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SEIU Flunks Finance 101


Anti-WaMu campaign breathtakingly wrongheaded.

If you've ever wondered how a good chunk of the news is manufactured each day, listen up.

The Service Employees International Union (SEIU), the entrepreneurial folks who believe in boosting government efficiency through unionization, have blasted a news release to reporters everywhere (even at Minyanville) touting a "National 'Day of Action' against Washington Mutual (WM)."

WaMu's alleged sins are multiple and include "unfair banking practices" such as "skyrocketing credit card interest rates," "obscene overdraft and late fees" plus an unholy alliance with Texas Pacific Group, a private equity firm.

On Wednesday, the SEIU will stage protests at Washington Mutual branches in Houston, Los Angeles, Miami, New York, San Francisco and at Texas Pacific's office in Fort Worth to call attention to what it calls the "toxic spread of higher fees (and) rate hikes." For the simple assignment editor or dingbat reporter who doesn't get it, protesters will wear hazmat suits and carry hazmat warning signs.

That's good. Someone at the SEIU understands how the media works and how to grab attention.

But they flunk Personal Finance 101 and resolutely refuse to understand how the free market works.

Banking is highly competitive. If you don't like what WaMu offers, check out Wells Fargo (WFC), Bank of America (BAC), Wachovia (WB) or JP Morgan Chase (JPM). If the major banks don't meet your needs, take a look at a regional one, such as the Apple Bank for Savings in New York or River City Bank in Sacramento.

There's no question that banks pile up profits on late fees and bounced checks. But with a little thought, it isn't hard to avoid either. For example, linking your checking account to your credit card will provide overdraft protection and save you from bounced check fees created by stupid math mistakes or by simply failing to keep an eye on your balance. In some cases, a bank will waive a late fee if you call the service center and make a coherent and believable case. (Blaming the Post Office might work - once.)

The reason: Banks want your business and know that you'll walk if treated badly.

Start with the basis: You can avoid outrageous credit card interest rates by knowing your FICO score. The trick: use the bank's money interest free for a month and pay your credit card bill in full by the due date. If you don't know how to read a credit report, here's how to get started. If you've gotten in over your head, you can fix your credit but it will take time.

Drafting a household budget that works isn't hard - the trick, like dieting, is sticking to it. Your budget should include a savings plan. The basics of personal finance aren't difficult – if you pay attention to the small details amid the clatter and chatter of daily life.

Of course, the SEIU's Wednesday shindig isn't intended to impart basic how-to tips for the wise use of your money. But you might wonder how much the union knows about anything when it calls Texas Pacific Group "a private equity firm known for squeezing returns as high as 20-30 percent or higher over relatively short periods."

It's called market discipline, folks. (It's also one helluva return.) Washington Mutual has gotten in trouble with subprime loans and may soon be on the block. In any case, the bank needs to get its balance sheet in order, a move that benefits everyone.

But unions are exempt from market pressures because, in general, they don't compete - and they can always increase the monthly dues of rank-and-file grunts.
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