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Obama Did It For the Money May 7, 2013

Posted by rogerhollander in Barack Obama, Economic Crisis.
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Roger’s note: Obama strikes again: rewarding another one the architects of the economic disaster that ruined thousands of lives.  But she got him elected and the banksters and the corporate blood-sucking congress-owning community will be pleased; and that is what is important to the president.

The love fest between Barack Obama and his top fundraiser Penny Pritzker that has led to her being nominated as Commerce secretary would not be so unseemly if they both just confessed that they did it for the money. Her money, not his, financed his rise to the White House from less promising days back in Chicago.

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President Barack Obama looks to longtime fundraiser Penny Pritzker, right, as she laughs in the Rose Garden of the White House, where he announced he would nominate Pritzker to run the Commerce Department and economic adviser Michael Froman, left, as the next U.S. Trade Representative. (Photo: AP/Carolyn Kaster)

“Without Penny Pritzker, it is unlikely that Barack Obama ever would have been elected to the United States Senate or the presidency,” according to a gushing New York Times report last year that read like the soaring jacket copy of a steamy romance novel. “When she first backed him during his 2004 Senate run, she was No. 152 on the Forbes list of the wealthiest Americans. He was a long-shot candidate who needed her support and imprimatur. Mr. Obama and Ms. Pritzker grew close, sometimes spending weekends with their families at her summer home.”

But don’t sell the lady short; she wasn’t swept along on some kind of celebrity joyride. Pritzker, the billionaire heir to part of the Hyatt Hotels fortune, has long been first off an avaricious capitalist, and if she backed Obama, it wasn’t for his looks. Never one to rest on the laurels of her immense inherited wealth, Pritzker has always wanted more. That’s what drove her to run Superior Bank into the subprime housing swamp that drowned the institution’s homeowners and depositors alike before she emerged richer than before.

Pritzker and her family had acquired the savings and loan with the help of $600 million in tax credits. She became the new bank’s chairwoman and ended up as a director of the holding company that owned it. Under her leadership, Superior specialized in subprime lending, hustling folks with meager means and poor credit into high interest loans that were bundled into the toxic securities that wrecked the U.S. economy.

As federal regulators began to move in on her bank after it had dangerously inflated the value of its toxic assets, Pritzker assured its employees: “Our commitment to subprime has never been stronger.” Two months later, the bank was pronounced insolvent. At the time, the Federal Deposit Insurance Corp.‘s inspector general report concluded, “The failure of Superior Bank was directly attributable to the board of directors and executive management ignoring sound risk diversification principles, as evidenced by excessive concentration in residual assets related to subprime lending. …”

No biggie. In announcing her appointment, Obama joked, “For your birthday present, you get to go through confirmation. It’s going to be great.” It’s the same sort of joke he could have cracked in appointing Citigroup alum Jack Lew to be Treasury secretary.

It is deeply revealing that in the midst of the continuing cycle of misery brought on by the chicanery of the financial community two key Cabinet positions dealing with business practices will likely be occupied by people who specialized in those financial rip-offs.

For Pritzker, as with the confirmation of Lew, the fix is in. The Republicans don’t dare push back too hard on shady business practices that their deregulation legislation endorsed, and Democrats will go along with anything the president wants.

The same restraint will be exhibited in exploring the offshore tax havens that have protected the Pritzker family’s immense wealth. Back in 2008, when she had been rumored for this same Cabinet post, Pritzker was queried about avoiding the sort of taxes most ordinary folks are obligated to pay, and she replied in writing: “I am a beneficiary of some non-U.S. situs trusts which were established about 50 years ago (when I was a child) and are administered by a non-U.S.–based financial institution as trustee. I do not control how those assets are administered.” If the Republicans challenge that canard, the Democrats will smugly remind them of Mitt Romney’s tax havens, as if that excuses tax avoidance within their own ranks.

Certainly the Republicans will not raise questions about the anti-union practices that helped create the Hyatt fortune in the first place and continue to this day. Nor will the Democrats, who embrace unions only at national convention time.

“There is a huge unresolved set of issues in the Democratic Party between people of wealth and people who work,” noted Andy Stern, former president of the Service Employees International Union, which attempts to organize the miserably paid workers that produced Pritzker’s wealth. “Penny is a living example of that issue.”

But it’s payback time, and even normally progressive Democrats like Pritzker’s home state Sen. Dick Durbin are prepared to roll over. Treating the appointment of billionaire Pritzker as a victory for women everywhere, the senator said she’d “broken through the glass ceiling with her extraordinary intelligence and business acumen.”

Right, Pritzker will be a fine role model for those women working at the Asian factories that she’ll be touring as Commerce secretary extolling the virtues of the American business model.

Robert Scheer

Robert Scheer is editor of Truthdig.com and a regular columnist for The San Francisco Chronicle.

Preying on the Poor: How Government and Corporations Use the Poor as Piggy Banks May 17, 2012

Posted by rogerhollander in Criminal Justice, Economic Crisis, Poverty.
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By Barbara Ehrenreich, TomDispatch | News Analysis

Thursday, 17 May 2012 10:09

Individually the poor are not too tempting to thieves, for obvious reasons. Mug a banker and you might score a wallet containing a month’s rent. Mug a janitor and you will be lucky to get away with bus fare to flee the crime scene. But asBusiness Week helpfully pointed out in 2007, the poor in aggregate provide a juicy target for anyone depraved enough to make a business of stealing from them.

The trick is to rob them in ways that are systematic, impersonal, and almost impossible to trace to individual perpetrators. Employers, for example, can simply program their computers to shave a few dollars off each paycheck, or they can require workers to show up 30 minutes or more before the time clock starts ticking.

