Category: ethics

Homeowners Betrayed

On By southwerkIn business ethics, Capitalism, Corporate Social Responsibility, Economic measurement, ethics, Government Failure, Philosophy of Business, White Collar Crime2 Comments

I have been accused of being shrill. Today is the day, I should tear the wallpaper off the walls in hot raging anger. The Senate passed a bill on the last day of the session by unanimous consent that essentially solves the banks’ mortgage foreclosure problems.

Have a read – (from Reuters)

The bill, passed without public debate in a way that even surprised its main sponsor, Republican Representative Robert Aderholt, requires courts to accept as valid document notarizations made out of state, making it harder to challenge the authenticity of foreclosure and other legal documents.

The timing raised eyebrows, coming during a rising furor over improper affidavits and other filings in foreclosure actions by large mortgage processors such as GMAC, JPMorgan and Bank of America.

Questions about improper notarizations have figured prominently in challenges to the validity of these court documents, and led to widespread halts of foreclosure proceedings.

The legislation could protect bank and mortgage processors from liability for false or improperly prepared documents.

Do we live in a nation where citizens matter? Hundreds of thousands of mortgages have been done without actual knowledge of the facts. This is not legal. But here comes Congress just when the crisis is beginning to develop. And Congress like the cavalry rides not to rescue the homeowners but to make it difficult or impossible for them to challenge inaccurate or false documents. It will also make it difficult or impossible to sue for redress by these simple Americans who lived their lives believing falsely they had a government that was concerned in some way about their rights.

It’s not law yet. It awaits that “stalwart defender” of the public, Barack Obama, to sign or veto. What do you bet?

This is incredible. The mortgage companies are caught committing essentially fraud on a massive scale at the very least lying to the court system not once but hundreds of thousands of times(probably several million times) and the government acts to legalize their acts just as the scandal is revealed.

I don’t know what to say. I am well aware that besides this frail web site, I have no influence. I want to go outside and scream. Doesn’t someone, anyone care about the homeowners who have been abused hundreds of thousands of times?

What do these huge accumulations of money have to do to get in trouble? Apparently there is nothing they can’t do. Apparently there is no line they can cross, that will cause our government to act against them.

Will there be any action taken? Will there be any outrage? Will there be any investigations and will they lead to any actual action?

Stay tuned. I’m not finished with this yet.

James Pilant

What Do I Hope to Get Out of an Ethics Class? (#1) (via Suzysushi’s Blog)

On By southwerkIn ethics

I discovered this thoughtful and personal reflection on ethics. This is ethics from a student perspective from one whose life is in turmoil and wants the class to apply to that turmoil. I like what the writer has to say and want to encourage her to say more. So, please give it a read, and if you are in a generous mood make a comment if only to say, “Good Writing.” Beginning bloggers need to feel some contact out there. Help them along.

I am a little behind in getting my blog going. I have a bunch of unpleasant personal stuff going on, including being laid off a few weeks ago. I think, therefore, my first blog entries are going to be based on more of a personal bent than might be expected. I am in a very strange place emotionally at the moment, and I have been riding a roller coaster of feelings since the start of this year. At this moment, I am both cynical and hopeful — an in … Read More

via Suzysushi's Blog

Google Faces Inquiry Into Anti-Competitive Practices

On By southwerkIn business ethics, Capitalism, Economic measurement, ethics, monopoly, Philosophy of Business2 Comments

From “France 24 International News” –

The European Commission has launched a preliminary inquiry into anti-trust allegations against Google brought by three online companies over how the Internet giant’s search engine operates and the way it sells its digital advertising.

The Commission is acting on separate complaints from three companies – the British price comparison site Foundem, French legal search engine eJustice and Ciao! from Bing, a German online retailer that was bought by Microsoft in 2008. The three have alleged that Google’s search engine artificially demotes the results of competitor sites in its rankings and questioned some of the conditions the company includes in its deals with advertisers.

It is unlikely that Google is only doing this in Europe. “Don’t be evil” is Google’s motto but they seem to have reconsidered especially considering their all out assault on net neutrality.

We have anti-trust laws on the books. Couldn’t we use some of them? Perhaps, the European Union could let us cooperate with their investigation?

We as a society lose a lot when one company clobbers another though anti-competitive practices. We pay more but worse than that a monopoly company can diminish the quality of their product and customer service. In the long term, product development and innovation suffer. So remember, it’s not just the money.

