Jon Stewart sums up the crisis brilliantly in a little more than seven minutes.
I am submitting to you the link. This is to an article talking about the Jon Stewart show. I cannot show a clip from Comedy Central and expect it to be up on my site for more than thirty seconds. You have to scroll down to the Stewart video in You Tube format.
Have fun and see how pointed humor can be.
James Pilant
The upcoming crisis in mortgage foreclosures has me thinking. I consider there to have been five crises for the capitalist system in the United States from 2007.
The first was the near collapse of the banking system in 2008. It demonstrated that the free market absolutism of a generation of cock sure Chicago economists made no more sense than an epigram found randomly in a fortune cookie. What was revealed was not a system of skillful investors protecting the interests of their clients but casino capitalism, a system where yearly bonuses drove behavior, annihilated Ethics, and discouraged any sort of patriotism and responsibility. The exposure of a system that tens of millions depended upon for their retirements, educations, and investments as an essentially gambling operation was not conducive to faith in capitalism.
The second was the bailout. The bailout was a disaster. While the government should and did act to prevent the financial industry from collapsing, the bailout was extremely favorable to the financial industry It was not just a case of stopping the decline, it was also a case in which the firms became immensely profitable with public money. I repeat, we had to do something as a nation because if the financial industry had perished we would all have gone down with that ship. But the government attached no conditions. They bought these companies bad investments at full market value rather than negotiating a fair price. There was no limit placed on executive salaries or bonuses. Add to this, the hard fact that the government officials in charge of these matters were loaded top to bottom with former employees of the financial industry, and it gives an impression of unfair influence. The companies clearly had regular repeated contacts with the Department of the Treasury and the White House, giving the impression that all other Americans with a stake in these issues had no representation. There is little evidence that this impression of powerlessness on the part of working America is any way incorrect.
The third was the health care bill. An idea considered literally for generations became not universal health care but forced purchases of insurance policies. To make it worse, the most important provisions were decided behind closed doors. A bill was created whose major elements were negotiated by the White House with the insurance and pharmaceutical companies. What people saw was a corrupt system in action placing them into subservience to private interests. That there is no election bounce for the Democrats this Fall is not surprising in any way. It is only surprising only to the White House. The clear view of corporate interests acting through their political proxies made most American sick at heart.
The fourth was the oil spill in the gulf of Mexico. This was a disaster unseen in world history up to that time. Yet, the government did not act to protect the public, it acted to prevent proper investigation and reporting of the crisis. The President of the United States was seen as unwilling to act. This undermined public confidence in the President, and as more of the ugly facts about the government – industry cooperation in these matters comes to light, it will not look any better. Politicians rushed forward to defend what should have not been defensible. It was obvious early on that the companies involved in the drilling had flouted regulations and acted with little regard to risk management, trusting to luck since they had gotten away with it in the past. One politician had the nerve to describe a crisis clearly created by poor management and violation of the law as an “accident.” The public did not feel defended. There was a sense of betrayal for many Americans.
I thought there would be a public outcry on these matters. The only clearly visible one is Fox News’ Tea Party movement, a spontaneous outpouring of populist rage heavily funded by industry, and directed at the government while exempting business for any responsibility for our current crises.
Why is there no electoral action to exploit the wild and reckless corporate behavior of the last two years? The answer is simple and disturbing. There are two political parties in this country and neither is willing to take action in regard to these matters. There is no one to vote for. The leadership that should arise from the disaster, angry and ready for battle, is not viable in today’s media markets.
The government is more heavily influenced by well paid lobbyists than it is by Americans.
I have been watching this for a while and I listen to what people are saying. At the moment, blame rests heavily on the government, and a great deal of blames belongs quite properly to the government. But not all of it. We can change the government down to the last brick of the capital building and nothing will change. Only if the private organizations that have acted illegally and recklessly are brought under control will there be effective change. I do not mean their destruction. What I want to see is their removal from the political process. Only human beings have rights. Organizations do not. A corporation is no more a person than my toaster. (However, there are many people who may have better and more effective solutions. Please let me hear them.)
But there is some change happening. The American public is in many ways like a landslide. You see a few pebbles fall down a slope. Nothing to worry about. But over time there are more pebbles and then stones.
I love my country. I am not leaving to escape to a different place in the light of the social turmoil we are likely to see. I believe in this people and their ability to solve problems and accomplish great things. They are being called upon right now. The call is quiet and can be barely heard. But it is there. And in time it will grow louder and more distinct.
