So the U.S. Supreme Court has decided that the revolution will NOT be telvised. Attorney General candidate Ted Lieu (a miliatary prosecutor himself) has a few choice words for them:
"The goal of the American civil justice system is to seek justice. The Supreme Court's decision to censor the public broadcast of the historic trial to reverse California's Proposition 8 amounts to a fear of too much justice. Our courts are not star chambers, where testimony and rulings are made in secret and hidden from the public.
"The Court majority's rationale that broadcasting this trial will result in "irreparable harm" has no basis in fact. The Court states that witnesses may suffer harm because they are concerned about possible "harassment" if the public actually found out what they will say under oath. Under that rationale, the Court should seal the transcript of this entire proceeding, not allow any non-witness to attend the proceeding, and block newspapers from reporting on this trial.
...
I served on active duty in the armed forces because I believe America is the best country in the world. Members of our armed forces have given their blood to defend our democracy and our constitutional liberties, including freedom of the press, which is perhaps the greatest check on governmental overreach. The Court's overreach in censoring the broadcast of this trial is something you would expect from the Supreme Court of Iran, not the Supreme Court of the United States."
There was a bit of discussion about the City of Industry / Ed Roski plan to build a new sports stadium in LA County. The stories neglect to tell you a very major point, that Ted Lieu is listed as a principle co-author of ABX381, a bill that many detests.
Now, Lieu is running for Attorney General and does not dare brag about this bill on his web site. In fact, the news lets Senate ProTem Steinberg take the rap for setting aside California's Environmental Quality legislation to aid a private developer and a city of less than 1000 people.
I don't think that this state needs an Attorney General who is so willing to set aside environmental law when it becomes convenient, just for that sake of a big developer who promises jobs... something that sports complexes routinely fail to deliver.
It might have been expected from a Republican. That Lieu is a Democrat should be embarrassing to the party. I have already seen an effort to have SoCal Greens oppose Lieu over his willingness to set aside existing law.
Back in 2007, former Assembly member Sally Lieber (D-Mountain View) wrote a Sentencing Commission bill, AB 160. You can read an analysis of that bill here. Like the current proposal, it had teeth. It didn't give the Legislature ratification authority. It had wide support of progressives, but not much support from either the Governor or from the Senate. In fact, on the Senate, it got only 10 votes, mostly from progressives like Carole Migden and Shiela Kuehl, but, somewhat suprisingly, also from moderates like Sen. Ron Calderon. Good on you Sen. Calderon.
On the Assembly side, it got 43 votes, including many members who are now protesting the inclusion of a Sentencing Commission today. For example, Asms. Huffman, Ma, Nava, Torrico all voted for the bill. For his part, the other AG candidate, Asm. Ted Lieu apparently was against solid prison reform back in 2007 too.
Now, turn the calendar a few years forward, to about last week. Basically many in the current Assembly Democratic caucus are walking away from a bill they ALREADY supported.
I'm not sure how at least two of these folks square their past votes with their public positions today. Take Asm. Pedro Nava (D-Santa Barbara), who voted for AB 160 in 2007:
"You essentially would be contracting out your duties as a legislator,"Assemblyman Pedro Nava, D-Santa Barbara, said of the Senate-passed plan. (SacBee 8/25/09)
Or from Asm. Torrico (D-Newark), who also voted for AB 160:
"The notion that the Legislature would not be required to vote on a sentencing commission proposal, I just think it's real problematic," Torrico said. (LA Times)
I don't want to give Asm. Lieu a pass here, as he is also stonewalling good policy here. Yet, how is that removing sentencing from the Legislature was good in 2007 but not today when the crisis is far more acute?
Could it be that this time it actually has a chance of succeeding? Back in 2007, Asm. Lieber's bill didn't have a snowball's chance in hell of getting through the Senate, let alone to be signed by Governor Toughie McActionStar. It is only today, with the very real possibility of this actually going into law that these legislators are balking at voting for real prison reform.
Sorry, but that smacks of the cynicism that has plagued Sacramento for so long. It is this cynicism that is why our prisons are under a slew of federal court orders and we can't manage our house. Blame it on fear of the prison guard's union (CCPOA) or the "law and order" vote or what you will, but the fact is that we need real reform that will allow our prisons to get back to the business for which they were intended: keeping California safe.
If it plays in Kansas, it can play here. It just requires leaders who are willing to stand up for their own values and for the voters who put them there. This should be past the point of politics now. I know, it's probably not possible for the Republicans, but I expect more from our Democratic Legislators. Do the right thing for our state and your political fortunes will follow.