Lenders, including major credit companies as well as payday lenders, have taken over the traditional role of the street-corner loan shark, charging the poor insanely high rates of interest. When supplemented with late fees (themselves subject to interest), the resulting effective interest rate can be as high as 600% a year, which is perfectly legal in many states.

It’s not just the private sector that’s preying on the poor. Local governments are discovering that they can partially make up for declining tax revenues through fines, fees, and other costs imposed on indigent defendants, often for crimes no more dastardly than driving with a suspended license. And if that seems like an inefficient way to make money, given the high cost of locking people up, a growing number of jurisdictions have taken to charging defendants for their court costs and even the price of occupying a jail cell.

The poster case for government persecution of the down-and-out would have to be Edwina Nowlin, a homeless Michigan woman who was jailed in 2009 for failing to pay $104 a month to cover the room-and-board charges for her 16-year-old son’s incarceration. When she received a back paycheck, she thought it would allow her to pay for her son’s jail stay. Instead, it was confiscated and applied to the cost of her own incarceration.

Government Joins the Looters of the Poor

You might think that policymakers would take a keen interest in the amounts that are stolen, coerced, or extorted from the poor, but there are no official efforts to track such figures. Instead, we have to turn to independent investigators, like Kim Bobo, author of Wage Theft in America, who estimates that wage theft nets employers at least $100 billion a year and possibly twice that. As for the profits extracted by the lending industry, Gary Rivlin, who wrote Broke USA: From Pawnshops to Poverty, Inc. — How the Working Poor Became Big Business, says the poor pay an effective surcharge of about $30 billion a year for the financial products they consume and more than twice that if you include subprime credit cards, subprime auto loans, and subprime mortgages.

These are not, of course, trivial amounts. They are on the same order of magnitude as major public programs for the poor. The government distributesabout $55 billion a year, for example, through the largest single cash-transfer program for the poor, the Earned Income Tax Credit; at the same time, employers are siphoning off twice that amount, if not more, through wage theft.

And while government generally turns a blind eye to the tens of billions of dollars in exorbitant interest that businesses charge the poor, it is notably chary with public benefits for the poor. Temporary Assistance to Needy Families, for example, our sole remaining nationwide welfare program, gets only $26 billion a year in state and federal funds. The impression is left of a public sector that’s gone totally schizoid: on the one hand, offering safety-net programs for the poor; on the other, enabling large-scale private sector theft from the very people it is supposedly trying to help.

At the local level though, government is increasingly opting to join in the looting. In 2009, a year into the Great Recession, I first started hearing complaints from community organizers about ever more aggressive levels of law enforcement in low-income areas. Flick a cigarette butt and get arrested for littering; empty your pockets for an officer conducting a stop-and-frisk operation and get cuffed for a few flakes of marijuana. Each of these offenses can result, at a minimum, in a three-figure fine.

And the number of possible criminal offenses leading to jail and/or fines has been multiplying recklessly. All across the country — from California and Texas to Pennsylvania — counties and municipalities have been toughening laws against truancy and ratcheting up enforcement, sometimes going so far as to handcuff children found on the streets during school hours. In New York City, it’s now a crime to put your feet up on a subway seat, even if the rest of the car is empty, and a South Carolina woman spent six days in jail when she was unable to pay a $480 fine for the crime of having a “messy yard.” Some cities — most recently, Houston and Philadelphia — have made it a crime to share food with indigent people in public places.

Being poor itself is not yet a crime, but in at least a third of the states, being in debt can now land you in jail. If a creditor like a landlord or credit card company has a court summons issued for you and you fail to show up on your appointed court date, a warrant will be issued for your arrest. And it is easy enough to miss a court summons, which may have been delivered to the wrong address or, in the case of some bottom-feeding bill collectors, simply tossed in the garbage — a practice so common that the industry even has a term for it: “sewer service.” In a sequence that National Public Radio reports is “increasingly common,” a person is stopped for some minor traffic offense — having a noisy muffler, say, or broken brake light — at which point the officer discovers the warrant and the unwitting offender is whisked off to jail.

Local Governments as Predators

Each of these crimes, neo-crimes, and pseudo-crimes carries financial penalties as well as the threat of jail time, but the amount of money thus extracted from the poor is fiendishly hard to pin down. No central agency tracks law enforcement at the local level, and local records can be almost willfully sketchy.

According to one of the few recent nationwide estimates, from the National Association of Criminal Defense Lawyers, 10.5 million misdemeanors were committed in 2006. No one would risk estimating the average financial penalty for a misdemeanor, although the experts I interviewed all affirmed that the amount is typically in the “hundreds of dollars.” If we take an extremely lowball $200 per misdemeanor, and bear in mind that 80%-90% of criminal offenses are committed by people who are officially indigent, then local governments are using law enforcement to extract, or attempt to extract, at least $2 billion a year from the poor.

And that is only a small fraction of what governments would like to collect from the poor. Katherine Beckett, a sociologist at the University of Washington, estimates that “deadbeat dads” (and moms) owe $105 billion in back child-support payments, about half of which is owed to state governments as reimbursement for prior welfare payments made to the children. Yes, parents have a moral obligation to their children, but the great majority of child-support debtors are indigent.

Attempts to collect from the already-poor can be vicious and often, one would think, self-defeating. Most states confiscate the drivers’ licenses of people owing child support, virtually guaranteeing that they will not be able to work. Michigan just started suspending the drivers’ licenses of people who owe money for parking tickets. Las Cruces, New Mexico, just passed a law that punishes people who owe overdue traffic fines by cutting off their water, gas, and sewage.

Once a person falls into the clutches of the criminal justice system, we encounter the kind of slapstick sadism familiar to viewers of Wipeout. Many courts impose fees without any determination of whether the offender is able to pay, and the privilege of having a payment plan will itself cost money.

