Posts Tagged ‘Mariel Boatlift’

ObamaCare’s adverse selection: Anybody remember the Mariel boatlift?

October 24, 2013

First, for all of you youngsters, some background …

The “Mariel boatlift” was a mass emigration of Cubans who departed from Cuba’s Mariel Harbor for the United States in 1980.

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The Mariel boatlift was precipitated by a sharp downturn in the Cuban economy which led to thousands of Cubans badgering the government to allow them to leave and seek asylum in the U.S.

Previously, the Communist government maintained closed borders – in and out.  Citizens weren’t allowed to leave.  Think, Berlin Wall.

Then, suddenly, the Cuban government announced that anyone who wanted to leave could do so, and an exodus by boat started shortly afterward.

At first, President Carter – reading the move as a humanitarian gesture – opened the U.S. borders to the emigrating Cubans.

Then, Fidel Castro seized the opportunity to load the boats with convicted felons from Cuban jails and patients from Cuban mental health facilities.

When Carter caught on, the Mariel boatlift was ended.

By that point, as many as 125,000 Cubans had made the journey to Florida.

Estimates vary widely re: what portion of the the exiles who made it to U.S. shores were hardcore criminals and very unhealthy patients.

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What’s the Mariel boatlift got to do with ObamaCare?

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Big banks face flight of unprofitable customers … good news for credit unions ???

November 7, 2011

Last Saturday was “Bank Transfer Day”.

First the details, then the analysis …

According to the AP:

A grassroots movement that sprang to life last month is urging bank customers to close their accounts in favor of credit unions.

The spirit behind “Bank Transfer Day” caught fire and had more than 79,000 supporters on its Facebook page.

“Consumers are waking up and seeing that they have options.”

Even with its public support, however, it’s not likely that any account closings that take place will make a big dent with industry titans such as Chase, which is the largest bank in the country with some 26.5 million checking accounts.

Credit unions and small community banks have been basking in the spotlight and issuing press releases highlighting what they say are superior interest rates and more intimate service.

Big banks have also learned that customer grumblings don’t always translate into action. That’s particularly true for those who have multiple accounts, direct deposit and automatic bill pay; many decide that switching just isn’t worth the hassle.

Here’s what I find bemusing …

Banks only make money on about 40% of their customers.  Think multiple accounts, big balances..

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My bet: the bulk of the  Bank Transferers are in the bottom 60% … especially since the debit card fee structures (from merchants) were cut by legislation and B of A’s evil $5 monthly fee was rescinded.

The WSJ says that people who gravitate to credit unions will likely  tend to be ones who were unprofitable for giant banks because of the small balances they keep on deposit, low number of products they buy and the relatively high account-maintenance expenses at big financial firms. —  it costs the giant banks about $350 to $450 per year to maintain a checking account

So, the credit unions and small banks are probably getting a bunch of accounts that will hurt their profitability.

Anybody remember the 1980 Mariel Boatlift?

Bank Transfer Day may be the big banks’ equivalent …

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