,000 miles on it. The value difference is amazing. To a sub-prime buyer, there is marginal difference between a car with 100,000 miles on it and 120,000 miles on it.

Then you need to arrange to sell it and unless the bank is going to open it's own used car lot (which costs money) they need to pay someone to sell it for them (which costs money).
Many credit unions, who are also in this business, do exactly that. But if you are a buy-here/pay-here lot, doing sub-prime loans, you already have the sales channel. So doing a repo, and putting the car back on the lot, is very low cost proposition. You will often have the same people doing sales and repo'ing the car later.

Also, if a bank repossess a car and somehow manages to sell it for more than the outstanding value of the loan plus expenses they don't get to keep the difference.
In theory no, but in practice, they never give a penny back. The internet is replete with cases with banks repo'ing a car worth $10k on a $2k balance, and the borrower never gets a nickel back.

Comment: Bogus justification (Score 3, Insightful) 299

by danheskett (#48000287) Attached to: Forest Service Wants To Require Permits For Photography

"She said the agency was implementing the Wilderness Act of 1964, which aims to protect wilderness areas from being exploited for commercial gain."

The Wilderness Act was designed to protect wild lands from being exploited in the traditional sense of the word - meaning, deforested, mined, or otherwise permanently changed.

If we are talking about some sort of mega industrial photography in which the flash bulbs destroy the trees, or a camera crew of 10,000, sure, that's exploitation for commercial gain.

But if we are talking about the normal filming or photography associated with any day to day activities or programming, then there is no exploitation for commercial gain.

Comment: Re:partly agree with him (Score 1) 353

by danheskett (#48000243) Attached to: FBI Chief: Apple, Google Phone Encryption Perilous

It's fine, if he wants to make the case to repeal the 4th amendment, and institute national key escrow, to save the children, I'll hear him out. He can take it to the states and to the US Congress.

But in the meantime, too fucking bad. I don't care if my encryption makes it difficult to do your job. And I don't care that if my teenage daughter has something on her iPhone you want that you can't get it. Too fucking bad.

Comment: Re: ...allow people to place themselves beyond the (Score 3, Interesting) 353

by danheskett (#48000225) Attached to: FBI Chief: Apple, Google Phone Encryption Perilous

What this calls for is encryption and deniability. You need to have the data encrypted, but you also need it hidden in plain sight, so that decrypting the data produces only trivially non-incriminating evidence.

A real mathematical feat would be one set of data, encrypted such that decryption with key #1 produces JPEG's of the US flag and patriotic jingles, while decryption with key #2 produces your actual data.

Comment: Re:And thus the balance shifts. (Score 1) 353

by danheskett (#48000211) Attached to: FBI Chief: Apple, Google Phone Encryption Perilous

It's not even the black letter law. There is the law, and then there are legal memo's which provide the legal reasoning of the laws interact and what the practical effects are. The legal reasoning becomes a new form of law. It's not black letter, it's not case law, it's not administrative law, it's some sort of zombie law. And worse, we can't even see what the zombie laws are.

It turns into these vast, scary, obtuse legal situations where their is no defense because you don't even know what you have supposedly broken for laws.

For example, we have no idea what legal basis Pres. Obama has for killing Americans abroad by drone.

Comment: Re:And thus the balance shifts. (Score 2) 353

by danheskett (#48000199) Attached to: FBI Chief: Apple, Google Phone Encryption Perilous

Or, just trust the people. If the 99/1 rule was in place, and some agent had to go all Jack Bauer, don't lie about. Fess up, get a special prosecutor, go to trial, and then either appeal to the jury OR take the conviction and then pardon the guy. That's how it's supposed to work. Instead, they want the best of both worlds - break the law when they want, and have no accountability.

Comment: Re:Think of the children (Score 5, Insightful) 353

by danheskett (#48000143) Attached to: FBI Chief: Apple, Google Phone Encryption Perilous

The posts by Orin Kerr are actually really bad on a lot of fronts.