(Say Hi to Asm. Lieu. NPR's Planet Money podcast did a good report on this subject as well. - promoted by Brian Leubitz)
Two weeks ago, Bank of America surprised Wall Street by posting an alleged 'strong' profit of $4.2 billion the first quarter of this year. Now we know how they arrived at those numbers: funny math. Today we learned that Bank of America actually needs another $34 billion injection of capital in order to survive.
Bank of America is not the only firm using funny numbers. Goldman Sachs posted an alleged profit of $1.8 billion for the first quarter of 2009. The company had previously followed a calendar quarter that ran from December to February. However, Goldman Sachs conveniently and suddenly decided to change its accounting to a calendar year schedule, and changed their fiscal year to start in January, effectively eliminating December's results. The company had suffered large losses in December. So the 'profit' Goldman Sachs posted doesn't account for the entire missing month of December.
Today, Chief Privacy Officer at Facebook Chris Kelly announced an exploratory committee for the race for California Attorney General. He joins a field that includes Assemblymembers Ted Lieu, Pedro Nava and Alberto Torrico; San Francisco DA Kamala Harris, and Los Angeles City Attorney Rocky Delgadillo. In his statement, which you can find at his website, Kelly talked about efficienct and effective government, Internet safety, proper training and equipment for law enforcement, and stopping trafficking. The words "prisons," "jails," "corrections" or "parole" was not mentioned.
Our prison system is a mess. We have the highest recidivism rate in the country, mostly because 2/3 of our prisoners returning to jail go there because of technical violations of their parole. This turns jails into giant holding pens instead of areas for rehabilitation and treatment, as well as colleges for nonviolent offenders on how to get involved in violent crime. The overstuffed prisons cost more money to staff and service as they become more dangerous, leading to the state spending more on incarceration than higher education. Despite all this spending, conditions in the prisons are medieval, with the ACLU proposing the closure of the LA County Men's Central Jail. Prison officials are discussing release of 8,000 nonviolent and terminally ill offenders, but that's a drop in the bucket. We also have denied prisoners their Constitutional right to health care, and have a federal receiver now remedying that situation, taking it out of the hands of the legislature. The "tough on crime" mantra that has ruled the thinking of both parties on this issue has utterly and completely failed.
And yet, our Attorney General candidates and our gubernatorial candidates view this absolute crisis as just another check on their list, instead of the serious problem it is. Gavin Newsom didn't bring it up in his speech, though I did ask him about it in the blogger meeting afterwards. He talked about how we need a re-entry strategy better than the failed parole system, and cited some re-entry reforms in San Francisco that have helped matters. And he stated that having the courts step in to fix the problem presents an opportunity for real reform. With respect to the drug war, which lies at the heart of this, he expressed his support for drug courts and mental health courts and the kind of options that wouldn't consign nonviolent offenders to the rigors of overcrowded prison life when they need medical treatment. And he vowed to have more detailed programs available soon. But when it counted, on stage, he said nothing. Jerry Brown did tackle the issue, but his non-stop fight against the prison health care receiver and sensible steps like Prop. 5 destroy any credibility he may have had on the issue.
I have appreciated Greg Lucas' interviews with some of the candidates in the Attorney General's race, and I have paid particular attention to their views on the prison crisis. (over)
When the Obama Administration's plan to mitigate foreclosures came out, it was clear that it would be insufficient to deal with the particular challenges faced in California. Initially, the plan would only modify loans where the amount owed was 105% of the home's true value. Given that home prices have collapsed here, this would have helped almost nobody in California. State lawmakers, in particular the Democratic point person on mortgages and foreclosures Asm. Ted Lieu, went to Washington to lobby for changes. And today, faced with a sluggish mortgage rescue program attracting few lenders or homeowners, the Administration expanded the plan.
The Obama administration said Tuesday it is expanding its foreclosure prevention program to cover second mortgages and to direct more troubled borrowers to the Hope for Homeowners program.
Under the administration's new program, the interest rate on second mortgages will be reduced to 1% on loans where payments cover interest and principal and to 2% for interest-only loans. The government will subsidize the rate reduction, with the money going to the mortgage investor [...]
Also Tuesday, the administration said it is now requiring servicers to offer troubled borrowers access to Hope for Homeowners as a modification option if they qualify.
Expanding Hope for Homeowners would address one of the major holes in the original Obama foreclosure prevention plan. It helps homeowners whose homes are now worth far less than their mortgages.
Servicers had balked at participating in the Hope program because it required they reduce the mortgage principal balance to 90% of a home's current value.
Hope for Homeowners, which began in October, is being revamped in Congress. Servicers would have to reduce the principal to 93% of the home's value. The change would also reduce the program's high fees, which turned off many troubled borrowers.
Loan servicers get a fair bit of cash incentives for participating in the program, which I don't totally support, but if we have to bribe lenders in order to keep people in their homes, that makes more sense than spending the same amount of money on the fallout from a foreclosure. And lenders do take a haircut in the Hope for Homeowners program, the first loss to my knowledge that lenders have been forced to take.
