Category: business ethics

President Clueless!

On By southwerkIn business ethics, Capitalism, ethics, Government Failure, Philosophy of Business, White Collar Crime6 Comments

The mortgage industry lies and cheats for two years and the President conveys his concerns.

He is worried about deadbeat homeowners.

I have to point out no matter how deadbeat a homeowner, he didn’t deliberately create a half million false affidavits. No matter how far behind in payments a homeowner might be, he didn’t foreclose on a property he didn’t own.

But the President isn’t worried about violations of the law, he’s worried that some homeowner will get aid he doesn’t deserve. That explains the byzantine labyrinth of paperwork required for the federal program, HAMP, (and why it doesn’t work).

Here’s the President –

“The biggest challenge is how do you make sure that you are helping those who really deserve help and if they get some temporary help can get back on their feet, make their payments and move forward and stay in their home versus either people who are speculators, own second homes that they really couldn’t afford because they’d gotten a subprime loan, and people who through no fault of their own just can’t afford their house anymore because of the change in housing values or their incomes don’t support it,” Obama said during a roundtable discussion with a handful of progressive bloggers at the White House.

“And we’re always trying to find that sweet spot to use as much of the money that we have available to us to help those who can be helped, without wasting that money on folks who don’t deserve help,” he continued. “And that’s a tough balance to strike.”

“The sweet spot,” Wow, do you get the impression that the only people allowed anywhere near him are bankers telling stories of deadbeat homeowners. I assume after they finish their litany about “personal responsibility, they then tell him how sad it is that the American people don’t appreciate his efforts.

I have been directly criticized for having the category, incredible stupidity, as one of my topics for search engines to pick up. It’s shrill. What else is appropriate here? Damn right it’s shrill.

I haven’t the slightest objection to being tough of wrongdoing on the part of the mortgage holders. But, good grief, the banks and foreclosure industry have been gaming the legal system, and refusing to act in good faith. Doesn’t he notice? Is he obligated by his Presidential oath to only worry about wrongdoing by non-banking entities?

Couldn’t he generate an unkind word for robo-affidavits? Just one unkind word?

He couldn’t even manage that.

Is the President right and fifty states’ Attorney Generals wrong?

Well, let’s look at the problem from a different angle – from CBS news –

Now there’s more evidence of just how blatantly the paperwork for that flood of foreclosures has been mishandled. Consider this: a stack of legal documents used to seize homes that don’t even identify the lender claiming to hold the mortgage.

Instead the words “bogus assignee” fill the space where the lender’s name should be. In foreclosure after foreclosure, the lender’s address is listed only as x’s, such as xxxxxxx. In some cases the documents identify the lender as “bad bene.”

“They have foreclosed in the name of ‘bad bene,’ for bad beneficiary,” says attorney Robert Hager.

Hager, who represents homeowners fighting foreclosure, says the paperwork also appears to bear bogus signatures.

“This is how arrogant they are with regard to taking homes,” he says.

How arrogant, indeed.

They might be less arrogant if held accountable.

James Pilant

Confessions Of A Robosigner

On By southwerkIn business ethics

He Spent So Many Hours Writing His Name That His Signature Morphed Into A Series Of Four Circles Overlapping One Another.

From CNN Money.com –

The paperwork he robo-signed most often were the notices to delinquent borrowers that the servicer was proceeding to foreclosure. By signing that document, he was affirming that the bank had reviewed the loan and it didn’t qualify for a modification. But, he said, the reality was he had no idea whether Bank of America had really tried to save the borrower’s home.

“We had no knowledge of whether the foreclosure could proceed or couldn’t, but regardless, we signed the documents to get these foreclosures out of the way,” he said, noting that he assumed another department had checked that the review was done.

In his final weeks on the job, a notary routinely left him stacks of 20-page files, each one with a tab indicating where he needed to sign or initial. He had no idea what those documents were.

He spent so many hours writing his name that his signature morphed into a series of four circles overlapping one another. He said that he and his co-workers joked that they got so used to the rapid-fire signatures that they started signing personal paperwork that way.

There was no examination of whether or not the homeowner qualified for a modification. That was not fair. The bank failed in its duty to its customers and stockholders. Stockholders? Yes, the banks would make more over time with modifications.

When we talk about a mortgage holder qualifying for a modification, we’re not talking about whether or not the holder is a good person or a bad one, the criteria are designed to tell the bank that they make more money renegotiating than not.

We are not talking about the bank doing a homeowner a favor. We are talking about a bank ignoring its own procedures and its own profits.

From further down in the article –

Now that he’s not in the thick of the foreclosure process, Doan said he has had time to reflect on what his actions meant. Each signature likely led to a borrower losing his or her home. While he got numb to that fact while he was on the job, he now feels guilty.

“I shudder to think how many foreclosure documents have my name on it,” he said.

It was needlessly cruel to deny borrowers the opportunity to renegotiate. It was a failure of ethical judgment and of the principles of basic fairness.

