Check this out. It's Auto-Armageddon! From BusinessWeek:

"It was like somebody turned the lights off in October," said GM sales and marketing chief Mark LaNeve. According to GM, October, after adjusting according to sales per capita, was the worst month for sales in the post-World War II era. It was worse even than sales in September and October after the Sept. 11 terrorist attacks against New York and Washington in 2001. "In my 27 years in the business, I've never seen a month like this," said an exasperated LaNeve.

The declines aren't limited to U.S. brands. "The carnage was completely widespread," said GM's LaNeve. Toyota (TM), despite huge ad spending and zero-percent financing, reported a sales drop of 23%. Nissan (NSANY) was off 33%. Hyundai was down 31%. Suzuki was down 44%. Luxury makes weren't spared. Mercedes-Benz (DAI) was down 26% and BMW was off 10%.

We find it just shocking that that annoying-as-hell "Saved By Zero" commercial that Toyota is mercilessly force-feeding hapless football fans isn't working. Don't you?

Auto Sales Worst Since 1983 [BusinessWeek]
Stop Playing Toyota's "Saved By Zero" Commercial [Facebook]
Toyota Won't Stop Saved By Zero Ads Despite Pleas From Thousands Of Facebookers [Jalopnik]

Here's a quick summary of the list:

1. Falling in love with a model.
   Becoming infatuated with a single model can blind you to alternative vehicles that may be better for your needs or make you skimp on thoroughly researching a vehicle's ratings, reviews, reliability, or safety and pricing information.
2. Skipping the test drive.
   A lot of vehicles look good on paper—especially in glossy brochure photos—but the test drive is your best chance to see how a vehicle measures up to expectations and how well it "fits" you and your family.
3. Negotiating down from the sticker price.
   "A salesperson may offer you a deal that's, say, $500 below the sticker price, and many consumers will conclude, often mistakenly, that they're getting a good deal. Unless the vehicle is in big demand and short supply, you can often get an even lower price by negotiating up from what the dealer paid for the vehicle."
4. Focusing only on the monthly payment when negotiating.
   "Salespeople like to focus on a monthly-payment figure while negotiating a deal. Indeed, "How much were you thinking of paying each month?" might be one of the first questions to greet you when you meet a salesperson. Don't take the bait. It's the first step down a slippery slope of being manipulated with numbers and overpaying for your vehicle."
5. Buying the "deal" instead of the vehicle.
   "...it's important to remember that any deal is only as good as the car that's attached to it. Just because you can get a good discount doesn't mean you should buy the vehicle."
6. Waiting until you're in the dealership to think about financing.
   "...it's critical to comparison shop for financing terms at different financial institutions and get prequalified for an auto loan before you go to the dealership to buy the vehicle. Check interest rates at banks, credit unions, or online financial sites to see which offers you the best rate."
7. Underestimating the value of modern safety features.
   "Today's vehicles offer an array of advanced safety features. But many buyers don't know which are most important or what to look for when comparing vehicles. Antilock brake systems (ABS), electronic stability control (ESC), and head-protecting side air bags, for instance, are effective and well worth the money."
8. Buying unnecessary extras.
   "Dealerships often try to sell you extras that boost their profit margin but are a waste of you money. They can include rustproofing, fabric protection, paint protectant, or VIN etching, in which the vehicle identification number is etched onto the windows to deter thieves. Don't accept those unnecessary services and fees. If you see those items on the bill of sale and you haven't agreed to them, simply cross them out and refuse to pay for them. "
9. Not researching the value of your current car.
   "Find out what both the used-car retail and wholesale prices are, so that you'll know what you should be able to get if you trade it in or if you sell it yourself. Typically, you'll get more money by selling it, as long as you're willing to put in the additional effort."
10. Not having a used car checked by an independent mechanic.
    "Before you buy a used vehicle, have it scrutinized by a repair shop that routinely does diagnostic work. A thorough diagnosis should cost around $100, but confirm the price in advance. "

10 common car-buying mistakes [Yahoo!] (Thanks, Stephen!)
(Photo: Bonita Sarita )

Unfortunately, the private equity firm that owns the company (it's passed through at least four owners in the past 18 years) didn't give employees the federally required 60-day notice, citing "unforeseeable business circumstances." If they couldn't secure money to pay salaries, that may very well be the case.

If you've got $20 in your household goods budget and can't live with the idea of a circus animal-less world, you can make your own with this kid-friendly cookie cutter set. Or just buy some vanilla wafers and pretend you're eating single-celled organisms, you big baby.

"Mother's Cookies abruptly shut down" [SFGate] (Thanks to Tom!)

Toyota experienced a 32% slide in U.S. sales in September.

Toyota offers interest-free loans on 11 vehicles [Reuters]
(Photo: blue_j )

How Wall Street's Woes Affect Car Shoppers [Kicking Tires] (Photo: Tengaport)

While we do recommend you pay for large purchases with a credit card and then pay it off immediately in order to take advantage of the credit card's various warranty/ purchase protection benefits, we sort of suspect that Home Depot is suggesting something else.

So how about you answer Home Depot's question in the comments. What are the benefits of paying cash?

...expenses related to foreclosures and other credit losses increased to $5.3 billion from $3.2 billion in the previous quarter. And the company signaled that those losses would probably accelerate.

The loss “is a reflection of the extraordinary pressures at work in the housing and mortgage markets,” Fannie Mae’s chief financial officer, Stephen M. Swad, said in a statement. “The credit picture remains very difficult.”

“We estimate that average home prices declined by 6 percent on a national basis during the second quarter of 2008, which translates to an 8 percent total national decline since the beginning of the downturn in the second quarter of 2006."

Two days ago Freddie Mac, the second largest lender, told investors that it had experienced a loss that was 3 times what they were expecting.

Fannie Mae says they will stop offering Alt-A mortgages and cut operating costs by 10%.

A $2.3 Billion Loss for Fannie Mae [NYT]

In March of 2007 our civil suit attorney contacted Dan Wolf. Dan Wolf owns Toyota of Naperville and other dealerships in the chicagoland area. Dan Wolf immediately fired Mr. James V Gentile in March 2007.... Toyota of Naperville has been served in November of 2007. Mr. James V Gentile aka Jim was hard to serve. Finally April of 2008 he got his papers...

