Housing legislation — even worse than you think
The housing bill in Congress — which has now morphed into a housing-and-Fannie/Freddie-rescue bill — appears likely to become law within days.
The president has dropped his objection to $3.9 billion in largesse to city and state governments to dole out to favored constituencies in exchange for the assurance of a blank check for Fannie and Freddie. So everybody wins — except the taxpayer/dollar holder.
But wait — it gets worse. It's not only a boondoggle, it's a major-league privacy threat.
Two egregious provisions of the bill haven't gotten a lot of coverage, especially since Fannie and Freddie got thrown into the mix, but I assume they'll end up in the final version of the bill: 1) Nearly all credit-card transactions will be tracked and reported to the IRS and 2) Many people in the mortgage and real estate industries must submit to a mandatory fingerprint registry.
Let's start with the credit card (and debit card) provision first. Former Congressman Dick Armey's Freedomworks organization has led a feeble opposition. As he explains it:
This is a provision with astonishing reach… Not only does it affect nearly every credit card transaction in America, such as Visa, MasterCard, Discover, and American Express, but the bill specifically targets payment systems like eBay's PayPal, Amazon, and Google Checkout that are used by many small online businesses. The privacy implications for America's small businesses are breathtaking.
To say nothing of America's consumers. The aim is to curb underreporting of income by businesses to the IRS. It sure seems odd that this would turn up in a bill championed by Sen. Chris Dodd (D-Connecticut) who poses as a champion of civil liberties, and indeed who took the lead fighting the warrantless wiretapping bill that retroactively cleared the phone companies of breaking the law.
But when it comes to reporting all our credit card transactions to the IRS, Dodd's office says nope, nothing to worry about.
This is not a controversial provision or a new one. Republicans and Democrats on the Senate Finance Committee have supported it for months, and it has been included in the Administration's budget proposal for years. This provision simply requires banks–not small businesses–to report sales transactions to the IRS each year and to merchants at the end of each day. It makes the tax system fair for everyone, without burdening small businesses and without putting consumers' privacy rights at risk.
I guess PayPal, et. al. now qualify as "banks" in Washington. You can read the official summary of the amendment [.pdf file] and decide for yourself:
The proposal requires information reporting on payment card and third party network transactions. Payment settlement entities, including merchant acquiring banks and third party settlement organizations, or third party payment facilitators acting on their behalf, will be required to report the annual gross amount of reportable transactions to the IRS and to the participating payee. Reportable transactions include any payment card transaction and any third party network transaction. Participating payees include persons who accept a payment card as payment and third party networks who accept payment from a third party settlement organization in settlement of transactions. A payment card means any card issued pursuant to an agreement or arrangement which provides for standards and mechanisms for settling the transactions. Use of an account number or other indicia associated with a payment card will be treated in the same manner as a payment card. A de minimis exception for transactions of $10,000 or less and 200 transactions or less applies to payments by third party settlement organizations. The proposal applies to returns for calendar years beginning after December 31, 2010. Back-up withholding provisions apply to amounts paid after December 31, 2011.
Then there's the fingerprint provision. As explained by the Competitive Enterprise Institute's John Berlau:
The provision says that "an individual may not engage in the business of a loan originator without first . . . obtaining a unique identifier." To obtain this "identifier," an individual is required to "furnish" to the newly created Nationwide Mortgage Licensing System and Registry "information concerning the applicant's identity, including fingerprints," that will be sent to the FBI and other government agencies.
The bill's definition of "loan originator" could cover a broad swath of employees working for mortgage lenders and brokers and real estate firms, including clerical employees, part-time and seasonal workers. An "originator" is defined as anyone who "takes a residential loan application; and offers or negotiates terms of a residential mortgage loan for compensation or gain." Real estate agents are also covered if they receive any type of compensation from "originators."
The rationale for this new fingerprint registry is thin. Were a significant number of bad loans made by ex-convicts? And how would the targeting of lower-level employees – rather than executives like Countrywide Financial CEO Angelo Mozilo – stem the creation of problematic mortgages?
And so, Congress and the President are about to perform favors for their contributors and constituencies, while ordinary people foot the bill and have their privacy stripped in the process. Just swell.
