Resolving the Housing and Immigration Crises - Simultaneously

Two Birds – One Stone
By Sid Eschenbach / The Rag Blog / March 22, 2009

Arguably the two biggest, most urgent and most complicated problems facing the Obama administration are those related to the general meltdown of the financial structure, and those presented by finding a long term solution to the problem posed by illegal immigration and its relationship to the rebuilding or the destruction of the American middle class. While seemingly unrelated, they both have a very simple, effective, and long term solution: immediately open a citizenship window not only to all those now in the U.S. illegally, but to anyone else on the planet who would purchase a home or other real estate in the normal market (not in a repo auction), including a cash down payment of at least 25% of the value of the property and suitable guarantees for payment of the balance.

If it wasn’t clear before, it is now clearer than ever; the financial problems facing the nation and the world have their roots in the collapse of the U.S. real estate market following the widespread misuse (not to say abuse) of the normal real estate credit markets. That being the case, until a genuine market floor is built under the real estate valuations that are at the bottom of the financial pile, there are no fiscally tenable solutions to the related, highly leveraged and extremely dangerous problems at the top of the pile. If a "bottom of the pile" fix could be pulled off, the health of the balance sheets of the major banks of the world and the threat posed to them by continued mortgage defaults would evaporate as quickly as they appeared.

The Migration Policy Institute estimates that there are an average of 1.8 million people who migrate to the U.S. every year, 500,000 of whom are illegal. Does anyone doubt that if the United States opened a temporary immigration window during which time any person who purchased a home in the U.S. would be granted citizenship, there would not be more than 10,000,000 applicants from all countries of the world in short order? Contrast those numbers against what is estimated to be roughly 2,000,000 surplus housing units at the end of 2008, and add to that the total number of subprime loans outstanding that are in trouble, another 2,000,000, and it’s easy to see that both the housing overhang AND the threatened outstanding sub-prime mortgage markets could be easily, quickly and privately redressed.

The strange thing is that this solution has been before us all along, because as difficult as the situation in the United States may be, it is still far and away the preferred migrant destination. As to the ethics of turning "Give me your tired, your poor," into "Give me your ambitious, your investors," many nations around the world put a price upon citizenship, with a variety of rules allowing immigrants to pay, invest or guarantee spending in the country in exchange for being given the right to live, work and live there lives there.

Just as the British used subsidized voyages like the famous "Ten Pound Passage" to New Zealand in the mid 20th century to solve their own particular settlement problems, citizenship in the United States could be sold to any and all who were able to purchase a home or other property. What better way to demonstrate your desire to become part of a country and a culture than to purchase the right through investment, helping yourself while you help your new home country?

Obviously, regarding the "how," the rules would need to be clear and the politics surrounding the issue would dominate any discussion: are all houses included, or only particular economic sectors; all regions, or only the hardest hit; is there a minimum investment required, or is any property fair game; would those who have lived and worked in the U.S. illegally be at the head, the middle, or the end of the line; should there be quotas by country, or should they be selected by size of potential investment; would there be a minimum time to any resale?

Regarding the "who," there would have to be special security vetting, including normal visa background checks, heightened security reviews, verification of sales, review of the origin of the funds, etc., but neither the administrative nor the political challenges are too difficult to overcome, and it’s certainly nothing that couldn’t be set up quickly and effectively by any number of federal or private agencies.

Most important, using this immigration "trick" to reestablish a balance in supply and demand would also provide the necessary breathing space needed for the creation of new, permanent regulatory measures so clearly lacking in both areas, regulations that would insure that the U.S. doesn’t face these very serious structural problems again.

In sum, there are no reasons -- legal, ethical, structural, administrative, or political -- why this could not be done and done quickly. And I believe that the implementation of this program, starting with it’s mere mention, would stabilize the housing markets and give real hope for the first time in nearly a year, from Wall Street to Main Street, that "normal" life is once again with our grasp. It would also give real hope to millions of "Americans" who currently live in the shadows, allowing them to take a proper and dignified place in the North American sun.

The Rag Blog

[+/-] Read More...

[+/-] Summary only...

Like Jeffrey Dahmer Selling Body Parts to a Clinic

Jason Mesnick and his Bachelor's harem. Photo source: Whitney Port.
The Rant List
By Gail Collins / March 4, 2009

I am having a tough time dealing with news that the former president of Countrywide Financial, the mortgage company that did so much to dig the hole in which we all now reside, is making a killing buying up delinquent mortgage loans from the government at bargain basement rates.

“It’s like Jeffrey Dahmer selling body parts to a clinic,” sniped one of my friends.

As Eric Lipton reported in The Times, Stanford Kurland, who was president of Countrywide during the years when it was selling mortgages with temporary low “teaser” rates that later turned into permanent unaffordable ones, now leads Private National Mortgage Acceptance Company, known to its friends as PennyMac.

In what one company official said was “off-the-charts good” business, PennyMac buys troubled mortgages from the government (which got them from failed banks) at rates like 38 cents on the dollar. Then it offers the beleaguered homeowners a chance to refinance at far more favorable terms. PennyMac makes money, the homeowner gets an affordable mortgage and the government gets a share of the profit.

Everybody’s happy! Except, of course, those of us who helped come up with the other 62 cents on the dollar.

Once again, we are reminded that life is not fair. Lately these unfairness bulletins have been coming so fast and furious that there isn’t time to get upset about all of them. Prioritization is essential.

Given the competition, I can’t get all that worked up about defaulting homeowners who are looking to the government for a rescue. True, a lot of them got in over their heads betting that housing prices would rise forever. But when it comes to stupid financial decisions to vent about, I’m sticking with Alan Greenspan.

