Bank of America and JP Morgan Chase Fleeing Community in Face of More Accountability

New Orleans    Banks have become either near criminal enterprises or complete criminal enterprises.  This is no longer a matter of speculation.  This is now a documented fact with confessions made in the dock.   Even with the very minimal supervision being given big banks by regulators and the vast loopholes in any banking laws, some are abandoning whole lines of business when forced to be minimally accountable, which essentially means avoid outright fraud.  Let’s look at the mounting evidence once again.

A sweetheart deal was announced by 10 huge banks, including Wells Fargo, Bank of America, and JP Morgan Chase to pony up another $8.5 billion to offset their foreclosure abuses.  I criticized the deal as lightweight and a hand slap last week when it was $10 billion for 14 banks, and it is worse today.  Gretchen Morgenson of the Times added another stanza to that same song on Sunday.  Some housing advocates supposedly are saying “the devil is in the detail” or “let’s wait and see,” but may reflect existing partnerships with the players or defeat and desperation.  Morgenson is right:  the banks won again.  There are two ways of seeing this, and worse with these settlements; the game is over, there’s no longer a do-over coming for the victims.   HSBC, the huge UK and Hong Kong based international bank with significant US operations, has admitted to wild money laundering worth billions recently, so one shudders to imagine why they were not willing to agree to this last hand slap and come up with the cash for the Office of the Controller of the Currency (OCC) deal?

Bank America is so hammered at the notion of having to run a clean mortgage lending operation that it seems to have become convinced that rather than pretend they can supervise an above the board operation, they are largely deserting the home mortgage business which they briefly dominated.  Reports are that they have now shrunk from 20% of the market to only 4%.

If you think that’s wild, wait for this one.  The Wall Street Journal reported that JP Morgan Chase, led by the ever arrogant and pompous and unsurprisingly an advocate of less regulation, James Dimon, became the only one of the four largest US banks to get a downgraded rating of “satisfactory” for its lending under the Community Reinvestment Act (CRA).  CRA requires no discrimination in lending.  Let me tell you haw amazing this is for Chase to get a barely passing score.  Over the 35 years since CRA’s passage, the regulations and enforcement by the Federal Reserve has become so wishy-washy that to be downgraded Chase virtually had to send loan officers into African-American and Latino communities to moon homeowners while telling prospective home buyers from those communities to go screw themselves.  Get the picture yet?  CRA enforcement these days makes grading on a curve in Ivy League schools look like the school of hard knocks.   Recently ACORN International looked at Bank of America’s numbers in San Luis Obispo for a partner of ours and they made zero loans to African-Americans and Latinos, and they have a top CRA rating, ok?

When it came to Chase’s credit card operations, the OCC released a report based on 2011 numbers that said that the credit card lending operation showed “evidence of illegal credit practices inconsistent with helping to meet community credit needs.”  In plain English that means that the OCC found evidence of fraud.

These formerly bailed out banks are now lining up in community after community with division after division to essentially flip off consumers, dare them to complain, and then laugh at government regulators who try to curb their abuses.  There business model is now, lawyers first, customers last.

How can anyone pretend differently?

Remittances Increase from USA, Progress on Disclosures, and Pushback from MTOs

New Orleans  I badly want to say that there is finally progress in the United States on remittances, which are financial transfers from immigrant families, migrant workers, and others to their families and communities back in their home countries.  The Wall Street Journal reported that the volume of money being remitted has in fact gone up based on the numbers available for 2010.  Our colleague, Manuel Orozco, the foremost US expert on remittances, even predicts an increase of 7% to 8% to Latin America and the Caribbean this year, which is also good news for developing countries.  The toothless World Bank says that the 215 million migrants it estimates around the world are moving $372 billion to developing countries in 2011 and they expect it to hit $399 in 2012 and $467 billion in 2013.  These are huge numbers, especially when one country after another continues to look the other way as migrants and immigrants are gouged by the costs of sending the money through the various money transfer organizations (MTOs).