Update on the criminal case... The states attorney has counted 19 blocked phone calls going to my cell phone from his home phone and his cell phone! Starting December 2005 and ending April 2006. Some how the jerk is having his attorney ( James Moore office of Rockford,IL) to pull off getting the case continued. The latest stunt they pulled was this... Court date in April was continued to June 12th because his attorney told the states attorney that he will take the plea. I was happy and I thought maybe there is some good in this man. But no, I get a call from the states attorney on June 12th to come down to the court house to testify! I could not believe it! So I went down to the court house and met with the States Attorney only to be told it will be continued due to the judge assigned to the case is on Vacation! The next court date is set for August 7th, but I am not going to count on it!

To the dealerships out in the Chicagoland area, if you have him as an employee, watch out, he maybe doing this to your customers! To the public, if he is your salesman, please beware of what kind of person he is!

The wheels of consumer justice grind slowly, and they grind exceedingly small.*

Read previous updates to this thread here.

(Photo: Beth and Christian)

* with hat tip to Friedrich von Logau(with hat tip to Friedrich von Logau

We purchased 2 46' Magnavox hdtv's on Dec 9th, 2007. At the time of purchase, Sears was offering a 0% interest for 24 months.

We have been being billed for interest for the past few months and I have been unable to resolve this.

The department manager "max" said it was an error entering the promotion in and he would take care of it. Nothing was done however. I talked with the executive customer support people this morning, so we'll see.

Any suggestions? I am a teacher, and my wife stays at home with our kids. These tv's were Christmas presents for our parents, and I cannot afford the interest that is being unfairly charged.

Ordinarily, we'd suggest that you try to escalate your complaint with an EECB (executive email carpet bomb), but since it's Sears we're talking about here there's probably no point. We suggest that you gather all of your paperwork together and file a small claims lawsuit against Sears for the interest that you've been wrongly charged. We believe that this will get the fastest response. It sounds scary, but suing big corporations in small claims court can be fun and easy.

If small claims court isn't your thing, or you feel it isn't worth the (modest) court costs, you can also report them to the BBB and your state's attorney general. Sometimes that does get Sears' attention. Not often, but sometimes.

Anyone else have any suggestions? We'd love to hear about tactics that work with Sears, if you know any.

Some highlights:

• Interest rates can jump to as much as 27.99 percent retroactively. That's the rate Chase HealthAdvance's zero-interest plan charges, for example, if you miss a payment or don't pay off the debt in the promotional period. By contrast, the average fixed-rate credit card charges 11.9 percent, according to Bankrate.com.
• Consumers report that they sometimes feel pressured by medical providers to finance needed medical care, in some cases while sedated or recovering from treatment.
• Doctors and dentists have financial incentives under these arrangements to encourage patients to sign up for more expensive treatments and to steer them to extended financing plans that take a smaller cut of the practitioner's fee.
• When hospitals persuade patients to tap unused credit, those patients can lose the power to bargain for discounts or even obtain charity care

Overdose of Debt [Consumer Reports]
(Photo: Getty)

Dealerships loathe credit cards for two obvious reasons:
Fees: The 2% transaction fees easily costs a dealer several hundred dollars.
Financing: Dealers receive lucrative incentives for arranging financing. They don't want the credit card companies having all the financial fun.

Just because you can use a credit card doesn't mean you should. Dealers factor the method of payment into their negotiations, and asking to pay with a credit card could jack up the price and deprive you of leverage. Even worse, financing your car on the back of your credit card could be a risky financial bet. That said, if you can pay off the car relatively quickly, your credit card can provide a windfall of cash back or frequent flier miles.

Convincing the dealer to accept plastic requires a copy of the cardholder agreement and a few shots of tenacity and persistence. First, negotiate the price of the car. Then, calmly explain that you'll be paying with credit.

Sound outlandish and ridiculous? Fine, don't trust us. Trust Matt Fadiman, Vice President of Riverbank:

...as per both the MasterCard and Visa merchant agreements, a participating merchant must accept that credit card (assuming it is valid and approved) for all purchases. The merchant cannot, by policy or practice, decide which transactions it will allow and which it will not.

I do agree that in reality many dealerships will attempt to refuse to charge the sale on a credit card, but when pushed they will back down. I have purchased my last 4 cars all on credit cards. To say the least the dealer was not happy, but when presented with both a copy of the merchant agreement, and my declaration to pursue with the credit card company, they quickly reversed their position. My calculation is that between the rewards (cash back) and the zero percent rates on the credit cards, my savings were well in excess of $6,000.

Visa confirms that dealers don't have a choice:

U.S. merchants must follow basic card acceptance rules for all Visa transactions. Visa's rules do not allow merchants to impose a maximum transaction amount as a condition for honoring a Visa card. Our rules require merchants to always honor valid Visa cards regardless of purchase amount — large or small.

There are plenty of reasons not to pay with credit, though the thought of charging back a lemon is tempting. Would you ever put a car on your card?

Savvy shoppers may get car with card [Bankrate]
(Photo: Peter Kaminski)

Before we get to the typical bad-company shenanigans—in this case, Dell's $599 discount mysteriously shrank to $400 between when he placed it in his shopping cart and when he reached the confirmation screen—we want to share this bit of ridiculousness. Dell's CSR Vanessa gives us the scoop on Dell's sophisticated order fulfillment system:

Jack: Can you look at sales history today and verify whether you sold this system at $599 off today? This was to be my third dell purchase, now I will not purchase again!
ATG Vanessa: There isn't a cart history unfortunately.
Jack: Sales history! Actual people who purchased this system today!
ATG Vanessa: We don't keep record of that.
Jack: You're telling me dell does not know what it has sold today?
ATG Vanessa: Remember this is done online and there's some confidential information we usually erase to protect customers.
Jack: Like what computers you have to build?
ATG Vanessa: So no, there isn't a record where you can see how much have been sold.
Jack: How do you know what you have to ship?
ATG Vanessa: It depends on what we have available at the moment.

Aside from that nonsense, the problem here is that Dell enticed Jack with a weird bait-and-switch, and worse still, they snuck it in at the very last moment before he hit submit.

