Wade Rathke: Chief Organizer Blog » New York Times

Houston’s Central City Ghost Town

Mariehurt — Mon, 14 May 2012 04:54:13 +0000

Houston Light Rail

Houston For a change it wasn’t work. We were in Houston during the weekend to celebrate the wedding of Emma Graves Fitzsimmons and Gerry Smith. First time ever any of us had attended a wedding reported in the New York Times. It goes without saying that Emma’s job on the national desk of the Times and her marriage to Gerry, a reporter for Huffington Post, so no slouch, had a lot to do with it. Good times or bad Times, having been at the wedding of her parents and known her since birth, we wouldn’t have missed the event for the world. They were deliriously happy, which might not be enough to change my views about marriage, but certainly was enough to convince me that the culture has a couple of strong and persuasive advocates still. Anything that for any reason can make two people that happy, has to have some real value.

I was also excited to have an excuse to be back in downtown Houston, 4^th largest city in the United States. We found a hotel right next to the new light rail system running down Main Street. I could hardly wait to see it. I could remember the arguments both pro and con about light rail when ACORN first opened our office in Houston in 1976 and now more than 30 years later, here it was. It was beautiful, too. Long and sleek. At some points along its route there were watercourses. At dawn, I watched a young woman absorbed in her cell phone with the water placidly reflecting the last shadows of the night behind her. She was also about the only person I saw anywhere around either then or the evening before. The light rail might be called light because its passenger loads were infinitesimally small with trains passing with only a couple of people aboard.

We were in a virtual ghost town. In fact walking early in the morning the number of For Lease signs and vacant properties throughout the main streets of this thriving commercial center were mindboggling. I started to wonder whether or not the buses coming up one street and the rail going down another had severed the arterial passages to the heart of the city? Rather than attracting businesses to the pathways along the speedy rail line, it almost seemed like businesses were in full flight.

Nothing was open. There was no place for even as much as a cup of coffee. It felt like we had stumbled into the valleys of an urban desert walking between modern skyscrapers. Even in Detroit, which once was the 4^th largest city, I could have found a diner. What had happened to Houston and its “catch the horse by the tail” bold and brash Texas shout to the urban future? Had this slipped into the bayou with Enron? Been lost in the skepticism attending a future with diminishing oil?

I love Houston, but I couldn’t help feeling with every block I stepped off along the miles of my walk that something was terribly wrong.

With a Corporate Culture Built on Bribery, Walmart Was Running with Plenty to Hide

Mariehurt — Mon, 23 Apr 2012 15:21:25 +0000

Walmart Store in Mexico City

New Orleans We told you so! We just couldn’t be heard clearly enough over the roaring engines of the corporate spinning machinery of Walmart in September 2005.

Let’s set the stage exactly. In Florida at the sharp point of the organizing engagement at Walmart as the curtain was being pulled down by all of the top corporate management from Lee Scott, the CEO on down, we were convening the first Sitefighters’ Conference in St. Petersburg, Florida bringing together Walmart Watch, Wake-up Walmart, and all of the other key players around the country to strategize on how to bring community, workplace, and political pressure to force some accountability on the company. Walmart Watch, a coalition driven by SEIU, and Wakeup Walmart, the UFCW’s effort to tackle the company on the web, were nicking the company regularly in the papers, and our efforts through our community-labor alliance, WARN (Walmart Alliance for Reform Now) and direct organizing of workers in the Walmart Workers Association were showing good results.

At that same time in September 2005 when Walmart was trying to garner good publicity for its logistical response to Hurricane Katrina on the Gulf Coast, the internal reality was “duck and cover:”

In September 2005, a senior Wal-Mart lawyer received an alarming e-mail from a former executive at the company’s largest foreign subsidiary, Wal-Mart de Mexico. In the e-mail and follow-up conversations, the former executive described how Wal-Mart de Mexico had orchestrated a campaign of bribery to win market dominance. In its rush to build stores, he said, the company had paid bribes to obtain permits in virtually every corner of the country.

