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Foreclosed Homeowners Re-Occupy Their Homes November 25, 2011

Posted by rogerhollander in Economic Crisis, Housing/Homelessness, Occupy Wall Street Movement, Racism.
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Published on Friday, November 25, 2011 by New America Media

  by Zaineb Mohammed

SAN FRANCISCO – Carolyn Gage was evicted from her foreclosed home in January. Earlier this month, she moved back in.

“I’ve been in here for 50 years. I know no other place but here. I left and it was just time for me to come back home,” said Gage, who is in her mid-50s.

Gage’s monthly payments spiked after her adjustable rate mortgage kicked in, and she could no longer afford the payments on her three-bedroom house in the city’s Bayview Hunters Point district. She says she tried to modify her loan with her lender, Florida-based IB Properties, but to no avail.

When Gage initially left about 10 months ago, she took some personal items with her, but left most of the furniture and continued paying for some utilities.

“It didn’t feel right for me to move. I just left my things because I knew I was going to return to them eventually,” she said.

She had to re-activate a few utilities when she returned, like the water, but found the process fairly easy.

Walking back into the house was an emotional moment for Gage, but a joyous one.

“I was like Dorothy in the Wizard of Oz; there’s no place like home,” Gage said. “It’s a family home; I plan to stay there.”

Gage was one of about two dozen homeowners who gathered Tuesday for a community potluck on Quesada Avenue for residents facing foreclosure and are refusing to leave their homes.

Homeowners expressed outrage at the way predatory lenders have targeted their community.

Residents of the Bayview are starting to see how the African-American community was especially victimized in the foreclosure crisis.

Gage believes that single women and elders in the black community were targeted for predatory loans. At the peak of the housing boom she was solicited for an adjustable rate loan to do some home improvements, even though she told the loan agent that she was on disability and did not have a steady income.

According to a report released last week by the Center for Responsible Lending, African Americans and Latinos were consistently more likely than whites to receive high-risk loan products. About a quarter of all Latino and African-American borrowers have lost their homes to foreclosure or are seriously delinquent, compared to under 12 percent for white borrowers.

Bayview residents Reverend Archbishop Franz King and Reverend Mother Marina King, who are founders of the St. John Coltrane African Orthodox Church, are also facing foreclosure. Their eviction date is set for Dec. 22.

King expressed deep anger and sorrow at the situation facing the black community in the Bayview.

“First redevelopment moved us out of the Fillmore and now we’re losing our properties too? It’s like there’s nowhere for us to go,” he said.

Grace Martinez, an organizer with Alliance of Californians for Community Empowerment (ACCE) who helped to arrange the event, commented that banks have become increasingly hostile to their efforts. “They call the police on us; they laugh at us.”

Vivian Richardson, a homeowner on Quesada Avenue whose house was also foreclosed on, also has no intention of leaving. Her current eviction date is set for Dec. 31, but she, like many of her neighbors, is asking her lender to reduce the principal on her loan in order to make the monthly payments more affordable.

Richardson has been attempting to modify her home loan for the past two years. Earlier this month, tired of the lack of communication from the lender, Aurora Loan Services based in Delaware, she worked with ACCE to coordinate an e-mail blast to Aurora’s chairman.

On Nov. 3, over the span of one to two hours, approximately 1,400 emails were sent and more than 100 phone calls made, imploring Chairman Theodore P. Janulis to stop Richardson’s eviction. A spokesperson from the bank called her an hour after the blast and asked her to send an updated set of financial information so that they could review her case.

Two weeks have passed and she has yet to hear anything further. The bank spokesperson commented that Richardson’s case is still being reviewed internally and they hope to get back to her by the end of next week.

However, Richardson has lived in her house for 13 years and plans to stay regardless of the bank’s decision.

“I will defend the home,” she said.

On Dec. 6, there will be a national day of action, “Occupy Our Homes,” where people across the country facing predicaments similar to Gage and Richardson may follow their lead.

Partly inspired by the Occupy movement, the day of action is supported by various community organizations like Take Back the Land and ACCE. The call to action is for people to move back into their foreclosed properties and to defend the properties of families facing eviction.

Martinez commented on the growing anger people are feeling. “The idea is, ‘I want what’s mine.’” She said many homeowners had trusted the banks and ultimately, “People were buying into a lie.”

Copyright © 2011 Pacific News Service

Bailout Plan Hits the Poor June 25, 2009

Posted by rogerhollander in Economic Crisis, Poverty.
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Published on Sunday, June 14, 2009 by ColorLines by Victor Corral

When Congress hastily created and passed the Troubled Asset Relief Program (TARP) last fall to bail out the financial sector, the program didn’t offer any consumer protection against the type of predatory lending practices that led to the financial crisis. It came as no surprise, then, when Santa Barbara Bank & Trust, a self-described “community bank” in California, announced in January that it was intending to use its $180 million in bailout money to make high-priced refund anticipation loans, known as RALs.

RALs are short-term loans borrowed against a consumer’s tax refund. They’re often advertised as “quick cash,” because they allow people to get their tax refund in days instead of waiting for the IRS, which can take at least 10 days. Historically, poor communities have been targeted for these loans. According to the IRS, 85 percent of the people who took RALs in 2006 had incomes of $37,300 or less, and nearly two-thirds were recipients of the Earned Income Tax Credit. On average, a person pays between $200 and $500 in fees for a RAL.