Clearly, not everybody agrees. In Congress, warnings about “rewarding those who acted irresponsibly” have bogged down a bill that would allow federal judges to reduce mortgage debt as part of a bankruptcy settlement. A watered-down version is finally coming up for a vote on Thursday in the House. From there it goes to the Senate, whose capacity for watering things down is second only to Category 5 hurricanes.

Earlier efforts by the White House to come to the aid of the hopelessly indebted homeowners sparked the now world-famous unfairness explosion by the CNBC reporter Rick Santelli. “How many of you people want to pay for your neighbors’ mortgage that has an extra bathroom and can’t pay their bills?” howled Santelli, in one really impressive display of righteous wrath and misplaced modifiers.

He got a ton of publicity for his tirade, a reward that was pretty unfair in and of itself. As a Chicagoan, he was even mentioned very, very briefly as a possible replacement for Senator Roland Burris of Illinois.

Although Burris isn’t leaving. While we’re talking unfair, can we point out that Burris, who clearly misled people about what he did to pry the Senate seat out of Rod Blagojevich’s hot little hands, is never going to give it back. Illinois officials can yell all they want. A guy who has already erected his own mausoleum with a list of achievements running down two sides of it is not going to let anybody add “resigned from the U.S. Senate in disgrace” after “President of the National Association of State Auditors, Comptrollers and Treasurers.”

And can we also mention that Blagojevich has gotten a book deal? True, only six figures, but much better than his other offer, an $800-a-month contract to play baseball for the Joliet JackHammers. Have you ever listened to Blagojevich talk? Do you think anybody’s going to want to read a whole book? Phoenix Books, why are you encouraging this person?

When I walked into work on Wednesday, the big unfairness issue people were talking about was not Countrywide, or Illinois pols, but the finale of “The Bachelor,” when the guy who had just picked his lifetime love on national television returned to the airwaves to dump her for the woman who came in second.

“I had to hurt people in a way, but I feel I did it with integrity,” said the bachelor in question, whose name is Jason Mesnick.

The big objection to Mesnick’s behavior is not the dumping but the fact that he waited until everybody had gathered together for a follow-up special to break the news to his about-to-be-ex fiancée. Mesnick told People magazine that he would have preferred to spare the poor woman the humiliation of being rejected in prime time, but the producers wouldn’t allow it. “That was part of the deal,” he said.

Unfair, but not making my Top 10. A woman who volunteers to find true love on a reality TV show is really uniquely qualified to get past this sort of trauma. Plus, at least Mesnick made good on his contract. Not enough of that going around these days.

Source / New York Times

The Rag Blog

[+/-] Read More...

[+/-] Summary only...

Acorn: Fighting the Banks to Counter Foreclosures

Jonathan Westin, an Acorn organizer, comforted Denise Parker, whose house was being foreclosed on, after she spoke at an Acorn training session in Brooklyn. Photo: James Estrin/The New York Times.
A Bid to Link Arms Against Eviction
By Fernanda Santos / February 17, 2009

As resistance to foreclosure evictions grows among homeowners, community leaders and some law enforcement officials, a broad civil disobedience campaign is starting in New York and other cities to support families who refuse orders to vacate their homes.

The community organizing group Acorn unveiled the campaign with a spirited rally on Friday at a Brooklyn church and will roll it out in at least 22 other cities in the coming weeks. Through phone trees, Web pages and text-messaging networks, the effort will connect families facing eviction with volunteers who will stand at their side as officers arrive, even if it means risking arrest.

“You want to haul us out to jail? Fine. Let the world see how government has been ineffective,” Bertha Lewis, Acorn’s chief organizer, said in an interview. “Politicians have helped banks, but they haven’t helped families in the way that it’s needed, and these families are now saying, enough is enough.”

At the onset of the foreclosure crisis, the problem was regarded by some as one of a homeowner’s own making, the result of irresponsible decisions made by families who chose to live beyond their means. But as foreclosures spread across the country, devastating even solidly middle-class communities, the blame has slowly shifted to the financial companies that made questionable loans and have received billions of dollars in federal aid to stave off collapse.

In recent months, a budding resistance movement has grown among Americans who believe they have been left to face their predicament on their own — and the Acorn campaign is an organized expression of that frustration, Ms. Lewis said. Instead of quietly packing up and turning their homes over to banks, homeowners are now fighting back.

On Feb. 9, a man scrawled a message on the roof of his house in a suburb of Los Angeles: “I Want 2 Be Heard.” Then he barricaded himself inside when deputies showed up to evict him, surrendering after a few hours. In October, a woman in San Diego chained herself to her front porch after the bank that held her mortgage refused to renegotiate the terms. She remains in her home, but has received a second eviction notice.

And last year in Boston, neighbors and activists locked arms outside eight buildings that had been foreclosed upon to prevent the authorities from forcing residents onto the streets.

Sheriffs in some places have also taken a stand. In Wayne County in Michigan, Sheriff Warren C. Evans, suspended all evictions starting Feb. 2 until the federal government implements a plan to help homeowners facing foreclosures.

In Cook County in Illinois, which includes Chicago, Sheriff Thomas J. Dart directed a lawyer to review all eviction orders to protect people who kept on paying rent after the buildings where they lived had been seized by banks. In Butler County in Ohio, Sheriff Richard K. Jones ordered his deputies not to evict people who had no place else to go.

“This is a cold place in the winter and I will not give people a death sentence for not paying their debts,” Sheriff Jones said in an interview. “These are human beings, responsible middle-class people who fell on hard times, and I just can’t toss them out onto the streets.”