In a study of 15 states, the Brennan Center for Justice at New York University found 14 of them contained jurisdictions that charge a lump-sum “poverty penalty” of up to $300 for those who cannot pay their fees and fines, plus late fees and “collection fees” for those who need to pay over time. If any jail time is imposed, that too may cost money, as the hapless Edwina Nowlin discovered, and the costs of parole and probation are increasingly being passed along to the offender.

The predatory activities of local governments give new meaning to that tired phrase “the cycle of poverty.” Poor people are more far more likely than the affluent to get into trouble with the law, either by failing to pay parking fines or by incurring the wrath of a private-sector creditor like a landlord or a hospital.

Once you have been deemed a criminal, you can pretty much kiss your remaining assets goodbye. Not only will you face the aforementioned court costs, but you’ll have a hard time ever finding a job again once you’ve acquired a criminal record. And then of course, the poorer you become, the more likely you are to get in fresh trouble with the law, making this less like a “cycle” and more like the waterslide to hell. The further you descend, the faster you fall — until you eventually end up on the streets and get busted for an offense like urinating in public or sleeping on a sidewalk.

I could propose all kinds of policies to curb the ongoing predation on the poor. Limits on usury should be reinstated. Theft should be taken seriously even when it’s committed by millionaire employers. No one should be incarcerated for debt or squeezed for money they have no chance of getting their hands on. These are no-brainers, and should take precedence over any long term talk about generating jobs or strengthening the safety net. Before we can “do something” for the poor, there are some things we need to stop doing to them.

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  • TedMfftt 2 comments collapsed CollapseExpand

    Ahh, a return to Nixon’s “War on Poverty” which was rebranded as a war on drugs. If only we were a nation of Christians who followed the teachings of Christ rather than those of his supposed followers.

     

     
  • Patti Haynes 1 comment collapsed CollapseExpand

    Religion causes problems. It never fixes them. There are always different factions fighting for their beliefs; that their beliefs are the true and only correct beliefs and all the others are wrong and should be punished. That’s why many wars have been fought throughout history. Government and religion do not mix!! Everyone in America has the right to practice their own personal religious beliefs, but not force those beliefs on others. Sadly, that is what’s happening now with this Evangelical push in this country. They want to set up their Theocratic government and force us all to do as they believe.

     

     
  • Linda Mae Chover 1 comment collapsed CollapseExpand

    Sounds like a bad dream, but many realities do.

     

     
  • Brooke 1 comment collapsed CollapseExpand

    Debtor’s prisons just changed their name to corrections facilities. It’s ironic that often corrections systems spend a lot of money educating inmates – get the GED, learn salable skills, get counseling, learn social skills, so you can reenter society and get a job. Returning military will be in competition w/those already out of work. For those paroled, getting a job has a myriad of difficulties that start with parole rules that are virtually designed to help them fail parole.

    This snowball effect on the poor trickles up and drags down the middle class. Unfortunately, most taxpayers are clueless to the negative effects of ‘tough on crime’ and ‘zero tolerance’ regulations they vote for. Programs that actually help get people off drugs and alcohol (drug), get training, etc. are generally viewed as ‘soft on crime’. If forward thinking judges cannot get the public to accept the positive effects of those programs then the poor are not going to get the help they need.

     

     
  • KiaMistilis 1 comment collapsed CollapseExpand

    I knew that squeezing the poor was bad in the U.S…I didn’t know it was THAT bad. Thanks for this concise and well written piece.

     

     
  • Wescal 1 comment collapsed CollapseExpand

    My wife was just charged $70 to change her insurance company paperwork at a doctors office. Imagine what we’ll pay if every doctors office does that.

     

     
  • Patti Haynes 2 comments collapsed CollapseExpand

    I had to pay to get my records from every one of my doctors! They used to be considered ‘your’ records and given to you free of charge, since you’ve paid for your visits to the doctor. Not anymore! It took several months and an attorney to get my doctors to release my records and a hefty sum of money!! This is not the same country I grew up in the 1950’s. America is a sad, sad place now. I used to be so proud to be an American because what this country stood for and how we took care of our people… now, I am not proud anymore. I am disgusted that the rich have bought this country, even the government! SCOTUS has given ‘Money’ the power and rights of speech while taking them away from WE the People! Five Justices are conservative, card carrying, Koch associates! Yet they are allowed to have the last word on all Constitutional conversation in the USA! This doesn’t even begin to touch on the Tea Party, who has taken over the Congress and pays NO attention to their constituency and their needs! They had their agendas set before they were ever elected and those agendas were to rape and pillage the poor and indigent and pass legislation counter-intuitive to the betterment of the American society! Theirs is an agenda to dupe all of us into believing this is all for Religious Freedom and to save unborn babies. It’s all LIES!! They could could NOT care less for anything or anybody!!! It’s all about MONEY and POWER of a very few old, white men!!!

    I am bereft of hope, but will keep fighting!

     

     
  • Dwaldon13 1 comment collapsed CollapseExpand

    I can relate to your final sentence Patti. I guess what struck me hardest concerning this article was the number of times “government” was implicated in the fleecing of the poor. And despite your correct analysis of the Tea Party and The Supreme Court, BOTH parties are heavily enmeshed in their abdication of principles and seeing government other than a self-aggrandizing machine designed to “aid” the wealthy, fight perdurable “wars on terror,” expand empire,and provide
    “perks and benefits” to those who have made their way into the political “club.”
    I am not a religious person but after hearing “God Bless America,” for the zillioneth time since the “government manufactured” tragedy of 9/11, I find myself desiring to inquire of any “honest” Christian…why would God bless America? I grew up in the 60’s and it seemed, for a time, despite the atrocity of Vietnam, we might be headed in the right direction in terms of shared equality.
    It sure doesn’t appear to be the case now. From an aging white man who “doesn’t” have any money or power. Perhaps that’s a blessing. I’ll keep fighting too!