I had found a link for an XPS system that had a $599 instant savings. I configured my system and added it to the cart and the $599 savings still was applied. I chose to then apply for financing beacuse there was no payments for 12 months. Once I was approved, i proceeded to checkout. Once I reached the confirmation page to submit my order I saw that the price had risen by $200.00 when I went back to check what happened the instant savings had dropped to $400. Confused I then initiated a live chat which led to nothing.

---

ATG Vanessa: Thanks for holding, I have checked and the instant savings changed. Please be aware that configuration, pricing, tax, shipping & handling and monthly payment information that appears in your cart is estimated and presented for your convenience only, and is subject to change without notice.

Not only was Vanessa less than helpful, but she was pretty apathetic at the end, too:

Jack: Well dell just lost a customer.
ATG Vanessa: Is there anything else I can help you with at this time?

Umm, no.

(Photo of computers: Extra Ketchup)

Consumerist,

I read your article about the EECB sent to Best Buy about the “Account Shield” used on the Best Buy Credit Cards. I kind of dealt with this in March and April and decided to give the EECB a try.

Here’s what I wrote:

Hello,

My name is Chad [redacted] I've been a long time customer of Best Buy.
Best Buy has always been my first choice when it comes to consumer electronics. I almost always buy my video games, music, movies, and etc at my local Best Buy.

I happen to be an active reader of The Consumerist. I recently read about a Best Buy customer that was sucked into an Account Shield service that was automatically enabled once he signed up for a Best Buy credit card. I learned that this is a type of insurance for the purchases used with the Best Buy card.

In March, I believe, I called the Best Buy customer service line to get more information on this. After getting transfered a couple times I was connected with someone and asked what this "Debt Cancellation" was. The person was explaining it and after they finished I told them that I wanted to cancel this service as I did not need it. They kept saying why I needed to keep this service only to have this explained to me why I need it. I decided I would try my luck with someone else at a later time.

In April I gave the customer service line another try and was met with the same situation from before. I had to be a little rude and interrupt the employee I was speaking with to tell them that I did not want this on my bill anymore. I was relieved to finally get that removed from my statement, but now I've ran into another problem.

After reading the article posted on The Consumerist I decided to take a look at the online statement for my card. I was looking over my statement and seen that the promotional rate that ended this month actually ended on May 8, 2008 and I was charged interest on my previous balance. I had just sent in $400.00 to pay off this promotional amount yesterday with an electronic check from my bank, Chase, only to see that I had already been charged because the promotion ended. What I don't understand is why this ended on the date it did intstead of my bill's due date. This date was before I had even received my statement.

Now, not only was Best Buy profiting off this Account Shield that cost me $20 a month which I did not sign up for, but I was just charged $75 for not paying a bill that was due 20 days before my actual due date. I estimate that Best Buy made an extra $175 off me just because I decided to sign up for their credit card and make quite a few large purchases at their stores.

Today, I spoke with Shabham through the customer service line. I was trying to get some information on my current balance and had a question about the recent purchase I made using my Best Buy card. I wasn't sure if this Account Shield was going to come up again or not. I had a hard time understanding him. I thanked him for his help and wished him a good day.

I've never had a problem with Best Buy until these last few months. The in-store customer service has always been great when it come to returns which defective products. Recently, with the Account Shield problems setting me back about $100 and the random date of my promotional six months no interest ending setting me back about $75 from what I'm told, I'm not sure how I feel about Best Buy anymore.

Sincerely,
Chad [redacted]

Here was their reply:

Dear Mr. [redacted]:

I am writing in regards to your email dated May 23, that you directed to the multiple Executives of Best Buy. The Executives have referred your correspondence to my attention to investigate and respond accordingly.

I'd like to apologize on behalf of Best Buy for any difficulties you may have experienced regarding this matter, but I appreciate the time you took to voice your concerns to allow the company an opportunity to properly address them. Indeed, Best Buy values this sort of contact as it provides the corporation with important feedback to make decisions regarding its future direction.

I am sorry for any disappointment that surfaced from this situation. As you are probably aware, Best Buy's credit cards are administered through HSBC, and you can contact the latter for any questions or concerns relating to your account via the customer service phone number referenced on your billing statements. Since I do not have direct access to your account for privacy reasons, I forwarded your complaint to my contact within HSBC upon its receipt to look into the issue. She reviewed your file and told me that HSBC's records indicate that you first called the organization about the Debt Cancellation program on March 11, 2008. According to the documentation from that interaction, the Customer Service Agent explained the benefits of the program to you and you decided to retain the service on the account. The next note regarding the Debt Cancellation benefit was on April 5, 2008, and the coverage was cancelled at that time. As of that date, you were charged
$108.56 in Debt Cancellation fees, but my HSBC contact waived these charges and assured me that no additional fees will be assessed for this coverage since it was cancelled.

Regarding the promotion, your particular incentive expired on May 8, 2008, as you mentioned, but payments were not received to pay off this plan by that date, so finance charges of approximately $72.80 will be charged to the account on June 1 when the statement cycles. However, since you initiated a total of $400.00 to pay off the plan, my HSBC contact will make sure that this amount pays off the promotion for you and waive the finance charges as a courtesy (when they bill in June).

Thank you again for allowing Best Buy to respond to your concerns.
Please let me know if you have any further questions or concerns. [redacted]

Sincerely,

Michael Arrighi
Senior Executive Resolution Specialist
Best Buy Corporate

As you can see they pulled through and helped me out by crediting me $180. This has been my only problem with Best Buy and they fixed it for me. They have kept my business.

I want to thank Mr. Arrighi for doing everything he did.

Thanks,
Chad

For more information about launching your own EECB, click here.

The information on your website helped me get an error corrected with how Sears/Citibank credited my Sears credit card payments. Since you have Sears and Citibank going against each other today in your "worst company" tournament, I thought you might like to hear my story.

