Eric Schneiderman Is My Hero!

Attorneys General of 50 States Sue The Big Banks

As mentioned in a previous post back in March, for months now the Attorneys General of  all  50 states of the union have together been suing the big banks over violations of real estate law. Banks transferred their mortgages repeatedly in order to create the infamous mortgage-backed-securities [MSB] filled with non-performing loans and sold all over the world. But, the banks never paid the taxes and fees due on the transfers and so have opened themselves up to lawsuit from every state.

We all know how strapped the states are for cash, so it’s no surprise that the Attorneys General would make every effort to collect.  In the meantime, though, the Obama Administration has also gotten involved and, as per usual, the Big Banks have been frantically lobbying to limit their liability-drastically limit their liability.

 

In fact, a number like $20 billion has been bandied about, leaked to the press, while yet the banks object vociferously to this number which, large though it is, is paltry in comparison to the hundreds of billions, not to mention trillions, they raked in during the “bubble” years when they were making these horrible loans to almost anyone with a pulse. Considering, too, that the final settlement amount must be shared among 50 states, that $20 billion is really small potatoes.

Banks Want To Escape Liability-Totally

The banks’ behavior, though, is far more troubling than merely limiting the dollar amounts they must pay the states. No, you see the banks want to limit their total liability to all those who lost their homes, legally or illegally. As mentioned in a previous post, foreclosure fraud via cooked-up loan documents is still going on, as was recently discovered. This plan would also limit banks’ liability to those investors, both at home and abroad, who bought the toxic investments which the banks knew were substantially worthless as they off-loaded them to the unsuspecting. The dive the pension funds took? Not their responsibility, either.

Helping the banks contain this damage into one neat little package and, as Matt Taibbi of RollingStone has it, shooting it off into deep space, are many of the AGs and the Obama Administration. It seems it would serve government’s goals as well if this whole thing would just go away.  Put into a neat, little [and cheap for the banks] package and allow the banks to then go their merry way. Never mind the millions of former homeowners who lost their homes, whose lives were ruined, whose livelihoods were destroyed by the easy money provided by the banks which fueled the bubble and made them billions of dollars.

My Hero Eric Schneiderman

 

Enter my hero, Eric Schneiderman, Attorney General of New York [my home state]. Schneiderman has refused to go along. Schneiderman actually wants to investigate the activities of these banks. Earlier this year he launched an investigation into the securitization practices of Goldman, Morgan Stanley, Bank of America and other companies. Further, Schneiderman is also blocking an individual $8.5 billion settlement for Countrywide investors. He has sued to stop that deal, claiming it could “compromise investors’ claims in exchange for a payment representing a fraction of the losses.”

Schneiderman is seriously compromising the Big Banks’, other Attorneys’ General and the Obama Administration’s efforts to shovel this huge pile of doo-doo under the rug of a tiny settlement.  He is under tremendous pressure to cave and has been summarily kicked off the negotiating team.

Banks are spouting a revisionist line: their crime is faulty paperwork, not massive corruption and fraud which, for those of us who can remember what life was like 5 years ago, a dwindling group, it appears, was their real crime. Banks knew their loans were bad. That is why they “sliced and diced” them and stuffed them into MBSs in the first place. They behaved with no regard for the effect on others; they operated solely for their own benefit. And, benefit they did, let us remember, to the tune of billions of dollars. And, when their crimes started to catch up to them, they cried “Bailout” to the federal government and the very same evil-doers got billions in tax-payers money.

Why is Eric Schneiderman the only one who remembers this? Why is he the only one who understands that he is the defender of the millions of helpless homeowners who lost their homes, often illegally, after they had already been victimized with fraudulent loans and offered no loan mods or trifling mods by these very same banks?

Eric Schneiderman is my hero. I truly hope he can hold out against the combined pressure of the Obama Administration and most of the other AGs. Please, Eric, hold fast.

Obama’s Plan: My View

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Finally, in Obama’s plan the federal government is doing something to stem the tsunami of foreclsoures and short sales. It’s trying to keep property values from decreasing further. It’s trying to keep families in their homes.

Even as President Obama was announcing his plan, he acknowledged that it would be just a drop in the bucket. Think about this: the plan offers $75 billion in federal money to help homewoners, mainly by providing incentives to lenders.

