Banks V. Homeowners March 17, 2011March 22, 2017 By Shahien Nasiripour in the Huffington Post: NEW YORK — The Obama administration is seeking to force the nation’s five largest mortgage firms to reduce monthly payments for as many as three million distressed homeowners in as little as six months as part of an agreement to settle accusations of improper foreclosures and violations of consumer protection laws . . . Described as a “shock and awe” approach, the deal would accomplish the four goals set out by state and federal policy makers and regulators as part of their multi-agency investigations into abusive mortgage practices by the nation’s largest financial firms: punish banks for violations of state law and federal regulations; provide much-needed assistance to distressed borrowers; stabilize a deteriorating housing market; and dissuade firms from abusing homeowners in the future. . . . ☞ The Republicans are against it. Indeed, from a recent must-read Milbank piece: Republicans are aiming to repeal the Home Affordable Modification Program, the Obama administration’s main response to the foreclosure crisis. The program, by all accounts, has been disappointing, helping only about 600,000 homeowners of the 3 million to 4 million projected. But its failure, watchdog groups say, was caused by the mortgage servicers’ ineptitude – lost paperwork, bad accounting and the like – and lack of concern about whether the mortgages they service (but don’t own) go into default. Rather than crack down on the banks, the House Republicans would kill the one program that, at least in theory, gives borrowers some chance of avoiding foreclosure. . . . ☞ Paul Krugman, writing for the New York Times, provides the big picture: Another Inside Job By PAUL KRUGMAN Published by THE NEW YORK TIMES: March 13, 2011 Count me among those who were glad to see the documentary “Inside Job” win an Oscar. The film reminded us that the financial crisis of 2008, whose aftereffects are still blighting the lives of millions of Americans, didn’t just happen — it was made possible by bad behavior on the part of bankers, regulators and, yes, economists. What the film didn’t point out, however, is that the crisis has spawned a whole new set of abuses, many of them illegal as well as immoral. And leading political figures are, at long last, showing some outrage. Unfortunately, this outrage is directed, not at banking abuses, but at those trying to hold banks accountable for these abuses. The immediate flashpoint is a proposed settlement between state attorneys general and the mortgage servicing industry. That settlement is a “shakedown,” says Senator Richard Shelby of Alabama. The money banks would be required to allot to mortgage modification would be “extorted,” declares The Wall Street Journal. And the bankers themselves warn that any action against them would place economic recovery at risk. All of which goes to confirm that the rich are different from you and me: when they break the law, it’s the prosecutors who find themselves on trial. To get an idea of what we’re talking about here, look at the complaint filed by Nevada’s attorney general against Bank of America. The complaint charges the bank with luring families into its loan-modification program — supposedly to help them keep their homes — under false pretenses; with giving false information about the program’s requirements (for example, telling them that they had to default on their mortgages before receiving a modification); with stringing families along with promises of action, then “sending foreclosure notices, scheduling auction dates, and even selling consumers’ homes while they waited for decisions”; and, in general, with exploiting the program to enrich itself at those families’ expense. The end result, the complaint charges, was that “many Nevada consumers continued to make mortgage payments they could not afford, running through their savings, their retirement funds, or their children’s education funds. Additionally, due to Bank of America’s misleading assurances, consumers deferred short-sales and passed on other attempts to mitigate their losses. And they waited anxiously, month after month, calling Bank of America and submitting their paperwork again and again, not knowing whether or when they would lose their homes.” Still, things like this only happen to losers who can’t keep up their mortgage payments, right? Wrong. Recently Dana Milbank, the Washington Post columnist, wrote about his own experience: a routine mortgage refinance with Citibank somehow turned into a nightmare of misquoted rates, improper interest charges, and frozen bank accounts. [“The problem in the nation’s housing market now isn’t subprime lending. It’s subpar lenders,” concludes Milbank. — A.T.] And all the evidence suggests that Mr. Milbank’s experience wasn’t unusual. Notice, by the way, that we’re not talking about the business practices of fly-by-night operators; we’re talking about two of our three largest financial companies, with roughly $2 trillion each in assets. Yet politicians would have you believe that any attempt to get these abusive banking giants to make modest restitution is a “shakedown.” The only real question is whether the proposed settlement lets them off far too lightly. What about the argument that placing any demand on the banks would endanger the recovery? There’s a lot to be said about that argument, none of it good. But let me emphasize two points. First, the proposed settlement only calls for loan modifications that would produce a greater “net present value” than foreclosure — that is, for offering deals that are in the interest of both homeowners and investors. The outrageous truth is that in many cases banks are blocking such mutually beneficial deals, so that they can continue to extract fees. How could ending this highway robbery be bad for the economy? Second, the biggest obstacle to recovery isn’t the financial condition of major banks, which were bailed out once and are now profiting from the widespread perception that they’ll be bailed out again if anything goes wrong. It is, instead, the overhang of household debt combined with paralysis in the housing market. Getting banks to clear up mortgage debts — instead of stringing families along to extract a few more dollars — would help, not hurt, the economy. In the days and weeks ahead, we’ll see pro-banker politicians denounce the proposed settlement, asserting that it’s all about defending the rule of law. But what they’re actually defending is the exact opposite — a system in which only the little people have to obey the law, while the rich, and bankers especially, can cheat and defraud without consequences.