The main benefit of encryption is that it prevents any access, without the key, to the data. We are focused on warrants, but what is worse is that the government, if it has the technical means, can access the contents of any iphone without a warrant. Since there are available tools to get data from an iphone without the passcode, it stands to reason that the government has access to them. We also know that the government spends billions of dollars on black things, and it's not unfeasible to think some of it is either bribes or weaken encryption, or technology to brute force it.

We know we can't trust the government, so there is no way for sure we can know that the government will go and get a warrant. We've already seen cases where top government officials demand other government officials bless legally dubious programs at a literal sick bed, we've already seen cases where top government officials clearly and blatantly lie with impunity, we've already seen cases where government agents make up fake back stories for evidence to cover up their legally dubious origins, we've already seen cases where the government subverts foreign governments to do things that they cannot legally do themselves. These are just the things we know about. For everyone abuse we know about, there may be thousands more we don't know about.

Encryption takes the 3rd party out of the equation. If the government has probable cause to get a search warrant, they can serve it on your for encryption keys. If you do not wish to incriminate yourself, you have that legal right.

The lesson the FBI and others should take from this is that once broken, trust cannot be reacquired by whining about the children.

Comment: Re:Well hang on there (Score 1) 904

by danheskett (#47995725) Attached to: Miss a Payment? Your Car Stops Running

I agree 100%, I am not taking anyone's word. I am presuming that the article is honest, and the reporters did their job.

"With regards to #2, where in the US if you call 911 do you not get an ambulance? They are not taxpayer funded, but they are required to take ALL calls. If there's a medical emergency, you'll get transport and treatment, even if you lack the means to pay. That is part of the problem with high healthcare costs (the costs of people who don't pay get rolled in to the people who do) and an excellent argument for universal healthcare at least for emergency treatment."

The US is a very big place. I am from Maine originally. A pretty good sized state. There are areas of the state that are so remote that an ambulance call, to reach you, could take the better part of a day. If one is available. Alaska, parts of Texas, Nevada - big empty states with scattered populations do not have ambulance service. In other parts of the State, 911 calls are handled by State Troopers (no local police for big chunks of the state) or sheriff's office. In many small towns, the fire and EMS are volunteer only, and since people work out of town, there may be no coverage at all during the day. I think you are right in that 911 is 100% universal, but there is no promise that they can actually help you.

Comment: Re:Oh good (Score 1) 904

by danheskett (#47995545) Attached to: Miss a Payment? Your Car Stops Running

You sure can. The same lots that sell cars for $5k will buy them back, and put them back into rotation. Yes, there is spread, but the absolute value of the spread in dollars and percentages are not the same. A car driven off the lot new and then repo'd 6 months later is going to be epic. 50%, and could be >$10k in loses, depending on the initial value of the car.

People who drive older cars know all about this. You buy a car for $3k, drive it for a year, maintain it, and sell it next year for $3k.

On a $5k 10-year old car, you'll get more than $2k for at auction or resale. It's even easier when the smaller banks and credit unions use the auto-lots to handle the whole transaction - they repo it and put it right back on their own lot, and sell it again.

Comment: Re:What is the net effect? (Score 2) 904

by danheskett (#47995171) Attached to: Miss a Payment? Your Car Stops Running

Subprime autolending can be vastly profitable, and basically, anyone who has a job and can pay a reliable payment can finance a car. Just not cheaply. There is essentially no demographic of people who can afford a car who doesn't have access to some form of auto financing. This does is allow financial institutions to get into the very sub-prime lending market. Previously, banks and credit unions would only go so far down the lending later. However, the profit incentive is too strong to resist. Look at it like this:

Financial institutions like banks can access funds from the Fed for about 0%. Let's call it 1% just to have a number. Lender finances a car that's worth $5000 for 3 years at 19.99%. That's a bi-weekly payment of $85. Even a person making minimum wage feels like they can afford that. After 36 months, the total of payments is $6,760.44. The cost of the money lent is basically negligible. Now, let's say after 6 months of payments the car has to be repossessed. So far they've received $1,020. They pay to have the car possessed, and then sell it back to a car lot. If if they sell the car for more than $4,000 they have at least covered the money lent, less expenses. How much does an 7 year old car depreciate in 6 months? Often, not at all.

