When it comes to foreclosing on Californians, it looks like Wells Fargo may take the prize. According to a report released today, Wells Fargo is responsible for more homes in the foreclosure pipeline in California than any other single lender.
Millions of dollars in new tax revenue earmarked for the University of California system as part of the state's recently passed Proposition 30 will instead be routed to major financial firms, because of bad bets made by a Wall Street-influenced UC Board of Regents.
Over the last decade, tuition and fees for undergraduates in the UC system have tripled, adding enormous debt burdens to UC graduates and pushing lower-income students into the already overburdened state college and community college systems, or out of higher education altogether. Members of the UC Board of Regents, which governs the system and which approved the tuition hikes, have blamed the increases on the bad economy and on politicians.
However, according to a new report written by five doctoral students at UC Berkeley, in the years preceding the 2008 financial collapse, members of the Board of Regents themselves had overseen "a qualitative shift in the financial practices of the University of California" by employing the same kinds of exotic financial instruments that precipitated the meltdown on Wall Street - primarily, bond issuances hedged by interest rate swaps.
This week, the U.S. Department of Housing and Development (HUD) and the Big Banks teamed up to propose a multi-state settlement to address the foreclosure crisis. But based on the terms described in numerous media reports, the deal appears to be a settlement for the banks, not a settlement for the middle class. The people of California need real relief, not a quick settlement that lets the banks off the hook.
California is home to nine of the ten cities that were hardest hit by the foreclosure freefall. The two million working families we represent have been at the epicenter of this crisis. Millions have been devastated by the loss of their homes. Many more have watched their home values plummet and now nearly one in three California borrowers are underwater, owing more to the banks than their homes are worth. California has the second highest foreclosure rate in the country, surpassed only by Nevada. For these reasons, our stake in the outcome of the settlement talks is great. Our families, our communities, our government and our economy depend upon a fair outcome.
Taxpayers revived the Big Banks from their self-inflicted crash with a $700 billion bailout in 2009. With the infusion, banks were directed to help homeowners recover from the mortgage crisis they created. Instead, bank executives took the money in big bonuses. The greed boggles one’s mind. Some should go to jail. Instead they again want to pay pennies on the dollars they took while foreclosing on millions of California homes.
On every level, the proposed settlement is inadequate: The total settlement amount is expected to be just $25 billion dollars, while the nation has $750 billion in negative equity. $25 billion would not even cover the loss of home equity to California families, let alone all homeowners across the country. The settlement is expected to help a million homeowners, when more than 10 million are underwater and millions more have been wrongfully foreclosed upon. The settlement needs to be in the range of $200 -$400 billion, not $25 billion.
Even worse, we are concerned that the settlement may not even come from the pockets of those who engaged in the misconduct. If the settlement gives servicers credit for writing down the value of investor-owned mortgage-backed securities without requiring them to write down the mortgages and liens they own, it will be our public pension plans, not the banks, that will take the hit. That means the same working families who have already seen their life savings go up in smoke will now face losses in their retirement funds. Not only is this a great injustice, but it fails to enact any real penalty against the bad actors.
It is difficult to overstate the harm that has been inflicted on our economy by the financial institutions now seeking to pay a relatively small sum and receive broad immunity. Foreclosures destroy families financially and emotionally, and blighted, abandoned properties destroy our communities. Cities, counties, and the state are unable to meet the needs of our most vulnerable, while banks sit on record reserves.
Four years ago Wall Street bankers crashed our economy after reckless gambling with our homes and our livelihoods. Then they looted our Treasury for bailouts and bonuses while their 1% allies used the economic chaos as an excuse to rob us of the investments we've made in helping every Californian achieve the American Dream. But since September 17, the simmering anger at Wall Street has found a powerful expression through the Occupy movement, massive campus mobilizations and increasing numbers of homeowners standing up to wrongful bank evictions by organizing community-led "home defenses."
Forbes magazine as gutsy consumer advocate? Well, not really, but even the favored rag of corporate shills everywhere seemed stunned by Bank of America’s $5 debit fee announcement on Friday, accusing the banking behemoth of committing
a common mistake large corporations make: taking the customer for granted, holding the belief that whatever products or services they offer are unique and indispensible, so their customers will always be there.