The existing California law only allowed people to obtain a birth certificate with the proper gender if they lived in the same county of their birth, or if their current county of residence allowed them to request one.
Many counties around the country (in this case, ones in Kansas) will not recognize this right, an obstacle that this ruling removes for native Californians.
This problem is also being addressed through EQCA-sponsored AB 1185 (Lieu) the Equal ID Act. This legislation was introduced in February, but has yet to be passed. Hopefully the legislature will strengthen the voice of the Court on this timely constitutional matter, and pass AB 1185.
Assemblyman Ted Lieu, who joined us at Calitics yesterday for an online town hall, has an op-ed with Gautam Dutta of the New America Foundation arguing for an election reform he will soon combine with a bill, to institute instant runoff voting for all special elections in California.
Here's the root of the problem. On March 24, 2009 barely 6 percent of registered voters showed up for a special election to fill a vacancy for California's 26th Senate District. In an area with almost 1 million residents and 400,000 registered voters, only 23,000 civic-minded citizens decided who would replace former State Senator Mark Ridley-Thomas (newly elected to the Los Angeles County Board of Supervisors).
How much did this special election cost? A whopping $2.2 million of our tax dollars - nearly $100 per voter - according to the Los Angeles Registrar-Recorder / County Clerk.
Unfortunately, we're not even close to being finished. Since no candidate won a majority, we must hold a second election that will cost even more money. Because this is a heavily Democratic district, it is certain the Democratic nominee, Assemblymember Curren Price, will win. Yet Mr. Price must wait two months for a second election before he can be sworn in as State Senator.
Far from being "special", special runoff elections cost millions of tax dollars to administer - at a time when governments have been forced to lay off schoolteachers and workers.
Obviously, the Assemblyman is making the fiscal responsibility argument for combining low-turnout special elections through IRV. But there's another crucial argument to be made - the irresponsible delay in proper representation in the legislature. Mark Ridley-Thomas was elected to the LA County Board of Supervisors in November, and his replacement won't take office until May. That's unacceptable, and especially so in California, where the Yacht Party uses the conservative veto to hijack the budget process. With a faster resolution of the Ridley-Thomas seat, for example, Republicans would have one less vote to use as leverage for the budget.
And this is more acute in the case of special elections for Congress in CA-32 and CA-10. Imagine, for example, if Sen. Gil Cedillo wins the Solis seat. He could be replaced by a sitting Assemblymember, which is the logical scenario. Then THAT Assembly seat needs to be filled. By the time all the special elections and runoffs are complete, we're well into 2010.
Enough. Instant runoff voting is a perfectly acceptable way to divine the will of the people without the need for a separate runoff election. The aforementioned Mark Ridley-Thomas has called for a feasibility study into IRV for these special elections. Lieu and Dutta explain:
With IRV, voters get to rank their choices, 1, 2, 3. If your first choice cannot win, your vote automatically goes to your second (i.e., runoff) choice. It's like conducting a runoff election, but in a single election. If IRV had been used last night, the election for the Senate district would be finished.
IRV has already been adopted by San Francisco, Oakland, Minneapolis, Memphis, and Santa Fe. Currently, Louisiana, South Carolina and Arkansas all use IRV for overseas voters. A number of prominent leaders have endorsed IRV, including: President Barack Obama, Senator John McCain, California Controller John Chiang, California Secretary of State Debra Bowen, and former Los Angeles Mayor Richard Riordan. Influential civic groups also support IRV, including: Los Angeles Area Chamber of Commerce, Los Angeles League of Women Voters, Los Angeles County Federation of Labor, Asian American Action Fund, Southwest Voter Registration Education Project, and New America Foundation.
This is not only a budget issue, it's the right reform for California. Let's end the special election merry go-round.
(Please welcome Assemblymember Ted Lieu to Calitics. UPDATE: Ted had to run to the floor for a vote but he will come back at some point to respond to any questions he missed. - promoted by David Dayen)
I want to thank Calitics and the community for this opportunity to interact and discuss some of the most pressing challenges facing us today. As some of you may be aware, I authored the California Foreclosure Prevention Act, which passed the legislature and was signed into law despite massive Wall Street opposition. I would be happy to discuss the mortgage and foreclosure crisis and any other issues you have.
UPDATE: It is 12:25 pm and I need to go to the floor of the Assembly now. Thank you very much for your great questions. I really appreciate the public service Calitics provides in disseminating vital, timely, and Democratic information to our residents in the greatest state on earth.