The much heralded Consumer Financial Protection Bureau (CFPB) that was the brainchild of Elizabeth Warren, now running for the U.S. Senate in Massachusetts took up the matter this year and has promulgated regulations.  Unfortunately, they gummed the problem as well, possibly because of the limits on their authority.  Rather than addressing the predatory nature of the pricing, the final rule which takes effect in February 2013 simply puts forward the standard liberal palliative of better disclosure.  I’ve often shared the limited value of the disclosures in the tax preparation industry for predatory refund anticipation loans (RALs), where the companies (H&R Block, Liberty, Jackson-Hewitt) were all too willing to flaunt their 250% on computer screens and big posters, knowing that the marks (clients?) were so desperate for their money they had no choice but to suck down the charges.  This is the same song now with remittances, simply another verse.

To quote their own website summary, the CFPB rule says the following:

The rules require companies to give a disclosure to a consumer before the consumer pays for a remittance transfer. The disclosure must list:

  • The exchange rate,
  • Fees, and taxes,
  • The amount of money to be delivered abroad.

Companies must also provide a receipt or proof of payment that repeats the information in the first disclosure. The receipt must also tell consumers the date when the money will arrive.

Companies must provide the disclosures in English. Sometimes companies must also provide the disclosures in other languages.

I’ll read the whole 113 pages of the rule in coming days in hopes of finding something more helpful, but I’m afraid that’s the deal.

Outrageously, Miriam Jordan of the Journal reports this new rule “could raise costs for consumers…some experts said.”  She then quotes someone from Wells Fargo, which is an embarrassment of a bank on almost every count,

Daniel Ayala, head of global remittance services at Wells Fargo, praised the rule for creating a level playing field.  But he cautioned that, ‘there are details that could…ultimately result in limiting access, higher costs and confusion.’

Are you kidding me?!?  Finally having a wee bit of transparency (in English which doesn’t necessarily help!) and a receipt is going to raise costs.   Wells Fargo and their banking and MTO buddies simply have no shame.  I hope these hypocrites made a big fat contribution to Clinton’s Global Initiative, because they certainly don’t mind exploiting the living bejesus out of these immigrant and migrant families.

In Canada the bill to cap costs at 5% (remember that is the World Bank and G-8 goal!) is making progress.  More endorsements have come forward from the Canadian Union of Postal Workers (CUPW) and the University of Toronto Student Union.  There are also encouraging discussions with the Liberals, who may actually join with the NDP in a joint bill.  I’m holding my breath.  Somewhere developing countries and the workers trying to help their families have to get a real break on costs, not just a piece of paper with some numbers on it.

No-Mo’s: Stealing Homes through Foreclosure No Modification Programs in AZ and USA

New Orleans    Finally the fog is lifting around state and federal foreclosure modification programs and the real program is clear.  In the way of acronyms and abbreviations that abound in such programs like Fannie Mae and Freddie Mac, the largest of the mortgage guarantor agencies, the real program is called “No-Mo,” which stands for No Modifications Program.

It turns out according to letters released in Congress that the guardian of Fannie and Freddie, Edward DeMarco, missing yet another deadline for revealing any other program than No-Mo, had also presided over killing programs that would have accelerated foreclosure modification programs that had been approved by the agencies and were in testing trial runs with both Citibank and Wells Fargo.  DeMarco substituted the No-Mo program for these efforts to actually keep families in their homes.

In responding to two Congressmen, he gave as his rationale the following answer:  “These pilot programs…ended due to complex operational issues, involving system changes, accounting considerations and the interest level of Fannie Mae’s partners.”  Let me translate that into English.   “Accounting considerations” means that the banks did not want to restate their balance sheets to correctly reveal the current market value of their real estate portfolios which would have exposed them to be the “ghost” banks they are.  “Interest level of Fannie Mae’s partners” is a euphemism for saying that the banks did not want to modify the loans and Fannie was unwilling to push them to do so, despite that being the stated Obama Administration policy.   So, as many of us have known, the real policy has become No-Mo, no modifications.

Arizona Advocates and Action brought a good example to me the other day of how extreme the No-Mo program is being implemented in Arizona where foreclosures have risen to epidemic levels.  There the state government, which has pretty much been a bellwether of what NOT to do on most every program these days has even come up with the absurd proposal that $55 million of the money negotiated by the various state attorneys general for foreclosure modifications and principal reductions should in fact be used for prison construction.

Can you believe it?!?  Only in Arizona could the government have figured out a way to create No-Mo on steroids.