Late in 2006, I purchased a Sears appliance, using their "no payments, no interest for 12 months" plan. Then last December 2007, around the time I was to pay off the remaining balance (apx $500) from the 2006 purchase, I purchased a Sears Kenmore furnace, also with the 12 months no payments, no interest plan. This purchase could not be postponed; it was December, and I had to have a furnace. I asked at the time of purchase, and was assured that my future card payments would first be applied to the older purchase then to the new purchase after the old balance had been paid off. A few days after my furnace was installed, I made a payment of $1000 on my Sears/Citibank credit card, which should have paid off the entire previous balance, and reduced the new balance on the furnace by about $500. But when I received my next bill, I saw that Citibank had applied only the minimum payment of about $25 to the old balance, charged me $21 in interest on the remaining old balance, and applied the remainder of the $1000 to the new purchase. I called the Citibank 1-800 customer service number, received an immediate acknowledgment that that didn't look right, but the system wouldn't let the customer service rep make the correction; I asked for and was connected with a supervisor who told me she couldn't make the correction and that my "Citibank" agreement allows them apply payments as they seem fit. I asked for her supervisor and was told there was no one higher than her available, but she would set me up with a call back when someone was available. (That call never came.) I hung up and redialed the same 1-800 customer service number, thinking I might get a better response from whoever answered the second time. I got a customer service rep in Puerto Rico, who also acknowledged that the payments didn't appear to be credited correctly, and he tried to correct the problem, but he too said the system wouldn't let him do it. Then I used the Citibank CEO contact information from your site, and after a couple of unsuccessful attempts, I got through using the [*] key after accessing the company directory. I was ultimately referred to executive customer service, who politely, professionally told me that my account appeared to have been corrected after all, by the first rude, unhelpful supervisor. She said she would check the following day after the overnight postings, to make sure it was in fact corrected. Then I again got the lecture that Citibank can apply my payment any way they see fit. I've since received another bill, which shows that the correction was in fact made. My problem with all of this: 1. The Sears "12 months no payment, no interest" promo is illusory if payments are applied first to the promo balance rather than the old balance on the account. 2. By applying only the minimum to the old balance each month for the next year, Citibank was set to make a killing off the interest they were charging me on the old balance. If I didn't get the payment corrected, I was prepared to pay off the entire balance, rather than pay interest to Citibank. This was a predatory tactic that would have cost me hundreds of dollars, literally, if I didn't have the means to pay off the card immediately. I sure there are many people who are being victimized by this Citibank/Sears practice.

This is the sort of thing that everyone should watch out for when taking advantage of "no interest, no payment" financing from retail stores. Be sure to read the fine print and don't be afraid to stand up for yourself like reader D.

For more information about how to learn to launch your own EECB, click here.

(Photo:cmorran123)

So many vehicles are being snatched from owners who stop making payments that some repo operators and auto auctioneers say lots are overflowing.

This year's predicted 10% rise in vehicle repos to 1.6 million would be a third higher than 10 years ago, says Thomas Webb, chief economist for a unit of Atlanta-based Manheim, which sells cars to dealers worldwide. The increase comes atop a 10% rise in repos last year.

Webb blames overly "generous" auto loans in the past couple of years as a key factor in driving up defaults that lead to repossessions.
...
"We're experiencing significant growth in repo volume to the point where we're using additional lots to store them," says Tom Kontos, executive vice president of Indiana-based Adesa Auctions. "Our inventories are growing to record levels," caused by repos on top of a glut of cars coming off leases and out of rental service

Repo lots overflow with reclaimed cars [USAToday]
(Photo:strangeinterlude)

Opening one new account could push a solid credit score of 707 down to 697 for six months, according to Fair Isaac's FICO Score Simulator, which gauges how consumers' actions affect creditworthiness. Even worse: Your score could drop by as much as 100 points if you come close to maxing out the line of credit, says Detweiler.

Frankly, we can't see the benefit of using these alternate payment systems except for cases when the customer actually owns no credit cards at all—if you're using it for short term financing, maybe you should ask yourself if you can put off the purchase until you save up enough money to buy it outright. Otherwise, if you're really concerned about online security then we (and many of our readers) suggest paying with single-use credit cards, which are available from some banks and now from PayPal.

"Alternate-Payment Services Have Some Pitfalls" [SmartMoney]

Gone are the days of the three-year car loan. The length of the average automobile loan hit five years, four months in October, up more than six months from 2002, according to the Federal Reserve. And nearly 45% of loans written today are for longer than six years. Even some staid lenders owned by the carmakers, such as Toyota Financial Services and Ford Credit, are offering seven-year financing. And a few credit unions, particularly in the West, are tinkering with the eight-year note.

At the same time, the amount of money drivers owe on their cars is soaring. In October, the average amount financed hit $30,738, up $3,500 in just a year and nearly 40% in the last decade, according to the Fed. More troubling, today's average car owner owes $4,221 more than the vehicle is worth at the time it's sold — up from $3,529 in 2002, according to industry analyst Edmunds.

The longer loans are directly related to the higher balances. By extending the length of loans, lenders keep monthly payments down. But because these loans take longer to pay off, a much larger piece of the principal remains unpaid at the time the car is traded in.

Cindy Gerhardt has rolled over so much debt on successive vehicle purchases — five in three years — that she now owes almost $43,000 on two trucks worth no more than $29,000 and, she says, perhaps as little as $22,000.

Faced with car payments that exceed her monthly mortgage, she tried to trade in the pair for a single vehicle. But with so much unpaid principal on the vehicle loans, the only offer she got from the dealer was to trade in one truck on yet another new vehicle — and increase her debt by another $25,000.

"It's our own fault that we traded in vehicles so many times, but we never thought it would get to this," said Gerhardt, a secretary who lives with her husband and two children in Clinton, Okla. She recently tried to refinance her mortgage, she said, but was declined because her car payments were too high. "Not one dealer ever said this was a problem. Ever. I never had a dealership say no."

New cars that are fully loaded — with debt [LA Times](Thanks, Arthur!)
(Photo:Ken Hurst/Associated Press)

Retailers often raise the price on free-financing sets, so the first thing you should do is see whether you can get a better cash-only deal elsewhere. Another trick is to approve a customer for a much higher amount than he is expecting, which tends to lead customers to purchase more expensive sets than what they originally budgeted.

Then there's the old bait-and-switch standby:

...zero-percent offers are used for bait-and-switch sales. Once the offer lures you into the showroom, a sales rep says you don't qualify, then tries to sell you the HDTV anyway.

"HDTV Buying Tips: Avoid Financing Traps" [PC World]
(Photo: Getty)

The financial sector of our economy is the largest profit-making sector in America. Our financial services companies make more money than our energy companies — no mean profitable business in this day and age. Plus, our healthcare companies. They make almost twice as much as our technology companies, twice as much as our manufacturing companies. We've become a financial economy which has overwhelmed the productive economy to the detriment of investors and the detriment ultimately of our society.