Next Tuesday morning, Asm. Ted Lieu (D-Torrance) will be dropping by to take some of your questions. In addition to being a friend of Calitics, Lieu has been focusing on fighting the housing and banking crisis. You can find his assembly site here to get more information on his legislative agenda.
Obviously, as ground zero for the foreclosure boom, this is a very important issue to California, one where there has been spirited debate. Asm. Lieu, who is also one of the many candidates for California Attorney General, will be here on Tuesday morning at 11:30 to answer your questions about the housing crisis and anything else you have on your mind. Feel free to post your questions here or just ask them on Tuesday.
For some reason, Attorney General has become the most coveted job in California. I'm counting EIGHT Democratic candidates either announcing or strongly hinting toward announcing for the primary. There's Kamala Harris and Ted Lieu and Alberto Torrico and Pedro Nava and Joe Canciamilla and Rocky Delgadillo among the announced. There's Chris Kelly, the chief privacy officer for Facebook (the website that keeps trying to invade your privacy), hinting at an announcement. And now my city councilman Bobby Shriver is talking about getting in.
Bobby Shriver, the nephew of President John F. Kennedy and the brother of California first lady Maria Shriver, is mulling a run for state attorney general next year, according to his political adviser [...]
"There's been a wide variety of people who have come to him and who he has used as a sounding board to talk about the job of attorney general and the role it takes, the profile it has in terms of moving California forward," said Harvey Englander, a Democratic political strategist who managed both of Shriver's successful runs for Santa Monica City Council.
Englander, who described himself as "very close" to Shriver, called the role of California's top cop "a very powerful position" and one that is "closest to fitting his profile."
I should say that Shriver is not seen as a progressive ally on the city council. The Santa Monica Democratic Club did not endorse him in his run for re-election, and nor did Santa Monica for Renter's Rights. I wouldn't say he's been terrible on the council, but he doesn't have a grassroots base. He has been quite good throughout his career on environmental issues, and his vote to reject the proposed Toll Road through the Trestles while on the state parks board earned him removal from his brother-in-law, Arnold Schwarzenegger.
In such a crowded field, his name may help with low-information voters. It will not help, according to other campaigns in the race with winning the overall primary:
As for Shriver, with whom (Torrico campaign consultant Phil) Giarrizzo said he has worked on environmental issues, "he's a talented, bright, articulate person, but we've seen many times, in the sense that 'he's a Kennedy,' that people look to accomplishment, they look to a record," Giarrizzo said. Primary voters tend to be very discerning, he noted, and "it doesn't work that you can just pass along a family name; he will have to run on his own merits ... a level of experience he'll have to communicate. I don't think we look at him as 'a Kennedy' - I think we look at him as Bobby Shriver, an activist and city councilman."
I would look to leadership in assessing these candidates. You have Ted Lieu traveling to Washington to meet with Administration officials and get them to raise the threshold on homeowners underwater in their homes eligible for help from the Obama housing plan. You have Alberto Torrico trying to get oil companies to actually pay for the natural resources they take out of our ground. And of course, there are the key issues that will face the next Attorney General, particularly in ending the prison crisis through responsible leadership instead of insane "tough on crime" policies that fail our state. I don't much care for names and profiles as much as I do leadership.
This week, Barack Obama announced the details of his plan to save up to 9 million homeowners facing foreclosure from losing their residences. The goal is to place a floor on foreclosures and help people whose rates have reset to work out loan modifications with their lenders. The federal legislation that passed the House which would allow bankruptcy judges to modify the terms of loans, which gives homeowners a powerful stick to force the lenders to pre-empt a cramdown from the judge, will also help this.
Unfortunately, the class of homeowners who would be left behind in this plan are those who are "underwater" on their homes; that is, they owe more on the principal of the home than the current value. And that's an accurate depiction of a very large segment of California homeowners.
The Obama administration's plan to stave off foreclosures could fall flat in California, where nearly one-third of mortgage holders are underwater on their loans -- many of them by amounts that would disqualify them for government-sponsored refinancing.
The problem is likely to be especially acute in areas like the Inland Empire, where homes have lost more than 40% of their value in the last year and nearly half the homeowners owe more on their loans than the properties are worth.
"They're underwater by six figures in many cases," said Greg McBride, a senior analyst with Bankrate.com. "Many homeowners in Southern California are left to twist in the wind."
Under the Obama plan, people who are current on their mortgages could obtain new loans with lower rates for as much as 105% of the value of their homes. That means people could borrow $315,000 against a home worth $300,000.
The problem is that in California, many people owe far more than 105% on their homes, McBride said.
The thinking may be that stopping the worst foreclosures from occurring and lowering the overall rate will stop the dramatic slide in home prices and give those who are underwater a chance to make up the difference. But we may not have that kind of time, as so many are drowning in debt with seemingly no hope to dig out. In addition, the 10.1% jobless rate here (and rising in February, to be sure) will mean that a substantial number of honeowners will simply be unable to pay no matter what kind of modification can be worked out, and so the wave of foreclosures will continue.