Our government is failing us. The great corporations are rogue having no sense of patriotism, no burden of belonging; they hear no call of righteousness. They evade the law, act against their nation’s interest, and pursue a philosophy recognizing no moral burden.
We can not long survive this.
Change is coming. The beginnings of that change will be ugly. It will be difficult. Many will suffer. But there is a strong chance that this nation will rise to the challenge and become a better place.
James Pilant
The President (against all my expectations) declined to sign a bill that would have provided those financial institutions protection from their use of robo signers and their violations of the law.
I am grateful to the President and surprised that I have an opportunity to be grateful to the President.
Now, lawsuits filed by Attorney Generals across the nation can continue. I predict 25 states will file lawsuits by the end of the year. Why? Because the kind of fines you can get from giant financial institutions for lying to the court system hundreds of thousands of times make it a big revenue raiser for the state and an upward leap in status for the state’s Attorney General who then can think about Congress or maybe a Governorship.
There is also this strange idea, that these companies, that these individuals in charge of these companies, no matter who they are, should face justice. I am as surprised to see this happen as you are. I am used to disappointment in the government and in private industry. Very used to it.
But today was different. Praise God! Today was different. I’ll treasure it.
James Pilant
(Please forgive my occasional bursts of religiosity. I know how offensive this stuff can sound since you usually here it in the context of pushing some strange social agenda. But I am a practicing Christian and on rare occasions I will refer to in this in my writing.)
This is a student looking at ethics from a journalistic/public relations point of view. I like it because it’s honest and it recognizes the corrosive influence of money on the process. Of course, as a teacher, I am always delighted to discover another student of ethics. Give it a read and maybe give some sign of appreciation. Ethics is not a hardy plant. It needs good soil, in other words, a lot of encouragement.
James Pilant
From an article by William Alden –
August saw more Americans lose their homes to foreclosure than any other month on record, RealtyTrac reported today. Banks repossessed a total of 95,364 properties in August, a 25 percent increase from the same period in 2009 and a 2 percent increase over this May’s previous record. Foreclosure filings of all types, including default notices, scheduled auctions and bank repossessions (the three major stages of the foreclosure process), increased to 338,836 in the month, a 4 percent jump from July.
Can there be any better evidence of robo – signing (the practice of mortgage companies simply have attorneys sign off on mortgages as if they had examined the paperwork for accuracy and legality [like whether or not the bank actually owned the property]) than these enormous numbers of foreclosures?
Foreclosing on people’s homes without doing the most minimal required legal work is “highly unethical.” (I don’t really want to use that phrase, but children might be reading my blog.)
Robo signing is profitable. You can see from the numbers just how streamlined the process can be if you avoid following the law.
But isn’t that the current philosophy in the “real” world? Isn’t the money the only thing that matters? And who are these homeowners anyway, just a bunch of dead beats. Why should they have any rights? They signed the note, didn’t they?
Yeah, do you know what note they signed? The actual amount of what they owed? Whether or not the home was actually the property of the foreclosing bank? Whether or not they were even in default?
I guess I’m just a strange person. I think you shouldn’t take people’s home casually. I think it is a very serious matter. Perhaps I don’t live in the real world. Maybe I’m one of those utopian thinkers who have expectations all out of accord with reality.
Or maybe, just maybe, justice is still important in this nation.
James Pilant
It has begun, there will be lawsuits filed across the country to punish the foreclosure industry for their violations of state laws. Can they stop these crimes? What is the Attorney General in our state going to do?
The Ohio Attorney General is filing suit and the Massachusetts Attorney General is considering doing the same.
From Huffington Post –
Attorney General Richard Cordray said Wednesday the alleged fraud could involve hundreds of foreclosures in the state. The lawsuit claims the company’s employees signed and filed false affidavits to mislead courts. Cordray called the alleged fraud the “tip of an iceberg of industrywide abuse of the foreclosure process.
The Texas Attorney General’s Office is halting foreclosures across the state – From CBS7 – West Texas –
The Texas Attorney General has called for a halt on all home foreclosures, this includes all sales of property that were previously foreclosed upon and all evictions of people living in previously foreclosed properties.
State Attorney General, Greg Abbott, has sent a letter to thirty loan service companies freezing foreclosures in the state as they begin an investigation into foreclosure practices in the state.
“Evicting someone out of their home is very serious, and it needs to be done in the proper manner,” said Western National Bank Financial Advisor Mickey Cargile.
Will there be any justice?
Stay with my blog, I’m not letting this subject go until we get to the end of it.
James Pilant
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
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
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
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
Pilant's Business Ethics Blog 
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