Early this week I wrote about unemployed workers getting hit with bank fees when they access their unemployment insurance benefit. Thankfully, Charles Rangel, Chairman of the House Ways and Means Committee, and Jim McDermott, chairman of the subcommittee on Income Security and Family Support, have decided to act. This week they sent a letter to Hilda Solis, Secretary of the Department of Labor asking for an investigation of state-level disbursement of unemployment benefits.

Here is an excerpt:

We write today to request that the Department of Labor determine the extent and impact of, as well as alternatives to, banking fees that are imposed upon unemployed workers who receive their weekly unemployment insurance (UI) benefit payments through debit cards. It has recently come to our attention that a number of States issue UI payments via debit cards, and that charges made to these cards, as well as customer service inquiries, may be subject to banking fees. Additionally, there is some evidence that UI beneficiaries are often unaware of the fees they might face when using such cards.

Losing your job is bad enough, right? Well, the AP has reported that as states partner with banks to dispense unemployment benefits, many recipients find themselves paying a fee to get their cash:

Thirty states have struck such deals with banks that include Citigroup Inc., Bank of America Corp., JP Morgan Chase and US Bancorp, an Associated Press review of the agreements found. All the programs carry fees, and in several states the unemployed have no choice but to use the debit cards. Some banks even charge overdraft fees of up to $20 - even though they could decline charges for more than what’s on the card.

While cards may provide extra convenience and lower administrative costs, they come at the expense of the unemployed and create a potential boon for banks.

In Missouri, for instance, 94,883 people claimed unemployment benefits through debit cards from Central Bank. Analysts say a recipient uses a card an average of six to 10 times a month. If each cardholder makes three withdrawals at an out-of-network ATM, at a fee of $1.75, the bank would collect nearly $500,000. If half of the cardholders also dial customer service three times in any given week (the first time is free; after that, it’s 25 cents a call), the bank’s revenue would jump to more than $521,000. That would yield $6.3 million a year.

The idea of bank cards shouldn’t be scrapped altogether, since they boost efficiency and save states money. But they deserve another look - especially as the new stimulus plan will increase unemployment benefits by $40. The goal should be to increase efficiency and help the unemployed, not the banks.

This afternoon the House will probably approve the stimulus package, sending it to a Senate vote this evening. If all goes as planned, President Obama can sign the new legislation this weekend.

While main goal of the bill is to create jobs - 4 million jobs according to Obama’s directives- it also contains much needed funding to assist those who are currently unemployed. Specifically:

• Unemployed workers could receive 20 more weeks of unemployment benefits. Those in states with particularly high unemployment rates could get up to 33 more weeks;
• Trade Adjustment Assistance health benefits could be available to 160,000 more people who are out of work because their job moved over seas; and
• People who have been laid off could receive a subsidy for health insurance up to 60 percent for nine months.

The bill also includes a one-time grant for states that reform their unemployment insurance programs, making it easier for low-wage and part-time workers to apply for the assistance.

The U.S. economy lost 598,000 jobs in January, marking the largest one month job loss since December of 1972. Unemployment is now at 7.6 percent. More than 11 million Americans who want a job are out of work.

As the Senate continues to debate the terms of the Economic Recovery Package, the economy is in free fall. President Obama gets it:

“I don’t care whether you’re driving a hybrid or an SUV,” he said. “If you’re headed for a cliff, you have to change direction. That’s what the American people called for in November, and that’s what we intend to deliver.”

We are at the cliff. The Wall Street Journal reports:

Unemployment filings have soared so high in recent months that seven states have already emptied their unemployment-insurance trust funds, which were supposed to see them through recessionary periods. Another 11 states are in jeopardy of depleting reserves by year’s end, according to the National Conference of State Legislatures, which published a January report entitled “The Crisis in State Unemployment Trust Funds.” So far, states have borrowed more than $2.3 billion in emergency funds from the federal government, money they are required to pay back.

Mark Zandi, former advisor to McCain has created this graph that shows the danger of inaction:

Job loss creates more job loss. The Senate needs to speed up their compromise and get our people back to work.

Yesterday’s news papers brought more proof that the economic fallout has reached most Americans. (Not that we really needed the extra proof to believe it.)

The USA Today reports that the number of homeowners in foreclosure grew by more than 70% in the third quarter compared to the same quarter in 2007. Just between July and September 766,000 homes received at least one foreclosure-related notice.

The Washington Post writes that there were more layoffs in September than in any month since September 2001. Close to half a million workers have filed for unemployment benefits in the last four weeks alone. With many companies imposing hiring freezes, it doesn’t seem like we will near rock bottom anytime soon:

Anecdotal reports suggest that the hemorrhaging in the job market has only begun. Companies that announced plans this week to cut jobs include Internet company Yahoo (1,500 positions), pharmaceutical company Merck (7,200), National City bank (4,000) and Comcast, the cable company (300).

In speaking to the House Oversight Committee, former Federal Reserve Chairman, Alan Greenspan, called the economic situation a “once-in-a-century credit tsunami.” Greenspan apologized for some of his previous positions noting that there “was a flaw in the model that I perceived is the critical functioning structure that defines how the world works.  He also gave a dire forecast for the near future:

“Given the financial damage to date, I cannot see how we can avoid a significant rise in layoffs and unemployment,” Greenspan said. “Fearful American households are attempting to adjust, as best they can, to a rapid contraction in credit availability, threats to retirement funds and increased job insecurity.”

Hold onto your seats, folks.

Today brings bad news for the American economy. In August, the unemployment rate soared to a five-year high of 6.1 percent, up from 5.7 percent in July and 4.1 percent one year ago. More than 600,000 jobs have been eliminated this year bringing the total number of unemployed Americans to 9.4 million.

Furthermore, job losses represent just one leg of the economic trouble affecting many American families. The uptick in unemployment is part of what the Washington Post calls a “triple whammy:”

They have less wealth, given falling home prices and a falling stock market. They can’t get loans as easily to ride out the bad times, as banks and other lenders have become more cautious. And now the job market is deteriorating even worse than expected.

The statements McCain and Obama on the new unemployment data are about what you would expect from each party in the height of a presidential election: a blaming of the other party for the situation, and a declaration that they will cut taxes more than their opponent. This is understandable, given that in order to actually do something about the economy, they will need to first win the votes of the American public. So while they battle it out in the swing states, here are a few ideas Congress should consider to help unemployed Americans.

• Create a new economy scholarship program. Laid-off workers get little help in boosting their skills for other employment. A “New Economy Scholarship” plan would change this by allowing dislocated workers collecting unemployment insurance to receive up to $4,000 worth of scholarships to assist in retraining and re-employment.

• Modernize the trade adjustment assistance and unemployment insurance (UI) systems. The UI system should be reformed so that it gives workers the right mix of incentives to get back to work and adequate benefits to help them get back on their feet. All employees who lose their job through no fault of their own should be eligible for UI, even if they have been working for a short time or are making low wages.

• Provide transitional health insurance for all unemployed workers. Losing health insurance coverage is among the scariest parts of losing one’s job. The current tax credit offered to cover health insurance has a low take-up rate and does not cover all UI-eligible workers. Therefore, the program should be expanded to cover all workers collecting unemployment insurance and streamlined so that the recipients receive timely tax credits.