Into this troubling situation has stepped Ted Lieu, the legislature's point person on the housing crisis. He is calling on the Obama Administration to do more.
"Many distressed homeowners in California are underwater by more than 5% on their home loan, which makes them ineligible to apply for refinance assistance," said Lieu, author of a state foreclosure moratorium law that Gov. Arnold Schwarzenegger signed last week.
Lieu said he would meet next week with administration officials to discuss his proposed changes [...]
Lieu said that whatever its flaws, the Obama plan addresses a root cause of the nation's economic woes by trying to help homeowners rather than "following the Bush administration policy of just throwing money at the banks."
Nonetheless, he said, the refinancing limit should be raised, perhaps to 115%, to help more people obtain cheaper loans.
"Otherwise, you're just going to end up helping a lot of people outside California," Lieu said.
It's just hard to put a single national standard on the plan when the circumstances are wildly different depending on the region.
Let's also note that Lieu's own housing legislation will begin to kick in shortly. This is from a press release:
My legislation, the California Foreclosure Prevention Act, will now compel a lender to modify a loan well before a homeowner should need to seek a solution from a bankruptcy court. Beginning in May, California will impose a 90 day foreclosure moratorium unless a lender offers a comprehensive loan modification program based, in part, on criteria set forth by the Federal Deposit Insurance Corporation. By adding a strong disincentive if a lender refuses to modify home loans, California's action not only compliments the President's plan, but gives him another stick to stabilize the real estate market and this economy.
It's worth praising those lawmakers who are taking the lead, especially on a problem of this magnitude which is such a major contributor to the overall economic meltdown in California.
If you tune in to the CalChannel right now, you'll see an Assembly hearing regarding HR 5, Asm. Ammiano's Resolution opposing Prop 8. After twenty minutes of some heartbreaking stories from LGBT families, it was hard to see it move on to the opponents. There were stories of children questioning whether their families were real because their wasn't a marriage involved. There were stories of LGBT children being brutalized.
Apparently the only opponents to marriage equality are from Antioch and Petaluma, as it seems the first half of marriage equality opponents came from those two Bay Area cities. The arguments were the typical, don't disenfranchise us, there are more of us than there are of you, typical ridiculousness. One of the richest arguments, just littered with irony:
We cannot allow the minority to rule against the people. I'm sorry if it doesn't go in your favor...I ask that you support the people.
I actually think this speaker, one Florence Cusick, meant to give this speech to the Republican Senate caucus regarding the budget. It's amazing the hypocrisy, it just burns. She spoke of the persecution of her Irish ancestors, and the persecution of her minority.
It really is amazing how one minority seeks to push down another once they have moved up the ladder. The repeated invoking of allowing a majority to oppress a minority. They gloat of prevailing, cry of disenfranchisement. And of course, the slippery slope argument leads to pedohilia, thanks to a pastor named Chauncy Gillings of Salinas. Why the Yes on 8 folks can't fathom the distinction, one of consent.
But in the end, democracy can only go so far. Democracy can only go so far as the tyranny of the majority does not
Asm. Ted Lieu (D-LA County) made quite a powerful speech.
Ten years ago I did not support marriage equality. I am a proud co-author of HR5, and proud to support Sen. Leno's marriage equality bills. To me the issue is very simple, it's about love. You never see the words love in the constituion. And that's precisely the point. Government ought not to be regulating the most sacred private parts of loving indivisuals. I love my wife, but there is no reason that love takes any precedence over Asm. Ammiano's love, or Sen. Perez's love of his life. There is nothing unique about my love that qualifies my wife and I to get a piece of paper that says marriage, that Tom Ammiano can't get for the love of his life.
No matter where you believe love flows form Jesus CHrist, as I do, or from Allah or from the human condition, you believe that love is the most sacred part of life. ... For government to choose winners and losers as to which love qualifies for what, is the ultimate offensive notion of what we are ll about. The issue isn't about your beliefs, it is about whether you think the government should be regulating in this most sacred area.
My view is that government should not pick winners and losers. We need to treat everybody equally. Government should stay the hell out of regulating this most sacred institution.
Friend of Calitics Ted Lieu has shown a lot of leadership during the housing crisis, attempting time and again to hold the mortgage brokers responsible and get sensible legislation passed that protects homeowners. It's been his signature issue the past two years. Now he's going to run for Attorney General.
Democratic Assemblyman Ted Lieu, D-Torrance, filed paperwork this week to run for attorney general in 2010.
