— by Sarah Edelman, Guest Blogger on Apr 17, 2013 at 3:48 pm
Could federal regulators and their cast of private contractors possibly do a worse job of getting relief to families who were wronged during the foreclosure crisis?
First, private contractors botched their initial review of banks’ foreclosure files. Then, the Office of the Comptroller of the Currency cut a bad deal with mortgage servicers that pays very little – about two-thirds of borrowers will receive only $300.
Finally, adding insult to injury, borrowers are having trouble cashing the disappointingly small checks!
Apparently, in order for borrowers to cash the compensation checks they received, their bank must contact Rust Consulting, the company handling the distribution of compensation funds for the U.S. government in order to verify the checks are cashing. However, when these banks followed typical protocol and contacted the bank issuing the checks, Huntington National Bank, the issuing bank was unable to verify and give approval to cash the check.
In the grand scheme of things, this bureaucratic slip-up can be resolved fairly easily, and the Federal Reserve has assured the public that borrowers should be able to access their compensation going forward. However, this most recent debacle underscores how this entire process has failed millions of families who have already lost their homes and savings during the foreclosure crisis.
A major problem throughout this process has been poor communication and outreach to borrowers. Last summer, the General Accountability Office reprimanded the OCC for ineffective outreach to more than 4 million borrowers who could be eligible for compensation. What’s more, the closed review process by the bank contractors – for which reviewers were paid more per hour than most borrowers will end up getting in total compensation – offered borrowers no opportunity to provide additional information as the contractors were determining whether or not they were wronged and if so, the amount of compensation they were owed.
As that review process became increasingly costly and bogged down, the OCC made a deal with 13 banks which, yet again, provides little meaningful redress to the vast majority of those whose foreclosure were mishandled.
Perhaps it could be amusing – or even inspire a comedy TV show – if a small-town sheriff was bungling its affairs this badly. But it’s no laughing matter when the primary federal regulator of big-bank safety and soundness and its high-priced contractors look like the Bad News Bears.
Our guest blogger is Sarah Edelman, a Policy Analyst at the Center for American Progress Action Fund.
This material [the article above] was created by the Center for American Progress Action Fund. It was created for the Progress Report, the daily e-mail publication of the Center for American Progress Action Fund. Click here to subscribe.
— an Op-Ed by Senator Bernie Sanders
We are supposed to be a country of laws. The laws should apply to Wall Street as well as everybody else. So I was stunned when our country’s top law enforcement official recently suggested it might be difficult to prosecute financial institutions that commit crimes because it may destabilize the financial system of our country and the world.
“I am concerned,” Attorney General Eric Holder told the Senate Judiciary Committee, “that the size of some of these institutions becomes so large that it does become difficult for us to prosecute them when we are hit with indications that if we do prosecute — if we do bring a criminal charge — it will have a negative impact on the national economy, perhaps even the world economy.”
The attorney general was talking about some of the same financial institutions that received billions, and in some cases trillions, of dollars in taxpayer bailouts after their greed, recklessness and illegal behavior plunged the country into a terrible recession. Over my opposition, Congress approved a $700 billion taxpayer bailout of financial institutions that were on the brink of collapse which some in Congress considered “too big to fail.”
In addition, the Federal Reserve provided over $16 trillion in total financial assistance to these same institutions during the financial crisis (which only became public after an amendment I inserted into the Dodd-Frank Wall Street Reform and Consumer Protection Act requiring the Fed to disclose this information).
The attorney general’s view seems to be that if you are just a regular person and you commit a crime, you go to jail. But if you are the head of a Wall Street company, your power is so great that a prosecution could have destabilizing consequences with national or even worldwide implications.
In other words, we have a situation now where Wall Street banks are not only too big to fail, they are too big to jail. That view is unacceptable.
The attorney general’s troubling acknowledgement has revived interest in an idea that is drawing more and more support. It is time to break up too big to fail financial institutions.
The 10 largest banks in the United States are bigger today than they were before a taxpayer bailout following the 2008 financial crisis.
U.S. banks have become so big that the six largest financial institutions in this country (J.P. Morgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs, and Morgan Stanley) today have assets of nearly $9.6 trillion, a figure equal to about two-thirds of the nation’s gross domestic product. These six financial institutions issue more than two-thirds of all credit cards, over half of all mortgages, control 95 percent of all derivatives held in financial institutions and hold more than 40 percent of all bank deposits in the United States.
