Tag Archives: suicides

Spanish Banks Move to Freeze Foreclosures Sounds like a Plan!

Protests against evictions in Barcelona

New Orleans   Watching the banks back track and squirm in Spain over foreclosures that ended in several well-publicized suicides that are now roiling the political establishment in that country is a good lesson in how financial institutions can actually be moved when political will begins to coalesce.   In the USA we certainly do not seek dramatic suicides, but it would be wonderful in the wake of the recent election if we could finally build the political weight to offset the banker’s financial interests, contributions, and army of Washington lobbyists.

The headline in the Wall Street Journal oversells the Spanish action (“Spanish Banks Freeze Foreclosures”), but still spoke eloquently to the Spanish banks’ recognition in their foreclosure crisis that they had to spin another way, rather than continue to flip off mortgage holders and foreclosure victims which has been the standard USA operation procedure.  The banks there claim that they will “suspend” foreclosures for two years due to “humanitarian reasons” when homeowners are “in extreme financial need.”

They had little choice and this voluntary offer might not be enough to meet the political crisis in Spain over this issue.  Both of the major political parties have come together, as we have noted elsewhere, to revise bankruptcy laws, which are the impediment in refinancing in Spain, just as they are for many here in the United States, to allow homeowners to reorganize to the market values, which is also a huge part of our crisis.  Advocates there are arguing that “the government should implement a law halting all planned evictions of indebted families acting in good faith,” which also sound like a great step forward.

With Geithner finally on his way out at Treasury and the likelihood of removing some of the officials that are standing in the way of restating home values to market in the name of “moral hazard,” even though Wall Street and all banks have eternally sworn off moral hazard for their own accounts years ago, it is worth seeing the issue of housing being part of any agenda for potential bipartisan activity.  It can’t be wrong to finally make bankers accountable to the government.  It can’t be wrong to finally hold banks and mortgage holders accountable for wrecking the economy and setting back the prospects of “citizen wealth” for millions of families.

Spain is showing the way we need to move.  Now is the time!


Microfinance Company’s Own Investigation Proves SKS Provoked Suicides

Mother holds one child which the other plays with a photograph of her debt-ridden husband Hari Prasad, who consumed fertilizer chemical to kill himself on Aug. 1, 2010, in the village of Kadiri near Bangalore, India

New Orleans    Working with ACORN International, Melanie Craxton from the University of Edinburgh and I produced a hard hitting report,  Mega Troubles for Microfinance, calling into question the claims that microfinance reduces poverty and the entire model of unsustainable practices, collection methods, and the resource bubble fueling their growth.   Sadly, a story written by the AP’s Ericka Kinitz largely focused on the Indian company SKS, formerly one of the largest players, once non-profit and now owned by investors, including Boston-based Sandstone Capital, now SKS’ s largest investor, and U.S. private equity firm Sequoia Capital eviscerates the industry once more.

Kinitz was able to obtain internal company documents, verify with outside investors, and conduct interviews with ex-employees and others familiar with the suicides and SKS.  She found:

An independent investigation commissioned by the company linked SKS employees to at least seven of the deaths. A second investigation commissioned by an industry umbrella group that probed the role of many microfinance companies did not draw conclusions but pointed to SKS involvement in two more cases that ended in suicide. Neither study has been made public.

Both reports said SKS employees had verbally harassed over-indebted borrowers, forced them to pawn valuable items, incited other borrowers to humiliate them and orchestrated sit-ins outside their homes to publicly shame them. In some cases, the SKS staff physically harassed defaulters, according to the report commissioned by the company. Only in death would the debts be forgiven.

The story is shocking even if not surprising.  The company continues to try and deny responsibility and even the existence of an internal investigation.  The families are now worse than destitute.  The uproar caused by various states banning such collection practices and Indian politicians in some cases calling for borrowers to cease payments seems more responsible than some of the strong arm tactics of SKS and other microlenders.

The AP piece is a long and painful read, but if you ever thought you were helping someone in the developing world by putting your own dollars in an MFI or thinking this might work, please read every word!

Father hold a picture of his 18 year old daughter who pressured until she handed over her last 150 rupees ($3) drank pesticide while leaving a suicide note reading: "Work hard and earn money. Do not take loans."