Watch These Four Segments Really: They Are Important March 16, 2011March 22, 2017 But first . . . LETTER FROM SENDAI Fred Stanback: “This is from someone I don’t know about someone else I don’t know, but it’s worth sharing.” ☞ Yes, it is: Hi folks, I thought you might like to read this letter from a friend of my brother’s who is living in the upheaval in Japan. It presents another perspective, and attitude, that touches me. Scott Date: March 13, 2011 3:55:14 AM EDT Subject: Blessings Hello My Lovely Family and Friends, First I want to thank you so very much for your concern for me. I am very touched. I also wish to apologize for a generic message to you all. But it seems the best way at the moment to get my message to you. Things here in Sendai have been rather surreal. But I am very blessed to have wonderful friends who are helping me a lot. Since my shack is even more worthy of that name, I am now staying at a friend’s home. We share supplies like water, food and a kerosene heater. We sleep lined up in one room, eat by candlelight, share stories. It is warm, friendly, and beautiful. During the day we help each other clean up the mess in our homes. People sit in their cars, looking at news on their navigation screens, or line up to get drinking water when a source is open. If someone has water running in their home, they put out a sign so people can come to fill up their jugs and buckets. Utterly amazingly where I am there has been no looting, no pushing in lines. People leave their front door open, as it is safer when an earthquake strikes. People keep saying, “Oh, this is how it used to be in the old days when everyone helped one another.” Quakes keep coming. Last night they struck about every 15 minutes. Sirens are constant and helicopters pass overhead often. We got water for a few hours in our homes last night, and now it is for half a day. Electricity came on this afternoon. Gas has not yet come on. But all of this is by area. Some people have these things, others do not. No one has washed for several days. We feel grubby, but there are so much more important concerns than that for us now. I love this peeling away of non-essentials. Living fully on the level of instinct, of intuition, of caring, of what is needed for survival, not just of me, but of the entire group. There are strange parallel universes happening. Houses a mess in some places, yet then a house with futons or laundry out drying in the sun. People lining up for water and food, and yet a few people out walking their dogs. All happening at the same time. Other unexpected touches of beauty are first, the silence at night. No cars. No one out on the streets. And the heavens at night are scattered with stars. I usually can see about two, but now the whole sky is filled. The mountains are Sendai are solid and with the crisp air we can see them silhouetted against the sky magnificently. And the Japanese themselves are so wonderful. I come back to my shack to check on it each day, now to send this e-mail since the electricity is on, and I find food and water left in my entranceway. I have no idea from whom, but it is there. Old men in green hats go from door to door checking to see if everyone is OK. People talk to complete strangers asking if they need help. I see no signs of fear. Resignation, yes, but fear or panic, no. They tell us we can expect aftershocks, and even other major quakes, for another month or more. And we are getting constant tremors, rolls, shaking, rumbling. I am blessed in that I live in a part of Sendai that is a bit elevated, a bit more solid than other parts. So, so far this area is better off than others. Last night my friend’s husband came in from the country, bringing food and water. Blessed again. Somehow at this time I realize from direct experience that there is indeed an enormous Cosmic evolutionary step that is occurring all over the world right at this moment. And somehow as I experience the events happening now in Japan, I can feel my heart opening very wide. My brother asked me if I felt so small because of all that is happening. I don’t. Rather, I feel as part of something happening that much larger than myself. This wave of birthing (worldwide) is hard, and yet magnificent. Thank you again for your care and Love of me, With Love in return, to you all, Anne AERIAL BEFORE AND AFTER Kathy Allan: “Hard to express the devastation in words alone. Pull the black line on the right of each picture with your curser to see the after.” COLBERT ON GINGRICH, PAWLENTY I don’t know who the Republican nominee will be, but it won’t be Newt Gingrich or Tim Pawlenty. (Click each to see why.) And now . . . MADDOW’S SPECIAL REPORT There’s a concerted, billionaire-financed power/wealth shift from the middle class and poor to the top 1% (really, the top 0.01%). Rachel lays it out in last week’s special report. She goes Republican governor by Republican governor: How Texas is making it hard for young people to vote (because they vote Democratic) but extra-easy for old people and concealed-weapon-permit holders (because they vote Republican) . . . How Florida is raising taxes on the poor and elderly to fund tax cuts for corporations . . . How Wisconsin and Indiana, Idaho and Ohio, Michigan and Pennsylvania are all working to shift power from the people. All four segments of the report are worth watching even if Rachel is not your normal fare. I’ve watched Glenn Beck and listened – lots – to Rush Limbaugh. You owe me. It starts here – about shifting wealth and power from the middle class to the best off . . . . . . continues here – about suppressing the Democratic vote. . . . and here (briefly) – about Michigan’s plan to axe local elected officials they don’t like, simply by fiat. . . . and then here – about tap water that catches on fire and a Pennsylvania plan to keep it that way. # I owe you answers to some of the thoughtful counterpoints you’ve sent lately . . . plus Guru’s latest thinking on our speculative basket. Traveling tomorrow, but hope to have something Friday.