Acorn’s strategy is modeled on a movement the group led in the 1980s, when squatters occupied and set out to renovate thousands of abandoned city-owned buildings in New York, Philadelphia and Detroit, among other cities. The motivation was to solve what Ms. Lewis has called “the working family’s housing crisis.”

In cities like Orlando, Fla., which has one of the nation’s highest foreclosure rates — and Boston, Houston, Baltimore, Oakland, Calif., and Tucson, Ariz. — Acorn organizers have been creating networks to alert a homeowner’s neighbors when an eviction has been scheduled or deputies are on the way. Some volunteers will summon friends and relatives to converge at the home, while others will be in charge of notifying the news media. Organizers are also recruiting lawyers willing to defend for no fee those who are arrested.

The campaign, called Home Defenders, enlisted about 500 participants during meetings held Friday and Saturday in New York and five other cities. Ms. Lewis and other organizers said that they believed the number will reach into the tens of thousands within weeks.

“This is a desperate, last-ditch effort by folks who are working two or three jobs, single mothers, elderly people who don’t know what else to do to save their homes,” said Ginny Goldman, Acorn’s lead organizer in Texas, where the campaign began in Houston on Saturday.

The rally in Brooklyn, at Brown Memorial Baptist Church in Fort Greene, drew about 150 people. There were homeowners, Acorn members, community advocates and candidates for the City Council. One councilman, Mathieu Eugene, was carrying a slab of papers as thick as a large dictionary, each sheet representing, he said, a family facing foreclosure in his district, which includes parts of Crown Heights, Flatbush and Kensington.

The church’s pastor, the Rev. Clinton M. Miller, opened the gathering with this prayer: “If anybody here is facing foreclosure, God, we ask that a miracle be made and a home be saved.”

Then, between homeowners’ sharing their plight, the crowd chanted, “Enough is enough.”

One homeowner, Myrna Millington, 73, who lives in Laurelton, Queens, said that she had to take a second mortgage on her home of 38 years to pay for repairs that turned out to be more extensive than originally planned. What Ms. Millington did not know was that she had signed for a subprime loan, which carried interest rates so high she could not keep up with the payments. Her house was foreclosed on in September.

“I may lose my home, but I’m only leaving in handcuffs,” Ms. Millington said.

Another homeowner, Denise Parker, a mother of three who works as a housekeeper at two Midtown Manhattan hotels, bought a home in Springfield Gardens, Queens, in 2005 with an adjustable interest rate that, after two years, went up every six months. Her payments started at $3,500 and now are $5,050 a month, she said. She fell behind last year and her house is scheduled to be auctioned off on Friday.

“I refuse to leave the home that I’ve worked so hard to keep,” Ms. Parker, 42, told the audience. “I will not let the bank take my home and I will not leave.”

Eviction resistance actions are scheduled for Thursday in cities including New York, Oakland and Houston. Organizers will try to recruit enough volunteers to form a human wall on the sidewalk to avoid being arrested for trespassing. But occupying a house or having people attach themselves to a home could also be a tactic.

The campaign has earned praise and raised concern. Sheriff Dart, in Illinois, said it was a “slippery slope when you have individuals deciding whether they can lawfully remain in their homes.”

Sheriff Jones, in Ohio, equated the planned resistance to “chaining yourself to a tree that’s about to be cut down” and said that though he may not agree with it, he sympathizes.

In Washington, Acorn has found a staunch supporter in Representative Marcy Kaptur of Ohio, who, during a discussion last month about the $700 billion bailout package for financial companies, took to the floor of the House and instructed people to “stay in your homes — if the American people, anybody out there, is being foreclosed, don’t leave.”

In an interview, Ms. Kaptur said, “I’m thrilled that the American people are rising up and exercising the power that Wall Street has taken away from them.”

Source / New York Times

The Rag Blog

[+/-] Read More...

[+/-] Summary only...

Foreclosed On? Congresswoman Says: Stay and Fight

Rep. Marcy Kaptur, D-Ohio, wants those losing their homes to stay and fight. Photo by Rick Bowmer / AP.
'So I say to the American people, you be squatters in your own homes,' said Congresswoman Kaptur before the House of Representatives. 'Don't you leave.'

By David Edwards and Stephen C. Webster / January 30, 2009

If you're poor and the bank is coming for your home, Congresswoman Marcy Kaptur has a plan for you.

Just squat, she says.

Yes, this Ohio Democrat is actually encouraging her financially distressed constituents whose homes have been foreclosed upon, to simply stay put.

In a Friday report, CNN's Drew Griffin explored the case of Ohioan Andrea Geiss, whose home was foreclosed upon in April.

"Behind in payments, out of work, a husband sick, she had nowhere to go," said Griffin. "So, she decided to follow the advice of her Congresswoman and go nowhere."

In Lucas County, Ohio, over 4,000 properties were foreclosed upon in 2008, reports CNN.

"So I say to the American people, you be squatters in your own homes," said Congresswoman Kaptur before the House of Representatives. "Don't you leave."

She's called on all of her foreclosed-upon constituents to stay in their homes and refuse to leave without "an attorney and a fight," said CNN.

"If they've had no legal representation of a high quality, I tell them stay in their homes," Kaptur told Griffin.

Kaptur is a high-profile advocate of an increasingly popular mode of fighting foreclosures best known for it's key phrase: "Produce the note."

By telling a bank to "produce the note," a homeowner can delay foreclosure by forcing the lender to prove the suing institution is actually the same which owns the debt.