James Pilant

Let’s Have A Moratorium On Foreclosures!

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

That’s right. Until we have evidence that the banks intend to follow established procedure when foreclosing homes instead of the hopeful, magic of the “our people don’t make errors” world.

No one has the right to take people’s home based on supposition or simply trusting companies who have proven by their behavior that they have no interest in justice and fair dealing.

Let’s stop it and use the time to do an across the board re examination of those mortgages foreclosed without proper procedure. It is obvious that homes have been taken and money charged without legal justification.

That’s not how we do things in the United States of America!

We are a nation of honor, where fair dealing and good faith are enshrined in the law. That’s right, they are on the books. They are part of the common law tradition in this country. They are still used to decide cases. This is one where they apply.

I’m not the only one who thinks a moratorium is a good idea. – (from Reuters)

An influential U.S. senator on Tuesday raised the prospect of an industry-wide moratorium on foreclosures as he pressed three banks accused of improperly kicking borrowers out of their homes to outline steps they are taking to fix their procedures.

“It is simply inexcusable that proper oversight proceedings were not in place, especially when dealing with matters as monumental as the seizure of a family’s home,” Senator Robert Menendez wrote to the heads of JPMorgan Chase and Co, Bank of America Corp and Ally Financial Inc, formerly known as GMAC and 56.3 percent-owned by taxpayers.

“At least one credit rating agency, Fitch, states that it believes this problem is widespread among banks and servicers, which raises the question of whether other banks should impose a moratorium until this lack of oversight is corrected,” wrote Menendez, the head of a Senate subcommittee on housing.

It’s a good idea. It’s something that should be done in the name of simple justice.

Simple justice may not be the fashion in dealing with the “self correcting” mechanism of the free market. But it’s still something I believe in.

James Pilant

Robo-Signers – Not R2D2!

On By southwerkIn business ethics, Capitalism, ethics, Government Failure, Philosophy of Business4 Comments

In an article featured in ProPublica by Marian Wang, the phenomenon of signing foreclosure document without knowledge of the contents is discussed –

Last week, we noted that the discovery of “robo-signers” — employees who signed off on thousands of foreclosure documents without much, if any, knowledge of their accuracy — had caused Ally Financial’s GMAC mortgage unit to freeze foreclosures in 23 states where foreclosures require a court order.

You’d think that all banks using the practice would be humiliated and chastened by a practice that misinforms the court as to their actual knowledge of the mortgage documents. You would be wrong, big time wrong.

From further down in the article –

The Associated Press reported late Sunday that a Wells Fargo executive acknowledged in a May deposition that he had signed hundreds of foreclosure documents each week without verifying any information aside from the date. The company, nonetheless, told AP it had no plans to halt foreclosures and was confident of the documents’ accuracy. (As we’ve noted, other banks — including those that have chosen to halt foreclosures — have also expressed confidence in the accuracy of their documents and played down the likelihood of mistaken foreclosures, despite the flawed paperwork.)

See, Wells Fargo, knows its documents are correct without even looking at them. Now, that’s a crack staff! Errors are discovered in mortgage filings all the time but they don’t have any.

The site, Complaints Board, catalogs Wells Fargo mortgage complaints. ConsumerAffairs.com also lists Wells Fargo complaints. But don’t worry, they only verified the dates but all the rest needs no examination!

This is a pretty high level of arrogance particularly when the court is being presented unverified documents. They taught us in law school to be scared of judges. Wells Fargo is apparently unaware of this basic rule. Telling judges you have verified data you have not could get them in the fining and contempt citation mood not even mentioning that throwing the case out of court thing.

Let’s see what happens next. I’m betting they can’t keep the practice of robo-signing up.

James Pilant

Andrew On Mortgage Foreclosure Lies

On By southwerkIn business ethics, Capitalism, Economic measurement, ethics, Government Failure, Philosophy of Business1 Comment

My friend, Andrew, once again displaying his usual knowledgeable approach adds to the discussion on my essay on the mortgage foreclosure crisis.

I live, and have a mortgage, in Georgia, which is a non-judicial foreclosure state. Here, the banks are required to register all mortgages in a computer system called MERS. I believe that stands for Mortgage Electronic Records Service or something along those lines. The bank has to input all information regarding all of its mortgages in Georgia into this system.

Whats scary is that if the MERS system sees a lapse in mortgage payments for an account, it can automatically initiate the foreclosure process. With Georgia being a non-judicial foreclosure state, its very hard to fight a foreclosure once it has begun.