This tax season, it’s expected that low-income taxpayers will pay more than $1 billion in fees and triple-digit interest rates associated with RALs.

Refund anticipation loans are made by a handful of banks, including HSBC, JP Morgan Chase and Santa Barbara Bank & Trust. The banks give tax preparers—including H&R Block and Jackson Hewitt, as well as preparers found at places like used car lots—a share of
the hundreds of dollars in “application,” “processing” and “e-file” fees that can be made from a single loan.

“These multimillion dollar corporations are basically skimming off another layer of taxpayer money with these loans,” said Chi Chi Wu, a staff attorney with the National Consumer Law Center, an organization that specializes in consumer law issues on behalf of low-income people.

While refund anticipation loans can be classified as abusive, predatory loans, they escape government regulation because they are bank loans, Wu said. National banks are immune to state consumer protection laws. Other than requiring full disclosure about RALs, all most states can do is sue for the fraud frequently associated with these loans.

Recently, the IRS began to implement the initial phase of a new system to process tax returns and issue refunds within 48 to 72 hours. “While this is significant, the refund anticipation loan business is anticipating this,” said Kimberly S. Jones of the California Reinvestment Coalition, a group that advocates for fair access to banking and financial services. “Now, some preparers provide RALs where you can walk out of there with a check or a check card. But it’s still a good thing, because it shortens the amount of time that they can accrue interest.”

Staff from the California Reinvestment Coalition and other groups recently met with Congress members to alert them to how bailout money was being used. “There was a lack of awareness on how TARP funds were being used” said Jones, who added that the groups are going to keep pressing Congress and the media about this “because there is a genuine, and appropriate, disgust with how TARP has been spent.” © 2009 ColorLines

Make America a Foreclosure-free Zone March 9, 2009

Posted by rogerhollander in Economic Crisis.
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Make America a Foreclosure-Free Zone
 
Keep all Americans safe from foreclosure
 
Click Here To:
Support Home Defenders and tell Congress that it’s time for a national moratorium on foreclosures.

Financial elite have no shame February 7, 2009

Posted by rogerhollander in Canada, Economic Crisis.
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Let’s imagine, for a moment, how different the public debate would be today if it had been unions that had caused the current economic turmoil.

In other words, try to imagine a scenario in which union leaders – not financial managers – were the ones whose reckless behaviour had driven a number of Wall Street firms into bankruptcy and in the process triggered a worldwide recession.

Needless to say, it’s hard to imagine a labour leader being appointed to oversee a bailout of unions the way former Goldman Sachs CEO Henry Paulson was put in charge of supervising the $700 billion bailout of his former Wall Street colleagues.

My point is simply to note how odd it is that the financial community has emerged so unscathed, despite its central role in the collapse that has brought havoc to the world economy.

Of course, not all members of the financial community were involved in Wall Street’s wildly irresponsible practices of bundling mortgages into securities and trading credit default swaps. But the financial community as a whole, on both sides of the border, certainly pushed hard to put in place an agenda of small government, in which financial markets largely regulated themselves and citizens (particularly high-income investors) would be spared the burden of paying much tax.

The agenda advanced much further in the U.S., but had an impact in Canada, particularly on the tax front.

One would think that those who pushed this agenda so enthusiastically would, at the very least, be a tad embarrassed today.

But so influential are those in the financial elite – and their hangers-on in think-tanks and economics departments – that they continue to appear on our TV screens, confidently providing us with economic advice, as if they’d played no role whatsoever in shaping our economic system for the past quarter century.

Of course, we’re told there’s been a major change in their thinking, in that many of them are now willing to accept large deficits in today’s federal budget, in the name of stimulating the economy.

While this does seem like a sharp departure from the deficit hysteria of the 1990s, a closer look reveals the change may not be that significant.

In fact, financial types have always accepted deficits – when they liked the cause. Hence their lack of protest over George W. Bush’s enormous deficits, which were caused by his large tax cuts for the rich and his extravagant foreign wars.

What they don’t like is governments going into deficit to help ordinary citizens – either by creating jobs or providing much unemployment relief.

So the Canadian financial community has been urging that the stimulus package consist mostly of income tax cuts – even though direct government spending would provide much more stimulus and do more to help the neediest.

If the Harper government follows the financial community’s advice, we will simply move further along with the small government revolution launched by Ronald Reagan in the early 1980s.

Of course, tax cuts are not the same as financial deregulation. But they are twin prongs of a bundled package aimed at reducing the power of government to operate in the public interest.

Surely it’s time to rethink this resistance to government acting as an agent of the common good.

And maybe it’s time for a little humility on the part of a financial elite that long has enjoyed such deference while turning out to be so spectacularly inept.
 

Linda McQuaig’s column appears every other week. lmcquaig@sympatico.ca

Rep. Marcy Kaptur (D-OH) Urges Homeowners to Stay in Foreclosed Homes February 3, 2009

Posted by rogerhollander in Economic Crisis.
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Guests:

www.democracynow.org, February 3, 2009

Rep. Marcy Kaptur, Democratic Congress member from the Ninth Congressional District of Ohio. She’s the longest-serving Democratic woman in the history of the House.

Bruce Marks, Founder and CEO of NACA, the Neighborhood Assistance Corporation of America, which has just successfully pressured Fannie Mac to restructure thousands of troubled mortgages.

