Category: Philosophy of Business

Debt Collectors Are Using Facebook!

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

From the Associated Press –

A Florida woman claims a debt collector went far beyond the usual phone calls in an attempt to recoup $362 for an unpaid car loan by sending her messages on Facebook — and by telling family on the social networking site to have her call the agency.

Melanie Beacham, who is suing the debt collection agency Mark One LLC in a Florida court, said she never expected to hear from a collection agency on Facebook, which she used to talk to loved ones and post the occasional photo or funny status update.

“I was shocked when I found out these collectors used Facebook to contact my family because they knew exactly where I was,” Beacham, 34, told The Associated Press in an e-mail on Thursday. “I’m angry they caused me so much embarrassment with my family.”

When will it stop? It probably will not. Now, that they have established that they can humiliate people, they’ve struck gold.

The federal government is the only power who can defend us from this kind of abuse. Without 50 state authority, any legislation at the state level is hit or miss.

But the federal government is a protector of large companies in almost all cases. It is little inclined to act in the public’s behalf and barely representative of the people.

You can see from the current controversy over airport scanners how little concerned they get over a public problem. An industry problem causes them to jump to attention and perform. A financial industry problem has them barking like a trained seal.

Where do we go for help?

James Pilant

Who Owns Your Mortgage? Or Anybody’s For That Matter!

On By southwerkIn business ethics, Capitalism, ethics, Philosophy of Business3 Comments

Dan Edstrom is a specialist. He performs securitization audits.

He decided to use his specialized training to discover who owned his mortgage.

The chart below is the result.

Do you know who owns your mortgage? Could you figure it out like he has?

From the article –

The following flow chart reverse engineers the mortgage on the Ekstrom family residence. It took Dan over one year to take it this far and it clearly demonstrates what happens when there are too many lawyers being manufactured.

You can click on it and it gets bigger.

Do I need to point out to you that with what has been happening with mortgages over the last five years, it might be unwise to allow banks to have someone sign off that they understand the account?

James Pilant

Can Thinking In The Long Term Help With The Future Of The Mortgage Industry?

On By southwerkIn business ethics, Capitalism, ethics, Philosophy of Business2 Comments

Jim Russell writes in an article posted on “Media Center,” the web site of Tom Gyepes, Loan Doc Originator & Broker. He addresses a question that has also been on my mind. How is the mortgage industry going to change in the face of this, at the very least, public relations disaster?

He has several suggestions but I like this one best. Make the mortgage “originator” a long term actor in the deal than just a one time salesman.

Read how he puts it –

Mortgage originators have long been compensated just for getting loan applicants to the closing table. After funding many mortgage originators simply lose interest in the borrower’s financial situation until they see another opportunity for origination income. The insurance industry dealt with this issue long ago. Today every insurance agent is tied to his/her client with a golden rope…

Most insurance companies do not fully compensate independent agents at the time of sale like the mortgage industry. Instead agents are partially compensated at the time of sale while the remainder of their income is paid out at a later date depending on the performance of the insurance policy they sold. This compensation practice is called “contingent commission” and it creates an incentive for every agent to act in the insurer’s best interests because if they don’t, they won’t be paid.

Let me share an example. There are two active groups of golfers at my club; mortgage originators and insurance agents. These two groups have very similar economic profiles, they are all high net worth income earners and they all constantly manage their book of business. There is one big difference in the way these two groups maintain their lifestyles though; the mortgage originators are highly dependent on landing new deals while the insurance agents are dependent on the long-term performace of the deals they’ve already written. This forces insurance agents to fully understand the risk profile of their clients before they close the deal and it also forces agents to maintain contact with their book of business.

If you are a business student, this is a great topic for a paper. But beyond this it is an idea that needs to be taught across our society, to think and act in the long term. Thinking only of the next quarter is an excellent way to convert a successful society into an apparently successful one, just as long as you believe the numbers.

There are a lot of areas in our economy where thinking in terms of the long haul would be in the best interest of all the players as well as our nation as a whole.