     

     
  • Don Roberts 1 comment collapsed CollapseExpand

    Really need to look at the Workforce Investment Act (WIA) and the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA) as mechanisms the gov’t uses to force poor people into low wage, meaningless jobs.

     

     
  • Kellie 1 comment collapsed CollapseExpand

    I know someone who got 2 years in prison for stealing an ipod…while I read stories like the one I recently came across about a 20 year old girl with no drivers license (never did acquire one) who ran over and killed a biker, but got 90 days probation because she was related to the sheriff….Where I live if you can afford an attorney, no matter what the offense, they pretty much leave you alone or drop the charges, but if you are poor – you are incarcerated, drilled to death with fines, fees, probation costs, and excessive harassment by the police.

     

‘Mortgage Settlement’ Funds Paying for Prisons, Not Foreclosure Relief May 16, 2012

Posted by rogerhollander in Economic Crisis.
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Published on Wednesday, May 16, 2012 by Common Dreams

 

Needy states use housing aid cash to fund prisons, education shortfalls, and plug budgets

- Common Dreams staff

As part of a financial settlement over fraudulent mortgage practices earlier this year, some of the nation’s largest banks agreed to make payments to state government totaling $2.5 billion that would be earmarked for victims of wrongful foreclosure and other distressed homeowners. Instead, reports the New York Times today, a majority of those funds are going to plug state budget shortfalls, leaving homeowners without recourse and validating critics who questioned the strength of the deal when it was announced in February.

Protesters staged a rally against home foreclosures in California on Tuesday outside the State Capitol in Sacramento. (Max Whittaker for The New York Times)

The total settlement was for $25 billion, but only a tenth of that was to come in the form of cash payment to the states. The remainder was to come in the form of “credits” for reducing mortgage debt and other loan activities.

Andy Schneggenburger, the executive director of the Atlanta Housing Association of Neighborhood-Based Developers, told the Times the decision showed “a real lack of comprehension of the depths of the foreclosure problem.”

* * *

The New York Times: Needy States Use Housing Aid Cash to Plug Budgets

Only 27 states have devoted all their funds from the banks to housing programs, according to a report by Enterprise Community Partners, a national affordable housing group. So far about 15 states have said they will use all or most of the money for other purposes.

In Texas, $125 million went straight to the general fund. Missouri will use its $40 million to soften cuts to higher education. Indiana is spending more than half its allotment to pay energy bills for low-income families, while Virginia will use most of its $67 million to help revenue-starved local governments.

Like California, some other states with outsize problems from the housing bust are spending the money for something other than homeowner relief. Georgia, where home prices are still falling, will use its $99 million to lure companies to the state.

“The governor has decided to use the discretionary money for economic development,” said a spokesman for Nathan Deal, Georgia’s governor, a Republican. “He believes that the best way to prevent foreclosures amongst honest homeowners who have experienced hard times is to create jobs here in our state.”

Andy Schneggenburger, the executive director of the Atlanta Housing Association of Neighborhood-Based Developers, said the decision showed “a real lack of comprehension of the depths of the foreclosure problem.”

The $2.5 billion was intended to be under the control of the state attorneys general, who negotiated the settlement with the five banks — Bank of America, Wells Fargo, JPMorgan Chase, Citigroup and Ally. But there is enough wiggle room in the agreement, as well as in separate terms agreed to by each state, to give legislatures and governors wide latitude. The money can, for example, be counted as a “civil penalty” won by the state, and some leaders have argued that states are entitled to the money because the housing crash decimated tax collections.

Shaun Donovan, the federal housing secretary, has been privately urging state officials to spend the money as intended. “Other uses fail to capitalize on the opportunities presented by the settlement to bring real, concerted relief to homeowners and the communities in which they live,” he said Tuesday.

Some attorneys general have complied quietly with requests to repurpose the money, while others have protested. Lisa Madigan, the Democratic attorney general of Illinois, said she would oppose any effort to divert the funds. Tom Horne, the Republican attorney general of Arizona, said he disagreed with the state’s move to take about half its $97 million, which officials initially said was needed for prisons.

Obama Sells Out Homeowners Again: Mortgage Settlement a Sad Joke February 23, 2012

Posted by rogerhollander in Barack Obama, Economic Crisis, Housing/Homelessness.
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Published on Thursday, February 23, 2012 by Common Dreams

by  Ted Rall

Joe Nocera, the columnist currently challenging Tom Friedman for the title of Hackiest Militant Centrist Hack–it’s a tough job that just about everyone on The New York Times op-ed page has to do–loves the robo-signing settlement announced last week between the Obama Administration, 49 states and the five biggest mortgage banks. “Two cheers!” shouts Nocera.

Too busy to follow the news? Read Nocera. If he likes something, it’s probably stupid, evil, or both.

(Photo: CNN)

As penance for their sins–securitizing fraudulent mortgages, using forged deeds to foreclose on millions of Americans and oh, yeah, borking the entire world economy–Ally Financial, Bank of America, Citibank, JPMorgan Chase and Wells Fargo have agreed to fork over $5 billion in cash. Under the terms of the new agreement they’re supposed to reduce the principal of loans to homeowners who are “underwater” on their mortgages–i.e. they owe more than their house is worth–by $17 billion.

Some homeowners will qualify for $3 billion in interest refinancing, something the banks have resisted since the ongoing depression began in late 2008.

What about those who got kicked out of their homes illegally? They split a pool of $1.5 billion. Sounds impressive. It’s not. Mark Zuckerberg is worth $45 billion.

