Pushing Back the Banks in the Wake of Occupy

tumblr_lt7r2hsiK51qav5oho1_500 Orleans Given all of the niggling around the impact of the Occupy Wall Street movement and its impact, it is worth raising some footnotes a little higher on the tally sheet where the results are important, but perhaps unnoticed.  Take these recent developments into account.
Small example, but telling is that JP Morgan Chase, perhaps the most arrogant of banks led by Jamie Dimon, announced that they were NOT planning to add the surcharge onto customers’ accounts for use of debit cards.  Bank of America, which had led the jump into the deep water with their announcement of the $5 per month charge, has also indicated that it is perhaps backing up from its Netflix moment in the wake of customer response.

As we have discussed earlier, lawyers who have successfully litigated with these outfits have called this nothing but grant larceny.  I had the discussion with my banker at Capital One who could only rationalize that it was being considered because “they had to raise money somewhere.” We all know that the defense that “you needed the money” is both the truest and least effective response any criminal can make.

The Times did a sad service with a front page article on the shrewd calculations that Bank of America and its colleagues have made by pushing direct and automatic payments for customers to their regular vendors from utilities to credit card companies to home mortgages and back again.  The story was an easy reminder for readers both how easy it is to sign up for such payments and how hard it is to unravel them to the degree you become welded to your bank regardless of the outrageous charges and abuse.   We are near the point where we are going to need to demand an easier “exit” policy from our banks, just as we had to achieve with our cell phone companies around keeping our phone numbers in recent years.  The little things can kill you!

Even though Occupy has not been successful in seeing any traction on the urgent “Geithner Must Go!” campaign to hold him responsible for some much of the Wall Street pandering and pampering he led first as the critically important head of the New York Federal Reserve Bank, the storm may finally be coming on the horizon.  Amazingly a story in today’s Times documents the giveaway with AIG where banks were paid in full from the federal coffers and were not asked to take any haircut, but in face were even required to shave.  Even banks that offered to take less that they were owed were informed by Geithner’s Fed, since he was head at the time, that they would be paid in full.

At least Geithner, now at Treasuery, with Ben Bernacke at the Federal Reserve are having to line up to finally provide some regulation for non-bank banks in recent hearings in the wake of Occupy.  Of course it is not enough, but even bringing 30 financial institutions like Mass Mutual, Zurich, some hedge funds and outfits like Blackrock and others under regulation because they control over $50 Billion in assets is something.  The Financial Stability Oversight Council still has to wait for comments so the lobbyists will be feeding at the trough, but at least now they need to realize that they might have to reckon with real, immediate, and potentially powerful political outrage if the boys give yet another break to the bankers.


Opposition for the Rich, Support for Activism

New Orleawall-street-protrest-occupy-wall-street-eat-the-richns The polls have to be giving the middle-of-the-roaders and the settle-for-the-best-we-can folks some pause when the lines are hardening against the scandalous income inequality in America wrought by one tax break after another for the rich and the increasing support for the Occupy protests and other expressions of frustration and rage spoken by any willing the voice the people’s true feelings.  Other indications are that the vast mobility of the young, long a defining characteristic of America, slowed to a screeching halt because of the Great Recession and the deepening frustration of a generation lost and the risks associated with future expectations and job losses.  The opposition to the status quo is going to increase as the resentment of the young accelerates.

Among the numbers popping up everywhere a Time Magazine/SRBI poll referenced by Charles M. Blow of the Times indicated that 54% of those polled are responding “favorably” to the protests.  86% believe that “Wall Street and lobbyists have too much influence in Washington.”  79% hold that “the gap between the rich and the poor in the U.S. is too large.” 71% believe – listen to this President Obama and Secretary of the Treasury Geithner – “Executives of financial institutions responsible for the financial meltdown in 2008 should be prosecuted.”  68% have finally decided that “The rich should pay more taxes.”  And, finally, given the deep cynicism more than half, 56%, believe the “movement will have no impact on American politics.”

At the end of last year the well respected Center for Budget and Policy Priorities reported that the income inequality in the United Stated had hit record highs since such reporting was documented.  During the period covered in the late 2010 period income at the top had risen by $180,000 and at the bottom by only $400.  The gap may be even larger at the end of this year.  Last week another study found that the income inequality in the United States now leads all other industrialized nations in the world.    What a sorry situation!

The only real surprise these days is that the polling data doesn’t indicate even more consensus that public policy slanted towards avarice and the rich has gone too far.  Little is being done to change it so, politicians and policy makers are obviously going to keep waving a red (green?) flag in our faces until we stand up and force the change.