While we agree that Bank of America’s incompetence runs rampant throughout the banking industry, by several measures of greed and arrogance, this troubled corporation stands alone. Allow us to present Bank of America with the following uniquely dubious titles:
Greediest TARP recipient: Bank of America took tens of billions of taxpayer dollars from the Troubled Asset Relief Program (TARP) in 2008. This bailout was supposed to help shore up the entire US financial system—as banks can be too big to fail but never too big to take free taxpayer money. Anyway, the terms of these loans required recipient banks to individually maintain sufficient cash to ward off a broader Wall Street meltdown. However, as last week’s Special Investigator General (SIGTARP) report confirms, Bank of America lobbied heavily to escape the program before they’d achieved the required financial reserves. Why? According to the report, Bank of America cited “…concerns including market perception and restrictions established by the Special Master for TARP Executive Compensation.” In other words, a shaky Bank of America weaseled out early to polish its image and pay executives more—jeopardizing the fiscal health of their company and the stability of our country.
Downsizer of the year: This one wasn’t even close. On September 12th, Bank of America CEO Brian Moynihan announced 30,000 layoffs—that’s more than twice the number of layoffs (13,000) declared by 2011’s second-place downsizer, pharmaceutical titan Merck & Co. Bank of America’s bombshell dropped just one month after Moynihan informed investors that “our capital levels are among the highest they’ve ever been in this institution’s history.” Maybe he’s confusing “our” capital levels with his capital levels: last year, Moynihan collected $2 million of his $10 million 2010 total compensation package. Other executives, in some cases, collected even more. Thomas Montag, head of investment banking and capital markets, will rake in $16 million for his work in 2010. Not bad for tanking one of the biggest banks the world has ever seen, though we have to wonder, how many jobs could be saved by firing these two alone?
#1 Tax Cheat: If you paid any federal income taxes at all last year, you paid more than Bank of America. In fact, unless you got a refund check bigger than $1 billion, you paid more taxes than Bank of America. It gets worse: these freeloaders paid no taxes last year and likely won’t for a long time. Chew on that next time pro-banker legislators demand we balance the budget through Social Security and Medicare cuts from middle class families.
First in Fees: All of which leads up to the latest Bank of America gaffe: the unprecedented $5 monthly debit fee slapped on any customer guilty of using his or her debit card for its intended purpose of buying things. This charge comes courtesy of a bank that for years encouraged frequent use of and zealous devotion to debit cards—mainly to help the bank rack up sky-high “interchange” fees from merchants on every card swipe. The company changed their tune, however, following federal legislation requiring that fees be “reasonable and proportional to the cost incurred by the issuer with respect to the transaction.” Apparently, despite final federal rulemaking that more than doubled the fee limit set by Congress, reasonable and proportional profits just aren’t enough for this champion profiteer—hence the shocking new fee.
While we applaud the furor over the monthly debit charge, be sure to consider this fee just the latest of many anti-consumer and anti-worker moves from the king of both. We’ll go to another surprising Forbes magazine masterpiece for the final word: “Banks aren’t our friends.” From one friend to another, we couldn’t agree more.
I took a break to enjoy the holiday, as I'm sure many of you did, but my inbox kept busy, and on Friday came a doozy, courtesy of the Washington Post.
You remember that little bit of a banking crisis we had a couple of years back, where banks around the world might have possibly, maybe, just a little, conspired in a giant scheme to package toxic mortgage loans into Grade A, investment-ready securities instruments, which then blew up in everyone's faces to the tune of a whole lot of taxpayer bailouts?
Well all of a sudden, it looks like an agency of the Federal Government is looking to do something about it, in a real big way.
Last Friday the Federal Housing Finance Agency (FHFA) announced they're suing 17 firms (I'll give you a list, bit it's pretty much all the usual suspects); depending on who you ask the Feds are seeking an amount as high as $200 billion.
As Joe Biden would say, it's a big...well, it's a big deal, anyway, and that's why we're starting the new week with this one.
More than a thousand RNs and other activists marched on Wall Street Wednesday, chanting "Wall Street got bailed out! We got sold out!"
They stood on the steps of Federal Hall across from the New York Stock Exchange and held signs - "Take it Back! Tax Wall Street" and "Heal America! Tax Wall Street" - so crowds of curious passersby got the message.
The wealthy right wing have always liked to pick on the working class. And now Wall Street wants to blame Main Street for the financial crisis our country is in. Big bankers taking home large bonuses are blaming the childcare workers and parking-meter collectors in this country, saying that their jobs are the reason we're in a recession.