“That probably nets out to less than $2,000 a person,” notes The Times. “There’s no doubt that the banks are happy with this deal. You would be, too, if your bill for lying to courts and end-running the law came to less than $2,000 per loan file.”

Readers will recall that I paid more than that for a speeding ticket. 68 in a 55. This is the latest sellout by a corrupt system that would rather line the pockets of felonious bankers than put them where they belong: prison.

Remember TARP, the initial bailout? Democrats and Republicans, George W. Bush and Barack Obama agreed to dole out $700 billion in public–plus $7.7 trillion funneled secretly through the Fed–to the big banks so they could “increase their lending in order to loosen credit markets,” in the words of Senator Olympia Snowe, a Maine Republican.

Never happened.

Three years after TARP “tight home loan credit is affecting everything from home sales to household finances,” USA Today reported. “Many borrowers are struggling to qualify for loans to buy homes…Those who can get loans need higher credit scores and bigger down payments than they would have in recent years. They face more demands to prove their incomes, verify assets, show steady employment and explain things such as new credit cards and small bank account deposits. Even then, they may not qualify for the lowest interest rates.”

Financial experts aren’t surprised. TARP was a no-strings-attached deal devoid of any requirement that banks increase lending. You can hardly blame the bankers for taking advantage. They used the cash–money that might have been used to help distressed homeowners–to grow income on their overnight “float” and issue record raises to their CEOs.

Next came Obama’s “Home Affordable Modification Program” farce. Another toothless “voluntary” program, HAMP asked banks to do the same things they’ve just agreed to under the robo-signing settlement: allow homeowners who are struggling to refinance and possibly reduce their principals to reflect the collapse of housing prices in most markets.

Voluntary = worthless.

CNN reported on January 24th: “The HAMP program, which was designed to lower troubled borrowers’ mortgage rates to no more than 31% of their monthly income, ran into problems almost immediately. Many lenders lost documents, and many borrowers didn’t qualify. Three years later, it has helped a scant 910,000 homeowners–a far cry from the promised 4 million.”

Or the 15 million who needed help.

As usual, state-controlled media is too kind. Banks didn’t “lose” documents. They threw them away.

One hopes they recycled.

I wrote about my experience with HAMP: Chase Home Mortgage repeatedly asked for, received, confirmed receiving, then requested the same documents. They elevated the runaround to an art. My favorite part was how Chase wouldn’t respond to queries for a month, then request the bank statement for that month. They did this over and over. The final result: losing half my income “did not represent income loss.”

It’s simple math: in 67 percent of cases, banks make more money through foreclosure than working to keep families in their homes.

This time is different, claims the White House. “No more lost paperwork, no more excuses, no more runaround,” HUD secretary Shaun Donovan said February 9th. The new standards will “force the banks to clean up their acts.”

Don’t bet on it. The Administration promises “a robust enforcement mechanism”–i.e. an independent monitor. Such an agency, which would supervise the handling of million of distressed homeowners, won’t be able to handle the workload according to mortgage experts. Anyway, it’s not like there isn’t already a law. Law Professor Alan White of Valparaiso University notes: “Much of this [agreement] is restating obligations loan servicers already have.”

Finally, there’s the issue of fairness. “Underwater” is a scary, headline-grabbing word. But it doesn’t tell the whole story.

Tens of millions of homeowners have seen the value of their homes plummet since the housing crash. (The average home price fell from $270,000 in 2006 to $165,000 in 2011.) Those who are underwater tended not to have had much equity in their homes in the first place, having put down low downpayments. Why single them out for special assistance? Shouldn’t people who owned their homes free and clear and those who had significant equity at the beginning of crisis get as much help as those who lost less in the first place? What about renters? Why should people who were well-off enough to afford to buy a home get a payoff ahead of poor renters?

The biggest fairness issue of all, of course, is one of simple justice. If you steal someone’s house, you should go to jail. If your crimes are company policy, that company should be nationalized or forced out of business.

Your victim should get his or her house back, plus interest and penalties.

You shouldn’t pay less than a speeding ticket for stealing a house.

© 2012 Ted Rall

 

Ted Rall

Ted Rall is the author of the new books “Silk Road to Ruin: Is Central Asia the New Middle East?,” and “The Anti-American Manifesto” . His website is tedrall.com.

 

 

Too Big to Jail May 24, 2011

Posted by rogerhollander in Criminal Justice, Economic Crisis.
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 Goldman Sach’s Lloyd Blankfein

Published on Tuesday, May 24, 2011 by CommonDreams.org

  by  Danny Schechter

This week the financial crisis finally went prime time in the form of a big budget HBO docudrama called “Too Big To Fail.”Goldman Sach’s Lloyd Blankfein. (File)

It was a well-acted docudrama focused on the BIG men and some women in the banks and in government who tried to put Humpty Dumpty back together again up on that wall to prevent a total economic collapse when panic dried up credit and financial institutions faced failure.

Based on the work of a New York Times reporter, it offered a skillfully-made but conventional narrative which, like most TV shows, showcase events but miss their deeper context and background.

We heard all the explanations, save one.

There was greed, ambition, ego and money lust. There were personal rivalries and ideological battles, parochial agendas and narrow self-interest. There was panic on THE Street and in the halls of mighty institutions. In many ways, the program recycled and made an official narrative compelling viewing. In the end, everyone was to blame so no one was to blame.

But… what was missing was any notion of intentionality and premeditation, almost no mention of systemic fraud and CRIME, that one word that sums up what really happened for those millions of Americans who have lost jobs and homes. We never saw victims or felt their pain and bewilderment. We were never shown how a shadow banking system emerged or how the finance industry worked with their counterparts in finance and insurance to transfer wealth from the poor and middle class to the superrich,

When I was but a precocious lad, my elementary school encouraged students to take out a savings account at the nearby Dime Bank in the Bronx. We were each given a bankbook and taught to put in $.50 a week to show us how to build wealth by being thrifty. It was with a sense of pride that I watched my balance grow.