I will soon introduce legislation that would give the Treasury secretary 90 days to compile a list of commercial banks, investment banks, hedge funds and insurance companies that the Treasury Department determines are too big to fail. The affected financial institutions would include “any entity that has grown so large that its failure would have a catastrophic effect on the stability of either the financial system or the United States economy without substantial government assistance.” Within one year after the legislation becomes law, the Treasury Department would be required to break up those banks, insurance companies and other financial institutions identified by the secretary.
Breaking up the too big to fail financial institutions is a notion that has drawn support from some leading figures in the financial community. Richard Fisher, president of the Dallas Federal Reserve Bank, wrote this: “The safer the individual banks, the safer the financial system. The ultimate destination — an economy relatively free from financial crises — won’t be reached until we have the fortitude to break up the giant banks.” James Bullard, the head of the St. Louis Fed, also weighed in. “I do kind of agree that ‘too big to fail’ is ‘too big to exist.’” Thomas Hoenig, the former Kansas City Fed president, was an early supporter of the idea of breaking up big U.S. banks. “I think [too big to fail banks] should be broken up. And in doing so, I think you’ll make the financial system itself more stable. I think you will make it more competitive, and I think you will have long-run benefits over our current system, which leads to bailouts when crises occur.”
In my view, no single financial institution should be so large that its failure would cause catastrophic risk to millions of American jobs or to our nation’s economic well-being. No single financial institution should have holdings so extensive that its failure could send the world economy into crisis. And, perhaps most importantly, no institution in America should be above the law. We need to break up these institutions because of the tremendous damage they have done to our economy.
If an institution is too big to fail, it is too big to exist.
— by Robert Reich, former Secretary of Labor under President Clinton
In recent weeks Republican state legislators have decided to thwart the Supreme Court’s 1973 decision in “Roe v. Wade,” which gave women the right to have an abortion until the fetus is viable outside the womb, usually around 24 weeks into pregnancy.
Legislators in North Dakota passed a bill banning abortions after six weeks or after a fetal heart beat had been detected, and approved a fall referendum that would ban all abortions by defining human life as beginning with conception. Lawmakers in Arkansas have banned abortions within twelve weeks of conception.
The morality brigade worries about fetuses, but not what happens to children after they’re born. They and other conservatives have been cutting funding for child nutrition, healthcare for infants and their mothers, and schools.
The new House Republican budget gets a big chunk of its savings from programs designed to help poor kids. The budget sequester already in effect takes aim at programs like Head Start, designed to improve the life chances of disadvantaged children.
Meanwhile, the morality brigade continues to battle same-sex marriage.
Despite the Supreme Court’s willingness to consider the constitutionality of California’s ban, no one should assume a majority of the justices will strike it down. The Court could just as easily decide the issue is up to the states, or strike down California’s law while allowing other states to continue their bans.
Conservative moralists don’t want women to have control over their bodies or same-sex couples to marry, but they don’t give a hoot about billionaires taking over our democracy for personal gain or big bankers taking over our economy.
Yet these violations of public morality are far more dangerous to our society because they undermine the public trust that’s essential to both our democracy and economy.
Three years ago, at the behest of a right-wing group called “Citizen’s United,” the Supreme Court opened the floodgates to big money in politics by deciding corporations were “people” under the First Amendment.
A record $12 billion was spent on election campaigns in 2012, affecting all levels of government. Much of it came from billionaires like the Koch brothers and casino-magnate Sheldon Adelson —seeking fewer regulations, lower taxes, and weaker trade unions.
They didn’t entirely succeed but the billionaires established a beachhead for the midterm elections of 2014 and beyond.
Yet where is the morality brigade when it comes to these moves to take over our democracy?
Among the worst violators of public morality have been executives and traders on Wall Street.
Last week, JPMorgan Chase, the nation’s biggest bank, was found to have misled its shareholders and the public about its $6 billion “London Whale” losses in 2012.
This is the same JPMorgan that’s lead the charge against the Dodd-Frank Act, designed to protect the public from another Wall Street meltdown and taxpayer-funded bailout.
