Wells Fargo, Criminal Enterprise

ct-wells-fargo-settlement-questions-oversight-20160910New Orleans   I’ve never been a fan of Wells Fargo. We fought them endlessly over predatory lending practices in mortgages and subprime products. They don’t listen, they obfuscate, stonewall, and hide behind layers of lawyers in stubborn refusal even when faced with evidence of clear misdeeds. We were able to fight Citicorp, Bank of America, HSBC, and a ton of subprimes, even Countrywide, and succeed in reforming practices and achieving decent settlements, but Wells Fargo, even when they settled did so narrowly and without conviction. I was clear for ACORN and our members, you just can’t trust a bank like that with your money.

It is some relief that now everyone in the United States is getting a crash course in learning that Wells Fargo is not the community banker it has claimed to be, but a criminal enterprise.

Let’s review the facts, now being widely reported. For five years employees of Wells Fargo opened up to 2 million bank and credit card accounts willy-nilly without any permission from anyone. Often the accounts were closed fairly quickly which is why the penalties now being paid by the bank are less than $200 million. It was a penny ante, amateur scam with employees making up email addresses and sometimes virtually opening up the accounts from Wells Fargo internet domains. The bank has now fired 5300 employees who were involved in this fraud. As the New York Times’ columnist, Andrew Sorkin, points out, “that’s not a few bad apples.”

Wells Fargo has taken out ads apologizing and taking responsibility, but they clearly, as usual, have their fingers crossed behind their backs. A couple of months ago before all of this criminality became public, they allowed Carrie Tolstedt, a 27-year veteran and their head of “community banking,” to retire and walk away with over a $120 million going away present. Various banking analysts are calling for a “clawback” since Wells has rules allowing them to recover monies from executives where there were ill-gotten gains. The Wall Street Journal was so grossed out by all of this that they reported the calls for clawbacks and showed a picture of Ms. Tolstedt, but couldn’t bring themselves to mention the $120 million she took away with her office plants for fear that all of us Visigoths would be clamoring at the gates.

What will they learn? Likely nothing.

But, it’s easy to explain how this happens, and it is the same way that it happened when mortgage brokers were writing fictitious so-called, “lair’s loans,” where many observers of the 2008 financial meltdown are still confused and some think it was the borrower fibbing, rather than the underwriter. In the current Wells Fargo case on cards and accounts, as well as their own and many other situations previously on loans, it is crystal clear that once you link pay to simple production, you can guarantee there will be fraud. The only question will be how long it takes you to be caught, and how much money the bank makes in the interim.

For managers there, just like Carrie Tolstedt, there is a disincentive to impose the kind of controls that would weed out these problems. Top dogs get paid on the numbers, just like the runts of the litter. In bank after bank, once you get them across the table for all of their talk about protection using sophisticated algorithms, risk management, and blah, blah, blah, they simply are culturally and systemically unable to tightly manage on performance and standards, once production is all, and pay is linked to such incentives.

They are all smart enough to know this, but it’s the nature of capitalism in some ways to ignore it. You can only conclude that they didn’t care or thought that they wouldn’t be caught. None of which recommends a bank like Wells Fargo as a place to trust your money, since they are clearly committed to themselves first and their customers last, as little more than numbers being crunched in their back rooms somewhere.

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Please enjoy Phish’s Breath and Burning. Thank you KABF.

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Tradeoffs Between Time and Money

timeormoneyNew Orleans   Two professors reported on the results of a study they made about the choices people made between time and money. They reported that people were happier and more satisfied with their lives when they chose to value time over money. They led into the piece by mentioning that one of the economists – a man – faced the choice analytically over spending time over a weekend with a new baby. He was offered a reasonably lucrative opportunity to conduct two days’ worth of workshops across the country which would have helped pay for the cost of daycare and other associated expenses of a new child, or he could have chosen to spent the time at home with the child. We were sort of left hanging on this one, but given their survey result and his argument, he clearly chose time over money.

All of this seems fine and dandy, but it also stops way short of being about reality. To have any real meaning such a study would have to try to determine what the financial benchmark would be that would realistically allow an individual the luxury to choose. Furthermore, there are two edges to this sword when you grab it, but we’ll get to that.