If you stop to actually look at the people and jobs Wall Street is attacking, you realize that we need to stop the lies. Public-service workers make little money and do the hard jobs necessary to keep our country running.
In 2009, public service worker Joe Wisniowski made $40,000 as an Airport Equipment Operator for an Ohio airport. Meanwhile Wall Street raked in $20.3 BILLION in bonuses during the same year.
As Robert Bonds, a parking meter collections assistant in Detroit, puts it: "What is this teaching my son? You can work hard, go to college to get your degree, and it's all out of your hands; your success is based on somebody sitting in an office somewhere on Wall Street... that's not what I want him to believe."
Public-service workers are coming under attack like never before. Wall Street has the money, the power and the media mouthpiece to spread lies about those who serve our country in necessary jobs. We can't let Wall Street destroy the backbone of America. Join with us to defend public service workers.
It's part two of our "Netroots Nation Goes To Vegas Piano Bar Extravaganza", and in keeping with tradition that means we are again taking a story request.
This time we won't be talking about energy security or "climate security"; instead, we'll discuss retirement security, keeping your money for yourself instead of paying it out in "mystery fees", and how one of the "usual suspects" is at it again.
Last night, President Barack Obama delivered his State of the Union address - my first as a U.S. Congressman. You've heard a lot of instant reactions from the Beltway and beyond about the President's message, but it's my hope we can take a step back from the minutia and develop a better sense of recent history.
Let's remember where we were when the President delivered his inaugural address last year. When the President took office, America had just endured the worst year for job loss since 1945. In the last three months of 2008, our country was hemorrhaging an average of 673,000 jobs per month. By the last three months of 2009, that number was reduced to 69,333, a 90% improvement. To be sure, the state of our union needs to be much stronger, but because of the efforts of President Obama and Democrats in Congress, we've endured the worst of the Bush recession and we're creating an economy that once again creates jobs for the middle and working classes.
Last Saturday, I hosted three town halls in Fairfield, Antioch, and Walnut Creek, and as you can imagine, the questions ran the gamut. But time and again, I heard from so many of my constituents about their troubles in this difficult economy. Whether it was recently laid off workers, students unsure if they can afford a 32% hike in their fees after five consecutive years of tuition hikes, laid off workers unable to collect unemployment insurance, employers who can't acquire the capital they need to expand, or homeowners trying to save their properties from foreclosure, our people are hurting, and it's our job in Washington to fix it.
We're all now painfully aware that our financial sector was permitted to run amuck under the previous administration and our government failed to stop it. To address this problem, today I proudly cast my vote for H.R. 4173, the Wall Street Reform and Consumer Protection Act. While I think more expansive reforms of the financial sector are necessary, this legislation is an important first-step that will go far in helping to protect consumers, investors, homeowners, and tenants.
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.
(Move over, AIG, this is the next outrage. - promoted by David Dayen)
Fool us once, shame on you. Fool us twice, shame on us. Given the intense public backlash against the shameful AIG bonuses, it is unthinkable that Fannie Mae would now award million dollar bonuses to four of its top executives. According to recent news reports, Executive Vice Presidents Kenneth Bacon, David Hisey, Michael Williams, and Thomas Lund will each receive over $1 million in bonuses. This is unacceptable.
Let's not forget that Fannie Mae failed last year. At least $15 billion of precious taxpayer dollars have been injected into Fannie Mae to keep it afloat, and hundreds of billions more are being used to guarantee their loans. We fire executives for bad judgment. It is beyond bad judgment for any of Fannie Mae's executives to accept their million dollar bonuses. There are many Wall Street executives without a job right now who will happily take top positions at Fannie Mae without the need for million-dollar bonuses.
On Wednesday I wrote a piece on Huffington Post and another at Open Left talking about the centrality of fixing the foreclosure crisis to any recovery from the economic meltdown. Since the toxic assets at the center of the meltdown are based on mortgages that are entering foreclosure at a rate of one every 13 seconds, we have to address foreclosure as a part of getting America back on its feet.
The Homeowner Affordability and Stabilization Plan (HASP), announced in Phoenix on Wednesday by President Obama, which will help up to an estimated 9 million families, is a good first step - and the first serious effort by the Federal government to confront the challenge. But just because there was an announcement does not lessen the urgency of the problem. We are still in a situation where four families every minute enter the foreclosure process. We believe there must be a moratorium on foreclosures until HASP is fully implemented.
