Ontario, Canada is Populist Battleground in Coming Elections

Toronto     The late Rob Ford gave steady and staid Toronto an international profile as mayor that wasn’t at the top of the local tourist board’s wish list.  He had ridden into office on a wave of populist discontent from the outer, working and middle-income districts of the city of Toronto, and he rode out on scandals involving not only his pronouncements and policies, some of which were acceptable to ACORN Canada, but also on his stays in drug rehab and videos of him buying crack on the streets, while mayor.  His excuse is a political classic.  He simply shrugged and said he “was hammered.”  His most consistent defender was his brother, an elected member of the Toronto city council at that time.

Now, it’s brother, Doug Ford who has them shaking in their snow boots with his upset win as leader for the Progressive Conservatives (whatever that oxymoron means as a name for a political party) making him a surprise, dark horse candidate for Premier of Ontario, the Canadian province containing more than a quarter of the country’s population as well as the cosmopolitan city of Toronto.  Pundits and opponents are quickly trying to brand Ford as the “Trump of the North,” and though the comparison is not exact, there are some likely similarities.   He has raised the question of revisiting abortion laws for example and his positions on climate change are questionable, but he is no Trump when it comes to immigrants and immigration, enjoying strong support in his races from the recently arrived, known as “new” Canadians in the north.  Observers believe his success in the party primary indicates that he may be able to tap into the feelings of anger and alienation in deindustrialized sections of Ontario where factories have closed and jobs have disappeared.  His record on issues effecting suburban women would not make him their first choice though nor would his tendency to move political closer to the bullying part of the spectrum.  Whatever might be the case, at the least his name on the list guarantees a very different election in the coming months.

The race is set to determine whether the longstanding government of the Liberals will be allowed to continue.  Polls indicate that there is a lot of voter fatigue with their government, although the current premier had been trying to recast herself as a candidate of change, Ford’s presence in the race is likely to disrupt that strategy.  Whether the more progressive, minority New Democrats can take advantage is also an open question.

The Ontario election seems to be worth following as part of the global contest over populism.  There is no question the election is shaping up as perhaps the least Canadian in terms of classic norms and sensibilities that has been seen in the great north in many decades.

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Please enjoy Led Zeppelin’s Immigration Song.

And celebrate the 50th Anniversary of Otis Redding’s Sittin On the Dock of the Bay.

Thanks to KABF.

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Alternative Mortgage Lending Tiptoeing Around a Broker-based Implosion – Again!

REUTERS/Chris Helgren

New Orleans   In the 2008 Great Recession, fingers pointed wildly in all directions and in some cases in little Taliban caves around the country they are still doing so, and trying to play the blame game at the expense of the victims. One of the more troubling terms to emerge from those terrible days for borrowers trying to stay in their homes was the notion of “liar’s loans,” as the subprime industry called some of these mortgages. The haters tried to claim the borrowers were the liars, though our work repeatedly found that the culprits – the big liars in the affair – were almost invariably mortgage brokers channeling huge volumes of paper to subprime lenders and blowing up the numbers on “stated” income mortgages.

ACORN understood the value of stated income mortgages because many of our lower income families worked in contingent employment that was impossible to verify because of cash transactions without social security statements. Tipped employees were just one of the examples. As we met with subprime company after subprime company (four in one wild day in Orange County, California, the subprime ground zero!), we raised our concerns about the supervision of brokerage networks accounting for much of the loan volume in the portfolios they were assembling and the incredibly high percentage of stated loans, often approaching or exceeding 50% of the lending they were making and packaging. They would then flannel-mouth something about a risk algorithm that was protecting them and assure us they were on top of it all, when in fact as it developed, they were doing the happy dance to bankruptcy and blindsiding our members, many of them whom had no idea what numbers brokers had claimed to be their income, often without so much as a wink-and-a-nod, and were shocked to find in some cases that their social security income had now been converted to six figures.

All of ACORN’s fights against predatory practices by subprimes came roaring back to mind when ACORN Canada shared an article with me about the cash-crunch and turmoil that ousted the top officials and plummeted the share price of Home Capital Group, a leading company in what the Financial Post called the “alternative mortgage lending” space, which is just another name for subprime loans. The problem was simply described:

Home Capital’s current crisis began on April 19, when the Ontario Securities Commission accused the company and some of its officials of misleading disclosure. The OSC alleges that the company misled shareholders because it knew there was fraud in its broker channels before July 2015, when it announced the findings of its internal investigations and disclosed it had cut ties with 45 brokers as a result.

The Post commentators were aghast that regulators were investigating Home Capital for what they viewed as dated and minor problems with the company’s brokerage channels and accused the OSC of what Republicans in the US would now call “regulatory overreach.”

How quickly people forget! The Ontario Securities Commission fortunately had some memory cells left from watching the real estate American meltdown a decade ago, and recognized what US regulators have still failed to grasp in the patchwork quilt that regulates and licenses brokers in this country on a state by state basis. Broker fraud is inevitable in the mortgage supply chain whenever brokers are substantially paid by commissions based on closings, rather than standards that include buyer affordability. We always demanded, and often won, though sometimes too late, agreements that US-subprimes not allow mortgage brokers in their networks to be paid that way. Given the hammering of stock prices for all the companies in the Canadian subprime industry, smarter investors must suspect that all of them are only loosely supervising brokerage networks, and that’s scary.

Low-and-moderate income families need a subprime market so that they can access mortgages for houses and apartments, but they also have to demand that the companies not be predatory and that they work as hard to keep their acts together as families do who are busting their butts to pay their bills and their house notes. Let’s hope Canadians are coming to grips with these companies and have learned the lessons that Americans are living in denial and still trying to forget.

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