James Pilant

A Thirty Dollar Fee?

On By southwerkIn business ethics, Capitalism, Corporate Social Responsibility, ethics, Government Failure, Philosophy of Business, President Obama, White Collar Crime

Now you, common middle class citizen, you have to pay a thirty dollar fee at a court house in most states for them to record a change in ownership in property. They have to do paperwork and change that little county map that shows who owns what. Now suppose you change the ownership again. You transfer it your spouse, your child, or you’re paying the fee as part of a sales contract. You have to pay a second thirty dollar fee.

Annoying, right? Of course, but has to be done. You have to know who owns what, right?

What if you don’t want to pay the second time? Well, you are out of luck there too. The state is not going to let you out of the fee. Besides without paying the fee, the records won’t show who owns the property, so it’s a good idea to pay it, right?

Everybody has to pay the fees, right??

No, they don’t.

If you are a bank using the MERS system, you don’t have to pay a second fee. (MERS = Mortgage Electronic Registry System)

You see all the transactions are done by computer therefore there is no fee for any transaction after the first one. The banks often transferred these properties dozens of times, but every transfer after the first one was free. Isn’t that great?

Now, you probably would like to say something dumb like, “Isn’t that state law?” Then you might follow it up with, “Doesn’t that mean they don’t own the property?!”

You silly person, don’t you realize this a is a banking institution? They are not like you.

They just decided not to pay.

See, when you want to change a law, you have to lobby and talk to people and ask the legislature to consider a bill changing the law, then it has to go through both houses and then be signed by the governor.

But when you are a bank, you simply decide not to pay the fees. It makes everything simple.

Now, there are those in this country who are bizarre individuals. Those strange people want the banks to cough up the money. So, the banks, their feelings deeply injured, have run to their friends in the United States Congress who are planning a surprise party for you.

At the surprise party a thinly clad financial industry lobbyist will leap out of a cake and tell you that Congress has legalized all that stuff that the banks have been doing for, Oh, about five years now.

Now you might ask another question at this point and it is not “Why aren’t I getting any cake?” Your question is “Doesn’t those payments to the country, those thirty dollars each time, aren’t those part of my county’s taxes?”

Why, yes, they are.

But remember, Virginia, there is a Santa Claus and he just took your county’s money and gave it to the banks.

What a sad story!

And it’s all true!!

From the Associated Press –

It used to be that every time a bank sold a mortgage, the county land recording office received a fee. It wasn’t much — $30 or so — but then real estate boomed in the 1990s and banks pooled millions of mortgages into securities that investors bought and sold.

One mortgage transaction became a dozen or more, and the tab grew ever larger. So the banks came up with a way around the fees. And now they are fighting to avoid perhaps tens of billions of dollars in penalties that have added up over the years.

From further down in the article –

MERS is “an admitted fee-avoidance scheme,” says Robert Hager, the Nevada lawyer who, along with his partner Treva Hearne, is filing the suits against MERS and its bank owners, including the government-backed mortgage-finance companies Fannie Mae and Freddie Mac. Fannie and Freddie provide a low-cost flow of funding to the nation’s mortgage markets by buying mortgages from lenders, packaging them into securities and then selling them to investors.

The suits were filed in California, Nevada and Tennessee and 14 undisclosed states where the cases are still under court seal. Hager and Hearne chose the states because their laws allow what are called false claims suits, in which citizens can take legal action against companies that may have cheated the government.

The suits allege that by privatizing public records, MERS enabled banks to circumvent American property law and bypass the counties’ fee and paperwork requirements, costing billions of dollars in lost revenue over more than a decade. MERS says its process is legal, and that the fees are not required under its system.

If only we were all banks!

James Pilant

MERS And Ownership

On By southwerkIn business ethics, Capitalism, ethics, Government Failure, Philosophy of Business, President Obama, White Collar Crime5 Comments

MERS, Mortgage Electronic Registry System, is a system used by the banks to evade paying fees or having to do the traditional paperwork necessary to change the ownership of property.