At the simplest level you have to have money in order to choose time. The professor was making a choice on allocation of his resources, but he started with sufficient resources to allow him to have a choice or at least believe that he had a choice and to believe that the consequences of either decision would not have been fatal or painful or face public scorn. And, in fact his time itself had value, as evidenced by the fact others were willing to pay him to expend it. An interesting question for him, as an economist, might have been what level of payment for these two workshops would have established a tipping point where he chose the work and the money, being able to rationalize that it would allow him to essentially purchase more time in the future.

For marginal workers and lower income families all over the world who lack baseline resources, there simply is no choice. If someone shows them the money, they have to go for it. And, in fact there’s another public risk for lower income individuals and families, especially those that get any kind of public support or resources. This is the other edge of the sword. This is the “welfare Cadillac” problem. A significant part of society wants all lower income individuals and families to never have a choice, but to always choose money, meaning work, because they believe against all evidence that work is always available, that nothing is too menial, and that anyone essentially choosing time is stealing their money and should have no choice. When it has to do with women on welfare with children, the same folks might want their wives to stay at home with their children for the sake of the children as their view of a social good, but want to deny such a choice to anyone receiving public aid.

Admittedly all of this was on my mind recently as I spent more than 30 hours in order to travel in one day from Berlin to Amsterdam to Washington, DC to Toronto and then wend my way through rental car hell and pouring rain to my final destination all as the result of a series of decisions solely based on being forced to choose money and assign zero value to time. The pre-dawn train and flight from Berlin to Amsterdam, is what had allowed visits with many activists, organizers, unions, and parities in Hamburg and Berlin in the first place. The cost of the roundtrip to Amsterdam was at the lowest possible cost to allow a peoples’ party to marshal its resources and the last and cheapest flight to Toronto and the cheapo 24-hour EZ-Rental Car operation was about saving every looney and toony for ACORN Canada.

Are people really happier with time rather than money? Sure, if that have enough money to start with and the right to make a choice in their best view of their interests. How many people are excluded from the right to make such a choice? Without that information, it would seem the conclusions are both irrelevant and trivial.

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Waking up the Sleeping Giant and Building a Renters’ Voting Block

us-hr-ageBuckhorn, Ontario  It is hard to escape the feeling, country to country, that low-and-moderate income families, and, just possibly, even families with more money, are rapidly consolidating into a permanent class of renters. Certainly in some cities around the world like New York City, Toronto, London, and elsewhere, this has long been the case. In the United States though it is a bumpier transition because the dominant narrative in the vast expanse of the land is that the American dream includes home ownership. Increasingly that dream comes with a disclosure now that you better be ready to move to smaller towns, cities, and rural areas if you want to live that dream.

In the US, the number of renters, and therefore potential renter’s votes, are rising. Renter votes increased 49% between 1996 and 2012, while owner votes only increased 23%, according to an analysis of U.S. Census data. According to data reported by the Wall Street Journal:

Nonetheless, just 22% of votes cast in the 2012 election were by renters, according to the analysis. But as the renter population grows, Apartment List [a rental leasing website] estimates that one-third of eligible voters in this election could be renters. Based on historical voting patterns, renters would likely cast about one-quarter of the votes—a small but meaningful increase from the last election.

This sleeping giant traditionally has not stirred much around Election Day. Renters are often seen as more transient, though some data interestingly finds that voting rates are as low for stable tenants as they are for frequent movers. They are also young, and poorer, none of which are huge vote movers. Furthermore, owners vote more consistently than renters. Another statistic in the Journal piece points to a potential game changer as anger over cost and affordability continues to rise.

The number of cost-burdened renters—those who spend more than 30% of their incomes on rent—has risen by 3.6 million since 2008, to a historic high of 21.3 million in 2014, according to Harvard University’s Joint Center for Housing Studies. In the meantime, the number of cost-burdened owners has declined by 4.4 million since 2008 to 18.5 million.

The Presidential campaign is silent on the issue of renters and rising rents and housing prices are at the heart of the entire Trump business model, so we shouldn’t be surprised. Either way, if any of them have a plan, it’s a secret.