Kathy Broka, President of the Fair Housing Center in Toledo, Ohio.

AMY GOODMAN: After an $850 billion bailout for Wall Street and another $25 billion for the auto industry, struggling homeowners still await large-scale government assistance. The Obama administration says it’s working out the details of its plan to stem foreclosures.

 

Well, in the absence of government action so far, some are taking action on the local level. In Michigan, Wayne County Sheriff Warren Evans announced Monday he won’t enforce sales of foreclosed homes. Wayne County includes the city of Detroit and has had more than 46,000 foreclosures in the past two years. Evans says he came to the decision after reviewing the Troubled Asset Relief Program, the Wall Street bailout measure known as TARP. He says the foreclosures would conflict with a provision ordering the Treasury Department to reduce foreclosures and help restructure loans. Evans said he’d be violating the law by denying foreclosed homeowners the chance at potential federal assistance. He said, “I cannot in clear conscience allow one more family to be put out of their home until I am satisfied they have been afforded every option they are entitled to under the law to avoid foreclosure.”

 

Meanwhile, the government-backed mortgage giant Fannie Mae has agreed to restructure mortgages after a campaign led by one of its biggest critics, the Neighborhood Assistance Corporation of America, or NACA. Fannie Mae will work with NACA to modify mortgage payments for struggling homeowners. In October, NACA held a protest outside Fannie Mae’s D.C. headquarters, blockading the entrance until being granted a meeting with top executives.

 

And in Ohio, Democratic Congress member Marcy Kaptur is encouraging homeowners facing foreclosures to stay in their homes. Kaptur says residents should exercise squatters’ rights to refuse being forced out because of loans she says could well have been illegal.

 

Congress member Kaptur joins us now from Toledo, Ohio. She is the longest-serving Democratic Congress[woman] in history. We’re also joined by Kathy Broka, president of the Fair Housing Center in Toledo. And on the line in Boston is Bruce Marks. He’s the president of the Neighborhood Assistance Corporation of America, which has just successfully pressured Fannie Mae to work with it to restructure thousands of troubled mortgages.

We’re going to go first to Ohio. Congress member Marcy Kaptur, can you repeat what you said on the floor of the House? What are you urging homeowners who could be foreclosed to do?

REP. MARCY KAPTUR: Well, the most important thing to do is to get legal help. And what we are finding is that if people receive a notice from a financial institution, their first reaction is fear, rather than getting proper legal representation. Here in our region, we recommend that people go to Legal Aid or the Advocates for Basic Legal Equality—or nationally, there’s a number people can call: (888) 995-HOME—and to get the proper legal representation, so they can actually have the scales of justice be balanced rather than, now, all the power to Wall Street and none of the justice to Main Street.

AMY GOODMAN: Now, explain how that works. If you have a person who’s at home, and they come to take the family out, you’re saying sit there?

REP. MARCY KAPTUR: Well, if it’s a sheriff’s eviction, if it’s reached that point, that is almost impossible. But we find that most of the foreclosures that haven’t reached that point, families are not getting the proper legal representation, and that’s why I’m saying that possession is nine-tenths of the law; therefore, stay in your property.

Get proper legal representation. If you believe that Wall Street has been deceptive, could have been fraudulent or tried to dupe the public, and with these subprime loans and with the kind of circuitous financing that’s been done, Wall Street cannot produce the deed nor the mortgage audit trail, you need a lawyer.

And you should stay in your home. It is your castle. It’s more than a piece of property. It’s your home.

And just because Washington hasn’t handled this bailout properly—and we never should have done it this way in the first place. We should have used the Federal Deposit Insurance Corporation and the Securities and Exchange Commission to resolve and do these workouts. Washington chose another road, which has been very, very destructive. I have opposed this all the way. But because they’ve done the wrong thing, you, at least, shouldn’t be the victim of what’s been happening on Wall Street and in Washington. You need a lawyer. You need a good lawyer. And you ought to get that legal representation so that the scales of justice are balanced.

AMY GOODMAN: And Congressman Kaptur, of course—Congress member Kaptur, of course, the people who are being forced out of their homes now are in the most difficult situations. How do they afford a lawyer? How can they even think along these lines?

REP. MARCY KAPTUR: Well, that’s why I’m recommending your Legal Aid Society. Call your local bar association or the national number, (888) 995-HOME. Most people don’t even think about getting representation, because they get a piece of paper from the bank, and they go, “Oh, it’s the bank,” and they become fearful, rather than saying, “Oh, wait a minute. This is contract law. The mortgage is a contract. I am one party. There is another party. What are my legal rights under the law as a property owner?” And many times, they are abrogating their own rights. They’re forgetting that they have rights in this proceeding. And they need to exercise those legal rights.

You know, when this mess started, when the meltdown really started back last year, 75 percent even of the subprime loans were performing. That means people were making their payments. What Washington has done and what Wall Street has done has made it so much worse. But those loans were performing loans. The other 25 percent weren’t all bad either. There were some issues, but they could have been worked out. Washington went backwards, when it should have gone forwards. It should have embraced Main Street; it embraced Wall Street first, and they trusted them again, the very same institutions, the five top ones, that have done most of the damage: JPMorgan, Wachovia, Bank of America, Citigroup and HSBC. If you get a letter from one of those, you should say, “I need a lawyer.” You need a lawyer in order to represent your interests in that contract.

