A couple of days ago I wrote about the stupidity of the California Employment Development Department and their debit card as payment mechanism.
Well here’s the follow-up to that piece.
I got the pretty EDD card in the mail.
Like all credit cards you have to activate it. There was an 800 number and a web address on the card. I typed in the web address, answered their questions and ended up having to create another online account so that I could figure out what the hell the balance on the card was.
I’m trying to simplify my life not complicate it. Yet another URL/Password combination is heading in the wrong direction.
Thus far, since I’ve begun dealing with EDD / Unemployment I’ve actually ADDED 3 new web addresses and passwords to the 90 or so that I already have.
After signing up with Bank of America & providing them with a lot of my personal information. By the way Bank of America is NOT my bank for a number of reasons which I will not get into right now. I was able to see the available balance on the card.
EDD withheld 1 week even though I’d been unpaid for three weeks, I’ve never understood that. Since it’s Unemployment insurance, shouldn’t they start paying on the date of loss? That’s the way other insurance companies pay.
In any case there was $450 available so now what do I do? In reading the supplied paper work and the instructions on the web, it appears that I have 3 choices.
I could PAY BofA $15.00 for the privilege of being forced to use them and request and “Emergency” transfer of funds to another bank
I can set up a specified transfer of X amount to another institution.
I can set up a transfer of the available balance to another institution.
The “Normal” transfers require 2 days to process.
This got me to thinking
The reported California Population 37,000,000
The reported Unemployment rate is 11.8%
That says that the number of unemployed people on the EDD roles is something like 4,366,000
If the Payment per person is $450, (I know it’s not. The payment amount is variable dependent on how much you made, and how much you’ve contributed to the system. I’d imagine a standard deviation calculation would be more conservative. On the other hand in my entire career, I’ve never been paid less than the maximum payment per week so I’m going with the Max.)
That means that BofA is processing $1,964,700,000 Per week.
Since Unemployment is paid every 2 weeks BofA is getting a pretty hefty rolling influx of cash to play with.
I was thinking about the “Your funds transfer may take up to 2 days” and realized that if B of A was playing the short term interbank loan game with only half of that money they must be turning a pretty good profit.
My figures aren’t terribly accurate, and lord knows my math skills suck! But follow this line of reasoning, and remember that this profit is being made ON THE BACKS of desperate people trying to pay their bills and stay out of default.
Let’s say for the sake of argument that Half of the people who are unemployed elect to transfer their entire balance to their home financial institution.
That’s $982,350,000
Now apply the overnight interbank loan rate 0.7368 (Which appears to be the current rate. I wasn’t able to locate in a quick Google search what the ACTUAL rate is today. I suspect I wasn’t asking the right question.)
In any case if you take the $982,350,000 and charge an interest rate of 0.7368 you get $7,237,954
Not a bad return for 1 night… But since it takes BofA 2 days to complete the transfer you could double it to $14,475,908 in profit.
Then consider that California pays unemployment twice a month, and you’re looking a BofA making $28,951,816 per month.
Maybe a little more since I’m sure they let the interest earned “ride”. That’s a pretty good deal for BofA. I find it difficult to believe that it would cost them anywhere near that amount in overhead.
So does California get any part of the profit? Over the course of a year that would add up.
If California EDD got a small taste… IT MIGHT BE ENOUGH FOR THEM TO ANSWER THE PHONE!
Another item of interest is that EDD sent me via mail, another form to fill out for the next unemployment payment. Before all this debit card bullshit, the form asking if you looked for work over the last 2 weeks contained the check for your previous claim.
Since EDD had to mail you a form to fill out, it made sense that the check was part of the form. After all they’re sending you paper anyway why not use the same envelope and get a two fer out of it?
The form still has the spot where they used to print the check, it’s blank now. You still have to detach it except now you throw it away instead of taking it to your bank and depositing it. If this is an example of how “Green” our state is, I’ll take wastefulness…
Trying to comply with the new system…
On July 25, I started the transfer. I got a confirmation email from BofA stating that they’d received the request.
Yesterday this notice appeared in my checking account.
| 07-27-2011 | Transaction COMMENT / DEP PRENOTIFICATION FROM BANK OF AMERICA | 0.00 |
Now I know that they have the right account number for the transfer.
It’s July 28… By my count July 25, to July 28 is Three days… Not two days… And you can be DAMN sure the bank would be charging me late fees if I pulled the same stunt.