Finding Friends on Microfinance, but Western Union Not so Much

Phoenix 3462_WesternUnioncampaignimage Winning any kind of global financial justice for low-and-moderate income families is admittedly a slog, but misery loves company, and I cannot resist keeping you in the loop as ACORN International pushes forward on these campaigns.

Good news first.  Our report, “Mega Troubles for Microfinance” www.acorninternational.org, picked up some friends in high places, which felt very nice, though we will have to see if it develops into real progress.  A letter from the Swiss international development agency indicated that they were in agreement with us that microfinance does not reduce poverty, and in line with our recommendations they had already scaled back involvement.  They were still hopeful about microcredit, though we are not sure what that really means other than saying that the poor should save, which is not exactly a development program.  Similarly when we issued our report the head of the United Kingdom parliamentary committee which has oversight over development joined in our argument heartily and indicated that they will take the report up more seriously now that the summer is past.  All very encouraging since we feared that we might burn at the stake for heresy!

On the other hand there is Western Union.  A long, as these things go, direct conference call between leaders of ACORN International and ACORN Canada with representatives from the Loveland, Colorado based king of remittances was difficult and indecisive.  Western Union conceded that there fees were not the 5 to 6% they claimed in their correspondence, but tried to argue that they were transparent nonetheless even though perhaps not fully.  If you can follow that sentence, you must have been behind the looking glass with us.  Their primary argument continued to rest in a defense of competition, which essentially is to say that they charge what the market will bear, until the market changes, and in response to ACORN International’s three reports on these questions tried to argue that there were 16,000 remittance channels so our dozen countries might just be out of luck.  We have pleaded with them for a direct face-to-face meeting in hopes of making real progress, and they agreed to consider it, but promised nothing.

Meanwhile we are pursuing meetings of the major countries who are soon looking at development issues to see if there might be a way to push ahead on financial justice for the global poor at those forums.  Optimism is boundless, but reality continues to intrude.


Stealing from Poor Workers

ruth-milkmanBaltimore Ruth Milkman of UCLA and Nik Theodore of University of Illinois, Chicago are top researchers and obviously savvy enough to put out their study, Broken Promises, Unprotected Workers, as an exclusive to Steve Greenhouse at the Times to get maximum attention to their summary of surveys from over 4000 workers in 2008 which indicates that wage theft from workers is simply routine.  I wish this was a surprise, but of course it is not.  The whole report is probably timed to Labor Day.  Hopefully, Russell Sage Foundation which financed the report will say something more than “low wage workers are hard to find,” which was such a preposterous comment that I found myself laughing in the pre-dawn while I read the highlights.

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Ballot Stuffing at Bank of America

New Orleans       Ken Lewis, the CEO and Chairman of Bank America has somehow joined Vikram Pandit of Citi as about the only old bulls of banking still left sitting after the implosion within the financial services industry.  It is almost unbelievable that they are still there.  Pandit has shed and shuffled board members, including bringing in the former head of Time-Warner to flak catch for him.  In biting off Merrill Lynch and absorbing John Thain and his “issues” at the same time, Lewis finally had a lot of the mess catch up with him, but is still trying to dance step his way out of real accountability.

      SEIU and others have correctly called for him to step down so that a new day can begin at Bank of America.   It seems inevitable that Lewis must go and now seems a good time for it.
      Unfortunately, as Charlotte Observer reporter Christina Rexrode observers in a skillfully garnered quote, there is no such thing as shareholder “democracy,” and the “ballot stuffing” may prevail in the votes being counted now on the question of Lewis’ ouster.  These pieces of her story tell the story better than any other that I have seen: 


    Key vote at BofA stirs up hostility

    Angry shareholders want Lewis ousted this week, but the rules make it unlikely he will be removed.

    By Christina Rexrode 

    April 26, 2009

    Three major proxy advisory firms — Glass Lewis & Co., RiskMetrics Group and Egan-Jones Proxy Services — have told shareholders to vote against re-electing Lewis. Along with PROXY Governance Inc., they also oppose the re-election of lead director Temple Sloan. Connecticut’s state treasurer, the Illinois State Board of Investment, the State Teachers Retirement System of Ohio, the Virginia Retirement System and TIAA-CREF all plan to vote against Lewis.

    “You’ve had this awful plummet in share price, and, in the middle of that, a lackluster acquisition of Merrill Lynch,” said William Atwood, director of the Illinois fund. “And if you’re not going to make changes now, in what circumstances would you make changes?”

    But of those investors, even the largest — TIAA-CREF — holds only 0.56 percent of the bank’s 6.4 billion shares. The rest hold far less.

