HR 3179 – New Legislation, Bad Old Idea

Last year, the Justice Department proposed legislation that became known as Patriot Act II. This legislation would have strengthened the original Patriot Act by broadening the government’s power to conduct searches and by imposing severe penalties anyone who refused to secretly comply with requests for information made under the Patriot Act’s powers.

Patriot Act II was eventually killed due to the public outcry caused by its assault on The Bill of Rights. Now, it is rearing its ugly head again, but in a different form.

A number of members of Congress have revived certain of the most controversial clauses in Patriot Act II and they are now attaching them as amendments to other bills that are making their way through Congress.

At present, the greatest threat is HR 3179, which is being called the Anti-Terrorism Intelligence Tools Improvement Act of 2003.

When the original Patriot Act was signed into law, it allowed the government to conduct “sneak and peak” searches, and to demand medical, financial, employment, transaction and ISP records of terrorism suspects. Sneak and peak searches are secret searches that take place without a traditional search warrant. All that is required is a “National Security Letter” issued drafted by the FBI. Likewise, these letters can be used to compel any business to turn over customer records in secret. In fact, the Patriot Act makes it a crime for anyone who is presented with a National Security Letter to reveal the fact that it has been presented to them.

When Congress passed the Patriot Act, it failed to include any penalties for businesses that refuse to comply with record requests, or for individuals that violate the secrecy provisions regarding National Security Letters. This gave both businesses and individuals some wiggle room, allowing them to negotiate their level of participation or giving them the ability to force the government to more highly target their requests for information.
HR 3179 would change this by providing, among other things, strict penalties for any person or business who does not comply with the secrecy clause of the Patriot Act, or with a request for information made with the use of a National Security Letter. In fact, violating the secrecy clause of the law could bring up to five years in prison.

The fact that Congress would continue to push these provisions of Patriot Act II is especially disconcerting given the public outcry against the law. This dissent has not only come from concerned citizens and privacy advocates. It has also come from State and municipal governments. In fact, 322 municipalities and four states (Alaska, Hawaii, Maine and Vermont) have passed anti-Patriot Act resolutions. Some of these go as far as stating that state or municipal employees should not cooperate with the Federal Government when requests for information on citizens are made through the Patriot Act.

HR 3179 would effectively void these state and local resolutions.

And there is reason to be concerned. Although the Patriot Act was enacted to deal with terrorism, the Justice Department admits that it has used the provisions of the Patriot Act to investigate drug dealers and racketeering. This is disturbing because the act clearly gives the government the ability to circumvent the Fourth Amendment’s provisions on unlawful search and seizure.

It has become increasingly clear that public opinion has turned against the Patriot Act and Patriot Act II. Unfortunately, some elected representatives have taken the attitude that the opinions of their constituents don’t count.

To read the full text of HR 3179, click here.

Interest Only Home Loans – Consumers Beware!

Real-estate prices around the country have been spiraling, thanks largely to low interest rates. Unfortunately, many panicked buyers have found that to get into the house or neighborhood that they want is simply unaffordable.

Here comes the lending industry to the rescue! (Uh… did I really just say that?) Well, not so fast.

Interest only loans were not invented yesterday. For speculators and short term investors, they can be the loan of choice; offering low down payments and manageable monthly payments.

Interest only loans are just what they say. You take out a loan and only make interest payments, paying nothing on principle. This reduces the amount you pay on a monthly basis. It also means that the amount of principle that is owed the lender doesn’t change. For those who only plan on holding onto a property for a short period of time, these loans offer a great deal of flexibility, and relatively little risk. If on the other hand you are purchasing your primary residence, you should avoid these loans for a variety of reasons.

When purchasing a home, buyers tend to look at how much they have to put down and how much their monthly payments will be. Many of the interest only loans on the market are available with low down and monthly payments.

Although interest only loans may seem attractive at first, those that are typically offered to home buyers have some significant downsides.

First of all, these loans actually convert to standard adjustable rate mortgages after a certain time period, usually 36 or 60 months (we’ll call this the initial loan period). During the initial loan period, the interest rate is fixed. This means that at the end of the initial loan period, you could be in for some real sticker shock.