So yesterday we at ACORN launched the Home Defenders campaign in seven cities - a campaign to force the question of moratoriums and to press the urgency of this crisis into the consciousness of elected officials on the state and national levels. This is a campaign of refusal and resistance, refusal by distressed homeowners to cooperate with the foreclosure process and resistance to attempts to evict them from their homes. And in some cases it is a campaign of getting people back into their homes.
I wanted to give everyone a report-back from our activities yesterday, which is in the extended text.
(Assemblyman Lieu has been a leader on the foreclosure issue. Welcome him to Calitics. - promoted by David Dayen)
Albert Einstein once said that insanity is doing the same thing over and over again and expecting a different result. Wall Street and Treasury Secretary Henry Paulson have continued to ignore the home foreclosure problem, despite clear and urgent warnings from consumer groups, legislators, and regulators. Virtually none of the $8.5 trillion in federal taxpayer bailout commitments is directed towards helping reduce foreclosures. So it should come as no surprise that new data from the Mortgage Bankers Association shows that foreclosures have increased 76% compared to a year ago to hit yet another record high, with a record 1 in 10 Americans now experiencing mortgage trouble.
The problem is particularly acute in California, which accounts for one-third of the nation's foreclosures. California alone has 54 percent of all foreclosure filings on adjustable rate loans.
The current plan to give $700 billion away to Wall Street - the same ones who got us into this mess - is a sign we need Clean Money public financing of campaigns more than ever. Finance, insurance, and real estate firms have poured over $5 billion in contributions into politicians' hands since 1990. They've already been paid back by special interest giveaways many times over, and now they're asking for over $2,000 from every man, woman, and child in the country.
Clean Money is the Only Way to Stop this Madness From Happening Again and Again!
Urge Governor Schwarzenegger to sign AB 583, the California Fair Elections Act, to start ending special interest dominance of politics by sending him a fax right now:
Like everyone, I've been watching the bloodbath on Wall Street unfold, but I had figured that so far, I'm relatively unaffected by it all, since I haven't involved myself in any of the investments (and losses) that such outfits as Bear Stearns, Countrywide, or AIG made. I have been pretty prudent with my money, and I thought I would stay clear of the damage. Now I'm not so sure.
On Saturday, I got a new policy declaration from my auto insurer, 21st Century. I've been pretty happy with thim, and it was nice to be going with a California company. But now, even though the declaration does list 21st Century at the bottom, up on the top, prominently displayed is the "AIG" logo.
I admit I knew this was coming, and up until recently, I wasn't particularly concerned since AIG is (was) a really big, solid insurance company with a good conservative reputation (and I like that in an insurance company). But in light of the news about the company, this change is no longer comforting.
Things have been further complicated by Governor Paterson's statement today that AIG would be able to "tap its subsidiaries" for up to $20 billion in "liquidity" to help it through a rough patch. Just which "subsidiaries" does the Governor mean?
If it's 21st Century, I am not pleased. It doesn't happen that often, but insurance companies do default on their obligations from time to time. It happened to me about 20 years ago with another car insurance company, and I ended up in the "assigned risk" pool while I undertook the always pleasant task of shopping for car insurance. That's how and when I ended up with 21st Century (back when it was only 20th Century).
I don't want to go auto insurance shopping, and I don't want to have to do it more than once either. I am left with the uneasy feeling that if AIG sucks the reserves out of Century 21, I'll be in the assigned risk pool again.
Also, if I do find another company, I am really not all that assured that it won't be at risk as well. This whole financial mess is much more complex than just the parts we know about, and probably all the insurers are hooked into crazy investments like Credit Default Swaps and Collateralized Dept Obligations. SO, while I shop, I have to wonder if I'm simply trading one problem for another.
I called the Department of Insurance today to find out it anyone there knew what was going on and what might happen if AIG does drag 21st Century down. I should have spent my time on something else, because they either don't know anything or aren't going to tell anyone anything until there really is a problem.
Tomorrow, I think I will be calling 21st Century just to see if they can give me any assurances. If they can't, I guess I will be spending my free time in the next couple of weeks evaluating auto policies and insurance company balance sheets. WooHoo!