Lobbyists for the giant banks have been systematically taking the teeth out of Dodd-Frank, leaving nothing but the gums.
The so-called “Volcker Rule,” intended to prevent the banks from making risky bets with federally-insured commercial deposits – itself a watered-down version of the old Glass-Steagall Act – still hasn’t seen the light of day.
Last week, Republicans and Democrats on the House Agriculture Committee passed bills to weaken Dodd-Frank – expanding exemptions and allowing banks that do their derivative trading in other countries (i.e., JPMorgan) to avoid the new rules altogether.
Meanwhile, House Republicans voted to repeal the Dodd-Frank Act in its entirety, as part of their budget plan.
And still no major Wall Street executives have been held accountable for the wild betting that led to the near meltdown in 2008. Attorney General Eric Holder says the big banks are too big to prosecute.
Why doesn’t the morality brigade complain about the rampant greed on the Street that’s already brought the economy to its knees, wiping out the savings of millions of Americans and subjecting countless others to joblessness and insecurity — and seems set on doing it again?
What people do in their bedrooms shouldn’t be the public’s business. Women should have rights over their own bodies. Same-sex couples should be allowed to marry.
But what powerful people do in their boardrooms is the public’s business. Our democracy needs to be protected from the depredations of big money. Our economy needs to be guarded against the excesses of too-big-to-fail banks.
This work is licensed under a Creative Commons License
Robert Reich, one of the nation’s leading experts on work and the economy, is Chancellor’s Professor of Public Policy at the Goldman School of Public Policy at the University of California at Berkeley. He has served in three national administrations, most recently as secretary of labor under President Bill Clinton. Time Magazine has named him one of the ten most effective cabinet secretaries of the last century. He has written thirteen books, including his latest best-seller,Aftershock: The Next Economy and America’s Future; The Work of Nations; Locked in the Cabinet; Supercapitalism; and his newest, Beyond Outrage. His syndicated columns, television appearances, and public radio commentaries reach millions of people each week. He is also a founding editor of the American Prospect magazine, and Chairman of the citizen’s group Common Cause. His widely-read blog can be found at http://www.robertreich.org.
|Why Is the Obama FCC Plotting a Massive Giveaway to Rupert Murdoch?
Craig Aaron, Op-Ed: “We can still stop this terrible plan from moving forward. The other members of the FCC can dissent and send this thing back to the drawing board. The dozens of senators who voted against this very policy less than five years ago can speak up again. The Obama administration can think about cross-examining Rupert Murdoch instead of appeasing him. None of that will happen unless millions of people make some noise.”
|Hostess: Challenges Facing Unions When PE Doesn’t Deliver
Eileen Appelbaum, News Analysis: Looking at the Hostess situation a union could conclude that negotiations over further concessions by workers to keep the company functioning were fruitless. The union could continue to bargain to try to limit concessions and stand up against the greed and mismanagement of the company’s owners and managers. It could refuse to make further concessions to a company It thinks is asking too much. If its demands on behalf of its members were rejected, it might consider striking.
|Poor management, not union intransigence, killed Hostess
LA Times | Michael Hiltzik: Let’s get a few things clear. Hostess didn’t fail for any of the reasons you’ve been fed. It didn’t fail because Americans demanded more healthful food than its Twinkies and Ho-Hos snack cakes. It didn’t fail because its unions wanted it to die. It failed because the people that ran it had no idea what they were doing. Every other excuse is just an attempt by the guilty to blame someone else.
|Boeing Won’t Offer Pension Benefits to Same-Sex Couples Igor Volsky, News Report: Since Slog published its report, Boeing issued a statement promising to reassess the impact of Washington State’s marriage equality referendum on company policy. “Boeing is taking a closer look at how R-74 might impact company policies once it takes effect in December,” the statement said. “Nothing is ever final in negotiations until they’re over,” a company spokesperson told the Slog. “What we said today is that [these pension benefits] are not currently addressed in the contract.”|
|Fracking the Great Lakes
Lois Gibbs, News Analysis: “My sister and brother-in-law were active in advocating the cleanup of the lakes in the 1970’s. Our family vacationed on the lakes. It was exciting back then to hear that a serious effort from both sides of the boarder would advance to make the lakes swimmable, the fish safe enough to eat and so many other promises. Now more than 35 years later reports are praising the cleanup of historical chemical deposits while at the same time new chemicals are allowed to enter the lakes without protest.”