"During the lending boom, most mortgages were flipped and sold to another lender or servicer or sliced up and sold to investors as securitized packages on Wall Street," explains the Consumer Warning Network. "In the rush to turn these over as fast as possible to make the most money, many of the new lenders did not get the proper paperwork to show they own the note and mortgage. This is the key to the produce the note strategy."

And Friday's segment on this growing foreclosure fighting "movement" was not the network's first. Earlier in January, CNN explored one person's strategy in demanding her bank "produce the note," only to find that the lender had "lost or destroyed" the evidence of debt ownership. Such a revelation can significantly strengthen a homeowner's position when asking to renegotiate a mortgage.

That these banks, many of which received billions of dollars in government bailout funds, continue to boot defaulted owners from their homes, makes them "vultures" says Kaptur.

"They prey on our property assets," she said. "I guess the reason I'm so adamant on this is because I know property law and its power to protect the individual homeowner. And I believe that 99.9 percent of our people have not had good legal representation in this."

Source / therawstory

Thanks to Karen Lee Wald / The Rag Blog

[+/-] Read More...

[+/-] Summary only...

FBI: 'We Knew That the Mortgage-Brokerage Industry Was Corrupt.'

Bank repossession, foreclosure and for sale signs sit outside a foreclosed home in Houston. Two retired FBI officials asserted that the Bush administration was thoroughly briefed on the mortgage fraud crisis and its potential to cascade out of control, but made the decision not to give back to the FBI the agents it needed to address the problem. Photo: AP.
FBI saw mortgage fraud early
By Paul Shukovsky / January 28, 2009

The FBI was aware for years of "pervasive and growing" fraud in the mortgage industry that eventually contributed to America's financial meltdown, but did not take definitive action to stop it.

"It is clear that we had good intelligence on the mortgage-fraud schemes, the corrupt attorneys, the corrupt appraisers, the insider schemes," said a recently retired, high FBI official. Another retired top FBI official confirmed that such intelligence went back to 2002.

The problem, according to the two FBI retirees and several other current and former bureau colleagues, is that the bureau was stretched so thin that no one noticed when those lenders began packaging bad mortgages into bad securities.

"We knew that the mortgage-brokerage industry was corrupt," the first of the retired FBI officials told the Seattle P-I. "Where we would have gotten a sense of what was really going on was the point where the mortgage was sold knowing that it was a piece of dung and it would be turned into a security. But the agents with the expertise had been diverted to counterterrorism."

The FBI not only lacked the resources, but also never got the tips it needed from the banking regulatory agencies. The Securities and Exchange Commission, the Office of Thrift Supervision and the Office of the Comptroller of the Currency also failed to detect the securities issue, said the first retired FBI official.

"These are very resource-intense cases that take a lot of work by very skilled people," said John Falvey Jr., a former federal prosecutor who currently does white-collar criminal defense work in Boston.

And Falvey said that financial executives who deliberately chose not to learn the facts about dicey mortgage-lending practices in their companies -- who chose to be "willfully blind" to such practices and the subsequent securitization of those mortgages -- could be vulnerable to prosecution for securities fraud.

Both retired FBI officials asserted that the Bush administration was thoroughly briefed on the mortgage fraud crisis and its potential to cascade out of control with devastating financial consequences, but made the decision not to give back to the FBI the agents it needed to address the problem. After the terrorist attacks of 2001, about 2,400 agents were reassigned to counterterrorism duties.

This mass reassignment was first chronicled by the Seattle P-I in the Terrorism Tradeoff, a series of investigative reports beginning in 2007 and stretching into 2008. That administration policy, the P-I reported, resulted in a dramatic plunge in FBI criminal investigations and referrals for prosecution. And recent data from Syracuse University researchers shows the problem has worsened.

FBI Assistant Director Ken Kaiser -- in a statement - took issue last week with any implication "that if the FBI had made more arrests for mortgage fraud, the crisis could have been averted. To even suggest that is a cry for a lesson in both civics and basic economics.

"It is not a fair or realistic assessment."

The FBI is now making one of its largest hiring pushes ever. The bureau is seeking 850 new agents this year, some to fill vacancies that had been allowed to languish for years even as the administration blocked efforts to reinforce the FBI's crime squads.

Still, a P-I analysis of information provided by the FBI shows that 850 new agents doesn't come close to restoring the bureau's crime squads. It would take more than double the number of agents and at least $400 million of new funding to bring the bureau's corps of crime-fighters back to pre- 9/11 levels.

But Deputy Director Steve McMillin of the Bush White House's Office of Management and Budget told the P-I last year that even partially restoring the FBI crime-fighting capabilities was not a priority.

"The assumption that how it was pre- 9/11 is how it ought to be for all time is not the correct premise," he said.

The first retired FBI official said: "We made a direct pitch (for more agents) to the OMB even though we weren't supposed to and they said no." Instead, "we were looking at reductions, not additions."

Further complicating efforts to detect and prosecute mortgage fraud, banks and other mortgage lenders were making so much money from the constant churn of transactions and the continually escalating price of homes that the fraud that did arise simply didn't cost the industry enough money to raise their concerns.

"You had victim banks that would not acknowledge that they were victims," said the first retired FBI official. " 'We're not out any money,' they would say. Nothing has been foreclosed. The banks weren't reporting, the regulators weren't regulating and the FBI was concentrating on external mortgage fraud as opposed to the underlying internal problem."

And the administration's attention was turned to terrorism.

When FBI Director Robert Mueller was briefed on mortgage fraud, "his eyes would glaze over," the first retired FBI official said. "It was not something that he would consider a high priority. It was not on his radar screen."

"We knew we had a broader problem, but you've got a Justice Department and the administration saying you need to concentrate on domestic intelligence and counterterrorism," the first official said. "It wasn't very popular to ask for resources for anything. It was dead on arrival."