The lengthy New York Times piece by David Barstow gives an amazing inside look at how Walmart was working from the bunkers of Bentonville and the impact our work was having:

Under fire from labor critics, worried about press leaks and facing a sagging stock price, Wal-Mart’s leaders recognized that the allegations could have devastating consequences, documents and interviews show. Wal-Mart de Mexico was the company’s brightest success story, pitched to investors as a model for future growth. (Today, one in five Wal-Mart stores is in Mexico.) Confronted with evidence of corruption in Mexico, top Wal-Mart executives focused more on damage control than on rooting out wrongdoing.

In one meeting where the bribery case was discussed, H. Lee Scott Jr., then Wal-Mart’s chief executive, rebuked internal investigators for being overly aggressive. Days later, records show, Wal-Mart’s top lawyer arranged to ship the internal investigators’ files on the case to Mexico City. Primary responsibility for the investigation was then given to the general counsel of Wal-Mart de Mexico — a remarkable choice since the same general counsel was alleged to have authorized bribes.

The level of bribes? $24,000,000 has been documented. Most were paid through an elaborate network of fixers (gestores).

All of the top brass at Walmart knew the score. Lee Scott slowed the investigation down and punted it back. Michael Duke, who was their international man at the time, and the executive of our ACORN International’s India FDI Watch Campaign was checkmating in India to stop their expansion there, knew the whole deal and is now the Walmart CEO. The head of the “ends justify the means” team for Walmart in Mexico fueling the fire of corruption, Eduardo Castro-Wright, is now the retiring Vice-Chairman of Walmart.

Lee Scott

As the whistleblower allegations finally found traction, the company filed a vague “play pretend” notice with the FCC without identifying that the problem was in Mexico and still claiming there would be no “material impact” to its results. Now of course there will be full scale investigations in Mexico and in the United States for violations of both countries laws. In the US these bribes by Walmart are clear criminality under the Foreign Corrupt Practices Act. It is hard to imagine a clearer case of situations where top executives should be held accountable (Scott, Castro-Wright, Dukes, etc) and face criminal charges and potentially jail. In Mexico the detailed annotations on the invoices indicating the officials who were bribed could absolutely lead to jail time as the scandal widens.

An international corporate culture based on bribery also makes us wonder whether the same system has been active in their work to expand and find a foothold in India where their efforts and others to modify the restrictions on foreign direct investment in multi-brand retail have been huge political issues in recent months, bringing government to a standstill at some points.

All of this is huge and demands sweeping action.

Click to read the entire Times story.

Raising and Indexing the Federal Minimum Wage

Mariehurt — Tue, 10 Apr 2012 16:13:13 +0000

New Orleans There was a picture in the New York Times claiming to be Dan Cantor (sure didn’t look like him?) of the New York State Working Families Party who was advocating an increase in the state minimum wage. Jen Kern, a career minimum wage expert as former coordinator of ACORN’s Minimum Wage Resource Center and now with the National Employment Law Project in DC, was also quoted at length on the benefits of raising the minimum. It felt like old home week and the calendar turning back a decade. One of those, the more things change the more they stay the same stories.

There is too much déjà vu in this campaign.

Once again, just like in the Clinton first term, we have a Democratic President that has not raised the federal minimum wage. Despite Jen’s skills and other voices rising, there won’t be an increase in the federal minimum wage this year on the eve of an election. There may be 1.8 million workers as Steven Greenhouse points out who are stuck at the minimum wage with another 2.5 million trapped beneath $7.25, but if this part of the vote is registered and not too suppressed, these are people voting more with their feet than with ballots and if they make it there, most will vote for Obama anyway, so little sweat will be expended in this direction. Once again our only real hope will be that if Obama is re-elected, then perhaps there will be a bump before the end of the 2^nd term following the Clinton pattern.

Looking at the 18 states with minimums over the federal level, it is surprising to me how narrow the compression is between what states have done and what Congress has allowed. I need to do more research on this in coming days. In some cases I fear that I have not kept up and the erosion of power at the state level by organizations and the surge by the right and groups like ALEC, may have erased some of the victories around citizen wealth won in recent years. Florida in 2004 for example voted for an increase $1 over the federal minimum with an index. Now, the index to inflation seems to have survived, but the dollar seems to have disappeared with Florida at $7.67 only a bit more than $0.40 over the federal level. It also appears that we may have erred in withdrawing ballot initiatives in states like Arkansas and Michigan and accepting legislative increases, which now have allowed those states to simply pay the same rate as the federal level.