Every now and then I hear about people here who make all of their payments on time, and the bank forgets to enter the payment information into MERS. MERS then initiates the foreclosure of the property, and the homeowners have to hire a lawyer to have the process stopped. Its scary to know that I can make all of my payments on time and do everything that I am suppose to, but if my account information happens to fall through the cracks due to a lack of diligence on the part of the bank, that I can be burned for it.

It is always good to have Andrew’s thoughts on a subject.

James Pilant

Mortgage Foreclosure Lies

On By southwerkIn business ethics, Capitalism, Economic measurement, ethics, Government Failure, Philosophy of Business4 Comments

Telling judges across dozens of states that documents are accurate and have been reviewed when you don’t know and haven’t done it, is just a pack of lies. Running thousands of foreclosures through the court system without enough staff to actually do the work isn’t just cost cutting it’s stealing from homeowners who do not owe the sums reported or are trying to prove fraud in the process. The banks essentially said, “Our documents show you are just wrong, suck it up.” All this when they had little or no assurance that the documents were correct.

In an article written by Arthur Delaney, he writes –

The paperwork scandal that has prompted several banks to halt evictions and review their foreclosure procedures is reminiscent of the predatory lending scheme that inflated the housing bubble.

“It’s the same process, falsifying documents to make them look acceptable to someone,” said Tom Domonoske, a lawyer and consumer advocate in Virginia. “They’re falsifying foreclosure documents so judges will look at them and say, ‘Here’s an affidavit. It’s signed.'”

Now, get a load of this – (further down in the article)

The bogus loans and bad foreclosure paperwork are both the result of Wall Street’s massive appetite for mortgages during the housing bubble, experts say, as banks repackaged mortgages as asset-backed securities and sold them to investors. As mortgages repeatedly changed hands, servicers in many instances lost track of who owned them. In states where foreclosures need a court’s approval, servicers now find themselves unable to prove they have a legal right to foreclose.

That’s right, they’ve been foreclosing on homes they weren’t sure they owned. (By the way, the sentence explaining that when they need a court’s approval, they don’t get to foreclose if they can’t prove ownership is nonsense. It is only when you contest ownership, usually with a lawyer, can you stop the process. There is no doubt in my mind that thousands of homes were foreclosed on, with no small profit to the bank, that the bank had no ownership rights to.)

What are we going to do? Banks have had a good reputation in the past with foreclosures. It was unpleasant for the bank and for the customer. They did their process and the home shifted possession. Because of this good reputation the law accepted the bank’s statement as to ownership and money amounts without demanding proof.

It would have cost a lot of money for banks to have to prove the facts in dozens of what were largely routine cases. So, the legal system streamlined the process. The bank’s paperwork was accepted as accurate as long as an attorney signed that he had personally reviewed the documents.

What have we learned? First, we can learn that the processes under which we gave financial institutions the benefit of the doubt have to be modified so that these institutions have to prove their case. Yes, it will make mortgages more expensive to forclose. Yes, it will make the process more complex and longer. But what choice do we have when the banks have deliberately and calculating lied for years in tens of thousands of cases? At what point do you stop giving them the benefit of the doubt?

Now.

They have proven that they cannot be trusted. Anyone who says otherwise is ignoring the hard, cold, unpleasant, unyielding facts.

James Pilant

Credit Card Companies Develop New Tricks To Get Your Money

On By southwerkIn business ethics, Capitalism, ethics, Philosophy of Business1 Comment

In an article from BNET’s Moneywatch, it is reported that there are three changes, credit card companies are using to make more money. These companies are losing a lot of money because of the new regulations. It definitely killed some of the content in their bag of tricks. But they are resourceful.

According to BNET –

The new Credit CARD Act, passed last year, handed credit card companies a long list of new consumer-friendly regulations. But it hasn’t taken long for card issuers to find sneaky ways around the new rules, says John Ulzheimer, head of consumer education for Credit.com.

The new rules are going to cost the credit card industry somewhere between $50 billion to $80 billion a year, he says: “That’s enough money that they’re going to have to make it up” in other ways.

First, they have increased minimum fees and interest rates.

Second, the law requires that if your payment falls on a weekend or a holiday while the companies are closed, your payment will not be late if you pay the day after. To evade this, the companies are keeping some of their offices open on those days. Call your company on a holiday and see if they have open offices, if so, to be on time, you must pay before the holiday.