To quote the Associated Press –

MERS’ owners are all the big mortgage companies, including Bank of America, Citigroup, Wells Fargo, JPMorgan Chase and GMAC. They are all facing a foreclosure-fraud investigation launched by all 50 state attorneys general, and all took government bailout money after the financial meltdown in 2008.

As I mentioned in my last posting, our lame duck Congress is thinking (if you could ever refer to their processing as having thought) of legalizing this system now, years after the major banks began using it with full knowledge of its legal problems. (Being a bank is very much like being in love in the movie, Love Story, you never have to say you are sorry.)

This is from the Washington Post. It explains why MERS is a problem.

I very much appreciate the Washington Post for developing this little picture and trust it was useful to you.

James Pilant

White Collar Job Are Disappearing

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

India is a jobs creator! So speaketh our President. What are the facts?

From McClatchy –

The good paying, predominantly white-collar jobs that once sustained many American communities are disappearing at an alarming rate, keeping the unemployment rate stubbornly high despite the end of the Great Recession.

More troubling, these jobs in accounting, financial analysis, commercial printing and a broad array of other mostly white-collar occupations are unlikely to come back, experts predict.

There isn’t a single cause to the trend. Some of it is explained by changing technology, some of it is the result of automation. Sending well-paying jobs to low-cost centers abroad is another big part of the story. So is global competition from emerging economies such as China and India.

Well, isn’t this sweet! At what point does any politician from any party address this issue? Don’t worry about the question. They won’t. They want to talk about abortion, family values, that mess in Washington, anything in short to take your attention away from the real game.

What’s the real game, you might ask?

How many American jobs, how much American infrastructure, how much American education, science and technology, can you sacrifice to make money? Actually, you could probably rephrase it to ask, “How much money?”

What can’t you sell? Blue collar jobs? Pretty much sold most of them. Remember when they told you we were going into a post industrial world and that a good education got you a job? Well, sorry, Charlie Brown, we moved the ball again.

And we’re not going to stop moving the ball. As long as you are stupid enough to believe that with enough education, enough grit, enough self reliance, you’re going to have and keep a good job, you’re part of the problem.

You see as long as your jobs are moving overseas, as long as your jobs are rendered useless by destroying the American economy and infrastructure, as long as government policies mitigate against stability and security, you’re just a bullseye waiting for the arrow.

And it’s never going to stop unless we stop it.

The promise of America is earned not given. The promise of America is worth an enormous amount of money and if you intend to have an American dread, you have to stop the people who are willing to sell it.

James Pilant

“Inside Job” The Director Speaks

On By southwerkIn business ethics, Capitalism, ethics, Government Failure, Philosophy of Business, Teaching, White Collar Crime3 Comments

Charles Ferguson directed the documentary “Inside Job.” He writes about his thoughts and conclusions from creating the documentary.

One of the things he found puzzling (as do I), doesn’t doing serious long term damage to the nation’s infrastructure like roads, bridges and education become a concern for the financial elites since over time it damages their American investments?

Here’s the answer.  (from the article) –

The financial services industry and the most successful American multinational firms now obtain rapidly increasing fractions, often already the majority, of their investment, employees, and revenues from (a) other wealthy individuals and corporations and/or (b) outside the United States. Over the last two decades their political interests, contributions, and lobbying have gradually followed these larger trends. As a result, the political duopoly has overseen a massive disinvestment in the future of the United States and the American people, and a massive transfer of wealth from the bottom 90% of the population to the top 1%. Taxes on dividends, high incomes, capital gains, and estates have sharply declined, while tuition at public universities, hours worked per family, household debt, and government deficits have all increased.

They have no interest in the long term future of the nation. This nation is similar to the Wild West idea of Robbers’ Roost.

Robbers’ Roost is a town hidden in the hills where the outlaws go to hang out. There is no law there. They do what they feel like. They are safe from the sheriff and all those people they took stuff from.

The United States is going to be a great big friendly place for people with lots of money and few morals. One law for them. One law for us.