There’s a way to change this though and wake the sleeping giant: put issues directly on the ballot in cities and states wherever possible that allow the people to step in with solutions where politicians fear to tread on campaign contributions from developers. Just as ACORN did earlier in place after place on living wages, we need to start crafting initiatives from our renters’ bill of rights from rent control to dedicated spending for public and subsidized affordable housing. Organizationally, we need to craft proposals that meet the crisis and the interest of tenants and bring them out to polls in force to alter this landscape.

We need to make sure there are consequences as well. As campaign discussions wound down on the prospects of winning a comprehensive and enforceable landlord licensing ordinance or bylaw in Toronto, ACORN’s head organizer there, John Anderson, noted flatly that either the Council passed the measure this fall or they would likely see the issue as the largest issue in the next election. As the votes of renters are triggered in just that way everywhere the issue is rising, that’s not a threat or a promise, but virtually a take-it-to-the-bank prediction.

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Renters’ Rising

banner_fb-page001Buckhorn, Ontario   It is starting to feel like we’re getting real traction in what has become a global fight for tenants’ rights. Not only has ACORN built an effective organization for tenants to resist the arbitrary, capricious, and sometimes dangerous and unhealthy practices of landlords in an often uncertain legal environment, but as importantly we are developing real programs for real protections from government and policy makers. As I was crossing the Atlantic to attend an ACORN head organizers and staff training session in Ontario, there was evidence of this kind of progress for tenants on both sides of the ocean.

In Bristol, in a conference attended by hundreds, ACORN organized a wide-ranging discussion on steps that needed to be taken to shore up and advance tenants’ rights not only in Bristol but throughout England. Launching a new campaign, Renters’ Rising, with actions and events throughout England, ACORN is calling for a country-wide Renters’ Union. Similar steps are being taken by ACORN Scotland on the wake of their parliamentary victories on security of tenure and rent control.

The crisis in affordable housing in the United Kingdom touches through virtually every city. London is now world famous for the breadth of the issue, but ACORN chapters in Newcastle, Reading, Birmingham, and of course Bristol and London have organized meeting after meeting where members are demanding solutions and are determined to take action. The collapse of social housing and the dramatic increase of private landlord tenancy has created an environment where protective rules and policies for tenants has not caught up, giving too many landlords the upper hand which they are exploiting. ACORN Bristol’s promotion of an ethical letting charter and its support by the Bristol Council as well as several letting agencies themselves has given momentum to these campaigns.

On the other side of the water the progress in Toronto in winning a landlord licensing regime with real teeth in enforcement after a campaign with ups and downs over more than a decade is finally at the finish line. ACORN has already won initial support by the full council but the devil is in the details and is now rounding up council support in anticipation of the staff report and final votes on implementation. Organizers reported real progress pretty much across the board with strong support from various council allies who are essentially telling us, “We got this!” Nonetheless, members are involved at every step along the way and will be present in large numbers at every opportunity. ACORN Canada President Marva Burnett was realistic in a recent interview on what the approval of landlord licensing would mean. She noted both her disappointment at the Toronto Council’s rejection of the proposal in 2008, as well as her expectations and hope for the final vote on the plan this fall.

Burnett’s points are inescapable. None of this is easy and, given the power of landlords, these fights are won through persistence. But the factor on ACORN’s side on both sides of the Atlantic seems to be that politicians cannot ignore reality forever. The rental market is out of control and that demands effective regulation. The other point that is equally inescapable whether Canada or the United Kingdom is that tenants can neither fight nor win without effective, mass organization and that’s what they have built in Toronto and elsewhere in Canada and that ACORN is now building with is Renters’ Union in England.

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The Interesting Transition from Ideological Argument to Personal Contact

Bönen 21.11.2014 [© Dietrich Hackenberg - www.lichtbild.org, Nutzung nur gegen Honorar, Urhebervermerk und Belegexemplar]

Bönen 21.11.2014 [© Dietrich Hackenberg – www.lichtbild.org, Nutzung nur gegen Honorar, Urhebervermerk und Belegexemplar]

Berlin   Visiting with political and labor organizers and activists of all stripes in Germany was fascinating and for me, an education. It was impressive to see the deep, lifelong commitments that so many have made individually to progressive work that permeates down to their living conditions. Similar to France and the United Kingdom, people often worked at minimum wage for years in support of their political and community projects, and then went home to cooperative housing arrangements, often erasing any lines between the personal and the political, or so it seemed to an interested observer.