The Working Families Party is right. The changes have to come at the state level if there is going to be real progress, but we finally have to make permanent indexing to inflation part of the package, or we need to step aside and let others carry the weight.

We won a statewide initiative in Missouri to increase the minimum wage after losing an earlier effort. Now reportedly yet another coalition is amassing signatures to once again try to raise the wage now stuck at the federal $7.25 level. We can’t keep doing this over and over again and now managing to make change permanent.

We need to look to make these changes at the state level, but we need to add indexing and we need to embed language that would require any rollback in the minimum wage to go to the voters, rather than allowing counter revolutions to wipe away these gains for working families.

Time to learn some lessons!

JP Morgan Chase Rip and Run with State Government Help in Louisiana

Mariehurt — Tue, 03 Apr 2012 14:13:39 +0000

New Orleans Joe Nocera starts his column in today’s New York Times with a story of running into Jamie Daemon, Chase CEO, who rhetorically asks the elevator crowd, “Why does the New York Times hate banks?” Yeah, I wish, but back to Nocera, he responds that that everyone hates banks and gives credit card collection practices by banks as the example. There’s rich soil there!

Perhaps more perversely we have a current set of examples with the curiously sweetheart deals between the State of Louisiana and Chase which allow Chase to ineptly handle citizen monies on unemployment benefits and now tax refunds without heed to customers or concern by the state over the fees. I’ve commented in recent years on the problems that unemployed workers have had in Louisiana trying to obtain their benefits when offered by Chase on a debit card. Phone numbers would often not work or have been changed without notice. Frequently the only resolution would be trips to certain Chase branches hoping for a resolution. I have known unemployed workers where it took over a month for them to successfully access their unemployment benefits. The program was a unreported disaster, which continues largely intact to this day.

Now it turns out that unless the state is given a bank account number for a direct deposit, the State of Louisiana in its wisdom joins with Chase to automatically issue the tax refund in a Chase debit card. There is no transparency on the question of fees. No way without a computer to determine balances on the card once received and used. No choice on the front end between a debit card and receiving a check.

When questioned, Byron Henderson, a spokesman for the Louisiana Revenue Department, said “the state doesn’t have an interest in monitoring the fees. It’s not our interest in how they’re making money.’” Incredible! Meanwhile Chase makes money on the interest from the $57 Million.

Even the Times-Picayune normally kneejerk apologists for all manner of mayhem with the Jindal Administration and certainly businesses and banks like Chase, is clear in an editorial: “A taxpayer who choose to get a refund through direct deposit doesn’t lose money in the process. Neither should one who doesn’t or can’t use that option.”

Amen!

Privatizing state functions to banks like Chase, can’t just be a “get rich scheme” for the banks at the expense of the citizens!

Apple, Times, and Others Advocating for Sweatshops

Mariehurt — Mon, 23 Jan 2012 16:55:11 +0000

New Orleans As improbable as it may sound; sweatshops seem to have a lot of high placed advocates who simply swear by them. Yes, sweatshops!

In the recent deification of Apple and its co-founder Steven Jobs, there has been unstinting praise for Apple and its high priced, sleek products as a great American success story. The credible allegations and proofs of how much of Apple’s manufacturing operation rested on the backs of sweatshop labor, particularly at huge manufacturers like FoxConn, were sometimes mentioned in passing, but largely swept under the rug. Not surprisingly a front page article on the death and demise of American manufacturing featuring both Jobs and Apple prominently also tried to bury the sweatshop reality on which so much of this manufacturing “miracle” exists in a few paragraphs of the very long story.

The reporter and others marveled at how on a whim 8000 workers could be pulled out of bed in company owned and run dormitories and put to work on a last minute changeover. Wow, the article and others seemed to say, that couldn’t happen here in America.

Well, that’s wrong. It could happened here in America, but Apple would have to pay for it, and that’s still the real difference.

One fool asked where you could find some thousands of workers in the United States, who would be ready to roll to work. Hey, just about anywhere, jerkwater! Has word of the recession gotten to none of these folks?

Even in the pages of the New York Times, if they were interested they can read about the skilled workers by the thousands that have trucked themselves into North Dakota (of all places!) to live in, yes, bunks, trailers, and all manner of man-caves in order to work in the oil industry on the plains. But, whoops, once again, I should add that they are doing so, because they get paid, and paid pretty damned well to do so! We saw thousands of workers flood into New Orleans to help on the recovery, but once again they did so on their own dime, because they thought they could make a dollar. In all of these cases these are workers with crazy, mad skills, too.