Sphere: Related Content
Not sure if this is read correctly, but would a paypal transaction funded via direct debit, not from payment card, be covered in this provision?
What about electronic gold fund transfers?
just wondering
Comment on July 23, 2008 @ 1:50 pm
And since govt, both fed and state, are singing together and holding hands I have my doubts that I will be doing any more mail order business. You see, California income tax forms have a provision where you are supposed to report anything you bought from out of state and pay California sales tax on it. Of course everyone lies about this if they are in the lower income brackets, as the paperwork involved to prove you need to pay sales tax was onerous. Now, I think I’ll be taking trips, paying in cash and bring it back without a paper trail.
Comment on July 23, 2008 @ 2:36 pm
Buying krugerrands with cash at the local coin shop just got a whole lot sexier. sales tax? Whoopeedoo; beats having The Man know my every financial more on Ebay.
Thanks Dodd, you dick. I’m starting to really hate that guy…
Comment on July 23, 2008 @ 4:26 pm
[...] data here. Just caught this excerpt from a blog I [...]
Pingback on July 23, 2008 @ 4:36 pm
Welcome to the U.S.S.A
Comment on July 23, 2008 @ 5:55 pm
time for a revolution against the tyrrany, according to Decl of independ, or one of those ancient docs.
Comment on July 23, 2008 @ 7:45 pm
Right! Time for a revolution, but who will gonn’a make it? The brain dead AI’s (American Idiots) living in fairy land IOUSA?
In Soviet Union the average poeple was more educated than average AI, they endured much more oppression and , at one point, even their basic needs for survival were denied. And where was the revolution?…
Nothing really happened till Gorbachev took the reins and dismanteled that monstrozity from the top!
I have no reason to believ something else will work in USSA eighter…
Comment on July 24, 2008 @ 12:04 am
Right! Time for a revolution, but who will gonn’a make it? The brain dead AI’s (American Idiots) living in fairy land IOUSA and waiting for another check from government?
In Soviet Union the average poeple was more educated than average AI, they endured much more oppression and , at one point, even their basic needs for survival were denied. And where was the revolution?…
Nothing really happened till Gorbachev took the reins and dismanteled that monstrozity from the top!
I have no reason to believe something else will work in USSA eighter…
People who use to read this site is not enough to elect a mayor in a small town, not mentionig something about a revolution in a country wide as a continent…
Comment on July 24, 2008 @ 12:11 am
Dag blammit, I thought we were supposed to get the “Ownership Society” not the “Receivership Society”.
Take heart though, with all this tracking and monitoring in triplicate, the largest fleecing in the history of Capitalism will be well documented, much like the scrupulous record keeping of the clinically homicidal Reich.
The phrase “beyond belief” seems somehow inadequate. But it is relieving to know that the President is an MBA grad and so everything will surely turn out Deeciderlicious.
Comment on July 24, 2008 @ 8:59 am
But if the banks report the credit card transactions, don’t they still have to cite the small businesses they received the data from–for obvious reasons?
Comment on July 24, 2008 @ 4:16 pm
I am registered with NASD/FINRA and had to be fingerprinted. What’s the problem with mortgage lenders doing the same?
Why allow a swindler to pack up and re-merge in another state under a new name? As mcuh as I love your comments - and agree with them - I can’t understand protecting swindlers.
Comment on July 24, 2008 @ 4:19 pm
Well, for one thing Alexander, fingerprinting people before they’ve done anythign wrong is assuming guilt until proven innocence. There was a time in this country, where having your fingerprints taken was a mark of shame, doled out to those who’d broken the law; now it’s a mark of shame doled out preemptively to those stupid enough to follow or work for the law.
Comment on July 25, 2008 @ 8:24 am
we get what we deserve. God knows what is our situation and He complements it with His mercy. Seen this coming for 30 years. i think the time it started with is the time abortion was approved in 73 i think. time will tell. charlie
Comment on July 25, 2008 @ 8:50 pm
Mr. Kuchar is right. As our founders believed, any nation who has abandoned our Godly principles the way we have in the last 35-40 years has no right to expect liberty. Men will be governed by God or tyrants. Take your pick. God is by no means dead nor is Hell yet half full. America was great because America was good.. “WAS”.