It may have been peanuts in the scheme of things, but to me, at the time, it was the way to plan for the future.

At the same time, in those year I watched TV shows glamorize the bank robbing antics of a man named Willie Sutton who also staged jail breaks wearing masks and costumes. When he was asked why he robbed banks, he responded famously, “That’s where the money is.”

And it still is, except in our era, it is the banks that are robbing us.

That’s because what’s now called the “financial Services sector” has gone from about 30 percent of our economy to over 60 percent. Through a process called financialization, they have transformed how all business is done.

Making money from money soon began to surpass making money from making things. What we were never warned about was the danger of getting too deeply in debt, or how the economy was shifting from production to consumption.

Private equity, credit swaps, derivative deals and collateralized debt obligations soon drove the economy. Markets became captives of high performance trading by powerful computers.

When Wall Street became the defacto capital of the country, the bankers accrued more power than the politicians who they bought up with impunity. Their lobbying power deregulated the economy and decriminalized their activities. They killed many of the reforms enacted during the New Deal designed to protect the public. They built a shadow (and shadowy) banking system beyond the reach of the law.

And now, here we are, in 2011, five years after the meltdown of 2007, four years after the crash of 2008 and the passage of the TARP bailout that pumped money into their treasuries at taxpayer expense. Since then, there has been a steady parade of scandals and the disclosures that have come out since. Every week, more banks close and or consolidate and run into problems with regulators.

Take “my” old bank in the Bronx. It has been through as many changes as I have been. A website on bank histories runs it down:

Dime Savings Bank of New York, The
04/12/1859 NYS Chartered Dime Savings Bank of Brooklyn
09/10/1930 Acquire By Merger Navy Savings Bank
06/30/1970 Name Change To Dime Savings Bank of New York, The
09/30/1979 Acquire By Merger Mechanics Exchange Savings Bank
07/01/1980 Acquire By Merger First Federal S & L Assoc. of Port Washington
08/01/1981 Acquire By Merger Union Savings Bank of New York
06/23/1983 Convert Federal Dime Savings Bank of NY, FSB
01/07/2002 Purchased By Washington Mutual Inc.
01/07/2002 Name Change To Washington Mutual Bank

And then, of course, some years later, Washington Mutual itself, went bust and was bought up for a song by JP Morgan Chase. Here are some of the latest headlines about the bank now known as WAMU:

WaMu agrees on post-bankruptcy control — report‎ – Reuters
WaMu, Shareholders, Biggest Creditors Said to Settle …‎ – Bloomberg
WaMu shareholders are offered $25M-plus to drop claims

On the day I wrote this commentary, the New York Times reported:

“The nation’s biggest banks and mortgage lenders have steadily amassed real estate empires, acquiring a glut of foreclosed homes that threatens to deepen the housing slump and create a further drag on the economic recovery.

All told, they own more than 872,000 homes as a result of the groundswell in foreclosures, almost twice as many as when the financial crisis began in 2007, according to RealtyTrac.”

And to whom does the Times turn for expertise on the subject, but a key former operative at Washington Mutual who was with the bank in the go-go era of shoveling out subprime mortgages? Now, he gives advice on risk management:

“These shops are under siege; it’s just a tsunami of stuff coming in,” said Taj Bindra, who oversaw Washington Mutual’s servicing unit from 2004 to 2006 and now advises financial institutions on risk management. “Lenders have a strong incentive to clear out inventory in a controlled and timely manner, but if you had problems on the front end of the foreclosure process, it should be no surprise you are having problems on the back end.”

What were people’s homes are now “inventory” to be stockpiled even though it has a negative cumulative effect on economic recovery of the housing market.

The banks that are increasingly despised and blamed for their role in engineering the financial disaster, are now trying to play nice to change their negative image.

Explains the Times:

“Conscious of their image, many lenders have recently started telling real estate agents to be more lenient to renters who happen to live in a foreclosed home and give them extra time to move out before changing the locks.

“Wells Fargo has sent me back knocking on doors two or three times, offering to give renters money if they cooperate with us,” said Claude A. Worrell, a longtime real estate agent from Minneapolis who specializes in selling bank-owned property. “It’s a lot different than it used to be.”

So, they are still foreclosing, but with a smile. Is it a ‘lot different than it used to be’?
Just last month, Huffington Post reported:

“Top executives at Washington Mutual actively boosted sales of high-risk, toxic mortgages in the two years prior to the bank’s collapse in 2008, according to emails published in a wide-ranging Senate report that contradicts previous public testimony about the meltdown.

The voluminous, 639-page report on the financial crisis from the Senate Permanent Subcommittee on Investigations singles out Washington Mutual for its decision to champion its subprime lending business, even as executives privately acknowledged that a housing bubble was about to burst.”

The truth is that most of the bigger banks have emerged from the financial crisis stronger than ever, with executives cashing in with higher salaries and bigger bonuses. That old saying about criminals who “laughed all the way to the bank” has to be revised because in this case they never left the bank.

More shocking has been the largely passive response by our government and prosecutors. At last, the Attorney General of New York is said to be investigating but none of the big bankers have yet gone to jail or suffered for the scams and frauds they committed. Most of the State officials who vowed to after the banks in the absence of aggressive federal actions have backed down.

So what can “we the people” do? We can do nothing and watch more of what’s left of our wealth vanish, or we can join others in demanding a “jailout,” not a bailout.

A well-known international banker was just arrested for a high profile alleged sex crime but not one of possibly thousands have been prosecuted for well documented financial crimes.

Where are the political leaders and activist groups willing to “fight the power” and demand accountability and transparency on Wall Street?