The second FBI official said: "Mueller was caught in a box.

"Mueller actually circumvented the Justice Department and the OMB to get resources. But he was shut down" by the administration.

Public statements by one high FBI executive shows that the bureau was well aware of the potentially devastating impact of rampant mortgage fraud at least five years ago. The executive ominously foretold the crisis in testimony before Congress.

"Based on various industry reports and FBI analysis, mortgage fraud is pervasive and growing," Chris Swecker, then assistant director of the criminal investigation division, said in October 2004 before the House subcommittee on housing and community opportunity.

Then Swecker made a chillingly accurate prediction of the coming mortgage meltdown and financial collapse:

"The potential impact of mortgage fraud on financial institutions in the stock market is clear. If fraudulent practices become systemic within the mortgage industry and mortgage fraud is allowed to become unrestrained, it will ultimately place financial institutions at risk and have adverse effects on the stock market."

Swecker went on to describe the scenario that ultimately wrecked financial havoc around the world: "Often mortgage loans sold in secondary markets are used by financial institutions as collateral for other investments. ... When loans sold in the secondary market default and have fraudulent or material misrepresentation ... these loans become a nonperforming asset, and in extreme fraud cases, the mortgage-backed security is worthless. Mortgage fraud losses adversely affect loan-loss reserves, profits, liquidity levels and capitalization ratios, ultimately affecting the soundness of the financial institution itself."

Swecker declined recently to comment, other than to say, "My testimony in 2004 speaks for itself."

But Kaiser, who currently occupies Swecker's old post, warned against misinterpreting the testimony.

"In context, Assistant Director Chris Swecker meant he believed the FBI could stay focused on mortgage fraud to prevent fraud from becoming the major driver that would cause a collapse of credit in the housing market," Kaiser said in comments e-mailed to the P-I earlier this month. "We believe by a good measure, the bureau did that.

"The FBI's Criminal Division has arrested 1,000 suspects and targeted 180 criminal enterprises since 2004," Kaiser said. "We targeted those lenders and buyers involved in multiple frauds or cases where the profits went to drug crews, gangs or organized crime. More investigations are ongoing. But the FBI is a law enforcement and intelligence agency, we are not banking regulators."

It wasn't just the FBI's white-collar crime program that lacked the resources and political will to do its job.

The Office of Thrift Supervision and the Office of the Comptroller of the Currency "and the bank regulators are really the first line of defense," the first official said. "The investigative agencies (like the FBI) are the second line of defense. We all caught the mortgage fraud aspect. But none of us caught the corporate fraud aspect."

But even if the regulatory agencies had come to the FBI with the tips, the resources necessary to pull off such an inquiry simply did not exist.

"There were two hurdles," said the second retired FBI official, "not enough agents working in the criminal area and not enough (federal prosecutors) to prosecute these complex cases. You have to have investigators to follow the money, you have to follow the decision making to take it up to the corporate suites. And we didn't have it."

The FBI had every certified public accountant in the bureau working on big fraud cases such as Enron and HealthSouth, the first retired FBI official said. "The ones that weren't working (those cases) went to terrorist financing."

The SEC, said the official, did not show an interest in working with the FBI on the problem, either. And it didn't begin responding to pervasive financial corruption until after the economy collapsed.

"The regulators are the ones embedded in the banks," the first retired FBI official said. "They would be able to see it if they were looking. They were the first line of defense in detecting it."

SEC officials declined to comment.

Thrift office spokesman William Ruberry said, "The OTS has a robust enforcement program to investigate and take appropriate action against corruption and fraud uncovered by our examiners, reported by consumers or conveyed by other sources."

Comptroller's office spokesman Kevin Mukri said only that "the OCC has always had and continues to have a professional and cooperative working relationship with all law enforcement agencies."

Nevertheless, high FBI and Bush administration officials knew a potentially devastating problem was on the horizon and failed to stop it.

"It was a sleight of hand because the public thought the administration was resourcing counterterrorism when in fact they were forcing cannibalization of the criminal program," the retired FBI official said. "Now the chickens have come home to roost."

[P-I reporter Daniel Lathrop contributed to this report.]

Source / Seattle Post-Intelligencer

Thanks to Mariann Wizard / The Rag Blog

[+/-] Read More...

[+/-] Summary only...

Housing Crisis: 8 Million Foreclosures in 4 Years

Foreclosures could top 8 million: Credit Suisse
By MarketWatch / December 9, 2008

BOSTON -- More than 8 million mortgages could go into foreclosure in coming years in the wake of the credit meltdown as the economy worsens and the U.S. suffers more job losses, according to a recent report.

Credit Suisse's fixed-income research team forecast that 8.1 million mortgages will be in foreclosure over the next four years, representing 16% of all mortgages. In a recent research note, Credit Suisse lifted its earlier forecast from April when it predicted 6.5 million foreclosures, or 13% of all mortgages.

"Despite some initial signs that subprime foreclosures were near a plateau, the combination of severe weakening in the economy, continued decline in home prices, steady increase in delinquencies, particularly in the prime mortgage space, ensure that foreclosure numbers, absent more dramatic intervention, will march steadily higher," Credit Suisse wrote.

Federal officials are struggling to find ways to restructure home loans to ease foreclosures as home prices continue to fall around the country. However, regulators are finding it difficult to modify mortgages because many were packaged up into complex credit vehicles and sold to large investors around the globe.

Earlier this week, Office of the Comptroller of the Currency director John Dugan released statistics showing a high re-default rate on mortgages that have been modified in the first two quarters of 2008.