From the transcript:

JOHN BOGLE: Well, let me say it very simply. The rewards of the growth in our economy comes from corporate, largely - from corporations who are a very important measure, from corporations that are providing goods and services at a fair price innovating and bringing in new technology — providing a higher quality of life for our society and they make money doing it. I mean, and the returns in business in the long run are 100 percent the dividends a corporation pays and the rate at which its earnings grow.

That still exists. But, it's been overwhelmed by a financial economy. The financial economy, which is the way you package all these ways of financing corporations, more and more complex, more and more expensive. The financial sector of our economy is the largest profit-making sector in America. Our financial services companies make more money than our energy companies — no mean profitable business in this day and age. Plus, our healthcare companies. They make almost twice as much as our technology companies, twice as much as our manufacturing companies. We've become a financial economy which has overwhelmed the productive economy to the detriment of investors and the detriment ultimately of our society.

BILL MOYERS: By the financial sector, you mean?

JOHN BOGLE:Banks, money managers, insurance companies, certainly annuity providers. They're all subtracting value from the economy. They have to subtract. To be clear on this now — I don't want to overstate it. To be clear on this, they have to subtract some value. But, the question is—

BILL MOYERS: What do you mean they subtract some value?

JOHN BOGLE:In other words, — you've go to pay somebody something to provide a service. It's just gotten totally out of hand. My estimate is that the financial sector takes $560 billion a year out of society. Five hundred and sixty billion.

BILL MOYERS: Where does it go?

JOHN BOGLE:It goes into the pockets of hedge fund managers, mutual fund managers, bankers, insurance companies. Let me give you this just one little example. If you didn't make a $129 million last year — I'm presuming that you didn't. You don't rank among the highest paid 25 hedge fund managers. A $129 million doesn't get you into the upper echelon.

BILL MOYERS: This seems to me to be your great concern, that this self correcting faculty that is built into both democracy and capitalism is in jeopardy?

JOHN BOGLE:Actually, I think it's fair to say it's in jeopardy. But there's one sense that it's not in jeopardy. And that is, ultimately, the system will correct. The bigger the boom, I fear, the bigger the bust. In other words, you pay the price. It's not a self sustaining system at this kind of a level.

BILL MOYERS: Do we need new rules?

JOHN BOGLE: One thing is, I believe, to have a federal standard of fiduciary duty for money managers. They've come from eight percent ownership of American business to 74 percent ownership of American business. It's staggering, over unbelievable change. Without any rules as to how they're supposed to behave. We have state laws of proven investing and fiduciary duty and things of that nature. But they don't seem to be working. And our founding fathers actually thought about having a federal statute— a federal corporate chartering statute. I think we probably need one because if some of the states step up and say improve their governance provisions, corporations will move to another state. So the state system I don't think can prevail.

So a federal standard of fiduciary duty which demands that our pension trustees and our mutual fund directors make sure that those pension funds and mutual funds are operated in the prime interest of those who have entrusted their money to them. And that includes responsibility for corporate governance. And it will ultimately turn to be focused more on long term investing.

When I came into this business in the 1950's, it was a business focused on the wisdom of long term investing. We changed in that period to a business that is focused on the folly of short term speculation. And think about this for a minute. If you're a true investor holding a company for the long term, you're well aware that the value in that company is company's earnings compounded over time, developing new products and services, developing efficiencies— trying to size up the proper corporate strategy, you know, making the company more valuable. But, in the folly of short term speculation, you're just thinking will that stock be worth more or less six months from now or a year from now?

Give you a very specific example. In the first 15 years I was in this business, the average mutual fund held the average stock for seven years. Call that long term investing. Now, the average mutual fund holds the average stock for one year. That's short term speculation. So, if you're a speculator, you don't care much about ownership interest. You don't care so much about corporate governance. Why vote a proxy, for example, if you'll not even be holding a stock in three months?

The other part of it is,and this is really makes it a very difficult problem to solve. And that is a little about of — I guess it's Pogo — we have met the enemy and they are us. These mutual fund companies— these management companies are now owned largely by corporate America. Or international corporations — Deutsche Bank — AXA, big international companies who have bought their way into the US financial system, which is— don't mean to demean that. But, they own these public corporations— giant public corporations like insurance companies, big banks— foreign insurance companies and banks own 41 of the 50 largest mutual fund managers.

Now, what is the job of a corporation when they buy into a mutual fund management company? It's to earn a return on the capital they invest in that company. It's not to earn a return on the capital of the investors who invested with that mutual fund. Now, in fairness, they want to earn as much money as they can for the fund shareholders. But, not at their own expense.

What we've done is have you know, what I call in the book, a pathological mutation of capitalism from that old traditional owners' capitalism to a new form of capitalism, which is manager's capitalism. The evidence is quite compelling that today corporations are run in a very important way to maximize the returns of its managers at the expense of its stockholders.

BILL MOYERS: Its CEOs.

JOHN BOGLE:Its CEOs, well, the upper level of five or six top officers. And they get enormous amounts of pay for actually doing very little. I'm a businessman. Listen, we all— we chief executives get an awful lot of credit that we don't deserve. Real work in companies is done by the people who are getting themselves together and doing the hard work of making companies grow—

BILL MOYERS: And, yet, these—

JOHN BOGLE: every day.

BILL MOYERS: These are the people who most often get laid off, right?

JOHN BOGLE:They get laid off. And, of course, the ironic part of that is they often get laid off — used to be called downsizing. But, of course, in today's America, it's called right sizing. They get laid off. That reduces expenses. That increases earnings and that means the CEO gets more.

Just think about the country for a minute. For an agricultural economy, 95 percent, 98 percent agricultural when this country came into existence. And even by 1850, half agricultural. Now it's about, they moved from agricultural economy, to a manufacturing economy, to a service economy. And now to a financial service economy. And the financial service economy is what troubles me. Because it's diverting resources from the investors to the capitalists. To the entrepreneurs. To Wall Street. To the investment bankers. The hedge fund managers. To mutual fund managers. And that is a negative to our societal values.