Possibly there is an even darker side emerging in the shadow of the subprime scandals that triggered so many of these foreclosures.  A message from the British Columbia headquarters of ACORN Canada came to me last night on a newly enrolled member in Kamloops who was facing foreclosure.  The mortgage, if you call it that, came from a company called Interior Equities, which is surely misnamed, and even in these days of 3 and 4% interest rates was carrying a 12% rate!  Reading their website it also became clear that signing up for one of these mortgages meant taking on a much discredited adjustable rate mortgage (ARM) and giving Interior In-equities the right to alter the interest rate every month.  This is a modern example of the old Wild West practice of claim jumping, where you simply steal someone’s property.

One there is No-Mo at the federal level it encourages states to steal relief monies and companies like Interior In-equities to steal property.  When can homeowners get a break?

Bringing Down Bank of America: Social Media or Social Movement?

New Obank-transfer-dayrleans The queue to “count coup” on Bank of America and its decision to step back from stealing debit card fees from its customers is almost unseemly.  We expect it from politicians, and props to Senator Durbin, VP Joe Biden, and the rest of the DC gang for the pile-on, which in fact was about damn time and very helpful, but at another level it’s the old story of defeat being an unwanted child and victory having a thousand fathers, but the self-aggrandizement is particularly stark in the face of community organizations, unions, and now social movements through the Occupy forces that have made Bank of America and its corporate confederates like Chase and Wells Fargo the largest corporate targets of direct action activity.

The Times post-mortem for the business readers continued with their usual theme of trying to manage protest by promoting social media (remember Egypt which they immediately had to retract with the “real” story?) as the “organizing tool” for change with the enthusiastic, over-the-top help of www.change.org, which is a great outfit, but seems to have had no boundaries in their personal congratulations on this one.

“But those customers may have found their voice, which has been amplified by social media. “People can now use tools like Change.org, Facebook and Twitter to rapidly organize and collectively act to influence the policies of even the largest companies,” said Ben Rattray, founder of Change.org, which allows consumers to start grass-roots campaigns using its online platform.

He pointed to Molly Katchpole, a 22-year-old woman from Washington who collected more than 300,000 signatures opposing the fee by using his company’s platform. And then there is the grass-roots effort that is calling for this coming Saturday to be “Bank Transfer Day,” where customers of big banks move their accounts to community banks and credit unions.

Mr. Rattray and other consumer advocates said the outcry was about much more than fees. “Bank of America’s new debit card fee was the last straw for many consumers who are tired of banks that got bailed out that are now turning around and hiking fees,” said Norma Garcia, manager of Consumer Union’s financial services program. “There was this phenomenon with banks and others confusing passivity with loyalty. And consumers are saying, ‘You can’t take us for granted anymore.’ ”

To be fair the “powers that be” want to make sure that protest continues to operate between the straight lines, so ample praise of course in the same piece by Tara Bernard (http://www.nytimes.com/2011/11/02/business/bank-of-america-drops-plan-for-debit-card-fee.html?scp=1&sq=social%20media%20and%20bank%20fees&st=cse) :

Lawmakers also openly criticized Bank of America’s planned fee. Days after the bank announced that it would charge the fee, President Obama said customers should not be “mistreated” in pursuit of profit, while Vice President Joseph R. Biden Jr. called the move “incredibly tone deaf.” And Senator Richard J. Durbin of Illinois, the No. 2 Senate Democrat, spoke out on the Senate floor, urging consumers to vote with their feet. He had sponsored the rule, known as the Durbin amendment, that limited the amount banks could charge for debit card transactions.

On Tuesday, he took to the floor again. “What we have at work here is a very fundamental principle of our economy, the free market economy, transparency,” he said. “So people know what they are being charged. So they have a choice.””

But, speaking of “tone deaf,” how is it possible not to mention the daily protests around the country and the world around banks and the admitted traction that Occupy has picked up in hitting Bank of America hard where previous large protests by community organization networks and unions had failed to gain traction?

I don’t mind being manipulated by the media anymore than the next person, but, gee, can’t they be a little more slick about it?  I know we are not supposed to believe that direct action, social movements, and mass protests make a difference as we parse the new tools that focus on a “theory of change,” but it takes people to use tools, and when the people are in motion, as they are now, let’s at least be clear about stating the obvious no matter how much credit some might want to claim or how much others might want to deny.