Today,   one in 10, that’s 10%  of all home loans are  right now facing foreclosure. It’s estimated that by the end of 2010 at this rate fully 25% of all homeowners will be underwater. That’s closer to $500 to $600 trillion in home loans.

The refis will not be too much help in California because we’ve lost too much value, though they may help in other areas. The loan modifications may help and the Obama team has said that any bank which has accepted TARP or any bailout money MUST do loan mods and good ones.

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Still homeowners must have income to do a loan mod.  So, if a homeowner  has lost a job or has been unemployed for more than a short time, I don’t see lenders offering anything–short sale.

Lately, I’ve been seeing an ad on TV featuring a women who says she gave up her job so she could take care of her mother when she realized she was “failing”. She says she talked to her bank and “worked it out”. This would be  laughable if it weren’t so villanous.  Calling your bank and telling them you can’t pay your mortgage or only part of it will accomplish only one thing–a faster foreclosure notice. They will definitely tell you to pay whatever you have and to pay the bank first before other items in your budget, probably even food. That’s what I’ve been seeing out in the field. Despite all the bailout money, as we’ve all noticed, banks have gotten more hard-nosed, vicious even, not less.

Wow, I’m glad I got that off my chest. I didn’t realize how much I despise banks, especially the big ones. It seems  Obama and his team have already learned the banks will have to be forced to do anything at all to help homeowners.Reblog this post [with Zemanta]

Loan Modifications: Obama’s Plan

Called the Home Ownership Stability Initiative the heart of Obama’s plan really is the loan modification. As we have all heard, some homeowners are facing payments jumping thousands of dollars a month as adjustable loans readjust. Many homeowners are paying 50% or 60% or more of their income in mortgage payments while the value of their proerties is tumbling.

This plan aims to modify loans for those who qualify at 31% of income. Notice, that just like refinances, modifications require income. That’s the first qualification: income sufficient to pay the modified mortgage.

Until now, banks have been reluctant to offer loan modifications to homeowners who, whatever struggles they were having, remained current on their mortgages. Most banks refused outright to help such borrowers. This plan changes that and makes loan mods available to those who are current in their home loans as well as those who are behind in their payments.

This is important because it allows those who have not missed a payment to maintain their credit. As we all know, often a few dings on the credit and a missed mortgage payment is a major ding, have a cascade effect. Credit card companies find out and jump up rates on credit card debt. It becomes much harder to get any credit at a decent rate, etc.

Let’s say, for instance, that the borrower is paying 43% of his income for his mortgage. He applies for a loan mod and the lender brings the payment down to 38% of his income. Then, the government [Freddie and Fannie] and the lender bring the loan down by equal contributions [3.5% and 3.5%] to 31% of the borrower’s income. That mod stays in place for 5 years. At the end of that time, the rate would be gradually increased to the rate at the time of the loan mod.

Also, and this is important, the government would reinburse the lenders who agree to bring down the principal. Bringing down the principal: all underwater borrowers’ dream and their lenders’ nightmare. Until now, it’s been the rare lender who would touch that principal.

Now, lenders have incentives. If they modify a current loan,servicers receive $500 and lenders [investors] $1500. Borrowers have incentives, too. Every year a borrower stays current in the new mod, he receives $1,000 for up to 5 years. This is clear incentive to help those “good” borrowers who have made tremendous efforts to pay their mortgages during this current crisis and by dint of great sacrifice maintain their credit. Obama’s plan clearly tries to help these people while at least partially answering the persistent critique that responsible homeowners received no help while the irresponsible were being bailed out. Obama’s plan specifically says speculators or flippers cannot particpate.

This, of course, brings up another issue: small investors who own rental properties, especially single family homes or condos, are suffering, too, but seem to be eliminated from this program. Apparently, that is the case except for rental property that was originally a principal residence. So, if you are renting out the condo or 2-bedroom house you bought as your first home before you bought your current residence, then you may be able to participate.

Final details of this plan are supposed to be released this week. The Treasury Department says it will issue clear guidelines for all lenders to follow in doing loan modifications. That would be a relief. At the moment, it’s a free-for-all out there. Some lenders are very cooperative; others refuse to do anything. There’s no doubt we need to do something even if it means helping those who have not, shall we say, been the most prudent in their financial choices. If we don’t the fallout is just too terrible to contemplate.

Bush’s Legacy: Obama Wins!

