Donors Muscling Democracy in Detroit

QPIMG_5892New Orleans No matter how jaded we might be about the ways and means that the deep pockets of philanthropies muscle up and try to force their will on desperate grant seekers, the article in the Wall Street Journal by Matthew Dolan, “Revival Bid Pits Donor Against Detroit,” was a shocking tale of arrogance, elitism, and autocracy by Rip Rapson and the $3.1 billion Kresge Foundation.

Reading the article it was hard to see any controversy.  Rapson and Kresge had backup on their heels in a face of wills on whether or not they knew what was best for Detroit and could impose their “vision” accordingly or whether or not the newly elected reform mayor and former NBA basketball player, Dave Bing, and the citizens should drive the process.  Clearly they were flat ass dead wrong and the article couldn’t have been clearer.

The foundation had put money into Detroit Works, a standard issue, consultant driven planning apparatus for looking at Detroit’s future similar to what virtually every city in the US has tried to unite business, labor, and other “stakeholders” to come together behind a plan.  Bing had put the operation together before he was elected as a transition vehicle for his emerging government.  Nothing much of a surprise here either.  It’s all standard issue in big time, big city politics.  The difference here is that Bing was elected and, appropriately, moved to integrate planning and other functions in city departments and, as mayor, make sure everyone got their fair say.

Rapson seems to have petulantly pulled Kresge’s money out of Detroit Works trying to insist that an outside planner from Harvard recruited earlier to run roughshod over the local players still got to push the program.  He also doesn’t like the way a rail plan is developing and the fact that the City of Detroit wants to drive the engine, not Kresge with him wearing an engineer’s cap, so he’s also suspended the foundation’s money there, arguing that without Kresge the project is DOA.  Whoa, doggie!  Kresge’s big bucks do give them a big stick and a loud voice because unfortunately that is the way things work in America, but didn’t he at least read a couple of the pages in the foundation executives’ handbook that says they should at least pretend they care about what others thing?  What country is Rapson from that he thinks this is the way the world works?

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Foreclosure Modifications, Killed by the Cure

Bailout OversightNew York City When the Inspector General of the Treasury Department starts agreeing with me that the Treasury Department and the banks are totally messing up the HAMP – Housing Modification Program – you just know it must be terrible!  And it is…according to a recent report in the Wall Street Journal by Jessica Silver-Greenberg:

The program “has undoubtedly put people into foreclosure,” says Neil Barofsky, the special inspector general overseeing the Troubled Asset Relief Program, which funds HAMP. “It’s a parade of documentation horrors.”

In a report to Congress on Oct. 26, Mr. Barofsky concluded that some borrowers seeking loan modifications through HAMP might wind up “worse off than before they participated.” Back payments, penalties and late fees triggered when homeowners are rejected for a permanent fix can push some borrowers over the edge, he said.

The medicine kills them when it turns out, as Arizona Advocates and Actions ( has documented repeatedly, there are pre-approved or given verbal instructions to modify payments and then through repeated paperwork snafus, the banks renege and leave the borrower stuck very far out on the limb.  They do not hesitate to dog pile the borrower then with add-on fees, late payments, and all manner of predatory charges because the borrower was following their instructions. Yet the program requires that the borrower has to successfully make 3 payments on the modified terms, so in no time the borrower is stuck like chuck.

But of course there’s no accountability at the top or the bottom.

“The Treasury Department doesn’t record how frequently errors occur with documentation on home loans submitted to more than 2,500 financial institutions and servicers empowered by the U.S. government to grant and reject HAMP requests. An outside review of borrowers denied permanent modifications disagreed with the servicer’s decision in 4.8% of the loans during the fiscal quarter ended in August.”

Our experience is that an error rate of 5% is way, way too kind to the financial predators at the table here.  But even noting that 1.4 million people have been tossed out of the program thus far (against the Obama Administration’s original goal of 3 million modifications), a 5% error rate would be 60,000 homeowners.  That number of mistakes along would decimate home communities in many states around the country.  Put the error rate more reasonably at 10 to 20% and we are dealing with 120,000 to 240,000 homeowners that could have saved their houses, but instead have been wrongly excluded and bounced to the street.

It is unbelievable that this can’t be fixed!


Wikileaks Complex Financial and Organizational Structure

wikileaks-julian-assangeNew Orleans I realize this might seem to be a contrarian position, but as an organizer I totally understand – and support — the complex and intricate structure devised by Julian Assange and his associates at Wikileaks.  I realize there is some uproar and even internal dissension among the Wikileakers about some of the decisions made in the acquisition and distribution of information of war reports from Afghanistan, and Assange may very well have made some wrong calls there, but in the main I think there should be a “fair use of available weapons of dissent” doctrine on both sides of the dispute when thousands of lives are at stake in pressurizing an important debate about the war, and therefore it’s a public service.  We should talk more about that some other time, because now I want to argue that this guy, Julian Assange, should get some slack while he’s under pressure and on the run.