The article seemed to say Apple employed 700,000 workers in manufacturing around the world, oh, and 40,000 or so in the USA. Their spokesperson wanted to make sure all of us knew that the American economy is not “their problem.” Their problem is only “making a good product.” Life and business is not that simple, and the responsibilities go much deeper.

This seems to be a problem throughout much of the Times. Nicholas Kristof did a column that I had to read because it was about Olly Neal from Arkansas, who I had worked with in the 1970’s when he was running the Lee County Clinic. Posting the article, more than one of my buddies reminded me how they too had to hold their noses to read anything Kristof wrote because he is such a relentless apologist for sweatshops.

Good news that we are really talking about manufacturing. Bad news that the ideology underpinning the conversation is that there can only be manufacturing at the expense of workers’ rights and wages in sweatshop conditions.

Shame on Apple, the Times, and the rest of the tribe that makes these rationalizations!

Despite Suze Orman’s Claim Prepaid Debit Cards Still No Good

Mariehurt — Mon, 09 Jan 2012 16:54:25 +0000

New Orleans Suze Orman has made her reputation as a TV financial advisor. Now she wants to promote a debit card for low-and-moderate income families who have weak credit and want the ability to operate differently. Her Approved card needs to be renamed as the Improved card, but it’s still not a good card, or at least not good enough for these times and this constituency.

Ron Lieber of the Times offered a helpful analysis of Orman’s new entry into this market and its impact on citizen wealth, but despite the fact that he seems to be bending over backwards, “vaporware,” as he calls the claim that credit giant TransUnion will actually use this data to qualify a customer for a real credit card, still seems to be the wrapping for this whole card. A prepaid card is exactly that, a card where one a customer turns over cash in order to spend that cash with plastic rather than cash. There have to be very good reasons for doing that, because, cash involves no extra fees, and these celebrity cards still cost money for questionable returns in a market that makes no sense unless it repairs credit or qualifies the consumer for something bigger and better.

Back with ACORN our team met extensively with Russell Simmons about his Rush Card. We loved Russell and he had been a great friend, especially to New York ACORN, but the rap master had produced a rip card. Promises were made and improvements were implemented, but the card still sucked, and it’s still sold in low-and-moderate income neighbors everywhere.

Orman will be moving on some other streets but it’s the same hustle it looks like to me with regular maintenance fees and transaction fees, even though there are ceilings that prevent going past the limits and some credit reports and credit reviews even though it is sound and fury signifying nothing.

If the point is something more than making money for Orman and friends, then what is the point of this for consumers.

None that I can find, and until then, if you have a little bit of cash, keep it in your pocket, rather than paying someone else to spend it for you.

Grease Wars!

Mariehurt — Sun, 08 Jan 2012 18:06:21 +0000

New Orleans Yikes – every once in a while, we find out we are out there on our own in a wild world where the protection provided for fools and little children is sadly lacking. This summer after 18 months of negotiation, we acquired through donation and loans a fantastic mobile biodiesel rig on an 8 foot by 4 foot trailer with the capability of producing 20,000 gallons of biodiesel fuel a month out of grease. Wow! The donor wanted to give a hand to New Orleans, and if there’s no question there’s a lot of cooking with grease in this city.

Two small problems emerged. One is just about solved and that is finding a location for the rig, the collection tanks, and everything that goes with it. The other was a surprise. When the New Orleans Biodiesel Project started doorknocking businesses to arrange to collect their grease, we were surprised to find that many were under contract paying them a few dollars a month to come and pick the grease up. In fact the companies were hauling the grease up to Baton Rouge to process. Unbelievable! Was it possible that we were in a competitive market for grease of all things? Would our rap about “doing good,” “protecting the environment,” and “supporting the recovery,” just crash and burn? How would we collect the volume of grease we needed to be sustainable. Eeek!

Then I read the New York Times and discover that not only is biodiesel a hot commodity suddenly, but it is trading on a “booming commercial market” at 40 centers per pound, and, even more bizarrely, because it’s suddenly more valuable, at least in New York City, folks are pulling pickups up behind restaurants and stealing the stuff in the dark of nights. The article in fact was about how lame prosecutors are about pursing grease crime.