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Democrats should be thanking George W. Bush at this historic moment: the landslide election of Barack Obama to the presidency, at least 5 more senators and a great plurality in the House of Representatives.

What caused this enormous sea-change from the divisive 2000 election when the Supreme Court decided Bush should have the presidency or even the 2004 presidency which in the eyes of many Kerry conceded far too early?  How has it happened that the 50/50 split of American politics seems to have disappeared, replaced by a new model? 

Tine marches on.  Nothing stays the same forever. It was inevitable that the pendulum would swing once again. Yet, I can’t help but think that the greatest reason for Obama’s massive victory is the legacy of Barbarian Bush and his horde of neo-cons.

When Bush came to power in a divided country, he had a Republican majority and he and his horde set to work intigating the policies that neo-cons had been espousing for 30 years. Small government, low taxes, little regulation…these are sacrosanct to neo-cons,  first espoused on the national scene by Ronald Reagan whose name still rings like music to their ears.

Bush’s gang had the first chance to really activate these ideas. And, boy, did they with gusto and glee, appointing industry insiders to head  the FDA, the EPA and other regulatory agencies. When they couldn’t get rid of the rules due to a pesky Congress, they made sure the rules were not enforced. They downgraded FEMA from cabinet post to a constituent part of a new agency, Homeland Security. The Justice Department was staffed with like-minded individuals who put party loyalty first. Bush had the opportunity to place two new Supreme Court Justices and he made sure they would be as right-wing as his neo-con friends…This is but a partial list. Eight years is plenty of time to gut almost every aspect of government.

These fabulous neo-con ideas of how a government should operate…how did they work out? We all know what happened.  We see the result every day. Wall Street became populated with looters who fleeced first the American people individually and then as group after the catastrophic collapse of the stock market. What caused this? To a great degree, it was lack of regulation as Wall Streeters came up with and implemented exotic and complicated new “financial instruments”, as we learned to call them. These were then sold all over the world, trading on a brand name, Brand America, built up over 150 years. Again, we know the result–not only our own economy, but the global economy is on its knees.

The degradation of the American economy due to Bush’s neocons’ economic theories is only the tip of the iceberg.  The US lost millions of jobs during Bush’s tenure. Why was that? The neocons believed that lessening the tax burden on the rich would encourage investment and allow income to “trickle down” to the masses. That bankrupt notion allowed the last of America’s manufacturing to head to foreign shores where the now richer rich spent their extra capital setting up off-shore factories to export product back to the US for a greater profit to themselves.  Further, these tax breaks for the wealthy also encouraged some of America’s service sector to be sent off-shore. Now,  the increasingly rare product support centers come with an Indian accent. Thanks, George Bush! Thanks, neo-cons!

It’s impossible to list the functions of government gutted or polluted by George W. Bush and his neo-con handlers.  We saw in Katrina what happens when government  does not do its job. Why not? Was it because the head of FEMA was a no-nothing political appointee? The people involved were the poorest of the poor and black to boot? Whatever it was, Brand America abroad became a loathsome thing. We, ourselves, began to lose faith. Our anger and disappointment became a palpable thing and focused on George Bush.

Lately, contempt for Bush is so pervasive that nobody even makes jokes about him any more. We all or most of us anyway, agree Bush is a joke and his presidency is the worst in our history.  Bush is in some sense a figurehead.  He represents the ideology of the neo-cons.  Those who espouse that ideology would have us believe that Bush the man is the culprit. With a better man, more intelligent, more dedicated, these policies would have worked. That is not true. It is the policies which have created this destruction.

Neo-cons have held the stage here for so long that it’s hard for many to give up these ideas. They are still afraid of regulation–it will hurt business, it will hamper trade. Obama must not raise taxes on anybody, including the rich, which he has promised to do by a few points.  The Big Three automakers are skirting bankruptcy, CEOs make 435 times the average wage, the stock market has sunk 35% in one year, millions of jobs were either lost or never created—and the answer is keep these old, useless policies.

These neo-con policies of George Bush are what sank the US economy. The only solution is to reverse them and try a different approach. Instead of discouraging labor unions, encourage them. Regulate Wall Street and the mortgage industry more effectively. Protect the consumer. Protect the environment. Tax those who make profit inthe US and disallow them from taking their American-gained funds tax-free off-shore. Encourage those who create jobs here in the US. Discourage those who take their business off-shore.