|Many Pro-GMO Corporate Biologists Own GMO Patents, in Bed with Monsanto
Anthony Gucciardi, News Report: “Very few scientists around the globe actually dare speak about these dangers due to the overwhelming political influence Monsanto and other biotech companies have over nations around the globe. We know thanks to 2007 WikiLeaks cables that not only are most if not all U.S. ambassadors on Monsanto payroll, but that prominent U.S. political figures have threatened nations who oppose Monsanto with ‘military-style trade wars’. A threat that has managed to strike fear into many nations who would not risk massive retaliation from the United States.”
|Solidarity for Tar Sands Blockade and Climate Justice Spreads Worldwide
Melanie Jae Martin, News Report: Hundreds marched to the U.S. embassy in Manilla last Wednesday to demand immediate climate action, while large numbers of peasants, organized by the Pakistan Fisherfolk Forum, demanded the protection of natural resources in Jamshoro. The Rwandan Climate Change Network helped spread climate awareness to Rwanda’s rural populations. Meanwhile, in Texas, over 100 people stopped construction of the Keystone XL pipeline on Monday, with four locking down and others setting up a new tree-sit blockade.
|The Age of Financial Repression
Edin Mujagic and Sylvester Eijffinger, Op-Ed: Meanwhile, Western central banks are using another kind of financial repression by maintaining negative real interest rates (yielding less than the rate of inflation), which enables them to service their debt for free. The European Central Bank’s policy rate stands at 0.75%, while the eurozone’s annual inflation rate is 2.5%. Likewise, the Bank of England keeps its policy rate at only 0.5%, despite an inflation rate that hovers above 2%. And, in the United States, where inflation exceeds 2%, the Federal Reserve’s benchmark federal funds rate remains at an historic low of 0-0.25%.
|Americans Want Leadership Now on Real Cliffs: Jobs and Human Survival
Truthout | Paul Street Op-Ed: "What Americans really want is the truth. They want leadership that says here’s what we need to do no matter how difficult it is, personal accountability on the part of Washington to get something done and then a level of transparency about what’s being done so that people can see progress along the way. That’s the way we do it in business. That’s the way we need to do it in Washington."
|How Renewable Energy Is Rescuing Schools from Budget Cuts
Yes! Magazine | Erin L McCoy, Report: When Richardsville opened its doors in fall 2010, it was the first “net zero” school in the nation, meaning that the school produces more energy on-site than it uses in a year. Actual innovations incorporated into it’s design make Richardsville better than net zero. It actually earns about $2,000 a month selling excess energy to the Tennessee Valley Authority.
|Why We Need Redistricting Reform
Brennan Center for Justice | Keesha Gaskins & Sundeep Iyer: On November 7, Americans woke up again to a Republican-controlled House of Representatives. And whether they like it or not, Americans should get used to this leadership. Republican control of the lower chamber could extend well past the 113th Congress, thanks in part to the once-a-decade process of redistricting. You see, when Republicans won big in the 2010 elections across the country — they had the power to redraw district lines to assure Republican victory after victory for the decade to come.
How can a greedy banker in London hurt thousands of public employees in Baltimore? Like this.
Professor Luigi Zingales, author, A Capitalism for the People: Recapturing the Lost Genius of American Prosperity, joins Thom Hartmann. The LIBOR rate-fixing scandal is coming to America. Now – more than a dozen banks are being investigated by the U.S. Justice Department to determine just how widespread the rate-rigging scandal, which might have cost consumers billions of dollars, really is. So far, only one bank – Barclays – has admitted guilt in the scandal. But several cities – led by Baltimore – are launching their own investigations to figure out if their pension funds took a hit as a result of the rate-rigging. During the financial crisis – the city of Baltimore was forced to lay off public employees and cut services. But the city now claims their fiscal problems were made worse by the manipulated LIBOR rates. Baltimore and other cities have filed dozens of lawsuits in a Manhattan Federal court against several banks including Bank of America, JP Morgan Chase, and Deutsche Bank – accusing the banks of manipulating LIBOR rates during the financial crisis to boost their own profits, while screwing over entire cities. So it could be a matter of time before some banksters’ heads roll. And by “heads roll” I mean a slap on the wrist fine – since we all know banksters are immune from jail time this day and age.