James Pilant

Drumroll: Bank of America reviews several hundred foreclosure cases and finds…. (via Rortybomb)

On By southwerkIn business ethics, Capitalism, ethics, Government Failure, Philosophy of Business, White Collar Crime

Further evidence is coming in that the banks’ and the Obama Administration’s assurances of no systematic abuse in the foreclosure process are just nonsense.

Here’s some more evidence.

By the way, the web site Rortybomb seems to really have their stuff together. If I were you I’d give it a regular look.

James Pilant

Drumroll: Bank of America reviews several hundred foreclosure cases and finds.... Uh-oh: The Charlotte, N.C., lender [Bank of America] discovered errors in 10 to 25 out of the first several hundred foreclosure cases it examined starting last Monday. The problems included improper paperwork, lack of signatures and missing files, said people familiar with the results. In certain cases, information about the property and payment history didn't match…. Some of the defects seem relatively minor, according to the bank, and bank of … Read More

via Rortybomb

“We Can Either Have a Rational Resolution to the Foreclosure Crisis or We Can Preserve the Capital Structure of the Banks. We Can’t Do Both” (via Foreclosureblues)

On By southwerkIn business ethics, Capitalism, ethics, Government Failure, White Collar Crime2 Comments

Foreclosureblues is a web site devoting to defending homeowners. I like this web site. This is a fighting web site filled with a desire for justice and fair dealing. Here is there take on today’s congressional hearings.

James Pilant

"We Can Either Have a Rational Resolution to the Foreclosure Crisis or We Can Preserve the Capital Structure of the Banks. We Can't Do Both" "We Can Either Have a Rational Resolution to the Foreclosure Crisis or We Can Preserve the Capital Structure of the Banks. We Can't Do Both" Today, October 27, 2010, 35 minutes ago | noreply@blogger.com (George Washington)   The quote of the day comes from Damon Silvers, a member of the independent Congressional Oversight Panel: We are faced with a choice here. We can either have a rational resolution to the foreclosure crisis or we can pres … Read More

via Foreclosureblues

Banks Muscle Up For Fight With States’ Attorney Generals!

On By southwerkIn business ethics, Capitalism, ethics, Government Failure, Philosophy of Business, White Collar Crime

Bank of America is loading up big guns for the coming battle over its mortgage practices. It has picked up former Virginia Attorney General Richard Cullen and Brian Boyle, formerly of the Justice Department.

From the Reuters article –

Richard Cullen, chairman of the McGuireWoods law firm and Virginia attorney general from 1997-1998, is one of the lawyers representing the nation’s largest mortgage servicer. Cullen has already been communicating with the offices of various state attorneys general, according to a source familiar with the investigation.

Here’s more from further down in the same article –

Cullen served on President George W. Bush’s legal team during the Florida vote recount after the 2000 presidential election. He also represented Republican Tom DeLay in a recent federal probe that did not result in any charges being filed against the former U.S. House of Representatives majority leader.

Through a spokesman Cullen declined to comment on Bank of America. The company also did not answer questions on Wednesday.

Bank of America has also turned to a former top Justice Department lawyer in the George W. Bush administration to represent it in dealings with state attorneys general.

Brian Boyle, formerly principal deputy assistant U.S. attorney general, participated in a conference call between the bank and representatives from the Florida attorney general’s office, a spokeswoman for the office said.

It’s a pity that the Americans who were the victims of these practices will have to fight without picking up this kind of firepower.

But there is such a thing as justice and if these practices are as nefarious as they appear to me.

Justice will come.

James Pilant

Microsoft Is A Dying Consumer Brand

On By southwerkIn business ethics, ethics2 Comments

After I bought a new computer some years ago with Windows Vista on it, my attitude toward Microsoft changed.

I swore revenge. That’s right. Whether you call it a Jihad, a crusade, or a revival of the Lincoln County Cattle War, I’m on board.

Night after night as my operating system imploded destroying my data, I got angrier and angrier. Than came the ultimate humiliation. It’s two o’clock in the morning and I’m busy at work. Suddenly the computer shuts down and loads updates. That’s right! My robodatakiller computer operating system went Hal on me.

Then Microsoft responded to the complaints. Their spokesman explained that these problems were temporary and basically added that they weren’t going to make any real changes and people like me should learn to suck it up.

Now, I challenge you to find anything with a microsoft label in my home.

So, the article in CNN Money was not unwelcome to me.

However, it acted like Microsoft’s problems were just a matter of poor timing and products not being competitive.

Apparently the writer doesn’t understand hatred.

James Pilant

Andrew Comments On The Post – HAMP (Home Affordability Modification Program) Disastrous!

On By southwerkIn business ethics, Capitalism, ethics

The original post was “HAMP (Home Affordability Modification Program) Disastrous!”

Here are Andrew’s thoughts –

Part of the reason I didnt vote for Obama is because he is a good orator, but I dont think he understood any of what he was actually saying.

Its not the “political system”. Its the inexperience and incompetence of the president that is causing this.

I think part of the problem is that our government is so complicated that the average layman cannot take the time to fully understand how it even works. This creates a smokescreen that allows these politicians to do as they please. Its easier to snatch cookies out of the cookie jar when noone can see you, right?