"The results were surprising, and not in a good way," Dugan told a gathering in Washington at the Office of Thrift Supervision's annual conference.

According to the OCC statistics, which looked at loans modified in the first quarter and second quarter of 2008, 36% of borrowers had re-defaulted by being more than 30 days past due and after six months the rate was roughly 56%.

After eight months, 58% of borrowers had re-defaulted. The OCC tracked the number of borrowers that re-defaulted on their mortgages after the modification was completed.

Dugan acknowledged that not all re-defaulted mortgages go to foreclosure, but he argued that the number was very high. He said he was not sure why there was such a high level of re-default, pointing out that it may be because the modifications were not low enough to be affordable.

Additionally, Office of Thrift Supervision director John Reich on Monday said rather than modifying mortgages, focusing on job creation might be a better use of federal dollars. Reich's statement clashed with Federal Deposit Insurance Corporation Chairwoman Sheila Bair over the best way to use government funds to end the financial crisis. Read more on the failure of many mortgage modifications.

Meanwhile, Credit Suisse said that if home prices continue to spiral down, more and more mainstream borrowers could end up walking away from their homes, especially if the mortgage is worth more than the value of the house.

"Thus far, the population of subprime borrowers in the U.S. is relatively small," the analysts wrote. "However, the severe recession that appears more and more likely, coupled with the collapse of confidence in housing and resultant foreclosures and the impact on credit scores, risks transforming the U.S. into a subprime society."

Adding to the headwinds, a deteriorating labor market will put more pressure on foreclosures, they said.

Source / MarketWatch

Thanks to Diane Stirling-Stevens / The Rag Blog

[+/-] Read More...

[+/-] Summary only...

Bailout Plan : Activist Moves the Homeless into Foreclosed Homes

Marie Nadine Pierre and her baby, Nennon, are squatting in a foreclosured house in Florida. Photo by J. Pat Carter / AP
'"We're matching homeless people with people-less homes," he said with a grin.'
December 1, 2008

MIAMI - Max Rameau delivers his sales pitch like a pro. "All tile floor!" he says during a recent showing. "And the living room, wow! It has great blinds."

But in nearly every other respect, he is unlike any real estate agent you've ever met. He is unshaven, drives a beat-up car and wears grungy cut-off sweat pants. He also breaks into the homes he shows. And his clients don't have a dime for a down payment.

Rameau is an activist who has been executing a bailout plan of his own around Miami's empty streets: He is helping homeless people illegally move into foreclosed homes.

"We're matching homeless people with people-less homes," he said with a grin.

Rameau and a group of like-minded advocates formed Take Back the Land, which also helps the new "tenants" with secondhand furniture, cleaning supplies and yard upkeep. So far, he has moved six families into foreclosed homes and has nine on a waiting list.

'Everyone deserves a home'

"I think everyone deserves a home," said Rameau, who said he takes no money from his work with the homeless. "Homeless people across the country are squatting in empty homes. The question is: Is this going to be done out of desperation or with direction?"

With the housing market collapsing, squatting in foreclosed homes is believed to be on the rise around the country. But squatters usually move in on their own, at night, when no one is watching. Rarely is the phenomenon as organized as Rameau's effort to "liberate" foreclosed homes.

Florida — especially the Miami area, with its once-booming condo market — is one of the hardest-hit states in the housing crisis, largely because of overbuilding and speculation. In September, Florida had the nation's second-highest foreclosure rate, with one out of every 178 homes in default, according to Realty Trac, an online marketer of foreclosed properties. Only Nevada's rate was higher.

Like other cities, Miami is trying to ease the problem. Officials launched a foreclosure-prevention program to help homeowners who have fallen behind on their mortgage, with loans of up to $7,500 per household.

The city also recently passed an ordinance requiring owners of abandoned homes — whether an individual or bank — to register those properties with the city so police can better monitor them.

Elsewhere around the country, advocates in Cleveland are working with the city to allow homeless people to legally move into and repair empty, dilapidated houses. In Atlanta, some property owners pay homeless people to live in abandoned homes as a security measure.

From shelter to home

In early November, Rameau drove a woman and her 18-month old daughter to a ranch home on a quiet street lined with swaying tropical foliage. Marie Nadine Pierre, 39, has been sleeping at a shelter with her toddler. She said she had been homeless off and on for a year, after losing various jobs and getting evicted from several apartments.

"My heart is heavy. I've lived in a lot of different shelters, a lot of bad situations," Pierre said. "In my own home, I'm free. I'm a human being now."

Rameau chose the house for Pierre, in part, because he knew its history. A man had bought the home in the city's predominantly Haitian neighborhood in 2006 for $430,000, then rented it to Rameau's friends. Those friends were evicted in October because the homeowner had stopped paying his mortgage and the property went into foreclosure.

Rameau, who makes his living as a computer consultant, said he is doing the owner a favor. Before Pierre moved in, someone stole the air conditioning unit from the backyard, and it was only a matter of time before thieves took the copper pipes and wiring, he said.

"Within a couple of months, this place would be stripped and drug dealers would be living here," he said, carrying a giant plastic garbage bag filled with Pierre's clothes into the home.

He said he is not scared of getting arrested.

"There's a real need here, and there's a disconnect between the need and the law," he said. "Being arrested is just one of the potential factors in doing this."

Miami spokeswoman Kelly Penton said city officials did not know Rameau was moving homeless into empty buildings — but they are also not stopping him.

No actions to stop

"There are no actions on the city's part to stop this," she said in an e-mail. "It is important to note that if people trespass into private property, it is up to the property owner to take action to remove those individuals."