Let’s say you take out one of these loans at a fixed rate of 5.25% for the first sixty months. Without any increase in interest rates, in month 61, your payment will increase by 25% because you now have to begin paying down the principle on your loan. If interest rates have jumped by 1.5% since you originally took out your loan, your payment in month 61 will jump by 50%. At a 2.5% increase, your payment in month 61 will be 64% higher than it was in month 60. And you still have 25 years left on the loan.

This is not the worst of it however. Because high real-estate prices have been driven by low interest rates, it stands to reason that as interest rates go up, there will be a downward push on housing prices. While this may not be true for all areas of the country, it will be true for most areas. This means that consumers that find themselves as the proud possessors of interest only loans could find that they have something else to panic about.

If the price of their house drops, consumers holding these loans could find that they have lost the value of any down payment that they did make, and that they owe more on the house they purchased than it is actually worth.

These loans, while tempting are also a recipe for personal financial disaster. As a rule of thumb, if you can’t afford a loan that includes both principle and interest payments, then you can’t afford the house. As a consumer, you will be far better served by either saving for a larger down payment, or purchasing a less expensive home. You may not get exactly what you want right now, but you won’t have to face the possibility of bankruptcy or foreclosure later.

Children’s Data for Sale! Are You Surprised?

Marketers are selling lists of children’s contact information to advertisers, for children as young as two years old. Considering that children influence as much as $500 million on household purchases, nobody should be surprised.

What is surprising is that at present, parents are nearly powerless to stop this practice, and the industry has proven itself impotent in matters of self regulation. Another surprise is that there is so much data available on children who have barely begun to walk.

US Advertisers are now spending $15 billion annually in advertising to minors. But its not just advertisers that have access to the lists that are available. Last year, a Portland, OR. TV station ran a story in which they purchased a list of children using the name of an Oregon man accused of kidnapping and murdering two young girls.

Certain companies do screen list buyers, but many do not. The question is, as a parent is there anything that you can do to reduce your child’s exposure to these types of privacy violations? The answer is “Yes”, but you do have to start being vigilant very early – in some cased before your child is born.

Many parents inadvertently contribute to getting their children placed on marketing lists. They do this by filling out information to receive coupons, win contests, and receive promotional materials. Often when signing up for these things, consumers are asked for highly personal information about themselves and their family members. Parents should never furnish information on their children for these types of marketing campaigns.

Even having baby pictures taken by the wrong company can present privacy problems. There is a company by the name of Growing Family that takes pictures of new-borns. Parents who purchase one of their photo packages sign an agreement that allows Growing Family to share their children’s information with select marketing partners.

Whenever you make a purchase that involves furnishing your children’s information, you should read the fine print. Whether purchasing a school ring, or an SAT test, you need to be aware of what is happening with the information you provide and what rights you are signing away in your child’s name.

Think Your E-mail is Private? Think Again!

Last week, a ruling by the US Circuit Court of Appeals, for the 1st Circuit in Massachusetts, crushed any privacy rights that you may have thought you had with regard to e-mail communications.

In a 2 to 1 vote, the court held that because e-mail messages have to pass through servers belonging to someone other than the person sending or receiving the message, causing them to be housed on these servers momentarily, that the company owning the mail servers can copy and use any e-mail message that passes through them.

A bevy of e-mail providers including EarthLink and AOL rushed to announce that they do not, and will not read consumer e-mail messages.

The ruling of the Federal Government’s attempted prosecution of Bradford Councilman, an officer of Interloc, Inc. (now defunct), in which prosecutors had alleged that Councilman had improperly ordered the interception of e-mail messages and violated federal law concerning the interception of wire messages. Councilman appealed and won in a lower court.

The Federal Government took the case to the US Court of Appeals, and lost. The appeals court ruling cited the fact that federal wire laws apply to transmissions that are always moving, such as voice conversations. Because of the short time that e-mail messages are housed on third party servers, the court ruled that these laws do not apply.

The ruling went on to say, "We believe that the language of the statute makes clear that Congress meant to give lesser protection to electronic communications than wire and oral communication…"

To protect your personal privacy, there are certain actions that you can take. Many e-mail programs offer encryption. You can send files as encrypted attachments. You can also setup your own mail server which, at the very least, will mean that the communications you send and receive are less exposed.

The bottom line here is that if a communication truly needs to be private, you probably shouldn’t use e-mail as a means of delivery.