Third, the law requires college students to show evidence of a job or have a parent as cosigner before they can get a card. The companies are turning a blind eye to other students co-signing and are considering student loans as income, evading both requirements.

I’m sure I’ll have more to report about credit card company tactics in the future.

No more tears? Think again. (via Pharm Regulations)

On By southwerkIn business ethics, Capitalism, ethics5 Comments

I found this site while cruising the internet looking at business ethics blogs. They are reporting a “clandestine recall” of 88,000 defective Motrin tablets. They haven’t been around very long but they have some good stories and I like their style, so stop by and give them a look!

James Pilant

No more tears? Think again. Looks like the lovable, family-friendly Johnson & Johnson company is running into a bit of a PR problem. CNN reported earlier this week that Lawymakers unveiled documents that showed J&J hired independent contracters to carry out a "clandestine recall" of over 88,000 faulty Motrin tablets. Usually, recalls work within a supply chain, with distributors alerting wholesalers that the product is faulty. They are able to promptly take it off t … Read More

via

Camp Millionaire

On By southwerkIn ethics, Teaching4 Comments

The Serpent and the Wolf

Claire Prentice writing for BBC news tells the story of Camp Millionaire where children learn the elements of financial management and wealth accumulation. I am sure to many this sounds bizarre but I have no problem with this practice. In fact, I teach my class that having money and, in particular, keeping money are arts that have to be learned. Students from upper middle class backgrounds have an enormous advantage over their lower class counterparts in the pursuit of economic success because of their head start in financial knowledge. I have discussed this with people from the upper crust (as much as we get in Northwest Arkansas) and they assume that lower class people are stupid because they don’t know these simple things. These things are not simple and if your parents did them daily, weekly and monthly, it’s easy to pick up this knowledge, much easier to understand these things than a student who comes from a family that has trouble putting three meals a day on the table.

Sometimes, I think we fail our college students in business schools across the country because we fail to teach them the habits of the upper classes. These may well be more important to business success than any actual talent, witness the disastrous behavior of Wall Street firms if you don’t believe in the success of style over substance. We probably ought to combine the serious elements of subjects like accounting with less technical but often more critical skills like upper-class mannerisms and expectations.

I want you to understand clearly that I hold the practice of judging people by whether or not they have the “look” of the right social class to be utterly contemptible. As a matter of ethics and intelligence at its most mundane level we should hire based on competence. This has mutated into something now called emotional intelligence. I kid you not. In this country, there is a philosophy that says getting along is more important than competence, than knowing how to do your job. Imagine American history without difficult people, John Adams, Andrew Jackson, Harry Truman (27% approval rating), and Lyndon Johnson. Every one of them was difficult to get along with as a person, but they had contributions to make just as employees do.

Well, these current philosophies have results and in my judgment we’re due for another set. Business philosophies come and go like the fabled length of skirts and with less reason and intelligence. These fashions would be less important if more thinking were done.

But as I was saying, business fashions, trends and much other nonsense has a lot to do with success or failure, hired or unemployed. It is a nasty world full of stupid and incompetent people. I don’t want to have to teach students that talent, intelligence, courage and hard work are often irrelevant to business success but I cannot deny objective reality.

We should teach students to dress, eat, socialize and converse in the manner of the “successful” people. We should teach them what elements of the truth are acceptable in business practice. We should teach that to do good and act honorably and justly according to the tenets of your religion are often elements of ridicule in the world of business. Now, immediately someone will throw the example of some bible toting business manager who proclaims that all of his business is conducted according to God’s law. Right. His reading of it. What’s more, one of these types is just that: a type, not the kind of businessman we expect.

If you tell someone in business of your respect for honor, justice and truth; you will be immediately considered naive and there will be chuckles as you walk by. This is because sold out despicable lamebrains without morality or soul have to sleep at night. Their belief that they deal with the “real” world gives them a juicy rationalization for their lack of moral judgment and comfort with wrong doing.

Matthew reports that Christ said, “Behold, I send you out as sheep in the midst of wolves; so be shrewd as serpents and innocent as doves.” Matthew 10:16

I think this is a good saying for the honorable both Christian and non-Christian.

I (of much less status) send forth my students the same way. I want them to uphold high moral values and to try to do the right thing but I also want them to survive and succeed in the business world. The two goals are not incompatible but they are difficult.  

James Pilant