AMY GOODMAN: You’re saying they did it wrong. Explain exactly what you felt was wrong and how it should have been done right and how it can be fixed now, Congress member Marcy Kaptur.

REP. MARCY KAPTUR: Alright. Well, if we look at prior meltdowns in the real estate market—and I’d love to have an hour to tell you what’s really gone wrong—but the federal institutions that were normally used to do workouts and to resolve pending bank failures are the Federal Deposit Insurance Corporation and the Securities and Exchange Commission. They have all the examination powers. They have enormous power to do workouts, to track that loan, to get it, to put the borrower at the same table. If they have to write down some losses, both by the lender and by the mortgagee, they do that. The Securities and Exchange Commission comes in and, through their auditors, they deal with the real valuation of property, even in a downturned economy.

Those institutions were put on the shelf. They were not used. In fact, I think one of the reasons they were not used is because when they come in, they bring examiners. They actually look at the books. They can do mortgage audit trails. And I think that Wall Street really didn’t want that, and they were powerful enough, in order to help to pass a bill, scaring Congress right before the election, before a new president was elected last fall, that they really put all the power in the Treasury Department, which isn’t a housing agency. It really doesn’t do bank regulation in the same way that the FDIC does, nor oversight. Treasury really works with Wall Street. They basically sell US debt. There’s a real circuit that goes between Wall Street and Washington, the Capitol, the US Treasury Department. So they used the wrong agency.

They brought in people from the very companies, like Goldman Sachs, to run the Treasury that had been one of the agencies—one of the companies that was going under, so they made it into a bank holding company. You can follow the trail of what they did. Meanwhile, they’re protecting their interests on Wall Street. And here on Main Street, the so-called bailout that they were given hasn’t trickled down. And so, millions and millions of families are getting foreclosure notices. They don’t have proper legal representation. The Washington-Wall Street circuit isn’t really working to allow these workouts to occur, and people are falling off the edge.

Somewhere, the scales of justice have to be balanced, and Washington has to use the traditional instruments that have worked. They have actually given power to a department that has been abysmal in its handling of taxpayer dollars. And you know what? There’s been no real oversight by the Congress, as required by that TARP law that was passed last year. So it, to me, is just an indication of how much power these institutions really have politically. But why should my constituents or the constituents of members around the country be hurt even more? They need representation in this process. They deserve it.

AMY GOODMAN: Congress member Marcy Kaptur, when you talk about those who caused the problem now being in charge of solving the problem, you can only think of a job description for the Treasury Secretary: be a part of the mess and don’t pay your taxes, and you, too, could be Treasury Secretary of the United States of America, Tim Geithner. Your thoughts?

REP. MARCY KAPTUR: Walk away with billions. And then—oh, Secretary Paulson came from Goldman Sachs, which, as this crisis began, carefully tucked itself as a—I call it a gambling house; it was an investment house up on Wall Street—they came under the Bank Holding Company Act. Why would they do that? Morgan Stanley did, as well. Why would they do that? They did that because they then become eligible for deposit insurance, which the good banks have paid into for decades. But Goldman didn’t pay into that. Morgan Stanley didn’t pay into that. So they all of a sudden went legit; they turned from a gambling house into a bank, just like that. Most of the public didn’t even catch that. And so, they wanted the protections, though they were high-risk institutions in their behavior, and they’ve hurt our country and the people of our country so much. They wanted to come under, put their nose under the tent of the Deposit Insurance Corporation.

You know, and then the good banks had to pay more for deposit insurance. They were powerful enough to turn the banking industry of this country almost upside-down and hurt banks in places like Ohio and caused the merger of institutions. Ohio now lost one of its major banks called National City Bank; it was merged with PNC in Pittsburgh. And the vice chair of PNC in Pittsburgh was the gentleman who invented derivatives on Wall Street. He left Wall Street and went to PNC. PNC now effectively has price control over the western part of Pennsylvania and parts of eastern Ohio now. That’s how powerful these institutions are.

And so, they’re not just powerful in Washington; they really have power out in the regions to control lines of credit, lending. It’s just unbelievable. This feels like the late 1920s and early 1930s, in terms of the concentration of the banking system itself. And if you look at the bad paper, if you look at where there’s trouble, 95 percent—95 to 98 percent of the paper really has moved to five institutions, the ones that I mentioned: JPMorgan Chase, Bank of America, Wachovia, Citigroup and HSBC. They have this country held by the neck.

AMY GOODMAN: We’re talking to Congress member Marcy Kaptur. This term, she becomes the longest-serving Democratic congresswoman in US history. She is the dean of the Ohio congressional delegation. I hope you’ll stay with us. We are also going to go to a housing activist in Toledo, and we’ll be joined by Bruce Marks, who’s head of NACA, the Neighborhood Assistance Corporation of America. He’s from Boston. He was blockading Fannie Mae; now he’s working with them. We’ll find out what’s happened. Stay with us.

[break]

AMY GOODMAN: We’re talking about the housing crisis. Our guests are Congress member Marcy Kaptur, the longest-serving congresswoman in US history. She joins us from Toledo, Ohio, as does Kathy Broka, president of the Fair Housing Center in Toledo, and Bruce Marks, founder and CEO of NACA, the Neighborhood Assistance Corporation of America.