Where I think Assange was unequivocally correct is in creating an opaque organizational and financial structure in order to protect the mission of Wikileaks and its ability to exist and survive against wilting and strenuous legal and governmental attack.   Some of this stuff is simply brilliant.  Some of it may be totally paranoid.  On any level it’s a case study on how to at least think about constructing operational opposition formations.

According to a piece in the Wall Street Journal a couple of months (8/23/10) part of the strategy involves incorporating and registering Wikileaks in different countries under different auspices that provide maximum protection under the laws of these countries:  a library in Australia, a foundation in France, and a newspaper in Sweden, and two no-name tax exempt 501c3 non-profits in the United States are some examples.  Many of the releases of documents for a while were based in Iceland where laws are extremely protective of speech.  All of those moves are simply to protect the organization.  There’s no question that creating a federation and registering separately in all of the countries where ACORN International worked was valuable in much the same way, both internally and externally, in protecting the work.

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Shocking Student Loan Debt

sallie-mae-2New Orleans In talking about Citizen Wealth around the country I’m frequently asked about education and the old saw that education creates income security.  Odds are that there is still truth to that, but it was shocking to read how predatory the least slipup can be for students taking on debts for a key to supposedly a richer future.  An article in today’s Wall Street Journal by Mary Pilon detailed some scandalous charges and run-ups that can take student loans up to as much as a half-million bucks. It’s not surprising to see how these vultures lure the young into a lifetime of debt servitude or more frequently loan defaults.

The tricks of the trade are seductive:

  • Deferrals:  sure seems like a friendly thing to do but the debt accumulates and grows while the payments are postponed.
  • Compound Interest:  I forget the movie where the old rich fellow was telling the callow the youth the secret to wealth, and it was “compound interest,” not “plastics.”  The ability to charge interest on top of interest on top of interest, takes the simple debt and its simple interest rate to stratospheric levels once you add time.  You are thinking this isn’t predatory, right?  This is just the way loans work, chump!  If there is no effort to explain the consequences transparently, then over time this morphs into a predatory practice as well.  Get it?
  • Penalties and fees:               The story detailed preposterous charges of $20000+ and $50000+ for turning over collection to a debt agency.  What?!?  How can that be possible?

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Pampered, Rich, Lazy Bankers Dis Prez

lloyd_blankfein-goldman-sachsNew Orleans The meeting between a dozen big bankers and President Obama was just for show anyway, but three of the big dawgs were too trifling to make it from New York to DC for cryeye because of fog.  The three scofflaws were Goldman Sachs, the poster child for banking excess, Citigroup, the face of a crippled institution, and Morgan Stanley, another “new” bank reincorporated to get to the pig trough for billions.  They were call-ins from New York not Iraq or Afghanistan or somewhere really hard to manage travel.

Even more embarrassing to these three has to be the fact that the head of PNC drove himself from Pittsburgh to DC on Sunday night to make sure there were no problems.  Another “new” bank, incorporated just for the billions, American Express, joined hoi polloi with the rest of the commuters and took Amtrak.  Richard Parsons (Citi), John Mack (Morgan Stanley), and Lloyd Blankfein (Goldman Sachs profiteers) clearly just couldn’t be bothered to either plan ahead and check into the weather or ride government transportation on the train with the little folk.

Having traveled for a living for decades, I just don’t buy any of their excuses.  They are so lame they are not worth repeating.

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Count Barney Frank

barney-frank New Orleans I don’t really need Google Alerts to keep up these days, especially when my hometown paper, The Times-Picayune, devotes one full page to six stories about ACORN.  Throw in the Washington Post, USA Today, McClatchy wire, AP, New York Times, and the Journal, and I think this is in fact what is known as a media storm.  One of that “little know community organizing group called ACORN” any more, that’s for sure.  One piece yesterday finally brought a big, fat grin to my face and that article was in the Wall Street Journal where Congressman Barney Frank (D-Mass) was giving what could only be called a head butt to the wags on the editorial page about why he was not in the number voting on the ACORN herding bill last week.

Frank is a tough customer.  When I was working with ACORN, he was always driving our DC folks crazy because he was impossible to organize, always knew best, and in many cases we felt was too quick and cozy to the deal with the financial companies.  We talked to his people all of the time with hope and a prayer.  I’ve even questioned recently why Frank had the Financial Service Committee drop supervision and oversight of the Community Reinvestment Act (CRA) from their version of the bill to create a new financial consumer protection agency when the Obama Administration has proposed otherwise.  But, that’s all business, and this is personal, so props to Frank for standing straight and tall!

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