Years ago I saw a great cartoon. A tall man in striped pants and wearing a stovepipe hat with stars on it kneeling before an old-fashioned mourner’s bench. The caption was, “Uncle Sam- where he belongs”
Comment on July 26, 2008 @ 1:38 am
If you have nothing to hide…
Uh-oh… they’re getting it, Nephew! But, as long as these sorts of comments are kept out of the main stream press and media, we have nothing to fear. Nevertheless, work harder to defraud the Amerikan publik of the truth of what’s really happening. Keep them thinking about how “if you have nothing to hide, all this finger-printing and other odious invasions of their privacy” doesn’t impact their lives or infringe upon their supposed freedoms. See, “only the law-breakers” should fear this legislation. And, Nephew, never let them speak of God, the Declaration of Independence, the Constitution (No talk of 4th Amendment), or that book (can’t say “Bible”). Keep this talk about our grandest scheme, Roe V Wade / abortion out of the public discourse. No more talk of prying Gov’t eyes on their every financial transaction. They must continue to not fear what doesn’t affect them (yet…). And get their finger prints (sooner the better), DNA samples at birth, number them, chip-implants, and track them from cradle to grave. For total ownership, this is essential.
Keep them satiated with petty party politics and, above all, make sure they focus only on the next Democrat or Republican presidential election - our wickedness is entrenched in the high places of each party…. If they ever learn the real action is in the house, that they can actually hold their elected officials accountable to their so-called “sacred oath of office,†and that they can vote our quislings out, we lose momentum. If too many get it, GAME OVER!
So keep these little voices of antagonism sequestered on puny blog sites like this and never let it see the broader light of day. We are, after all, invincible and to resist is futile. Revolution? Heh, heh … they can only talk. We’ve got them right where we want them… down on the Fed Plantation. Soon, their lives will totally be ours, their wealth depleted, and entire families in debt for generations to come. It’s beautiful, if you think about it. We’re on the right track, Nephew. Hold the course. We’re almost there. America is almost over. The little experiment in freedom and liberty has just about run its course. Insolvency, Nephew - be ever diligent towards that end. It’s our most potent weapon. It brings entire nations and people to their knees before us. Remember, sin pays wages and empowers the likes of us to ply our nefarious trade with impunity. So far, so good…
Comment on July 26, 2008 @ 12:54 pm
All Your Credit Are Belong To Us!
Comment on July 28, 2008 @ 10:23 am
This legislation is another brick in the wall of the great penitentiary known as the “USA”. The 4th amendment guaranties the right to be free of unlawful searches and seizures. This is a clear violation of the intent of the U.S. Constitution. And all in the name of protecting US. Remember the clear words of Poor Richard “Those who would sacrifice liberty for security deserve NEITHER!”
Comment on July 28, 2008 @ 7:34 pm
In Canada, the federal government has introduced legislation that imposes a duty on realtors, brokers, etc., to identify all clients with name, address, phone number, DOB, occupation and photo ID. If you’re dealing with someone over the phone (say, in another jurisdiction) you have to pay to have a similarly credentialled professional conduct the identification process in that other jurisdiction.
The government is an @zz here, too.
Comment on July 28, 2008 @ 9:19 pm
Re: fingerprinting to be allowed to work; The “nothing to hide” argument is irrelevant. If you would feel uncomfortable knowing there was a camera in your bathroom and someone might watch you wiping your behind, then you understand why “nothing to hide” is not what privacy is about. Privacy is partly about you getting to decide who you are intimate with (including who gets to know the details of your fingertip patterns)and who gets to share your embarrassing moments, not about hiding illegal acts.
Re: another shackle on freedoms; The more these sociopaths try to micromanage the citizens and their behaviors, the more underground the economy will become.
I am not overstating a bit to call the 537 minus 1 “elected” goons in DC sociopaths. It is sociopathic to want to have power over other peoples’ lives, especially to the degree they do.
Comment on July 29, 2008 @ 2:47 pm