Lieu is the third Democrat to make the move, following San Francisco District Attorney Kamala Harris, who announced she was exploring a run in mid-November, and former Assemblyman Joe Canciamilla, who filed in July.
Harris and Lieu and Canciamilla can answer one question for me that would help me in my decision for 2010. Do they feel they can keep stonewalling the Federal Prison Receiver, as Jerry Brown has, and refusing to comply with providing prisoners an environment that doesn't violate their Constitutional rights, or do they feel that the failure in leadership over 30 years of wrong-way sentencing and "tough on crime" nonsense needs to be stopped. Solving the prison crisis ought to be the foremost issue for the state's top cop.
That's the only explanation I have for him vetoing AB1830:
Gov. Arnold Schwarzenegger vetoed a proposal today that would have imposed tougher restrictions on mortgage brokers, such as banning them from issuing exotic loans to subprime borrowers that cause balances to grow rather than shrink over time [...]
The bill by Assemblyman Ted Lieu, D-Torrance, would have banned subprime borrowers from obtaining "negative amortization" loans, agreements that offer low initial payments but increase the principal balance over time, boosting interest costs and making them difficult to pay off.
AB 1830 also would have specified that mortgage brokers owe a "fiduciary duty" to borrowers. It would have prohibited brokers from steering borrowers toward higher risk loans than they would qualify for based on their income and credit. And it would have capped prepayment penalties for borrowers who want to refinance their loans to seek better terms.
Schwarzenegger, in his veto message, said the bill had laudable goals but that it "overreaches and may have unintended consequences."
Overreaches into the profits of his mortgage lending industry buddies, that is. Schwarzenegger's concerns about putting state mortgage brokers at a "competitive disadvantage" compared to their unregulated federal counterparts is easily managed (like forcing anyone who does business in the state to work under one standard) and just a pathetic excuse.
We are in crisis mode on Wall Street right now because mortgage lenders, pressured by investment banks and securities markets, abused the process and came up with all sorts of exotic schemes to get borrowers into homes. This bill would have curbed the worst practices of the industry. The Governor would rather they continue. He would rather mortgage lenders rip off their customers. He would rather the economy sink into a deep recession.
One unexamined aspect of the Governor's character is how much of a mindless puppet he is for Chamber of Commerce interests. Let this be another example.
The big story today continues to be the Bush/Paulson bailout bill, which is now being debated on Capitol Hill. In calling my representatives yesterday, Rep. Waxman seemed very wary of giving away $700 billion dollars to the Treasury Dept. without oversight or judicial review. Sen. Boxer's statement still buys into the "need for speed" that is accelerating this legislation in an effort to sneak through something very bad, but she does hit the real genesis of the crisis.
In addition, we must get to the root of the housing crisis and work to keep people in their homes through refinancing; if we don't, housing prices will continue to freefall and we will still be in a mess.
In California, we have more foreclosures than any other state-in August more than 101,000 Californians received foreclosure notices and more than 33,000 lost their homes.
If the American taxpayers come to the rescue in this financial crisis, you have to provide assurances that they aren't just taking on bad debt and further jeopardizing their future.
The housing crisis is the first mover here. Lenders and financial industry actors had an extreme need to get people into mortgages, no matter their income or ability to pay, and they sweet-talked them into teaser rates and ARMs with no money down and low opening monthly payments. The idea was to accumulate as many mortgages as possible to package them into mortgage-backed securities to sell overseas. It was a bad bet predicated on perpetual growth in the housing market, and when it crashed there was no flight to safety.
The most important protection for taxpayers comes with protection from the types of lending schemes we saw in the housing market, and that starts not just on Wall Street, but in the states. Aggressive regulation of the housing market in California will go very far to protect against such a crisis from happening again. The legislature passed AB1830 to address exactly this issue, and today Asm. Ted Lieu, the author of the bill, writes Governor Schwarzenegger urging him to sign it.
As you have said in advocating for budget reform, "Enough is enough!" Similarly, the past few years have shown the consequences of a system that failed to effectively regulate and reign in the out of control subprime mortgage industry. The laissez-faire policies previously advocated by much of the industry have turned out to be disastrous. As with budget reform, we need effective mortgage reforne. "Enough is enough!"
To much of the industry's credit, many within the industry and Wall Street recognize that they need better regulation. That is why the following major industry institutions (collectively representing thousands of financial institutions) have all gone neutral on this bill and many of them have contacted your office asking you to sign this bill: The California Bankers Association, California Mortgage Bankers Association, California Independent Bankers, California Credit Union League, and the California Financial Services Association [...]
AB 1830 provides consumer protections for subprime loans while maintaining access to credit and homeownership. This carefully crafted bill is the product of dozens and dozens of meetings and discussions with industry and consumer groups over an eight month period. Through our efforts to craft a balanced approach the leading organizations in the financial and banking industry have gone neutral on this bill. Although a minority of groups still oppose, such as the mortgage brokers and realtors, we have taken several of their suggestions and have worked hard to try to accommodate their concerns.