We’re going to come back to Toledo in a minute. But, Bruce Marks, tell us the scope of the problem in Massachusetts. And how did you, who was blockading the doors of Fannie Mae in October until you could meet with its CEO, how did you end up now working with Fannie Mae?

BRUCE MARKS: Well, it’s good to be on, Amy.

I mean, we have got offices around the country. We have got forty offices around the country. We do the best solutions out there for working people throughout this country. So if you go through NACA, you’re able to restructure your mortgage by permanently reducing your interest rate to as little as three percent and reducing your principal to make your mortgage affordable. And we’re doing it for tens of thousands of homeowners.

And in a sense, it’s done through nonviolent bank terrorism. So what we do is we confront these institutions. And yes, Fannie Mae has done the right thing. They have set the standard. But on this Saturday, Sunday and Monday, if you go to our website, Amy, and you go there, and what—we appreciate what Marcy is saying in terms of being able to—don’t leave your home, like what the sheriff in Cook County, Chicago has done—he has said, “I will not foreclose. I will not throw anybody out of their home.” But this weekend, we’re going on the Predators Tour. So when the congresswoman says that we should hold JPMorgan responsible, we should hold Option One, Wilbur Ross, who heads Option One, responsible, and GMAC. Let’s go to their homes. So if you go to our website at naca.com—and we would like the congresswoman to join us—let’s go on the Predators Tour to the homes of these CEOs with thousands of homeowners.

And this is what we’re going to do with thousands of homeowners, go into their home and say, “I want you to meet my family. I want you to see who you’re foreclosing on.” We’ve got to not just talk the talk; we’ve got to walk the walk. And walking the walk means it’s personal. If someone’s going to lose their homes, if you go to our website, you can see pictures of how the rich and the greedy are living now on our dime, on our dollar, on our homes. So we’re going—if they’re going to take our homes, we’re going to go to their homes, and we’re going to tell them, “No more.” And that’s what it has to do, not just go and stop the foreclosures. Let’s go into their communities.

And so, you can see pictures of where Jamie Dimon, CEO of Chase, lives, not just in Stamford, Connecticut, where we’re doing this event with literally thousands of homeowners, or re. Wilbur Ross, who runs Option One, or Feinberg, who runs GMAC, you can see where they live. And if you can’t come to Stamford, Connecticut, then go to their—go to Jamie Dimon’s home in Chicago or in other parts of the country, because these CEOs, they have multi-million-dollar homes. The one in Stamford, Connecticut—actually it’s in Mount Kisco, $17 million, where he lives. And so, that’s what we have to do. And also, what we’re going to do—

AMY GOODMAN: And what are you demanding when you go to their homes?

BRUCE MARKS: I’m sorry?

AMY GOODMAN: What are you demanding when you go to their homes?

BRUCE MARKS: We are demanding that they meet with the homeowners who they’re foreclosing on. We believe that if they can see, face-to-face, in the eyes of the homeowners, what they’re doing and the consequences of their actions, that that makes it personal. And we want their children to meet the children of the homeowners who are losing their homes and have those children have a conversation with each other and have their children go back to their parents and say, “Mom, Dad, is it true that you’re foreclosing on these homeowners?”

I mean, Wilbur Ross, he owns Option One. He has $1.8 billion in net worth. $1.8 billion. Jamie Dimon, $300 million. Frey—this guy is suing Bank of America, because he does not want them to do modifications. I mean, you go down the line, you can see their homes, you can have their addresses. You can go visit them, not just on our Predators Tour, but anytime you want, because they—it’s personal now.

And we’re not just going as ten or twenty people; we’re going with hundreds and thousands, because at this event, we’re also doing individual counseling, because, yes, you’re right, we have agreements with the major servicers out there where they’re required to restructure your mortgage to make that affordable for the long term. Yes, it’s nice, and it’s a good step that we say get an attorney, but it’s the confrontation, it’s the advocacy, it’s personalizing the issue that makes that work, and to get other sheriffs around the country, like they’ve done in Cook County, saying, “I’m not going to foreclose on my own. I’m not going to foreclose on hard-working people, because that’s who I am,” to do that. And, you know—and we’re able to get it done.

And Congress has been nowhere on this stuff. Where is the moratorium on the foreclosures? Where is—we still have hearings today on the refinance option by Barney Frank. We know that doesn’t work. So—

AMY GOODMAN: Well, let’s talk about Hope for Homeowners, and I want—

BRUCE MARKS: —when is Congress going to step up and say, “Let’s restructure mortgages to make them affordable”?

AMY GOODMAN: I wanted to talk about the Hope for Homeowners bill, and maybe Congress member Kaptur could weigh in here. It was passed last summer. The idea is it would help out something like 450,000 homeowners to stop the foreclosures. And in the end, I think there have been twenty-one successful applications. It’s almost impossible to go through that system. Barney Frank is saying, well, now they’ve not only prevented abuse, they’ve prevented use. And so, today they’re reopening it. What’s that about, Congress member Kaptur?

REP. MARCY KAPTUR: Well, I am one of three Democrats that voted no on that bill. And during the debate and during our caucus meetings on the bill, Congressman Frank, who chairs the committee, and I had an ongoing debate in a very open forum, where I basically said it won’t work and that the necessary workouts were not going to be done, that the administration would find a way, because of the way that the bill was written, not to give us the immediate help that we needed. He prevailed in that vote; I did not.