Half Staff March 15, 2011March 25, 2012 A column about our domestic politics was posted here today before the catastrophe in Japan took a turn for the worse. I’ve taken it down. It just doesn’t seem appropriate right now to think of anything else.
Half Staff March 14, 2011March 25, 2012 By several orders of magnitude, the only thing that seems appropriate today is a note of condolence to the people of Japan. Here’s wishing them the best under awful circumstances.
Priorities March 11, 2011March 22, 2017 I screwed up the second of the three links yesterday – why do I keep doing that? – which I didn’t correct until nearly noon. So here it is again: FAT-CAT TEACHERS Jon Stewart, here. CLASS WAR Republican governors have declared it on the poor and middle class. Watch Rachel Maddow here as she covers Wisconsin, Florida, and Ohio. Then look what Michigan’s governor is trying to do – here. The problem in America today (apparently) is that the game is not already sufficiently skewed to the rich and powerful. These Republican governors aim to fix that. ☞ I realize it takes time to watch each of these clips, but try. It all started in 1980, with the election of Ronald Reagan. He actually RAISED taxes on the working class (as he should have – Social Security needed to be put on a solid footing and he raised the payroll tax accordingly) even as he LOWERED the tax rate on the rich (as he also should have – 70% was nuts and counterproductive). But he went too far in helping the best off (even George H.W. Bush recognized that when he raised the top tax rate a bit) . . . and George W. Bush went absolutely crazy with the tax cuts for the best off, gravely weakening our national balance sheet and deeply widening the gap between rich and everyone-else to a level not seen since 1929. Now the Republicans are trying to make things even better for the richest and most powerful – they want to make the tax cuts for the rich permanent, they want to break the unions, they have Justice Thomas’s wife on their payroll trying to take away the new health care benefits for the most vulnerable . . . and on and on. When Jeb was governor of Florida, he had to look really hard for a way to cut taxes for the rich, because Florida has no income tax. He couldn’t cut the sales tax – that would help everybody, not just the rich. He couldn’t cut the property tax – ditto. So he eliminated the “Intangible Property Tax,” paid only by people (like me) with real money. It wasn’t an onerous tax (it basically said that if you had millions growing at 5.4% a year, say, the state would nick a little of that so that it grew at only 5.2% instead), and Florida needed the revenue; but Jeb eliminated it anyway. And not long afterward – citing Florida’s fiscal squeeze – he eliminated most of the funding for drug treatment (including in prisons, where arguably it is needed most). We just couldn’t afford to help people get off drugs, because millionaires were in greater need of assistance, and in the real world you can’t do everything, you have to prioritize. This is not to say Jeb saw no value in drug treatment programs. At the very same time as he was cutting funding for the public programs, he was paying out of his own pocket for his own child’s treatment. But that’s different. He could afford it, and cared about his own daughter enough to want to help her. He apparently saw no compelling public interest in helping the children of less affluent parents. You have to set priorities, and the Republican priority, when it comes to taxation or regulation, is to help the rich and powerful. To oppose the minimum wage and the social safety net and collective bargaining. To oppose health insurance for children. To oppose worker safety regulation and consumer financial protection and all the rest. They are totally entitled to prioritize as they do. But so are the bottom 98% entitled to reject their priorities and elect Democrats. It’s class warfare, they started it, and they’ve been winning – big-time. But that could change.