This whole sustainability, self-sufficiency thing is an education every day it turns out, and damned if it isn’t the school of hard knocks!

Republican Presidential Candidates Houses: Bad Taste Past the Boundaries

Chieforgasst — Sat, 31 Dec 2011 19:01:07 +0000

New Orleans Republicans, Democrats, or whatever, when something is way, way over the line, it should be roundly understood as out of bounds. A piece in the New York Times Home and Garden section this week by Kate Zernike called “The Houses of the Hopefuls” was appalling on any number of levels.

Having Glen Beck and other haters give people my home address and phone number is, admittedly, part of why I am fairly easily offended that there are simply no standards at the Times or anywhere else it would seem over about the privacy of public figures, and the Times would at least like to pretend that it is a place that sets such standards. Past privacy though, was there no editorial or journalistic judgment that would restrain them from publishing pictures and descriptions of the candidates houses in the interest of public safety and some sense of a basic human right to safety, even if they are so bold, arrogant, or principled to put themselves forward for public office.

On those grounds alone the piece was offensive from its first premise that somehow we (citizens and voyeurs?) have a “right” to peek through the windows of their houses and stalk them on the blocks where they live in order to “get to know them better.” God, how ridiculous is all of that?

But, then if readers tried to get through the piece, you would quickly be able to discover why Republican candidates of all stripes and persuasions have no problems with the “call and response” from their base about the smug elitism and sensibilities of what former Vice President Spiro Agnew once famously called the “nattering nabobs” of the East Coast corridor. The article without apology seems to see its mission as making fun of the candidates and their families, parading forward one rock throwing, self-promoting designer after another willing to take a crack at the taste and sensibilities of these candidates and their private spaces. The article was snide and “bitchy.” In this case bad taste was truly in the eyes of the beholder, because virtually the entire article reeked of bad taste compounded by terrible judgment.

The reporter and the Times think they are in a position to take potshots at the taste of the candidates because they are so old-fashioned, traditional, and tend towards the “colonial” in housing styles. Duh? Quelle shock! When George McGovern ran for President as a peace candidate against the sitting Democratic President Lyndon Johnson over the issue of the Vietnam War, he clearly stated a universal political law when he said, “those that would be most radical, must remember to appear most conservative,” as he explained his on wardrobe and lifestyle in the post-sixties environment.

Here’s the perfect example from the article. I’m no friend of Michelle Bachmann, but once one gets past that and wraps one’s mind around the fact that a large family overflowing with adopted and other children that makes its money through public and social services can possibly afford a house with a $750,000 price tag, why is it not in fact admirable that she and her husband bought a house that was part of a charity construction design and build project? To me it seems commendable in fact, though it rates no comment from the Times other than earning her a couple of body shots from a so-called professional whining about the design and line of the roof, as if Michelle and her gang were the architects and up there hammering away on the beams and shingles.

It never gets better after that, expect that the reporter and her buddies do seem to believe that you get more if you are richer so they had some faint praise for Romney and Huntsman as the zillionaires of the crew.

The Times Public Editor and anyone with an iota of routine manners and slight common sense should recoil and protest this unseemly and unsafe invasion of privacy and ad hominem attack (and that goes for Michelle Bachman , too!).

As always, let’s hope for a better new year!

Wiki-worlds Need More Women & Less Snarky-ness!

dine — Mon, 31 Jan 2011 15:54:25 +0000

Toronto What is it about the Wiki-worlds that seems to encourage no boundaries, let it rip, snarky-ness? I don’t get it, but I’m pretty sure it needs to be fixed.

Two cases in point: New York Times editor Bill Keller’s piece on Julian Assange and Wikileaks and the “calling all women” initiative at Wikipedia’s 10^th birthday bash.