Why are so many us banking on a financial recovery to bring back jobs and a modicum of justice created by the very people and institutions responsible for the crisis?

And why didn’t I learn about these dangers when I first discovered the wonderful world of banking? Isn’t that what schools are for?

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Danny Schechter

Mediachannel’s News Dissector Danny Schechter investigates the origins of the economic crisis in his book Plunder: Investigating Our Economic Calamity and the Subprime Scandal (Cosimo Books via Amazon). Comments to dissector@mediachannel.org

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

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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.

ACORN: Stop Foreclosures Now January 28, 2009

Posted by rogerhollander in Economic Crisis.
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ACORN Foreclosure Campaign Alert
Learn More / Donate / Take Action

 
 

           Baltimore ACORN members protest a recent foreclosure auction.  

       

 

 

SIGN THE PETITION TO FIGHT BACK AGAINST THE FORECLOSURE CRISIS


Dear Roger,

I am writing to you today to announce the next phase in ACORN’s anti-foreclosure campaign. With over 2.3 million people facing foreclosure in 2008, the urgency of this crisis could not be greater. It affects all of our communities, but especially low-and moderate-income neighborhoods and communities of color, epitomized by people like ACORN members Rosa and Juan Rico.

Facing an impending foreclosure, the Ricos have been trying to work with their bank for months to get a modification of their loan. But the bank just kept giving them the runaround.

So Rosa and Juan, with backing from 40 Oakland ACORN members, moved themselves into a local branch of the bank on January 15th, complete with a cot and sleeping bags in order to press their demand that the bank work with them.

Unsurprisingly, the bank managers immediately called the police and kicked ACORN and the Ricos out pretty quickly. It’s clear that when banks decide to move swiftly they can, but it is sad that with the Rico’s they are swift only in saying “No!”

In 2008 2.3 million families faced foreclosure proceedings, the highest number since the Great Depression. Though the cost to individual families is hard to measure, the cost to our economy is staggering: using the Joint Economic Committee estimate of $78,000 per foreclosure, the cost to the US economy was at least $156 billion in 2008.

If we do not take any action, Credit Suisse predicts that there will be between 8 and 9 million foreclosures in the next four years, at a potential cost to the economy of $702 billion. Simply put, addressing the foreclosure crisis must be at the heart of any economic recovery plan.

Foreclosure Campaign
The foreclosure crisis touches all aspects of the economic meltdown and as such requires a comprehensive solution. A comprehensive solution requires a comprehensive campaign. ACORN’s strategy has two objectives: help affected families stay in their homes and create the political will necessary to implement a comprehensive solution in the face of the full court press lobbying effort the financial industry is running-an effort that cuts homeowners out of any recovery package.

Thus ACORN’s campaign is working to put the human faces of foreclosure victims front and center while escalating the campaign tactics to include civil disobedience aimed at keeping people from losing their homes. Everything is on the table: disruption of sales, disruption of banking business, even refusing to be evicted or moving families back into their foreclosed homes. (For a full description of our recent work, see my Huffington Post blog posting) from Tuesday, Jan 27. The urgency of the crisis demands no less.

This week we’re launching a petition  asking the Obama Administration to adopt a set of short-term and long-term steps to address the crisis. Please take a minute to sign the petition and join the campaign to halt foreclosures. Please make sure that all your friends and family get this e-mail as well, so they can join in the fight!

But the biggest escalation of this campaign will occur over the first three weeks of February as ACORN members and local activists launch an effort to keep foreclosure victims in their homes.

Fighting Back – Homesteading and “Home Defender Teams”
Despite the refreshing change in attitude towards the plight of families facing foreclosure from the Obama Administration, it is clear that there continues to be tremendous opposition from the financial services industry and Wall Street to any plan that truly helps homeowners.

Therefore, ACORN members are launching a Homesteading effort as part of the comprehensive foreclosure campaign. Rolling out during the month of February, it will help families threatened with foreclosures to stay in their homes, or in some cases, to reoccupy their homes. ACORN members will occupy their homes in growing numbers of cities around the country in acts of civil disobedience designed to force the issue.   

ACORN is working with its membership and activists around the country to build “Home Defender Teams”. These teams will be prepared to mobilize on short notice to peacefully help defend a family’s right to stay in their homes until a fair solution to the crisis is put into place by the new Administration.  We are recruiting allies and elected officials to support our efforts and call for a full and comprehensive solution to this crisis.

We are escalating this campaign both to help save individual families’ homes, but also to win a foreclosure moratorium – some needed breathing room – while we push for a comprehensive solution to this crisis.

Look for a formal announcement of the Home Defender teams at the beginning of February, complete with a link to the on-line form that people who want to ensure that hard-hit families can stay in their homes until a common-sense solution to the crisis is put in place can use to join in. In the meantime, sign the petition  to the Obama Administration in order to fight back against Wall Street interests blocking needed reform from being enacted.

Please forward this e-mail to everyone you know who is affected by this crisis so we can all start fighting back now!

 

Yours,

Bertha Lewis

ACORN CEO and Chief Organizer

Fed Refuses to Disclose Recipients of $2 Trillion December 14, 2008

Posted by rogerhollander in Economic Crisis.
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fed-chair-ben-bernankeFederal Reserve Bank Chairman Ben Bernanke is seen through a cracked door. The Fed is refusing to disclose exactly who is receiving $2 trillion in non-TARP bank loans. (Photo: Jonathan Ernst / Reuters)

by: Mark Pittam, Bloomberg News

  The Federal Reserve refused a request by Bloomberg News to disclose the recipients of more than $2 trillion of emergency loans from U.S. taxpayers and the assets the central bank is accepting as collateral.