Congress is jumping into the mix, too, with plans to bring Federal Reserve Chairman Ben Bernanke and Treasury Secretary Tim Geithner to Capitol Hill for hearings before the Senate Banking Committee and the House Financial Services Committee. Given the charade on Capitol Hill when JP Morgan Chase CEO Jamie Dimon came down to testify a few weeks back, we shouldn’t expect too many tough questions about this latest financial scandal. Then again, if Treasury Secretary Tim Geithner knew what was going on while he was head of the Federal Reserve Bank in New York – then we might actually get some answers. After all, if there’s one thing Republicans love more than protecting Wall Street, it’s embarrassing the Obama Administration. But the bigger picture here is this. Four years after Wall Street crashed our economy – then made off with trillions of dollars in bailout money – leaving the middle class to suffer the effects of a Great Depression – here we are again – in the middle of another Wall Street scandal.
And just like the last scandal – it looks like there may have been collusion between the banks, regulators, and governments. As witnessed by the Tea Party phenomenon – at least before it was hijacked by billionaires – and more recently the Occupy Movement – faith in the American economic system is shattered today. So what effect might this latest scandal have – and what will it take to eventually restore faith in our economy – and get it back on the side of the American people?
Danny Weil, Truthout: “The Republican Party of Texas has issued their 2012 political platform and has come out and blatantly opposed critical thinking in public schools throughout the state. If you wonder what took them so long to actually state that publicly, it is really a matter of timing. With irrationality now the norm and an election hovering over the 2012 horizon, the timing of the Republican GOP announcement against ‘critical thinking’ instruction couldn’t be better. It helps gin up their anti-intellectual base.”
Read the full Article
— by Bill Moyers, Moyers & Co. | News Analysis, Truthout
One of the tasks of the Texas State Board of Education is to update curriculum standards and textbooks for TX schoolchildren. The Texas school system is so large — 4.8 million textbook-reading school children as of 2011 — that revisions made by the board are often included in school books across the country, though digital technology has lessened this effect in recent years. In 2010, the board got a lot of attention when it approved over 100 amendments — many of which had a very clear conservative political agenda — to the social studies and economics curriculum standards. Here are some of the more pointed proposals.
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The Demos report is an eye opener as to the hidden costs which cause 401k programs to not only fail to keep up with inflation, but to fall behind even the base amount invested into these funds.
Why is Nobody (in the US) Freaking Out About the LIBOR Banking Scandal?
—by Matt Taibbi | Rolling Stone: The LIBOR manipulation story has exploded into a major scandal overseas. The CEO of Barclays, Bob Diamond, has resigned in disgrace; his was the first of what will undoubtedly be many major banks to walk the regulatory plank for fixing the interbank exchange rate. The Labor party is demanding a sweeping criminal investigation. Mervyn King, Governor of the Bank of England, responded the way a real public official should (i.e. not like Ben Bernanke), blasting the banks:Barclays bank.
“It is time to do something about the banking system…Many people in the banking industry are hardworking and feel badly let down by some of their colleagues and leaders. It goes to the culture and the structure of banks: the excessive compensation, the shoddy treatment of customers, the deceitful manipulation of a key interest rate, and today, news of yet another mis-selling scandal.”
Mike Papantonio, Attorney/Host-Ring of Fire Radio joins Thom Hartmann. Mitt Romney released his so-called plan for educating students in America last week – and to noone’s surprise – the plan does very little to help students in America afford a higher education. Rather than promote policies that reduce the costs of college and help the student loan debt crisis – Romney has chosen to protect for-profit colleges and big business. In fact – Romney pledges to undo two essential reforms implemented by President Obama and his administration: Student Loan Reform and Holding For-Profit Colleges accountable for waste, abuse and fraud. Right now – student loan debt in America is over $870 billion dollars – and apparently – if Mitt Romney becomes President – he’s comfortable letting this debt grow larger. Whether Romney wants to admit it or not – America is in the midst of a student loan crisis – and something needs to be done about it.