I’m sure I’m the only one, but the Times when over board this weekend with “all the news the elites can eat!” as their new slogan, and they did so without the least hint of irony. Here they are doing an “insta-book” on their redaction of the Wikileaks documents triangulated to them via Julian Assange, and they are selling the insta-book for money, but they then think that they should also distance themselves from their golden news goose by making fun of him, trivializing his real situation, and thereby acting like their inside baseball slams that he was a “source” rather than a fellow “journalist” has some meaning to the poor readers. They think he is paranoid because he is moving all around London believing he may be followed or others are trying to get him, but he’s in jail now and in fact there’s every reason to believe he was being pursued. They are offended in equal measure when their reporter first meets him in London because he was (a) tall and (b) smelled a bit ripe. They need to get past their hangups with being short, ok? And, is it now part of the Times style book under Keller and his snarky crew to comment on the scent of every “source.” Might have to rewrite a lot of the reports from other climates without the air conditioning of the Times building in New York. They make a big point that Assange didn’t trust them. Hmmm….given how they so demonstrably were dealing with him, seems Assange was perfectly tuned into them.

So for the Times, how about learning a little, “just the facts, ma’am,” huh?

And, speaking of the facts, Wikipedia celebrated its 10^th birthday and enormous accomplishments, but could not escape recognition of the fact that of their huge army of contributors, only 15% are women, and that’s a problem. They make some claims about what they are doing about that but part of the real problem, I’ll bet is once again the snaky-ness quotient. If anyone has ever tried to correct an error in Wikipedia, good luck and I hope you are ready to quit your full-time job. It’s an endless maze of contention as you try to correct something and endure the aims of others trying to distort the story. I learned all about this in the ACORN-wars with the right. Eventually you throw your hands up.

Small example. I learned recently that Gary Delgado, the first great organizer I ever hired at ACORN, had even written Wikipedia to try and get them to correct the listings in various spots that he and I were co-founders of ACORN. I had just sort of shrugged, though it is a little vexing when so many people try to go to Wikipedia as the source for real information. Eventually in the push with the right and others with different interests, Wikipedia simply doesn’t allow changes to be made at all, so whatever is wrong, becomes wrong forever (or a while), who knows?

For a while my daughter and some of her friends took it as a project to try and fix the ACORN listings on Wikipedia. Talk about the “wall of hate” they were scaling, wow! They ended up stepping back because no one had time to keep up with the haters out there and their project to defame and distort.

So, I love the call for women to step up and make sure that “their facts” are welcome at Wikipedia, but unless Wikipedia can control the contention and the misogyny of too many folks who contribute but have a horse in the wrong race, this is going to still be an unregulated and unfriendly environment for folks more comfortable with snarky than the facts in Wiki-world.

Brewer, Bankers, and Union Busters – Election Day!

dine — Tue, 02 Nov 2010 14:12:29 +0000

Grizzly Mom voted!

New Orleans Yesterday was the first day of our future and from all reports it was much, much scarier than Halloween might have ever hoped to be. Look at the cases in point.

In the federal hearing on immigration madness in Arizona, Governor Brewer took time out of her campaign schedule (ok, that’s a lie; the hearing WAS her campaign schedule after all!) to rubberneck at the federal judges parsing the hate from the law in SB 1070. From NDLON tweets at the trial and the story, it seemed many of the questions went to the issue of exactly why the state should be doing the federal government’s job. With the Republican Tea Party explosion, how many pieces of anti-immigrant can we now expect? Certainly, the hope for reform needs a total retooling to mount a push back from our base in progressive cities and states to offset the madness.

Our friend, Joe McCartin, labor history professor at Georgetown, was quoted liberally in the New York Times, on the coming attacks against labor unions with Republican Tea Party ascendancy, but all that did was put a little sugar in the coffee, because it was a bitter drink to swallow. Card check has been dead, but

they intend to bury it to no one’s surprise. Prevailing wages for construction workers is on the chopping block, but the Republicans may not have gotten the word on how much that has been eviscerated in many communities already. They must be just positioning to take early credit for some of what they have already done. The only good news is that there may be a stalemate, but given the decline in labor strength, a stalemate is another nail in our coffin, unless we finally shift directions and change strategy.

There is a great scene and line in the new movie, Social Network, where then Harvard President and always arrogant Larry Summers, turns to an aide, while meeting with the whining crew roaring elitists, and says, “punch me in the face, now!” This is how I felt this morning reading the Times story on the bailout bankers positioning themselves after their economy collapsing performances of recent years and their disaster tour on foreclosures. These guys are coming back to power. They are exulting at the prospects of defunding regulation under the Frank bill, SEC, and other regulatory agencies. They are buying each other t-shirts to wear under their silk ties that say: “F**k you – We Have Learned NOTHING!”