But I went up to him after that vote—I’ll never forget it—and I said, “You know what, Barney?” I said, “You’re a friend of mine. We serve together. I really hope you’re right.” And my heart was breaking at that point, because I knew that hundreds and hundreds and hundreds of more people in my region, just my region, would receive foreclosure notices and would be thrown out of their homes during that period. And that is exactly what has happened. I hope that Chairman Frank will act with dispatch to bring to the table the parties that need to be brought to the table to get these workouts going.

This foreclosure crisis has tied up our entire banking system to the point where companies that want to expand in districts like ours, where unemployment is over 11.5 percent now, cannot get credit from the banks. This is having a terrible impact on the credit system of this country. And that bill was completely inadequate, and it was almost doomed to fail.

The proper way to proceed is to bring the FDIC and the SEC to the table now. I hope that the new president, President Obama, will bring the chair, will bring Sheila Bair to his office, will make necessary appointments to those boards and talk to people who’ve actually resolved bank crises in the past, like William Isaac, who had served both the Democrats and Republicans back in the 1970s and ’80s when we had these problems before. This isn’t the first time that the banks of this country have sort of done it to the American people, and there are very knowledgeable experienced people in the commercial banking world who have actually done these workouts and have systemically changed what needs to be done. They’re not being used right now.

AMY GOODMAN: Congress member Kaptur, your assessment of the Treasury Secretary Tim Geithner and who he has brought on?

REP. MARCY KAPTUR: Well, you had asked me the question before about the influence of Wall Street in Washington. Mr. Geithner has now brought one of the major lobbyists who had lobbied for Goldman Sachs as his chief of staff, Mr. Patterson. And this revolving door between Washington and Wall Street is terribly strong. And I say, how can we trust the very people who brought us to this point to now manage the public dollars, the taxpayer dollars of the people of the United States? We need to clean out that operation, and we need to hold the Wall Street banks and all of their associates accountable to the American people. The scales of justice have to be balanced. They are far out of whack right now.

AMY GOODMAN: Kathy Broka is also in Toledo with Congress member Kaptur. She’s president of the Fair Housing Center there in Toledo. Tell us the scope of the problem, Kathy Broka. We heard Bruce Marks lay out what NACA is doing. What is Fair Housing Center in Toledo doing? How many people are being foreclosed on? How are you helping?

KATHY BROKA: Toledo is, along with Cleveland, which was considered the epicenter of the foreclosure crisis in the country—I was talking to Cleveland people months ago who had people from all over the country showing up in their offices as the epicenter of the foreclosure crisis. So we’ve been struggling with this for years.

The Fair Housing Center alone has helped save homeowners over $5 million by doing loan modifications and workouts. This is one small agency, whose primary purpose was to investigate allegations of discrimination in housing. Now, at least half of the work that we do is on foreclosures, because there were really no other agencies in the city that was doing the work, and it was the primary problem in our community. And so, we are doing workouts, but we’re one small agency. This needs to be on a massive national scale. We can’t piecemeal this any longer. I feel like my staff are little gerbils on a wheel that just keeps turning around. So, as much hard work as we do, as dedicated as my staff is, we need help.

I’m so tired of hearing how banks are saying, “Call us early, before you get in trouble.” And then we try to do that, and they tell us, “Why are you calling us? You’re not even behind yet on your mortgage payment,” even though the homeowners are doing their due diligence and know that they’ve got a loan that’s going to adjust in two to three months and that they absolutely won’t be able to keep those payments going. And so, they’re doing what the banks tell them to do. When are the banks going to do what they say they’re going to do? That’s my question.

I was watching TV not too long ago, when Maxine Waters was on trying to get in touch with one of her constituent’s lenders to see what could be done for them, and it took her over half-an-hour, maybe even longer, two, three hours, where she kept getting the runaround. If she can’t get an answer, a straight answer, from the banks, what do you think our constituents are doing? How hard do you think it is for those of us who are on the frontline trying to get these deals done to keep the homeowners in their houses?

AMY GOODMAN: What would be the single act that would help you most, would help people who are threatened with losing their homes most, Kathy Broka?

KATHY BROKA: The single act would be for the banks to do what they say they’ve been doing for months and years: just do what you say you’re doing, that you want to keep people in their houses, that you’re willing to work with them, because we get someone at a bank, we finally get a person who’s there to help, who will do these loan modifications and workouts, and then the next month they’ve been laid off, and somebody new comes on. Get people in those departments at the banks who have the authority to do workouts that make sense.

I get so tired of hearing the banks say, “Well, you know, these don’t work. These loan modifications don’t work, because we give them to homeowners, and then, two or three months later, they’re right back being in default.” But what they don’t say is, oftentimes those homeowners have gotten into workouts without any representation, the bank has thrown them something and said, “Take it or leave it,” have set them up once again for failure, and then they use those very statistics to tell the rest of the people in the United States that these are just freeloaders and why are we helping them. It’s so unfair, and it’s so untrue.

AMY GOODMAN: Congress member Kaptur, what do you think of the Obama stimulus plan? What do you think, the possibility that your state, that Ohio, could get something like $9 billion under the plan? How much of a stimulus is the overall plan?