AB1830 would put mortgage brokers themselves on the hook for their predatory practices, imparting to them a fiduciary duty which would subject them to potential civil suits and loss of license were they not to put the economic interest of the borrower first. It would end the practice of yield spread premiums, which actually financially incentivized brokers to put borrowers into riskier and more costly mortgage options. It would prohibit steering prime borrowers into subprime loans, a common practice. It would ban "negative amortization" loans that would cost the borrower more for the loan even after their initial payments. It would increase enforcements, put caps on prepayment penalties, and go very far to prevent the kinds of abuses that led to this crisis in the credit markets.
It's essential to the future of your stock portfolio as well as the future of the state's economic picture to pass AB1830. The Governor should do so as soon as possible.
Yesterday, the Assembly passed SB 1137, which would alter the mortgage industry in California and aid those in danger of losing their homes. It got through the Assembly by one vote, with 10 Republicans voting with the Democrats. The Senate will need to pass it again to conform to some amendments and then this will go quickly to the Governor's desk. As Frank Russo writes:
The bill that passed, SB 1137 is authored by Democratic Senators Don Perata, Ellen Corbett, and Michael Machado, and coauthored by Speaker of the Assembly Karen Bass and principal coauthor Assemblymember Ted Lieu, who presented it on the Assembly floor. It goes beyond federal laws and received broad support from consumer groups. The legislation requires lenders and servicers to: 1) contact borrowers (or engage in a prescribed process to do so) to schedule telephone or in-person meetings on restructuring options before beginning the foreclosure process, 2) requires a 60-day notice to be given to tenants of buildings facing foreclosure before they can be removed from a rental housing unit; and 3) allows fines of up to $1,000 a day for owners of foreclosed properties that fail to adequately maintain them.
I like aspects of this legislation, particularly the steps toward removing blight in homes that aren't properly maintained, which is a big problem in heavily foreclosed areas. But this bill is a watered-down supplement to the raft of bills presented by Ted Lieu earlier this year, which would have really reformed the mortgage market. There would have been enhanced regulation, limits to penalties for prepayment, a requirement to translate loan terms to non-English speaking customers (yes, that's not current law), eliminate yield spread premiums (which rewarded lenders for getting their customers into higher interest-rate loans) and gotten rid of weasel language in mortgage documents like involuntary legal waivers. Almost all of those bills were gutted to the delight of the lending industry. What's in its place is vaguely helpful to borrowers, but not at all the industrywide reform that is needed to ensure that a runaway market like we saw a few years ago will never be repeated. Lieu modeled his reforms after those in North Carolina, where they work very well. This was a case of the lobbyists getting a hold of legislation before it could actually do any good.
This article by Frank Russo got me pretty depressed about the state of California politics.
There's something amiss in the state of Sacramento-and it has something to do with the state's banking and lending institutions and the stacking of committees that deal with them with legislators that are either weak kneed or just a bit overfriendly with the industry that they should be protecting us from.
What else is new?
Well, this afternoon, the Senate Committee on Banking, Finance, and Insurance, Chaired by Senator Michael Machado of Stockton, will be hearing two bills that have been gutted down behind a closed door process such that today's public proceedings on them may amount to little more than a sham [...]
It's difficult enough to get bills passed through the Assembly Banking Committee and the Assembly floor when going up against the behemoth banking industry which has a lot of spare change to throw around in legislative races and many high paid lobbyists scurrying about the Capitol.
It looks like AB 69 by Assemblymember Ted Lieu, originally a great bill, has been amended since it left the Assembly-and before today's hearing-such that the Center for Responsible Lending, a nonprofit, nonpartisan research and policy organization dedicated to protecting homeownership and family wealth by working to eliminate abusive financial practices, initially listed in support, has withdrawn that position.
Read the whole thing. The bottom line is that in this recent primary election special interest groups spent nearly $10 million, and a good bulk of them were business interests who are now playing inside Democratic primaries in traditionally liberal areas to sell low-information voters a bill of goods. This doesn't always work, but it works just enough to frustrate progress in Sacramento.
Lesson 3: The business lobby can influence Democratic politics, even in a largely minority district.
Former Assemblyman Rod Wright, a moderate, defeated liberal Assemblyman Mervyn Dymally -- reversing the pattern of leftist victories -- in a South Los Angeles Senate district after business donors invested roughly $1 million in Wright's campaign.
"Business has tended to stay out of black politics," says Sragow, who advises the business lobby. "But some black politicians ask, 'Why? We're always out looking for economic development in our districts.'