If the car is repossessed after 18 months, they've received $3,315. If the sell the car for more than $1700, they have covered capital outlay. If they sell the car for $3000, they've recovered 94% of the total expected profit and saved 18 months of loan servicing costs, probably coming out net better than if the loan went to term.

Basically, unless the car is overvalued, or the loan defaults in the first week months of the loan, they are almost certainly going to at least break even.

The major risks are:

1. They can't reposses the car at all because the borrower skips with it. This GPS device minimizes that risk.

2. The car degrades in value to the point where it can't be sold for anything. This is mitigated because the lenders usually require the dealers making the sale to offer a power-train warranty at least as long as the term of the loan. In return, the dealers inflate the cost to cover the expected cost of future repairs.

3. The borrower defaults immediately upon getting the car.

Even if 50% of these loans default, it can be a very profitable business. In prime lending, the interest rates are low and the risks are fairly high that it's mainly a volume business.

Comment: Re:Oh good (Score 4, Interesting) 904

by danheskett (#47994605) Attached to: Miss a Payment? Your Car Stops Running

The cases presented are really disturbing. Lenders lending money on fully depreciated cars are not taking a big risk. Lending money on a new car is taking a big risk because if there is a default, the cost of recovery, plus liqudation, means the lender will have to pursue the borrower for a large deficit that is now unsecured. Guy driving off the lot with a brand new car with a $2500 downpayment is upside down on that 5 or 6 year car loan for at least two years, maybe more, depending on the rate,

If you drive off the lot with a loan for a car that is fully depreciated already, and you paid an appropriate amount for the car, even without a down payment, the lender has a relatively small amount of risk.

The fact that these devices exist and are popular suggest that the lending process is broken somewhere. It could well be with valuations. If the vehicles are being overvalued, or loans are being written for more than 100% LTV, it would explain this.

Comment: Re:Uhhh (Score 2) 904

by danheskett (#47994475) Attached to: Miss a Payment? Your Car Stops Running

If they are disabling your car before you have been properly notified of a default, a right to cure, and exhausted the appropriate waiting times they very well may be breaking the law. If I was one of these lenders, I would not want to have to defend disabling the car after a few days past due in front of a judge.

Comment: Re:Uhhh (Score 3, Insightful) 904

by danheskett (#47994437) Attached to: Miss a Payment? Your Car Stops Running

It's not that far fetched.

Many of the cases in this article were people borrowing money on very old vehicles. Having a high-interest car loan on a 10+ year old car is very foolish. Lenders need the protection of this device because the asset being secured is worth so little.

When you have a loan for a car, the car is the secured property backing the loan. Of course you are going to be upside down on the loan in most cases on a new car, but on a used car, it is entirely reasonable that even given interest costs you should never be upside down on the loan. Especially on a car that is already full depreciated (7+ years often), basically, the secured property should essentially always cover the outstanding principal on the loan.

The fact that the device is needed suggests that the people buying these cars are getting penalized twice for being a subprime risk - it first suggests that the cost of the vehicle is inflated. That's on top of a high-interest rate.

If the buyer is being penalized in both the purchase price and the interest rate indicates that the loan shouldn't have been made to begin with. In this case, the thing backing the loan isn't asset - the car - but the activity - getting to work, living life, driving, etc. In that case, the loan is not a secured loan backed by an asset, but something else new and different and disturbing.

Disobedience: The silver lining to the cloud of servitude. -- Ambrose Bierce