Here! Here! Here! Three Must-See Clips March 10, 2011March 22, 2017 FAT-CAT TEACHERS Jon Stewart, here. CLASS WAR Republican governors have declared it on the poor and middle class. Watch Rachel Maddow here as she covers Wisconsin, Florida, and Ohio (clearly, it was premature for her to declare victory in Wisconsin, but the game’s not over yet). Then look what Michigan’s governor is trying to do – here. The problem in America today (apparently) is that the game is not already sufficiently skewed to the rich and powerful. These Republican governors aim to fix that.
Report To Your Post; You’ve Been Reinstated March 9, 2011March 22, 2017 THERE WAS A COLUMN YESTERDAY . . . I just forgot to click “Post.” (Until, at the crack of dawn – 8:45am on the East Coast – one of you threw a bucket of cold water on me to wake me up, like in those old Westerns, and I went dripping over to the computer to make it right.) If you missed it, you click post. One of us has to. PERRY WATKINS Today, still not quite right in the head from that rude awakening, I simply offer the compelling story of an exemplary serviceman, long before the era of Don’t Ask / Don’t Tell – but not before the era of injustice.
Surowiecki on the Central Debate March 8, 2011March 22, 2017 Yesterday, Paul Krugman on the central economic issue of our day – whether to invest in our future. (“Republicans have managed to come up with spending cuts that would do double duty, both undermining America’s future and threatening to abort a nascent economic recovery.”) Today, the New Yorker’s James Surowiecki on that same topic. He concludes last month’s column: . . . In 1998, the economists Charles Jones and John Williams showed that the socially optimal level of investment in R. & D. [is] two to four times its current rate. Historically, at least, [investment in R. & D.] was a bipartisan position. Alexander Hamilton argued for the “encouragement of new inventions and discoveries” by government. In the nineteenth century, an era of limited government, one of the few things that people were willing to spend money on was “internal improvements”—canals, railroads, and the like—and Abraham Lincoln supported these as being of “general benefit.” And Dwight Eisenhower created the Interstate Highway System and presided over the post-Sputnik boom in government-funded scientific research. It’s hard to make a case for investing more when everyone believes we should be spending less, but there’s never been a better time. Interest rates are historically low, so borrowing is cheap. (Corporations have already realized this: they borrowed half a trillion dollars last year.) And the weak economy means that there’s less competition for labor and resources. Yet, instead of taking advantage of this, we’re too often doing the opposite. Only recently, a plan for a new tunnel under the Hudson River was killed. The tunnel would have reduced congestion, expanded commerce between New Jersey ports and New York, and created enormous long-term value for the entire region. But short-term budget constraints doomed it. This is a classic instance of eating your seed corn and of the way that fiscal “responsibility” can actually be irresponsible. At the moment, we’re spending too much on things that consume resources—like the military and earmarks—and not enough on things that create them. ☞ If you read the whole thing, you’ll see why government has an even more important role to play in this than it used to. $25/MONTH VIRGINS Greg San: “What a coincidence – I just bought one of the LG Optimus V phones and activated it on Virgin Mobile on the $25/month plan [you featured yesterday]. I’m switching from a first generation iPhone on ATT which costs about $60/month. But two points anyone considering a similar move needs to consider: First, Virgin Mobile is on the Sprint network exclusively – if you find yourself in an area without Sprint coverage you have no coverage. (Roaming is not provided.) Second, do a Google search on LG Optimus V battery drain. I got the phone Saturday and charged it overnight. Sunday morning I tried out the GPS location feature – cool (my 1stGen iPhone did not have GPS). When I picked up the LG Optimus V again about 5 hrs later, it would not turn on – battery was completely drained. Oops – GPS is a battery-eater. Following various tips, I changed some of the phone settings and was able to have the phone sit overnight off the charger and still have 80% battery charge the next morning.” Bob S.: “I too have been a Virgin fan, for the last seven years. I recently upgraded my $5 per month plan (for 28 minutes per month!) to the $25 per month plan you detailed yesterday. And I too bought the LG Android phone, directly from Virgin. But it is on sale this week at Target for only $129.99, and it includes a $20 Target gift card! Also, keep in mind that Virgin does NOT require a service contract. It is purely month to month. And the Sprint network it runs on is very good.”