"The business community has decided it can't get a Republican Legislature, so it will play in districts where there's a Democratic candidate it can work with."
A major Democratic strategist has all but said that Don Perata shepherded along the candidacy of Rod Wright, and actually put it in terms that come very close to illegal coordination (note "a flurry of record spending by closely-aligned IE groups focusing all of their attention and ammo in one, concerted direction.")
This is the game. IE's are increasingly the only way to reach the electorate, as the low-dollar revolution has pretty much not reached the Golden State. So the Chamber of Commerce and industry groups fill the pockets of the politicians who, once elected, feel obligated to repay them. The US Constitution allows the right for anyone to petition their government for redress of grievances; outlawing lobbyists or the ability of merchants to consult their politicians is not tenable. What is tenable is to either create a parallel public financing system by employing the residents of the state to pay attention to local politics enough to fund progressive-minded candidates, or to bring clean money to California, where it's arguably needed more than anywhere else, and end the pernicious influence of special interests in state elections. Otherwise, you get a steady parade of mortgage relief bills that offer no relief.
• Assemblymember and former Banking Committee Chair Ted Lieu had a good piece yesterday on the foreclosure crisis and how continuing a laissez-faire attitude toward a deregulated lending industry is a recipe for even more disaster. AB 1830 is the vehicle to crack down on irresponsible lenders and ban risky loans.
• Steve Wiegand writes about the circuitous route the Governor has taken this year, first toward fiscal austerity, then toward revenue enhancement, and everywhere in between. Schwarzenegger is completely squeezed, knowing his legacy and reputation is on the line and at his wit's end over how to bridge the chasm between Republican intransigence and a way forward for California.
• The California Labor Fed has released its endorsements for legislative races. Not a lot of surprises here, nor a lot of variance from the CDP endorsements, although Carole Migden and Bob Blumenfield didn't see their endorsements vacated on the convention floor. The Labor Fed can endorse multiple candidates in one race, which allows them to wiggle out of some of the more contested primaries (in AD-14 they actually had a TRIPLE endorsement). The Labor Fed does bring member education, and in some cases money and volunteers, so it's not a little thing.
• Wired's Autopia looks at LA's future in mobility. In a word, I would call the report frustrating. It's basically going to take forever until the city truly has the transit system it deserves; right now, just 7% of the city uses mass transit.
"I am concerned that ICE enforcement actions are creating an impression that this region is somehow less hospitable to these critical businesses than other regions," Villaraigosa wrote in a March 27 letter to Michael Chertoff, secretary of the Department of Homeland Security [...]
In his letter, Villaraigosa said ICE has targeted "established, responsible employers" in industries that have a "significant reliance on workforces that include undocumented immigrants."
"In these industries, including most areas of manufacturing, even the most scrupulous and responsible employers have no choice but to rely on workers whose documentation, while facially valid, may raise questions about their lawful presence," he wrote. He said ICE should spend its limited resources targeting employers who exploit wage and hour laws.
"At a time when we are facing an economic downturn and gang violence at epidemic levels, the federal government should focus its resources on deporting criminal gang members rather than targeting legitimate businesses," said Matt Szabo, the mayor's spokesman.
In general I agree with worksite rules enforcement, but the issue does seem to be out of proportion and balance. It's selective.
• This is a really interesting and refreshingly honest article by Brad Plumer on the SEIU/UHW situation.
Because I'm dumb: corrected to Portantino from Portafino
Rep. Anthony Portantino got a fax last week informing him that he was no longer chairing the Education Committee. Rep. Hector De La Torre lost his chairmanship of the Rules Committee and won't even get to stay on the committee. The LA Times and the Pasadena Star News, along with Capitol Weekly, paint the moves as some combination of retribution for running for Speaker (both ran against Karen Bass) and lining up Bass' preferred leadership ahead of her taking over the Speakership.
Steve Maviglio, in his normally flowery language, said simply "it's an internal caucus matter." Both Portantino and De La Torre have said they spoke to Bass and she told them she knew nothing about the demotions. If you've been living under a rock lately, you may have missed that Education is rather a hot topic about now in the halls of the Capitol, so a shakeup at the top of the committee is notable. And the Rules Committee is always a big deal, so swapping out a recent Bass (and Nunez) competitor for Ted Leiu (who's long been in Nunez's and Bass' respective camps) and dropping De La Torre all the way off the committee, well...that's also notable.
If anything, it brings into stark contrast two competing governing theories. Some people want to govern surrounded by the folks who get to the top based entirely on their merits, some prefer to be surrounded by the folks they work best with. Certainly this isn't a cut-and-dried contrast between the two options, but I'm sure it sets (or reinforces more likely) a standard of discouraging people for aspiring to higher positions lest they be punished for it.
