Wednesday, Nov. 10 —
The financial-services legislation that will soon become law is a disaster in the making. Among other bad impacts, it creates huge new risks in the technology-driven financial system. It will let commercial banks, insurance companies, investment banks, brokerages and other financial institutions buy each other and go into each others’ markets. Congress didn’t beef up regulatory oversight to match the heightened incentives for financial institutions to take scary chances with customers’ — and ultimately taxpayers’ — money. The legislation also guts the valuable 1977 Community Reinvestment Act requirements that helped ensure at least some lending in poorer areas.
Big Money, in the form of bribes to politicians — sorry, I should say “campaign contributions” — has again carried the day. It’s a disgrace.
But bad macroeconomic policy isn’t the only problem. At the behest of the big-money interests, customer privacy has been left out of this legislation. Congress gutted provisions that would have forced the financial institutions to ask our permission before sharing data with other parts of their conglomerates.
So now, if your bank is in bed with an insurance company and mortage company, your medical information may be shared with your banker. Your credit-card information may go to your life-insurance company. Your tax return (required with most mortgage applications) will find its way to everyone. And so on.
The alleged benefits of this law are one-stop shopping for financial services. That’s a crock. Technology will soon give us all a way to create a shopping basket of discrete financial services without putting all of our eggs, and most sensitive personal information, in the hands of people who see us more and more as data to be churned, and less and less as human beings.
There’s only one thing you can do about this. You can move your various accounts into institutions that are not part of giant financial conglomerates. That’s my plan.
Goodbye, Wells Fargo. You got what you wanted from Congress. Now you’re going to get what you deserve from me — one less customer.
Taipei’s Answer to Fry’s?
Here’s a cross between a flea market and a retail store — a multi-floor grab-bag of shops selling all kinds of computer-related goods and accessories.
It makes a lot of sense, actually. A great deal of the world’s PC and peripheral manufacturing is done here in Taiwan, and it’s natural that some of those goods make their way into the local consumer market.
Some of the shops inside this building are little more than cubby-holes. Others are somewhat bigger. Collectively they add up to a serious selection of goods, ranging from PCs (especially laptops) to software, CD-ROM drives, add-in cards, chips, memory, motherboards and more. At least one of the stores was selling video CDs and DVDs at, shall we say, very low prices.
Some of the personal technology here and in Hong Kong is truly remarkable. Stay tuned for a report on Asian gadgets.
P.S. For those of you not in the Bay Area, Fry’s is the Silicon Valley-based chain of gigantic computer and electronics supermarkets.
Ballmer’s Turn
It looks like Steve Ballmer, president of Microsoft Corp., has been designated as the principal front man in the company’s campaign to explain away its growing legal troubles. This makes sense, given Bill Gates’ total lack of credibility at this point. Ballmer wasn’t a witness at the antitrust trial in Washington, and as far as I can tell, his deposition testimony, if he gave any, hasn’t been made public.
I found Ballmer’s latest contribution to the public debate in the Asian Wall Street Journal this morning. In a piece on the newspaper’s editorial page, Ballmer (or whoever wrote the column for him) trots out the usual arguments to support the idea that his company a) is in imminent danger of demise due to the efforts of the Linux community and other enemies; b) behaves with utter integrity; and c) really, really wants to resolve this matter.
He recites the standard company mantra: “Microsoft is standing up for a fundamental principle on which the entire high-technology industry is built — the freedom to innovate and create competitive new products that better meet our customers’ needs.”
Later, he notes that Microsoft is “held to a very high standard of conduct.” That’s interesting language. Obviously, given the evidence, Microsoft doesn’t hold itself to a high standard of conduct. Luckily for Microsoft’s customers and the future of free enterprise in America, the Department of Justice, state attorneys general and other people have intervened in this regard.
In fact, Microsoft is standing up for the fundamentally ugly principles on which it was built — the right to monopolize its market; brutalize any potential competition by using its monopoly power; and eliminate antitrust enforcement in the Digital Age.
Ballmer is right about at least one thing. The stakes are high.