The financial industry is the same way. Worse if you ask me. There is so much red tape and smoke being blown that it seems like most banks EXPECT the average working man to not have a clue as to how banks and financing work. A perfect example of this was when I applied for the mortgage on my home. The loan officer was going through the paperwork with me (she was a very nice lady, by the way). When we got to the interest rate, I stopped her and asked her “Is this number here (pointing to the sheet of paper) the nominal or effective interest rate?” She seemed utterly astonished at this! She said in the 8 years that she has been a loan officer, she has never run across anyone else, who did not work in the banking industry, who understood that distinction. That suprised me.

If the American people dont even understand the problem, then how can we effectively judge how well the administration is doing to actually fix the problem. This creates an environment so that the President can attend to his own agenda and, like you said, let good PR cover up the fact that he doesnt seem interested in actually fixing the problem.

Andrew Responds To The Post – The Vast Majority Of Foreclosures Were Done Correctly?

On By southwerkIn business ethics, ethics, Government Failure

My post, The Vast Majority of Foreclosures were done Correctly?, received several responses.

As always, Andrew provides an excellent thoughtful addition to the discussion.

In my personal opinion, the number of botched foreclosures is not the issue. The issue is that it has happened beyond the scope of being a rare isolated incident.

In one of my sophomore level engineering classes, called Mechanics of Deformable Bodies, our final exam was to select the proper materials and geometries for each member of a standard, run of the mill, truss bridge. Each member was to be designed with a given safety factor in mind to protect against cyclic fatigue of the truss members.

I was about 3/4th of the way finished with my exam when one of my classmates got up, and turned in his exam. The professor had the proper design right in front of him. He quickly compared my classmates design with the proper design, and then told my classmate that he received an F on the exam. When my classmate challenged this, my professor pointed to one of the truss members and said “Your bridge will fail, you get an F.”

My classmate raised his voice in protest. He said,”Professor, I messed up on TWO truss members! TWO out of 24! I shouldn’t get an F for that!”

By this time, the whole class had stopped working on their exams and were all staring at the student and the professor. I will never forget what the professor told my classmate. He looked at the boy and said, “Tell that to the people who were on your bridge when it failed.”

Colleges, Universities and Alumni Associations Were Paid 83 Million Dollars To Push Credit Cards On Students

On By southwerkIn business ethics, Capitalism, Economic measurement, ethics, Government Failure, Philosophy of Business

Do university administrators feel guilty about encouraging their students to sign up for credit cards that Handful of cut-up credit cards.provided kickbacks to their schools?

Of course, these administrators should. Over the year, hundreds of colleges gave student credit card issuers amazing access in return for cold cash. Colleges surrendered such personal information as student emails, addresses and phone numbers so these companies could pelt students with promotions. And schools allowed credit card issuers on their campuses where they lured kids into signing up for student credit cards in return for t-shirts or other freebies.

Of course, they don’t. Guilt is for suckers. Winners take their opportunities as they come. After all, those students are adults (most of them). They make their own decisions, right?

Looks to me like shooting fish in a barrel.

For years, colleges pushed credit cards on to their most vulnerable students, often those without income and certainly those without financial savvy. The colleges made a tidy sum. A few of their students committed suicide and a great number wound up in debt that fifteen or twenty years will be required to pay it off.

Of course, they don’t feel any responsibility. It was just business.

Average student credit card debt – $3173.

Hook ’em and Cook ’em.

And the colleges, universities and alumni associations weren’t protecting their students. They were exploiting them.

Business ethics – You don’t rip off your customers. (Apparently this is hard for some people.)

James Pilant

The Big Short

On By southwerkIn business ethics, Capitalism, ethics, Government Failure, Philosophy of Business

The Big Short is a new book by Michael Lewis. It is reviewed by Larry Swedroe in CBS Money Watch.

From the review –

Lewis has done an incredible job researching the origins of the financial crisis. He then provides a great service by making a very complex subject easily understood. He turned what could have been a dry text on the crisis into a character-driven story that reads like a great novel. In addition, he shows clearly how the interests of much of Wall Street are not aligned with those of even their clients, let alone those of investors in general. Lewis demonstrates this by filling the book with tales no Hollywood writer could even dream up. The following, just one of many, demonstrates this point and shows why Wall Street must be required to provide a fiduciary standard of care.

Danny Moses was a hedge fund trader who related the following tale. “When a Wall Street firm helped him into a trade that seemed perfect in every way, he asked the salesman, ‘I appreciate this, but I just want to know one thing: How are you going to f**k me?’ The trader hemmed and hawed but Moses persisted. ‘We both know that unadulterated good things like this trade don’t just happen between little hedge funds and big Wall Street firms. I’ll do it [the trade], but only after you explain to me how you are going to f**k me. And the salesman explained how he was going to f**k him. And Danny did the trade.”

Here’s the Amazon.com page for it as well as some further reviews. This book looks interesting to me.

James Pilant