Federal Reserve Blasts Wells Fargo with Largest Ever Fine

Maude Hurde leadin an action against Wells Fargo years ago

Maude Hurde leadin an action against Wells Fargo years ago

New Orleans I may still be under a gag order on ACORN’s final settlement with Wells Fargo, but who knows at this point and who would care now.  Wells Fargo was always about hard ball and hard bargaining, but when we moved after than in 2004 after settling first with Ameriquest and then Household Finance on predatory lending practices, they were the next obvious target.  We had them to rights, rather to wrongs, but rather than accept the Ameriquest and Household terms for settlements they stonewalled.  The ACORN National Convention in Los Angeles that year made Wells Fargo its central target as 1500 people passed the Disney Concert Hall and then swarmed outside their building, handing the executives a copy of the suit our lawyers filed that day.

We settled eventually on the best terms we could get.  They implemented best practices and supposedly made other modifications.  The suit had been narrowed from the national scale of Household down to just California plaintiffs.

I read with some bittersweet pleasure at justice delayed being still better than justice denied that the Federal Reserve had settled with Wells Fargo this week for $85 million to compensate between 3700 and 10000 victims of virtually the same predatory practices that ACORN had exposed.

The Fed hit them for abuses that continued after our settlement from 2004 to 2008.  Much of it sounded the same though.  Documents had been faked with false income numbers.  Borrowers had been steered into unaffordable loans.   The CEO now, John Stumpt,  released a statement swearing it was a “small group” of employees who made this giant mess, and furthermore they had already paid off 600 customers.  Hmmm?  If that’s supposed to be an apology, then in typical Wells Fargo fashion, it sure doesn’t sound like one to me.

The Federal Reserve slept through the subprime crisis, and this latest fine, even though the largest, does not prove differently.

Judging from the tearless, limp finger pointing by Stumpt at others, it is clear that even as they pay the fine, nothing is changing in the sanctimonious and callow corporate culture at Wells Fargo.

If you want a safe bet, make one that they will continue to do the same thing over and over again, until caught and forced into a situation where they really have to change, rather than copping a plea where they admit nothing and deny everything as always.

Banks Silently Step up on Remittances

24basic.1.600Atlanta On ACORN International’s Remittance Justice Campaign (www.remittancejustice.org) we have had difficulty getting any response from the big banks except in the most cursory terms.  Wells Fargo did finally reply and told us they were doing great within a small footprint of countries.  Bank of America and JP Morgan/Chase were stone silent.  Not surprisingly given the predatory nature of their pricing.

A story broke yesterday on the wire and NPR which might more clearly indicate that the big boys can actually hear the footprints coming up behind them even as they stick to stonefaced spinning.   These three banks got together on something called ClearXchange in order to try and retain some of their customers exhausted with the constant fee rip-offs and increasingly inventing other alternatives including hand-to-hand transfers through prepaid debit cards within families or utilization of the PayPal if folks are sophisticated.

Frankly, this is a Band-Aid the banks are applying when a tourniquet is called for.  They may keep a couple of their more inept and lazy customers, but folks are leaving this train station and demanding other tools that reflect modern technology, rather than ancient and pervasive greed.

The NPR report seemed to hint that Google was talking about moving into the space of money transfer utilizing phones and mobile devices.  Talking about “doing good” or something like that which used to be their motto, I could fall in love again!  I couldn’t track down the whole story on a Google search (sounds contradictory doesn’t it?) but I did find that it has been possible to move money between various Google accounts fairly seamlessly using something called Google Checkout for the last two or three years.  Obviously not widely recognized or publicized, but they could also be knocking on the right door.

In Citizen Wealth I argued that companies, even big bad boys like Wal-Mart and H&R Block could create business models with huge returns by delivering service that low-to-moderate income families need and demand.  Money transfer of remittances is precisely the service that will see the game change fundamentally in a short time.  The banks and credit unions are trying to hold on to old models that are predatory and not realizing that you can’t leave $22 billion in profits out there and not have other, easier and cheaper services eventually suck them dry.

It’s past time for remittance justice.