Krugman on the Central Debate March 7, 2011March 22, 2017 From his latest column (worth reading in full), here’s Paul Krugman’s bottom line: . . . Over the next few weeks, House Republicans will try to blackmail the Obama administration into accepting their proposed spending cuts, using the threat of a government shutdown. They’ll claim that those cuts would be good for America in both the short term and the long term. But the truth is exactly the reverse: Republicans have managed to come up with spending cuts that would do double duty, both undermining America’s future and threatening to abort a nascent economic recovery. ☞ And if you doubt that Republicans know how to undermine an economy, just look at how they managed to upend the Clinton/Gore prosperity of the Nineties. $25/MONTH UNLIMITED ANDROID Marian Calabro: “People seem to tie themselves in knots over cell service. Why? I’ve been a Virgin Mobile no-contract devotee for years, even though I’m hardly in VM’s teenybopper demographic. Just upgraded to an LG Optimus V Android 2.2 phone for $149. The payoff comes in the low monthly rate. VM offers unlimited data, Web, email, messaging, apps, and 300 voice minutes on the Sprint network for $25 a month. Since I’m not a big talker, I never use 300 minutes. But if I’m retroactively vaccinated with a phonograph needle (remember that cliché?), I can switch to 1,200 minutes for $40 or unlimited for $60. This must be a great deal, because the LG Optimus is out of stock temporarily. I wish it had a keyboard, but getting used to the touch screen has been easier than expected. Moreover, I feel like I’m learning something new, which is always gratifying. VM’s customer service remains quite good. Other frugal readers may want to check this out.” CONTORTION Talk about overcrowding. Check out this video, if you have a few minutes to go slack-jawed in claustrophobic amazement.
Venison March 4, 2011March 22, 2017 SAVING $1,000 A YEAR Brandon Mayes: “I have just started reading your Investment Guide and was surprised to see that I had already implemented several of your suggestions for saving $1000 each year. For example, I always pay my credit cards off in full each month, I have been using Ooma for years (and have convinced numerous others to switch to it) and recently cancelled cable TV (letting Hulu/Netflix/espn3.com fill the void). . . . No doubt you receive tips from people all the time, but I figured I might offer another one (sorry). This one saved me about $55/month, though this figure will vary depending on the circumstances. . . . I currently own a Sprint HTC Evo cellphone. The cheapest plan Sprint offers for this phone is $70/month with an additional $10 charge for 4G service. By the time you add in taxes and fees it’s about $90/month. Even though I’m 28 years old and have my own family (my wife has AT&T service however), I dropped my service and switched to my mom’s family plan. The cost is $20/month for the additional line and of course the $10 charge for 4G as well. I then chip in an additional $5 for taxes for a total of $35/month. Easiest savings I have ever found. We share minutes now, but Sprint only deducts minutes if you dial a landline – calls to mobile numbers, regardless of network, are free. It’s essentially impossible for us to ever use up all of our monthly minutes. If we need to call a landline and are at home, then Ooma is available and thus the call doesn’t require any cell phone minutes to be used. The savings don’t seem to be as significant if there are only two phones on the family plan, but adding a phone beyond that is extremely cost-effective.” FRUGALITY MEETS FASHION John Leeds: “Ah – isn’t this [post from last Friday] the story and the agony of so many wonderful couples, except ever-much-more-so with you and Charles? It describes my wife and me, my father and both his wives (not at the same time!) and so many other couples I have known and know now. Opposites attract – sparks fly – the mass coalesces – and then the sparks REALLY fly! . . . Me, I am the frugal one – the guy who calculates what we’re spending compared to our AGI. Various wines? 2% of the AGI. Fine Belgian chocolate? 1% of the AGI. The amount spent on these things over a ten year period? Staggering. . . . I am the guy who calculates the pre-tax money needed to earn the aforementioned ‘necessities.’ The one who butchers roadkilled deer (yes!) so we can have free organic meat. [Emphasis added, wide-eyed.] The one who opens tea bags and gets a gallon of tea out of the amount meant for 8 oz. The one lets the house freeze at night until we can restoke the high-efficiency woodstove with free wood I’ve hauled from the roadside to home, split and stacked and constantly reshuffled on our narrow fenced-in driveway. . . . And guess – guess! – who is eating most of these profits? [But maybe not the roadkill?] Would it be the same one who, as you describe with Charles, boils more water than needed when she makes her coffee, keeps on lights all over the house when she could use just one, and yes, buys tiny amounts of tasty foods at exorbitant prices? Who isn’t planning for retirement? But why does she NEED to plan retirement – she has me to plan. . . . And what is her value to me? . . . Priceless.” ROBERT REICH Thomas Whitaker: “I’ve found Robert Reich’s last couple of essays – here and here – to be very helpful in correlating recent events: Wisconsin, Citizens United, the tax issue, the coming war on education (sad!!!), the Koch brothers.”