    Another disadvantage for opponents is the issue of shares held by brokers. If an individual holds shares through a brokerage and doesn’t tell the broker how to vote, then voting power generally transfers to the broker 10 days before the shareholder meeting. Brokers almost always vote in the company’s favor.

    “Many people consider that legalized ballot stuffing,” said Davis, the corporate governance expert. (The SEC is accepting comments on whether this rule should be amended. Go to www.sec.gov/rules/sro/nyse.<wbr></wbr>shtml and look for the proposal about Rule 452.)

    CtW Investment Group, representing a coalition of unions with Bank of America pension investments, estimates the broker vote will make up 22 percent of shares cast. That means Lewis and other directors need only about 36 percent of all remaining shares voted to win re-election.

    “I see a very big shareholder vote against (Lewis),” said Michael Garland, CtW’s director of value strategies. “But I think it’s likely he will get (the necessary) 50 percent plus 1 with the broker vote.”

    Jon Finger, of the Houston-based investment firm spending $75,000 on a campaign to shake up the board, said Lewis is more likely to win re-election than Sloan.

    “Some institutional investors,” he said, “may be concerned about maintaining stability at the company.”

    Unlike a political election, Bank of America knows the results of the voting so far. Investors can change their votes up until the meeting. Abstentions do not count either way. That means if there are 100 shares, and 70 are not voted, a director needs 16 votes to be elected.

    The bank isn’t disclosing interim results. “We won’t speculate on the results or what we would do if any vote goes against us,” said spokesman Scott Silvestri.

    Corporate-governance experts say the bank is likely trying to bargain with institutional investors who have cast their votes against it.

    “They can twist and cajole,” Reda said. “They can say, ‘OK, Lewis will agree to leave the company at the end of the year if you change your vote.’ And one minute before the shareholder meeting starts, somebody can fax in a change to their vote and swing the election.”

    The shareholder groups and the company would probably prefer to work out their differences behind closed doors, Reda added. The public fighting “tarnishes the bank’s reputation, and as a shareholder what do you want that for?”

    If Lewis loses his seat on the board, he would still be CEO. But experts agree that he’d almost certainly resign that post, or risk shareholder outrage.

    Even if Lewis and his directors win re-election, it doesn’t mean they’re in the clear. Shareholders still sound a pretty loud message if they garner significant, but not majority, opposition against a director.

    “I could be wrong, but I think all the directors will be re-elected,” said Ray Groth, co-founder of Duke University’s Directors’ Education Institute. “But if one gets even 30 to 40 percent against him, they’re going to sit up and say, ‘Boy, maybe we need a few fresh faces on the board.'”

    Bank analyst Dick Bove says there’s “no likelihood” that dissident shareholders will win Wednesday’s vote because they haven’t mounted a big enough campaign. Chris Cernich, a research analyst at PROXY Governance, agreed that shareholders’ odds are slim.

    “To be honest, the likelihood of winning when you’ve got so many shares and such broad shareholdings — it’s going to be difficult to unseat anybody,” Cernich said. Staff writers Rick Rothacker and Kerry Hall contributed.


Wages of Work and Welfare

New Orleans Newspapers over the weekend from London to Washington and New York are full of stories about the increasing wages of the top dogs in the financial industries on Wall Street and the City of London.  The estimates range from 10% to 25% hikes.  Meanwhile we continue to struggle to figure out the most accurate and pragmatic rates for the minimum wages for workers in New Westminster, British Columbia, and Ottawa, Ontario.  Where’s the justice here?
The bankers and their running buddies are merely trying to get around the new (and worrisomely, perhaps, temporary curtailments of bonuses), so are jacking up their pay envelopes within mere days and months after some of them were hang dogging around Washington and elsewhere, as if they had learned something from all of the greed and excess of the last several decades.  A friend overheard, King Milling, a top officer and director of Whitney National Bank here in New Orleans, talking in a social setting about returning the TARP money, because there was no way he was going to be able to live on “only $500,000 a year.”  Laugh, laugh.  How quickly they try sneaking around and rewarding themselves at what is now often the public trough.
Such stories cast a cloud over conversations we are having across Canada and the USA with our allies and researcher friends about how to set the fairest living wage standard in major communities in Canada where these campaigns have not been as ubiquitous as the states.  Should the wage be for an individual or be “family-based,” including childcare and other costs?  Is $15 CN per hour the right wage in Ottawa?  How much higher or lower in BC?
At ACORN International we sweat the loonies between $30K and $35K per year, while we read about our pockets being picked by folks who are driving the ships into the icebergs without a clue.  Our friend at Whitney was having his chuckles within days of last week’s announcement that the bank lost over $11M during the first quarter.
Justice is coming!