 

    Bloomberg filed suit Nov. 7 under the U.S. Freedom of Information Act requesting details about the terms of 11 Fed lending programs, most created during the deepest financial crisis since the Great Depression.

    The Fed responded Dec. 8, saying it’s allowed to withhold internal memos as well as information about trade secrets and commercial information. The institution confirmed that a records search found 231 pages of documents pertaining to some of the requests.

    “If they told us what they held, we would know the potential losses that the government may take and that’s what they don’t want us to know,” said Carlos Mendez, a senior managing director at New York-based ICP Capital LLC, which oversees $22 billion in assets.

    The Fed stepped into a rescue role that was the original purpose of the Treasury’s $700 billion Troubled Asset Relief Program. The central bank loans don’t have the oversight safeguards that Congress imposed upon the TARP.

    Total Fed lending exceeded $2 trillion for the first time Nov. 6. It rose by 138 percent, or $1.23 trillion, in the 12 weeks since Sept. 14, when central bank governors relaxed collateral standards to accept securities that weren’t rated AAA.

    “Been Bamboozled”

    Congress is demanding more transparency from the Fed and Treasury on bailout, most recently during Dec. 10 hearings by the House Financial Services committee when Representative David Scott, a Georgia Democrat, said Americans had “been bamboozled.”

    Bloomberg News, a unit of New York-based Bloomberg LP, on May 21 asked the Fed to provide data on collateral posted from April 4 to May 20. The central bank said on June 19 that it needed until July 3 to search documents and determine whether it would make them public. Bloomberg didn’t receive a formal response that would let it file an appeal within the legal time limit.

    On Oct. 25, Bloomberg filed another request, expanding the range of when the collateral was posted. It filed suit Nov. 7.

    In response to Bloomberg’s request, the Fed said the U.S. is facing “an unprecedented crisis” in which “loss in confidence in and between financial institutions can occur with lightning speed and devastating effects.”

    Data Provider

    The Fed supplied copies of three e-mails in response to a request that it disclose the identities of those supplying data on collateral as well as their contracts.

    While the senders and recipients of the messages were revealed, the contents were erased except for two phrases identifying a vendor as “IDC.” One of the e-mails” subject lines refers to “Interactive Data – Auction Rate Security Advisory May 1, 2008.”

    Brian Willinsky, a spokesman for Bedford, Massachusetts- based Interactive Data Corp., a seller of fixed-income securities information, declined to comment.

    “Notwithstanding calls for enhanced transparency, the Board must protect against the substantial, multiple harms that might result from disclosure,” Jennifer J. Johnson, the secretary for the Fed’s Board of Governors, said in a letter e-mailed to Bloomberg News.

    “Dangerous Step”

    The Federal Reserve refused a request by Bloomberg News to disclose the recipients of more than $2 trillion of emergency loans from U.S. taxpayers and the assets the central bank is accepting as collateral.  

    “In its considered judgment and in view of current circumstances, it would be a dangerous step to release this otherwise confidential information,” she wrote.

    New York-based Citigroup Inc., which is shrinking its global workforce of 352,000 through asset sales and job cuts, is among the nine biggest banks receiving $125 billion in capital from the TARP since it was signed into law Oct. 3. More than 170 regional lenders are seeking an additional $74 billion.

    Fed Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson said in September they would meet congressional demands for transparency in a $700 billion bailout of the banking system.

    The Freedom of Information Act obliges federal agencies to make government documents available to the press and public. The Bloomberg lawsuit, filed in New York, doesn”t seek money damages.

    “Right to Know”

    “There has to be something they can tell the public because we have a right to know what they are doing,” said Lucy Dalglish, executive director of the Arlington, Virginia-based Reporters Committee for Freedom of the Press.

    “It would really be a shame if we have to find this out 10 years from now after some really nasty class-action suit and our financial system has completely collapsed,” she said.

    The Fed’s five-page response to Bloomberg may be “unprecedented” because the board usually doesn’t go into such detail about its position, said Lee Levine, a partner at Levine Sullivan Koch & Schulz LLP in Washington.

    “This is uncharted territory,” said Levine during an interview from his New York office. “The Freedom of Information Act wasn’t built to anticipate this situation and that’s evident from the way the Fed tried to shoehorn their argument into the trade-secrets exemption.”

    The Fed lent cash and government bonds to banks that handed over collateral including stocks and subprime and structured securities such as collateralized debt obligations, according to the Fed Web site.

    Borrowers include the now-bankrupt Lehman Brothers Holdings Inc., Citigroup and New York-based JPMorgan Chase & Co., the country’s biggest bank by assets.

    Banks oppose any release of information because that might signal weakness and spur short-selling or a run by depositors, Scott Talbott, senior vice president of government affairs for the Financial Services Roundtable, a Washington trade group, said in an interview last month.

    “Complete Truth”

    “Americans don’t want to get blindsided anymore,” Mendez said in an interview. “They don’t want it sugarcoated or whitewashed. They want the complete truth. The truth is we can’t take all the pain right now.”

    The Bloomberg lawsuit said the collateral lists “are central to understanding and assessing the government’s response to the most cataclysmic financial crisis in America since the Great Depression.”

    In response, the Fed argued that the trade-secret exemption could be expanded to include potential harm to any of the central bank’s customers, said Bruce Johnson, a lawyer at Davis Wright Tremaine LLP in Seattle. That expansion is not contained in the freedom-of-information law, Johnson said.

    “I understand where they are coming from bureaucratically, but that means it’s all the more necessary for taxpayers to know what exactly is going on because of all the money that is being hurled at the banking system,” Johnson said.

    The Bloomberg lawsuit is Bloomberg LP v. Board of Governors of the Federal Reserve System, 08-CV-9595, U.S. District Court, Southern District of New York (Manhattan).

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