REP. MARCY KAPTUR: Well, first of all, I’ve been concerned about how much a state like Ohio, which is in deep recession, will actually receive from this program. We appreciate the President’s leadership on extending unemployment benefits, on covering people with health insurance, on heating assistance. I call these lifeline programs, absolutely essential. The people who have been thrown out of work have paid tax dollars to help our country when she gets in a situation like this, so I think they’re getting back what they paid for, essentially.

But the real issue for Ohio is, if all Ohio gets is $9 billion or $12 billion, which some people have been saying, our population is 3.66 percent of the country. Not even discounting for unemployment, we should be receiving anywhere between $25 billion and $30 billion in the various tax provisions and the investment portions of the bill. And if we do not receive that, then my question is, to which states is that money going?

So I think that the lifeline support programs are critical, but here, regionally, right now, because our banks are not loaning, even green energy companies—we’re one of the three leading solar energy capitals in the hemisphere. I have solar companies out here that want to bring on employees. The banks won’t loan. They—we have companies that want to bring up factory floors right now, and even some of these Ohio banking institutions that have received TARP funds, the bailout funds, aren’t making loans. So it’s very important—and I hope the administration is listening to this—that—

AMY GOODMAN: Looks like we just lost the satellite. We’re going to try to bring it back. We’ve been talking to Congress member Marcy Kaptur, also Kathy Broka, president of the Fair Housing Center in Toledo. We’re going to go to a break. We’ll come back, and hopefully we’ll get her back on satellite, or we’ll get her on the phone. But we’ll wrap up that discussion, and then we’re going to turn to Sri Lanka and what’s happening there. This is Democracy Now! Stay with us.

[break]

AMY GOODMAN: We’re back with Congress member Marcy Kaptur. Again, she is the longest-serving congresswoman in US history. Two last questions for you.

Slightly off topic, but very much a part of the stimulus package, we just got this emergency email from a fellow Ohioan, Congress member Kaptur. It is from the well known anti-nuclear activist Harvey Wasserman. As you were talking about alternative energy, he says, “A $50 billion nuke power bomb is dropping toward Obama’s stimulus package. The desperate, dangerous nuclear power industry has dropped a $50 billion stealth bomb,” he says, “meant to irradiate the Obama Stimulus Package.

“It comes in the form of a mega-loan guarantee package that would build new reactors Wall Street [wouldn’t] finance even when it had cash.” He says, “It will take a [healthy] dose of citizen action to stop it, so start calling your Senators now.”

He says that “[t]he vaguely worded bailout-in-advance provision was snuck through the Senate Appropriations Committee in the deep night of January 27. It would provide $50 billion in loan guarantees for ‘eligible technologies’ that would technically include renewable sources and electric transmission. But the handout is clearly directed at nukes and ‘clean coal.’”

Now, this is in the Senate section. What do you think of this?

REP. MARCY KAPTUR: Well, I have not read the Senate bill. They’ve just been drafting that. I can tell you, in the House bill, we have $114.5 billion for green energy: for solar, for wind, for geothermal, for biofuels. These are all industries we are bringing up here in our region.

I happen to represent the nuclear power plant that in the last twenty years has had more accidents than any other one in the country. And so, my own view is—and, in fact, there was a brownout a couple years ago because of this particular—the system this particular plant is attached to. And my feeling is, until we can actually assure ourselves that these plants are operated safely, I don’t know why we would want to reward this industry. I would be very concerned about that, based on our own living history of what has happened here. This is a very dangerous technology and one that we have to exercise extraordinary responsibility. So I was—that was not in the House version, to my knowledge, and I haven’t read the Senate language.

AMY GOODMAN: Finally, two questions. One is Judd Gregg as Commerce Secretary, and the other is, well, the question about you. George Voinovich has announced he will not be seeking another Senate seat. You’re the longest-serving congresswoman in history. Will you be seeking his seat in 2010?

REP. MARCY KAPTUR: Well, maybe I’ll just say that in terms of my tenure, I’m the longest-serving Democratic woman. There are others, Republican women, who have served thirty-five years, so I’m far from that right now, but at least on the Democratic side of the aisle, I am the longest-serving woman.

And we’ve just come through an election out here in Ohio. Our economy is in really tough straits. And I think it’s too early for anyone to say that they are or are not running. Obviously, I think every elected official in Ohio who’s a Democrat is looking at that right now. And we’ll give it some time.

AMY GOODMAN: And as for Judd Gregg, who is stepping away from his seat as senator, tapped to be the third Republican in the Obama administration in a key seat as Commerce Secretary, your thoughts on him?

REP. MARCY KAPTUR: Well, the Department of Commerce is a very important department, obviously. And about 60 percent of its budget is NOAA, the National Oceanic and Atmospheric Administration. He comes from a coastal state in the Northeast, so I think that his knowledge of some of the issues that come before the Department of Commerce will be an asset. And we wish him very well. And the Department of Commerce, particularly in the Economic Development Administration, is very important to us here in the industrial and agricultural heartland. I would hope that the fact that he comes from a rather small state will not in any way prescribe his travels or his views about what needs to be done to help the big industrial and agricultural states to move forward economically.

AMY GOODMAN: Congress member Marcy Kaptur, thanks so much for being with us, again, the longest Democratic woman who has served in US history.

REP. MARCY KAPTUR: Thank you.