Where agriculture and manufacturing and services, I mean, I'm perfectly willing to give a high value, for example, to art and poetry and literature. They add value to society. It may not be easy to measure it in a society that measures too much of what's not important. And not enough of what is important. As the sign in Einstein's office says— "There are some things that count that can't be counted. And some things that can be counted that don't count."

Transcript - September 28, 2007 [PBS]
Watch The Interview [PBS]

Countrywide, which eliminated 12,000 jobs on Friday, says deeper job cuts may be coming. The mortgage industry has already lost 50,000 jobs this year, according to Reuters.

New mortgages funded by Countrywide are down 17.3% from last year.

Countrywide gets $12 bln new financing, shares jump [Reuters]

The card provides APR-free financing for up to 36 months; there is a $25 fee for missed payments, according to the customer service rep we spoke with, but never an interest rate. Minimum monthly payments are $25 or 4% of your bill, whichever is higher.

CarePayment is provided through arrangements with hospitals, so you can't go out and apply for the card yourself. Usually a participating hospital will offer it to you automatically if they feel you will have trouble paying off your bill. Otherwise, you can contact your hospital's billing department and ask them whether they offer it. If your hospital doesn't offer it, you might want to ask them to look into it, as it's a good way for them to recoup money from the patients least likely to be able to otherwise pay their bills.

"Hospital Charge Card: Don't Leave the Ward Without It" [Wall Street Journal Health Blog]
(Photo: Getty)

2) Thou Shalt Get A Credit Card With Extended Warranty Protection, Cash Back or Reward Points, And Thou Shalt Take Advantage Of Them.
Credit cards can be very useful tools for consumers. Extended Warranty Protection can double a manufacturer's warranty and costs you nothing. Cash back, obviously, saves you cash. Reward points are useful for lots of things. Take advantage of these tools! They're there for smart people like you.

3) Thou Shalt Check Your Credit Report.
Go to annualcreditreport.com to check your credit report. It's free and you can do it once a year. If there's something incorrect on the report, you can challenge it. Removing old or incorrect stuff from your credit report will cause your FICO score to rise, and that can save you money.

4) Thou Shalt Pay All Bills On Time.
Paying your bills on time helps your credit score and keeps you from having to pay fees. Do it!

5) Thou Shalt Avoid ID Theft. Buy And Use A Shredder, and Thou Shalt Not Fall For Phishing Scams.
ID Theft sucks. It's not always your fault, but you can take simple steps to help prevent it. Be aware of phishing scams and don't fall for them. Always type urls into your browser, don't follow links from emails. Don't save your banking passwords in your browser or on your computer. Buy and use a shredder. None of these steps takes much effort, but they go a long way towards protecting you. Sure, your credit card protects you from a lot of the financial damage from ID theft, but there's no reason you can't be responsible about protecting yourself.

6) Thou Shalt Take Advantage of No Interest No Payments Financing Deals, But Thou Shalt Pay Them Off On Time.
No interest, no payments financing can be great, but you've got to ignore the "no payments" part. Make payments. If you don't, once the "no payments" period is over, you're going to get hit with interest from the date of purchase... and that interest rate can be huge. Don't do this! Use the "no payments" period to pay the item off, then you've used the store's money for free.Yay!

7) Thou Shalt Avoid Interest On Consumer Debt. Thou Shalt Try To Pay Interest Only On Student Loans, Mortgages And Car Loans.
Sort of self-explanatory. It's not a wise investment to be paying interest on soap and tacos. If you don't have enough money to pay your balance off every month, look for ways to cut your spending.

8) Thou Shalt Keep Thine Credit Utilization At A Reasonable Level.
Credit utilization is important to your FICO score. Basically, you don't want to use all the credit available to you. Don't max out your credit! Lenders will approve you for more than you can afford. Remember that.

9) Thou Shalt Not Cancel Credit Cards, Thou Shalt Try To Keep Them Open So As Not To Shorten Thine Credit History.
Length of credit history is important to your FICO score. If you don't want to use a card that you've had for a long time, that's fine, but don't actually cancel the card. Just don't use it, unless it has an annual fee and you really want to get rid of it.

10) Thou Shalt Not Constantly Obsess Over Thine Credit Score. Life is too short.
Following these commandments should help your credit score, but remember that its not written in stone. It's more of a snapshot than a grade. It can always go up and down, and it will. While it's important to be mindful of your credit report, don't let it ruin your life. Smile.

We know you have your own commandments to share, so leave them in the comments and help our readers learn about managing their credit wisely!
(Photo:MykReeve)

The typical "No Payments No Interest" store credit rules apply. You have 6 months to pay off the tickets. If you don't, American Airlines will charge you interest from the date of purchase at up to 26.05%. You do not want that to happen.

Fly Now, Pay Later - 6 Months No Payments, No Interest [AA]

•Consider A Credit Union For Financing. "Get a pre-approved loan through a credit union, most of the time they will approve you up to a certain amount and give you a check that can be used at the dealership of your choice, which turns you into a cash buyer, you already know how much your payment will be a month, and it makes it so you have one less thing to negotiate with the dealer about."

• Selling Kias is about volume. "Most salesmen don't make squat selling new cars alone, it is all about volume, at the Kia dealership we made $100 per new car from the dealership with Kia offering an incentive called "Kia Cash" where you would call a number after a car had been registered with corporate as being sold and you could "win" anywhere from $25- $500 for each sale you made. Our dealer would also offer weekly "spiff's" where you would get an extra X dollars for every car sold if the dealer sold Y number of cars, or on a weekend if you sold more than three you would get a compound bonus where ever car would be worth 50 bucks more to you than the last one 1st one 50, second car 100 etc.."

• At Carl's Kia Dealership there was a time limit for each customer. "The way we made money pretty much meant that we weren't going to spend anymore time with a customer than necessary. The manager's had an unofficial time limit, if you were with a customer for more than an hour without closing in on a sale, they would either step in or send in a Closer to make the deal go. If we spent more than two hours with a customer they had better be making a bulk deal because it really wasn't worth the time invested."

• Kia dealerships can be sort of sleazy. "Kia markets their cars as a lower cost alternative to Japanese cars and as a result most dealership's aim their marketing at high credit risk customers, because of this,the dealerships can be pretty sleazy to deal with because they know that most people who look at Kia's have been turned away from every other new car lot in town. If you were to wander in to a Kia dealership I would pretty much expect every high pressure trick in the book to be thrown at you."