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Democrats have now, thanks to George Bush and a charismatic presidential candidate, a historic chance to turn this country around into a place which is more just, more equal and with more opportunity for all.

Bailout Bust: Politically Bankrupt

Barbarian Bush and his horde of cronies failed in their assault on the City on the Hill. A few fragile and weak defenders managed to stave off the ultimate game of chicken. Astonishingly, the defensive forces came from the progressives in the Democratic party [Kucinich, Jackson-Lee] and the most conservative Republicans [our own Rohrbacher, Issa and Hunter among them] both reluctant at first and then finally determined to repel the concerted attacks from the “leadership” of both parties.

So, is this a good thing? We the people think so. We the people are tired of the Barbarian Bush horde’s fear-mongering. For Bush and the horde, it’s always level orange if not red. Unlike one of our most beloved presidents, FDR, who told us in another time of deep despair and financial catastrophe, “You have nothing to fear but fear itself” [First Inaugural Address, March 1933, a very dark time indeed]–our current president tells us at every opportunity, “Be afraid. Be very afraid.” Be afraid of the “terrorists”, a completely meaningless term by the way. That fear led to an unprovoked war on a sovereign country, Afghanistan. Then, be very afraid of WMD. That chimera led to an unprovoked attack on another sovereign nation, Iraq. Before every election, especially 2004 when Bush seemed poised to lose, out he trots with the fear factor.

This fear factor has already sunk this country into deep debt, recession, job loss, the Katrina disaster ad nauseam. The real effect?  We the people now completely  distrust our own  government. Apparently, some very respectable lawmakers in the House and Senate think this bill is necessary, almost a majority from both parties, in fact.  We the people know, though, these same lawmakers believed the fear-mongering after 9/11. They agreed to unprovoked attacks on sovereign nations [you may know this as “preemptive strikes” or “the Bush doctrine”]. They agreed to abrogate the Constitution with the Patriot Act, surely the most ill-named bill of all time. They agreed recently to extend the FISA bill, allowing domestic spying and exempting from prosecution telecom companies who illegally agreed to do the spying at the instigation of guess who? King George, of course,

If this bailout bill is any good, why can nobody understand why this great nation must go into debt up to its neck to shovel yet more money to the bloated billionaires of Wall Street? If this bill is really necessary, why does no one bother to explain it? Listening to C-span yesterday, I heard a Republican lawmaker claim that reducing or eliminating the capital gains tax, long a right-wing talking point, of course, would solve the crisis. He, apparently, wasn’t aware that companies winking out of existence are not going to be paying capital gains tax, that gigantic losses do not attract taxes…If he was so clueless, what about the rest of us?

Then, there are the two presidential nominees who both support the bailout. Of course, McCain is lurching from position to position with all the grace of an elephant on roller skates. September 15th–the economy is strong. The next day it’s a disaster and the day after that he must “suspend” his campaign and rush to Washington to “lead” in finding a solution to the problem. Abandoning that tactic, yesterday his campaign issues a statement in which he claims credit for getting the bailout passed. Oops! Bailout didn’t pass. Do you get credit for that, too?

What about Obama? Shouldn’t he rush in and solve the credit crisis if fellow Dems and McCain fall short? That seems to be what some people are demadng that he do. But, wait…this crisis was created by Barbarian Bush and his horde. Why should Obama or any Democrat rush in to save him? Even agreeing to support Bush’s bailout was risky for Obama.

So far, many of his policies enunciated on the campaign trail, espcially and most strangely his  foreign policy statements, seem to have been adopted or coopted is perhaps the better word by Barbarian Bush. Obama struggles against everybody to demand a time line for getting out of Iraq. B.B. amd horde adopt a time “horizon” to get out.  Obama is ridiculed for suggesting during a primary debate that as president he would meet with our “enemies”. Reversing previous policy, Bush sends Rice off to talk to North Korea. Now, Obama says he would attack high-level Al Qaeda operative within Pakistan and is savaged by John McCain as “naive” for that position, but B.B. is doing exactly that.

Obama would be an idiot to rush to Washington to bail out Bush and horde because he would get no credit for it and since he is not the president he would have no power to do it his way. McCain’s campaign seems at this point to be imploding, so Obama appears to be more able to cope. Let’s all pray he can come up with a plan should he make it to the White House.