It’s one thing to go to the polls holding your nose. It’s another when you have to make sure you have a bag packed by the time you come back from voting, so you are ready to roll and run at any moment!

Bank Conflicts of Interest on Foreclosures and Modifications

dine — Mon, 01 Nov 2010 14:40:12 +0000

Arizona Advocates and Action

New Orleans My god, pinch me! Unbelievably the august New York Times in its editorial today has bellied up to the right side of the bar in pointing out the obvious and long noted (including by me!) conflicts of interests enjoyed by banks in the foreclosure game where they often pretend to be chicken, but are usually fox. The Times being the Times can’t quite get it all right. They put the horns on the Federal Reserve as a sleep-at-the-switch regulator of this mischief and mess, when the Treasury Department and the Administration both deserve at least equal billing of this horror movie showing at homes all around the country.

But let’s not quibble and count our small blessings when they come:

That is a big reason that the Obama administration’s antiforeclosure effort, with its voluntary participation by banks, has fallen so short.

Here is the background. The big banks — Bank of America, JPMorgan Chase, Citibank, Wells Fargo — service most of the nation’s home mortgages for investors who own the loans. They are paid a fee by the investors and also make money from fees on delinquent loans.

Servicers are obligated to manage the loans in the best interest of the investors. That means modifying a troubled loan, if reduced payments would bring in more money over time than a foreclosure. Or foreclosing if a borrower cannot make the payments on a modified loan.

If only it worked that way in practice.

Take, for example, underwater borrowers — the millions of Americans who owe more on their loans than their homes are worth. For them, the best modification is often to reduce the loan’s principal balance, lowering the monthly payment and restoring some equity. That could be best for investors too, because even reduced payments are often better than a foreclosure sale. A bank’s servicing fee is based on the principal balances of the loan — a strong incentive not to reduce a troubled borrower’s balance.

Another conflict occurs when the bank that services a primary mortgage is also the owner of a second lien on the same property. Resolving a troubled first mortgage generally requires a write-down of the second lien, a step that banks have been loath to take.

Banks also profit from late fees and other default-related charges assessed on borrowers. And there is an additional incentive to pile on charges, since the bigger the loan balance, the higher the fee to manage the loan. A group of prominent investors — including Freddie Mac, the Federal Reserve Bank of New York and Pimco, the world’s largest bond fund — recently accused Bank of America of fee-padding. The bank denies wrongdoing.

High default charges harm homeowners because they make it increasingly difficult to catch up on late payments and avoid foreclosure. They also disadvantage investors, because the servicer collects the charges from the foreclosure sale before the investors see any money. Everyone loses, except the bank.

I tried to make it easy…follow the “underlines” for the story here.

The punch line though is right in the face of homeowners across the country who are desperate for relief, but instead continued to be fleeced.

I wonder when the White House will realize that part of the bad marks for TARP come from the total, unmitigated failure of all of the platitudes from Pennsylvania Avenue to impact on any of the millions of homes facing foreclosure on Main Street?

Seems like this is another lesson that we will all be paying for again tomorrow on Election Day.

Support for Taxing the Rich

dine — Wed, 25 Aug 2010 13:15:46 +0000

New Orleans I won’t say it’s a sea change, but there are starting to be some encouraging signs of change among the elites and critical chattering classes on the issue of more equitable taxation, particularly the need for the rich to pay their fair share.

In a recent issue of the New Yorker, surely a barometer of such things if anything might be, their regular “columnist” of sorts, James Surowiecki, who does the “Financial Page” in the magazine, came out squarely for the need for more brackets to tax the rich and super rich. Hear, hear!

Paul Krugman, the Nobel prize winning op-ed columnist for the New York Times also seemed to be weighing in favor of the rich paying a more equitable burden.

There have been encouraging stories debunking the notion that jobs are created by unfair taxation favoring the rich as well. Other reports are correctly documenting their tightfistedness compared to the poor and working families when it comes to philanthropy despite the headlines from the Gates-Buffet Company.

Several years ago there was real debate and almost victory in creating a “millionaire’s tax” in New York City to deal with budget woes there. Seems to me it’s time to make this national policy.

Why is the Obama Administration not part of this debate?