Pierre herself could be charged with trespassing, vandalism or breaking and entering. Rameau assured her he has lawyers who will represent her free.

Two weeks after Pierre moved in, she came home to find the locks had been changed, probably by the property's manager. Everything inside — her food, clothes and family photos — was gone.

But late last month, with Rameau's help, she got back inside and has put Christmas decorations on the front door.

So far, police have not gotten involved.

Source / AP / MSNBC

Thanks to Sarito Carol Neiman / The Rag Blog

[+/-] Read More...

[+/-] Summary only...

Foreclosure Chronicles : The Desperate Hours of Addie Polk

1918: Bathing suit parade, the year Addie Polk was born.
1919: Race Riots in Chicago.
2008: Fannie Mae foreclosed on the home of Addie Polk; Annie Mae Polk put a gun to her chest.
'In 1970, Robert and Addie Polk bought a small white wood-frame house in a Black neighborhood of Akron for $10,000. Or to put it another way, he exchanged years of labor on the Goodrich assembly line for a place to live.'

On October 1, 2008, a sheriff and his deputy knocked on the door of a small white house in Akron, Ohio. Addie Polk, the 90-year-old Black woman who lived there, went to her dresser and looked at the foreclosure notice that had been duct-taped to her door a month earlier. She pulled out her life insurance policy. She put it next to her keys.

And then she opened the drawer where the pistol was kept.

Addie Polk was born in 1918. It was the year World War 1 ended. That war—between England, France, Russia and the U.S. on one side, and Germany on the other—was fought over which imperialist powers would control the colonies of Asia, Africa and Latin America. The war brought carnage on an unprecedented scale—five million lives thrown onto the altar by the “great powers” to determine the outcome. The war also brought huge changes, all over the world.

In the United States, the war provided a chance to make big profits. But the American capitalists needed workers to make those profits, and their preferred source of workers—the impoverished immigrants from Europe—were cut off by the war.

So the capitalists cast their gaze to the South, where the masses of Black people were still chained to the land. The South, where Black people were forced to grow and pick the cotton, from can’t see in the morning to can’t see at night, only to end up deeper in debt at year’s end—while the landlords grew richer. The South, where Black people had to step off the sidewalk when a white man walked down it, and turn their eyes to the ground when they talked to a white man. Where they couldn’t drink out of fountains reserved for whites, or go to school with whites. And where those who didn’t go along were jailed and made into a new kind of slave on the road gangs and in the mines of the South...or were beaten...or were lynched.

So when the northern capitalists put out the word that they would, for the first time, hire Black people in large numbers, the people responded. They fled the horrors of the South for the “promised land” of the North in massive numbers, and half a million found jobs in the big northern industries. Sometimes, especially in the early days of the migration, the Black people heading North would even break into cheers and song when the train passed over the Mason-Dixon line—the dividing line between North and South.

Akron—where Addie Polk was to make her home—boomed in the war as well. It became the “rubber capital” of the world, churning out tires. Its population went from 69,000 in 1910 to nearly 210,000 in 1920. And Akron, where a lynch mob had once run wild for two days in 1900, saw a Black community begin to take root.

But when the war ended, the boom ended. Capital could no longer profitably employ many Black people who had come North. It didn’t need them.

And besides—the social order was becoming unglued. In Russia, the Bolsheviks had led the masses to make a revolution. This revolution was led by the formerly bitterly-exploited working class and it had, as a central point, freedom and equality for the oppressed nationalities of the Russian empire. The revolution, and the communist ideology that led it, were gaining worldwide influence. And the Black men who had been drafted in World War I had been trained and sent to Europe to fight for the U.S.—where they were in some cases treated as equals by European whites. The men of property and power decreed that traditional social relations—the hierarchy—must be forcibly hammered back into place.

And so in 1919, when Addie Polk was one year old, the cheers on the train turned to dust in the people’s mouths. White workers (along with small businessmen, shopkeepers, etc.) were, once again, mobilized as white people—to protect “their” jobs and “their” neighborhoods. Scores of cities, North as well as South, witnessed barbaric white rampages against African-Americans. Chicago was the worst, with at least 38 Black people killed. Norfolk, Virginia was in a way the most bitterly and bloodily ironic, as a white mob broke up a reception for Black troops returning from World War I and murdered six. Hundreds fell to the violence of white mobs—with at least eight Black people being publicly burned.

But there was also something new afoot. W.E.B. Du Bois, a great Black intellectual and leader of the time, put it this way: “Today we raise the terrible weapon of self-defense. When the murderer comes, he shall no longer strike us in the back. When the armed lynchers gather, we too must gather armed. When the mob moves, we propose to meet it with bricks and clubs and guns.”

The riots finally ended. But the majority of Black people who had come north had been cast and hammered into a subordinate position within the working class. They were to be the last hired and first fired, and when they did work they were to be confined to the very worst, dirtiest and most dangerous jobs. They were segregated into housing that was almost as expensive as it was dilapidated, and cast into broken-down schools that barely deserved the name; and they were dogged at every turn by brutalizing and murdering police. Northern capital inserted Black workers into its system—and in such a way that their labor would turn super‑profits for the system.

This was the world in which Addie Polk took her first steps; the world in which she learned her ABCs; the world in which she grew to womanhood.

Addie Polk looked at the pistol. She heard again the knock at the door, and the voices of law enforcement. She felt the blood pounding in her chest, and pounding in her brain. She picked up the pistol and walked, stiffly, over to her bed.

When World War 2 came in the 1940s, capital once again had need of Black labor—and this time on a far greater scale than before. Now millions more Black people came North. Black men like Robert Polk—Addie Polk’s husband—could find work at Goodrich Tire. The dirtiest, the hardest, and the most dangerous work—but work.