• Stay away from big chain dealerships. "I would recommend staying away from chain dealerships, auto malls, and anyplace billing itself as "THE BIGGEST (insert brand here) DEALER IN THE REGION!!!" because they are going to be high volume which means that the sales team doesn't have any particular reason to keep you as a return customer. Employee turnover at chain dealerships can be extremely high, especially for positions like management and finance, which can be the most cut-throat positions in the dealership. Not uncommon to see a new sales manager every week or two at some of these places. Small family owned dealerships that have a good reputation in the community are disappearing but they are the way to go."

•Try A Vehicle Buying Service. "Most credit unions also have a vehicle buying service, where an independent party will find a vehicle of your choice and get you a price that is usually right around invoice. I don't think most people could go to a dealership and get the same results that buying services do, and it can save you a lot of time if you know what you want in a car."

• If you're happy, let the dealer bribe you with free gas. "Customer satisfaction surveys are a joke, at the dealer I worked for we would bribe customers with free gas if they let us fill out their surveys when they come in the mail." Sketchy, but hey. It's free gas.

Thanks for the tips, Carl! According to Consumer Reports, Credit Unions can be a good place to get a low interest rate.:

"Because they are nonprofit, their operating costs are fairly low and their lending rates can be quite competitive. Many people belong to credit unions just to take advantage of the convenient loan policies."

Once they get pre-approval "members can essentially shop as a cash customer and that's what we instruct them to do," says Larry Jones, vice president of marketing at ORNL Federal Credit Union in Tennessee.

"Pre-approval is a way you're sure you're going to get the loan," said Ellis Waller, product manager for automotive lines with the Credit Union National Association.

"You can go into the dealership with money in hand at a rate you know is attractive. When you say you have the financing, the dealer won't try to convince you their 2.9 percent financing is better. It's almost always better to take the rebate and finance with the credit union."

There is a clear advantage for the credit union, too. Fewer members end up with dealer financing.

For more info about financing and credit unions:

Credit unions get up to speed for online car shopping [Bankrate]

Where to shop for an auto loan [Consumer Reports]

If you work in the car sales business and want to offer some helpful tips to our readers, write to us at tips [at] consumerist [dot[ com.

(Photo: Ian Muttoo)

WEIGOLDS: Mr. Gentile changed from jury trial to bench trial. This automatically delays another 2 months! The new date is March 15th. Our states attorney did not do his home work anyway. We are pushing him to obtain Jim's phone records before next trial date. Another wasted day off! Don't know what happened we were told jury trials are expensive.

CONSUMERIST: How do you think this will affect your case?

WEIGOLDS: The statute of limitations runs out 2 years from the date of the last offense. We still have time but..... hurry up and wait! We have contacted our civil lawyer waiting for a return call, we are going to tell him to proceed to file instead of waiting for the verdict from the criminal matter.

— BEN POPKEN

Previously:
UPDATE: Consumer Takes Sleazy Prius Salesman To Court
Consumer Takes Sleazy Prius Salesman To Court
UPDATE: Sleazy Prius Deal Ends in Salesman's Arrest Warrant
UPDATE: Sleazy Prius Deal Ends in Warrant For Saleman's Arrest
Sleazy Prius Deal Ends in Warrant For Saleman's Arrest

— BEN POPKEN

Previously:
Consumer Takes Sleazy Prius Salesman To Court
UPDATE: Sleazy Prius Deal Ends in Salesman's Arrest Warrant
UPDATE: Sleazy Prius Deal Ends in Warrant For Saleman's Arrest
Sleazy Prius Deal Ends in Warrant For Saleman's Arrest

The consequences are scary if you're not the sort of person who pays on-time. "Let's say you owe just $150 on a $2,000 sofa you financed with a zero-percent offer. Missing the final payment will cost you an extra $480 at 24 percent interest. On top of that, you'll probably get socked with a late fee of $35 or so."

Yikes! Pay those off on time! —MEGHANN MARCO

Consumer Lookout: No interest? No payments? No sympathy for the unwary [Minneapolis Star-Tribune]

Angela Wiegold tells us that on October 19th 2006 there was another pre-trial hearing for the defendant Mr. James Gentile who entered a not guilty plea to the charge of a Class B criminal misdemeanor.

The State's Attorney has ordered for a copy of Mr. Gentiles home and cell phone records. The Weinglod's call log for April 2006 shows 5 calls in one day.

You can follow the outcome with this online app. Type in: GENTILE JAMES.

The Wiegold's lawsuit against Mr. Gentile is on hold, pending the trial's outcome.

The next court date is Dec 11th, 2006.

Backstory here.

There will also be a note in the suit for the Sheriff about Gentile's outstanding arrest warrant for disorderly conduct and phone harassment. Which brings up something they never told you while suckling Law and Order from the boob tube. Just because you have a warrant out on you doesn't mean you're going to be hauled away by the police any time soon.

Oh and by the way, all those ALL CAPS, all defensive comments under Mark's login? Those were from his wife, who took your comments very seriously. There's a joke about women driving your comments login that we are very most certainly not making. Good luck, Mark, may you find satisfaction.

Mark had some friends call Naperville Toyota to let them know the complaint was on The Consumerist. Reportedly, the annoyed lady on the phone said, "one unhappy customer will not hurt us."

Since appearing here, Mark has received inquiries from area newspapers, included the Chicago Tribune. He also plans on filing on lawsuit and is speaking with a lawyer this weekend.

His outrage so hot and fierce, we were not originally able to put up Mark's whole complaint, with the squirrely financing details and all. The letter is now posted in it's entirety after the jump...

One of the assumptions of modern consumption is that if you buy something you don't like, you get to return it. You also assume that the salesman isn't going to write your wife's name on the bathroom wall and say she willing to have sex for money. Both of those assumptions, and more, proved not true for Mark when after he bought a Prius from Toyota of Naperville, IL.

It's bad enough that the salesman, Jim Gentile, committed outright fraud on Mark's car financing. But then after Mark complained and tried to return the car, not only was he subject to more bilking and his efforts rebuffed, his wife started receiving lewd phone calls from people who said they found her name and number on a hooker website. A phone trace revealed the phone numbers harassing Mark's wife belonged to one Jim Gentile.