AMY GOODMAN: Thank you, speaking to us from Toledo, Ohio. And thanks also to Kathy Broka, president of the Fair Housing Center in Toledo, and Bruce Marks of NACA, naca.com, that’s the Neighborhood Assistance Corporation of America, speaking to us from Boston.

Ecuador’s Debt Default: Exposing a Gap in the Global Financial Architecture December 22, 2008

Posted by rogerhollander in Economic Crisis, Ecuador, Latin America.
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Neil Watkins and Sarah Anderson | December 15, 2008

Editor: Emily Schwartz Greco



Foreign Policy In Focus
When the government of Ecuador failed to make a scheduled interest payment on private bonds today, it was hardly the first time a country had defaulted in the middle of a financial crisis. In fact, it wasn’t even the first time for Ecuador. The small South American country did so just 10 years ago, at a time when the economy was reeling from natural disasters and a drop in oil prices.

But this default is different. For the first time in history, the government’s defense isn’t based on an inability to pay. Ecuadorian President Rafael Correa explained rather that he was unwilling to continue to pay debts that are “obviously immoral and illegitimate.”

Like many of the victims of the U.S. subprime mortgage mess, the Ecuadorian people were the targets of predatory lending. In the 1970s, unscrupulous international lenders facilitated some $3 billion in borrowing by Ecuadorian dictators who blew most of the money on the military. After the transition to democracy, the Ecuadorian people got stuck holding the bag.

Over the years, the country has made debt payments that exceed the value of the principal it borrowed, plus significant interest and penalties. But after multiple reschedulings, conversions, and some further borrowing, Ecuador’s debt has risen to more than $10 billion today.

Human Costs

The human costs are staggering. Every dollar sent to international creditors means one dollar less is available for fighting poverty. And in 2007, the Ecuadorian government paid $1.75 billion in debt service, more than it spent on health care, social services, the environment, and housing and urban development combined.

Correa campaigned on a commitment to prioritize the payment of the “social debt” over financial debt. After taking office in 2007, he responded to demands from Ecuadorian civil society and the international Jubilee Network to form an independent commission to investigate the origins, nature, and impacts of the nation’s external debt. While citizens’ groups in other countries have carried out their own debt audits, this was the first time a government had supported such an effort.

The debt audit commission documented hundreds of allegations of irregularity, illegality, and illegitimacy in the contraction of Ecuador’s debt. In the case of the bonds Ecuador has now defaulted on, the commission alleged that they were issued and restructured illegally, violating Ecuador’s domestic laws, U.S. Securities and Exchange Commission regulations, and general principles of international law. The agreement that gave rise to the Global bonds themselves may not be legal under Ecuador’s constitution, which prohibits an individual from incurring debt on behalf of the country.

Commercial debt is the most expensive component of Ecuador’s portfolio, making up only 30% of its total obligations but comprising 44% of the country’s interest payments in 2007.

Correa says he hopes to cut a deal with creditors, much in the way that many U.S. homeowners are seeking to restructure their subprime mortgages. Ecuador’s global bonds are currently valued at $3.8 billion. If negotiations aren’t fruitful, however, the economic repercussions could be severe.

One avenue for the bondholders would be to sue under the U.S.-Ecuador bilateral investment treaty, which went into force in 1997 (long before Correa took office). Arbitration tribunals, such as the World Bank-affiliated International Centre for the Settlement of Investment Disputes (ICSID), handle such cases. Under this system, there is no public accountability, no standard judicial ethics rules, and no appeals process. A group of Italian investors has a pending ICSID claim over about $5.5 billion in bonds that Argentina defaulted on in 2002.

Investors could also sue in New York courts, as the bonds were issued under the laws of that state. Holders of Argentine bonds have also used that tactic.

Financial analysts have also predicted that Ecuador’s default will cut off the country’s access to capital markets and could dim its chances of obtaining a long-term extension of U.S. trade preferences, which will expire in 2008.

While the risks of default are high, Ecuador had only two options: keep paying a dubious and possibly illegal debt at the risk of social unrest, or default and face the wrath of the international markets.

Independent Mechanism

This exposes a gaping hole in the international financial system: the lack of an international, independent mechanism for countries to resolve disputes over potentially illegitimate and/or illegal debt or in the case of bankruptcy. Ecuador may be the first developing country to default during the current crisis, but it’s unlikely to be the last.

As world leaders seek to build a new international financial architecture to respond to the current meltdown and prevent future crises, they should consider a new debt workout mechanism as one key pillar.

A bill pending in the U.S. Congress would be a step forward. The Jubilee Act, which passed the House of Representatives in 2008, would require the Comptroller General to undertake audits of the debt portfolios of previous regimes where there is substantial evidence of odious, onerous, or illegal loans. The legislation also instructs the Secretary of the Treasury to “seek the international adoption of a binding legal framework on new lending that…provides for decisions on irresponsible lending to be made by an entity independent from the creditors; and enables fair opportunities for the people of the affected country to be heard.”

To ensure more responsible and productive lending and borrowing in the future, we need to learn from and redress the errors of the past. Only then can we build the architecture for an international financial system that works for people and the planet.

Neil Watkins, a Foreign Policy In Focus contributor, is the executive director of Jubilee USA Network, and Sarah Anderson, a Foreign Policy In Focus senior analyst, is the director of the Global Economy Project at the Institute for Policy Studies.

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