America came out of World War 2 on top. U.S. capital called the tune for the whole world—except for the Soviet Union and the new revolutionary socialist state in China. Facing off against the challenge of the socialist world, and riding atop the imperialist heap, the capitalist rulers of America felt they could—and they felt they had to—pay higher wages to the workers within the U.S., to pacify them and turn them away from any radical movement.

These capitalists also felt that they could—and that they had to—begin to make some concessions to Black people. On the one hand, the big changes of the “Great Migration” and of the upheaval of the war itself contributed to a more militant mood among Black people from all strata, and to growing grassroots resistance. On the other hand, it didn’t go down well internationally for the United States to pose as the supposed great upholder of freedom, when millions of its own people were legally forced to endure segregation, to live without political or social rights, and to face lynch-mob violence at any time.

But those concessions were not enough to stop Black people from rising up, first in the civil rights movement and then in the Black liberation struggle. Over 250 American cities erupted in rebellion during the 1960s. A spirit of defiance took hold and a revolutionary movement began to develop, in the streets and on the campuses and more broadly beside—including the factories where Black workers labored. The ruling class was forced to grant concessions far beyond what they had ever envisioned, and this included opening up jobs that were formerly reserved for whites.

Meanwhile, Robert Polk worked in one of those factories. He punched in each morning and when he did he turned over all his life force to the greater good—and profit—of Goodrich Tire. He punched out each night and went home dead tired. And on payday, he would open the envelope to find just enough to provide the necessities that would bring him back again to the time clock early Monday morning.

It was the “equal exchange” that, multiplied a billion times, keeps capitalism running—the exchange of one person’s life force and labor power, which produces those profits, for the means of subsistence. The “equal exchange” that results in the most profound inequality in wealth, in power, and in life-chances. The “equal exchange” on which all the so-called financial instruments are built. The “equal exchange” that masks a relation of exploitation: the exchange of labor power for wages.

In 1970, Robert and Addie Polk bought a small white wood-frame house in a Black neighborhood of Akron for $10,000. Or to put it another way, he exchanged years of labor on the Goodrich assembly line for a place to live.

Addie Polk lay down on her bed, pistol in her hand. Still the voices, still the occasional knock. She put the pistol to her chest. She began to squeeze the trigger with the 90-year-old fingers that were so achy, and finally so tired.

Capitalism came into the world unique—the only economic system in which innovation was a necessity. No capitalist knows how much “the market will bear”—they don’t know in advance if they can sell all that they produce. But if they do not sell, they go under. So they must constantly figure out ways to produce more goods more cheaply. They invest in new, more productive machinery and they constantly search for ways to more thoroughly exploit the workers they already employ...or else they shift operations altogether.

The U.S. stood atop the heap after World War 2. But European capital innovated. The tire companies of Akron “lost market share” in the ‘70s and early ‘80s to new kinds of tires produced first in Europe, and then in the factories of the “third world.” Soon the factories shut down. Akron, once dubbed the “rubber capital” of the world, found a new title as the city decayed: the “meth capital” of Ohio. Akron, now nearly 30% African-American, saw crack invade its Black community and the streets and schools fall further into disrepair. On Addie Polk’s street, the roadbed comes right up through the concrete, and nearly every other house lies empty, or is up for sale.

Robert Polk died in 1995. But capital was not done with Addie Polk yet. There was blood yet left to suck. Just as meth and crack rampaged through Akron, stoking people up to make it through one more day of hell, new “instruments” of credit gave the capitalist economy a shot of new energy. Politicians and financial commentators on TV talked as high and as giddy about this as a cranked-out meth freak yammering in a bar. But these new “credit instruments” now turn out to have victims. They have victims all over the world on a horrendous scale—and they have victims within the U.S. as well.

Addie Polk’s house had been hers, bought and paid for, “free and clear.” But in a society where the basic necessities of health care, for instance, constantly climb out of reach ...in a situation where no one even pretends that the social security and the pittance of a pension for industrial workers are enough to survive on...Addie Polk needed money. The sharks came—not the street-corner ones, but the “legitimate” ones. And they offered her deals—mortgage your house again and get the money you need, up front. And then mortgage it once more, to pay off your earlier deal and to get more money. It was all part of what they now call “the real estate bubble.”

And like so many others, when the real hidden terms kicked in, Addie Polk fell behind. The notices began to come. Knocks on the door, followed by the frightening papers that said NOTICE in big red letters and threatened eviction. The lending company foreclosed. And on October 1, 2008, three men with guns stood downstairs, preparing to move Addie Polk and the few cherished possessions of 90 years, into the streets.

Addie Polk held the gun to her chest, and pulled the trigger. Did she cry out in despair when the first shot missed, and hit her shoulder? We don’t know. But if she had second thoughts, they carried no force—for she marshaled the strength to pull the trigger yet again.

Addie Polk, somehow, did not die. Her neighbor, Robert Dillon, had climbed into her window to check on her and found her stretched out, unconscious, on the bed. She was rushed to the hospital, where she remains today. The mortgage holder, stung by the bad publicity, promises, for now, to let her remain in her home—when and if she gets out of the hospital.

Last week, it was announced that another 765,000 houses entered into the foreclosure process, or were actually being auctioned in the last three months alone.

The end is not in sight.

Source / Revolution

Also see Fannie Mae forgives loan for woman who shot herself / CNN / Oct. 3, 2008

Thanks to Mercedes Lynn de Uriarte / The Rag Blog

[+/-] Read More...

[+/-] Summary only...