Unions are still strong. But, these are times of transition. Unions are not as strong as they were. I heard that the massively impressive building of Ver.di, the second largest union in Germany, where we met with a group of people one evening, was now seeking tenants for space they no longer occupy. At the same time there is new energy in some organizing projects. In our meeting at Ver.di were three or four organizers and activists preparing for a strike for a first contract at a huge hospital where they had won bargaining rights while still trying to organize a secondary unit of 2300 workers.

On the other hand, talking the next day to students from the Global Labor College, a small elite program to train future union staff and policy people, it was somewhat surprising to hear how little attention and training was focused on organizing, as if somehow everything would remain locked in place. Asking students about to graduate if they were being placed either in their countries or elsewhere, it seemed they were offered internships, but in many cases they laughed and told us that this was largely an exercise in them providing free labor in exchange for future contacts, and it was unclear if they would be able to find a place in the labor movement in the future at all.

Party life is carefully articulated and dissected into large slabs and small slivers. People often have more voice, than they have power. Meeting with top education, strategic planning, and campaign staff of Germany’s Die Linke, perhaps the largest left-progressive parliamentary party in Europe, was fascinating. A more talented and thoughtful team of people would be hard to find anywhere in the world. Yet, as the meeting went on, it became clear there was a transition at work here as well. Where once parties could communicate easily to a large base of ideologically compatible people, modern times and issues were intruding and confusing the base of working class voters everywhere. Participation in voting was falling election after election. Wedge issues like immigration were toxic, but there was also a sense from some sectors of the base that there was satisfaction in assuming a fixed level of support was possible without aggressively trying to adapt to modern political campaigning, communication, data, and field operations.

Just as I had found in the Netherlands, people are pushing forward and making plans, while listening and learning on the run. There is good cause for hope in the future, but like everywhere, we are running against the clock and change – and sometimes the calendar – are not always kind to us.

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Please enjoy Holy Communion by The Pretenders.  Thanks to KABF.

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Is Labor Day for Workers or Politicians?

highlight-img2Berlin   Every four years Labor Day marks the official beginning of the “real” campaign for President in the United States. Of course these campaigns are endless and began years and years before for most candidates, like a Hillary Clinton. Even Mr. Surprise Candidate, Donald Trump, has been hard at it for at least a year now. Both candidates had their big-bodied planes in Ohio on the same tarmac on Labor Day. Reporters could run back and forth between the planes. Candidates could nod in each others’ direction and note how important Ohio is as a battleground state. Democrats could show up at some of the few remaining Labor Day parades, marches, picnics, or whatever we might call them and genuflect to what’s left of the remaining power of labor unions, much of which is in fact on the goal line stand defense of politics and elections.

It is worth wondering if Labor Day really exists anymore to celebrate workers and their unions or just an easy access bridge for politicians to have their photo ops with workers, and then move on to more fundraisers and other touchstones of micro-targeting. It goes without saying for most people Labor Day is more the mark of the end of summer and perhaps the beginning of school sessions, and a last chance at a 3-day holiday in the long stretch until Thanksgiving. What’s labor got to do with it?

Judy Duncan, ACORN Canada’s head organizer forwarded me this piece she had gotten commemorating Labor Day, and it’s worth sharing:

In 1894, it [Labor Day] became a national holiday in Canada. The Canadian government was seeking to accommodate the Labour Movement after the rise of the Knights of Labor and the strengthening of unions in the 1880s. Shortly after, the American government followed suit, wanting in particular to offer a counterpoint to May Day, which commemorated the state violence against the 1886 Haymarket demonstrators. The contrast remains between the North American Labour Day holiday and May Day, which is Labour’s day elsewhere. While May Day stands for the international struggle against capitalism, Labour Day signifies the accommodation of workers within the capitalist system. Canada and the U.S. are the only countries where Labour Day rather than May Day celebrates the achievements of workers.

Accommodations are much, much different than achievements, especially with the disappearance of any social contract between labor and management involving an equal sharing of the benefits of work and wealth. When Labor Day becomes little more than a showcase and access point for politicians, that’s an even further dilution of the critical content of the day.

We have to hang on to it of course. At least we have one day that we can still try to claim as our own, since almost every other day of the year seems to celebrate business and the rich for all of us, and perhaps especially for politicians.

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