When Mark called the dealership to confront Jim, he found that Mr. Gentile no longer worked there. He worked for Pontiac and was promoted to manager.

A warrant is out out for Jim's arrest for phone harassment and disorderly conduct but Mark's thirst for justice is not slaked. He demands restitution from Toyota Corporate.

Anatomy of a sleaze bucket, after the jump...

[Ed. Mark's letter is too long to post in its entirety, so we're just printing the parts that have to do with the harassment.]

After trying to return his car and being told by the manager to "get that car off his lot" before he called the tow truck and had it impounded, Mark reports:

"I received a call on my wife's phone, the number was blocked. A man with an east Indian accent asked if my car was for sale claiming "there was a web site for losers who could not pay for their cars" and that my name was on it with a Prius for sale. The voice would not state their name so I hung up. This was the first of MANY bizarre calls surrounding our purchase.

During that month the content of the bizarre blocked incoming phone calls changed. They used to be at random times with the same male "east Indian" voice claiming to be Toyota corporate or Toyota finance, the calls were about paying for the car. Some were threatening, saying if we did not pay for the car we would lose our house at 1088 Heritage Hill Rd (that address is an apartment). The newer calls were directed to my wife Angela, the voice said there was a website stating she would have sex for money. My wife was absolutely horrified and demanded identification when none was given she hung up. These types of phone calls kept coming in, each one more disgusting than the previous.

The nasty phone calls continued at random times until April 21st when my wife received 5 blocked incoming calls in 1 day. All of them were sexually suggestive and vulgar in content. We called the Winnebago Sheriffs and had an officer sent to our residence to file a report. We had a sneaking suspicion that Jim Gentile was the person behind the telephone voice. The call about losing our house in Naperville came after we had moved to Rockford, but our phone number and old address were on paperwork filed with Toyota. The officer took some information and suggested we file charges for harassment and disorderly conduct. We went down to the Sheriffs office and filed charges, we waited the 48 hours necessary to complete filing a charge, then we finalized it. Monies from tax return allowed us to finally retain a lawyer. After discussing the case with the lawyer he said we had a clear case of fraud. He was intrigued by the phone calls and stated that it would be interesting if we could find out about the phone calls and Jim Gentile.

"We subpoenaed our phone records since phone representative said as long as the phone was answered by a human, the calls could be traced. The records could only be obtained for 45 day prior to request. It took a few days for the information to come in; when it arrived we went over all the numbers. The records showed two different numbers repeatedly calling Angela's on April 21st. We did not recognize the numbers so we called each as a test. One I called was answered by a male voice, I asked if this was Bob and a familiar voice said that I had the wrong number. I quickly asked if this was Jim, the voice said "yes this is Jim". I hung up and tried the other suspicious number and listened to a message stating "this is Jim Gentile; I'm not able to answer....." Now I had proof that it was our Toyota salesman harassing us over the phone through a course of over four months. He had obviously been reprimanded or possibly fired over his fraudulent actions. I called Toyota of Naperville and asked for Mr. Gentile. They said "he no longer works here he was promoted and now works for Pontiac"."

"I deserve some comeuppance for mental, physical, and monetary stress including destroyed credit which is a direct result of a soured business dealing with Toyota Motor Corp."

"As of June 14th, 2006 Winnebago County States Attorney Issued a warrant for the arrest of Mr. Gentile for phone harassment, and disorderly conduct."

"This is the oldest trick in the scam book...You buy a new car, the "LieNance" manager says you got a low APR, hands you the keys, and you drive home... Two weeks and 500 miles later, the dealer calls you saying "Sorry, you didn't qualify for that low interest". This is where "subject to financing" clauses on contracts bite you in the butt. Everyone thinks that you sign papers it's a done deal."

While this isn't exactly what happenned to M, it could be a variation. Perhaps the dealership financier really did make a mistake. Perhaps after seeing how dogged M was, they realized they couldn't get away with the snookery.

Either way, CarBuyingTips.com had lots of info to arm yourself with before buying a new car. By using the web site and knowing what to do and what not to do, Justin says he got the $33k sticker price down to just a few bucks over $27k.

Previously: Buying a Car and Getting Away With It

Her story serves as a good reminder to read the finance contract with care and if you believe you're being screwed, be vocal and persistent in pursuing your grievance.

If a business doesn't believe the customer is always right, guess what? The customer will spend somewhere they're not wrong.

M.'s dealership knew this and that's why in the end, she wins. Read more, after the jump...

M. writes:

"I recently bought a new car and bout 30 minutes after my husband and I left the dealership, our financier called us. He told us there had been a mistake made on the finance contract that we signed. He accidentally gave us a 2.9% APR AND $2,000 in rebates and customer loyalty incentives. OOPS! He thought we were buying a different car and gave us the incentives for the wrong model. The model I bought offered a special 3.9% financing rate OR a $500 rebate (almost all car incentives work this way — either/or on financing and rebates.) He not only gave us the wrong rebates and incentives, he gave us BOTH rebates and the incentive APR.

When we arrived at the dealership, the financier, along with the business manager presented us with a new "correct" contract. We were extremely hesitant to sign this new contract, under the common understanding that once a contract is signed, it's legally binding. When we asked the business manager what would happen if we did not sign the new contract, he told us that the entire deal would be undone and we would have to give back our new car. He told us that the bank would not accept the first contract and that it would be declared null and void. For our troubles, they threw in a free oil change and car detailing. OUCH. Talk about rubbing salt in our wounds!

We spent the entire weekend fuming and called the general manger of the dealership first thing Monday morning. He apologized and invited us back to the dealership to present us with a new deal... a GREAT deal. First, we got the original 2.9% financing back. The dealership basically had to redo the finance deal with another bank and buy down the rate. We also got $1,000 in rebates AND a four year service plan. When we added up the costs on their recommended pricing and maintenance schedule, it added up to more than $1,200.

EDUCATE yourself about the car buying process and read the finance contract carefully!! If you believe the dealership has made a mistake, be persistent in contacting the people in charge — going higher up the management ladder if necessary. The dealership made the right move in correcting the mistake and going above and beyond for something that they bunged up in the first place."