Names In the News

California Blackout Blackmail

January's blackouts in California were intended to pressure state officials to order a public bailout of the utility companies, Credit Suisse First Boston confirmed in a memo sent to its clients.

Referring to the rolling blackouts, the memo concludes that the blackouts were likely "intended to soften up the Legislature and the voters to the need for rate increases."

The Los Angeles Times in January reported that the firm has been advising California Assembly Speaker Robert Hertzberg on the energy crisis.

Consumer advocates said that the memo confirmed their analysis that supply shortages were not responsible for the blackouts.

"We didn't have blackouts until the utility companies, unable to win a $10 billion ratepayer bailout by threatening bankruptcy, decided to stop paying their power bills," said Harvey Rosenfield, president of the Los Angeles-based Foundation for Taxpayer and Consumer Rights. "The next day, the blackouts began, and the day after that, the legislature approved the governor's emergency request for an additional $400 million for the state to buy electricity. Then the blackouts stopped."

"The memo confirms the suspicion that the blackouts were nothing more than blackmail by the energy industry which brought California to its knees so that state officials would panic and open up the public treasury to these thieves. Unfortunately, the scheme worked."

Privacy Win

"Fleet's new privacy policy is a positive step forward in advancing the goal of protecting the financial privacy of consumers across the nation," says New York Attorney General Eliot Spitzer.

Fleet's new privacy reforms come as a result of Spitzer's objections to Fleet's sharing of customer account information with marketing companies without providing full prior disclosure to its customers.

Last year's federal financial deregulation act requires financial institutions to provide a privacy policy to its customers and a procedure for its customers to "opt-out" of having non-public personal information shared with non-affiliated third parties. This protected information includes: credit line, last transaction date, number and amount of purchases per year, cash advances, amount of finance charges, and a consumer's credit card balance.

Under Fleet's new policy, the bank will not share personal information about its individual account- and credit card-holders without their informed, voluntary, specific and documented consent.

The Fleet settlement follows New York settlements over the last year with Chase Manhattan and two national telemarketing companies, MemberWorks, Inc. and BrandDirect, Inc., over privacy disputes.

The telemarketing companies were given access by various lenders to account-holders' financial information. During their solicitations for memberships in discount clubs using negative options plans, in many cases the companies failed to notify consumers that they already had access to credit card numbers, and if consumers did not affirmatively cancel in a "free trial period," their credit cards would be billed.

As part of the settlement, Fleet will contribute $100,000 towards a consumer privacy rights education campaign.

Aventis Pays Up

Aventis CropScience, the maker of StarLink genetically modified corn, has signed a "binding contractual agreement" with 17 states attorneys general to compensate growers and elevators for loss in value resulting from StarLink corn, buffer corn and commingled corn. StarLink is the genetically modified corn that was not approved for human consumption but entered into the food chain, discovered first in Taco Bell brand taco shells.

The states were acting on behalf of growers and grain elevators who may suffer losses as a result of StarLink corn.

Documents attached to the agreement include terms and claim procedures for StarLink growers and buffer growers, for growers with losses related to non-StarLink corn containing StarLink Cry9C protein or DNA, and for elevators with losses related to StarLink corn.

Among the main terms are that Aventis will pay 25 cents per bushel to StarLink growers and buffer growers for corn grown from StarLink hybrids and corn grown within 660 feet of corn grown with StarLink hybrids. Aventis also agreed to move such corn to approved sites and uses.

Growers and elevators also are eligible for Aventis payments for documented StarLink costs or losses such as transportation, storage, testing, demurrage - extra costs resulting from handling StarLink - and loss of value.

In speaking for the settling states, Iowa Attorney General Tom Miller has said it was "irresponsible" for Aventis to market the StarLink seed corn with unrealistic restrictions ­­ including that there must be at least 660-foot "buffer strips" between StarLink and other planted corn, and that StarLink grain had to be kept segregated from other corn. He also has said his office believes most growers were not aware of the restrictions in any event.

- Russell Mokhiber