James Pilant

The trailer –

Foreclosure Judges Fight The Good Fight

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

Alain Sherter (who I do not write enough about) has a excellent column titled, “How Local Judges are Putting the Feds to Shame In Halting Improper Foreclosures.”

Here’s a selection from it –

Consider this astonishing stat drawn from a WaPo story today: Courts in the area are estimated to be dismissing upwards of 50 percent of foreclosure cases against homeowners because of slipshod — or outright fraudulent — paperwork filed by lenders. Banks are appealing many of these decisions, a sign of just how afraid they are the rulings could embolden courts around the country to follow suit:

In millions of cases across the United States, local judges have wide latitude to impose sanctions on banks, free homeowners from their mortgage debts or allow the companies to proceed with flawed foreclosures. Ultimately, the industry is likely to face a messy scenario — different resolutions by courts in all 50 states.

Sherter puts his finger on what I try to communicate to my classes. Attorneys and Judges are not the Ogres portrayed on television. It is true that are some very, very bad attorneys. I hold them in contempt. But you would be astonished and impressed by the attorneys I’ve met who fight for their clients for little money, sometimes no money. This whole mortgage foreclosure mess would never have come to light, if it weren’t for attorneys working for next to nothing trying to keep people in their home.

He makes another point in both the title and inside the article.

Federal bank regulators are equally intent on keeping the foreclosure assembly line moving. That’s no surprise, given that they’re deeply implicated in the foreclosure mess. For instance, state financial supervisors turned to the OCC in 2007 after JPMorgan Chase (JPM) and Wells Fargo (WFC) stonewalled their investigations into improper foreclosures.

Not content to simply ignore the problem, the OCC actually made it worse. Protecting its authority to oversee national banks, a doctrine known as “preemption,” the agency shooed the state enforcers away. Then it asked the banks to look into the matter.

I said exactly the same thing in one of my posts – If you are waiting for the Obama administration to come your rescue, you are going to be waiting a long time.

James Pilant

The Lively World Of Ethics!

On By southwerkIn business ethics, Capitalism, Philosophy of Business

Let’s take a little run around the internet and see what other blogs are saying about business ethics.

The web site, Modern Pensees, takes a very tough stand on society as a whole considered in the light of the cheating scandal at UCF Business School.

The Ethical Dilemma, subtitled as Life as a “do it all” deals with ethics from a Christian perspective.

Jayaribcm’s Blog is a very learned and well written. He has recently discussed corporate governance and corporate social responsibility in his blog. If you are a student writing a paper or a columnist looking for background, this is a good web site.

Homophilosophicus writes about business ethics from an Irish perspective. He subtitles his web site, “A commentary of the perplexed.” This guy writes well. He’s a teacher, and I would like to be one of his students. It’s obvious he believes in the importance of his craft. I appreciate that.

Ricks Picks is an interesting concept. Each day he lists three web sites he recommends. He recommends business ethics sites from time to time, which is why it came up on my search. It’s a fun approach and it makes sense when one has a busy schedule. I looked at his picks, they’re pretty good.

Leading In Context LLC is discussing business ethics as applied to ethical consumerism.

The web site, UH HUH HER, discusses the ethics of consumerism. It is written “by the girl.” “The girl” can write. It’s a little off beat, but she knows what she’s talking about. I’d give it a look.

Well, this is the different ways people talk about business ethics in their blogs. We ranged from very conservative Christianity to a CSR expert in India, to a dedicated teacher in Ireland and finally wound up reading a post “from the girl.” I’m glad you went with me. This was great fun, albeit very time consuming. Still I met some new people. Some of them are warriors in the field of ethics. They will probably become allies and friends. You can join the struggle, too.

James Pilant

Ireland’s Economic and Moral Crisis (via homophilosophicus)

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

This guy can write! I was scanning the net for business ethics sites and came across it. He writes with intelligence and passion. He’s often very indignant and appalled at what is happening in his country (similar to some one we know, right?).

I want to meet this guy. Like me he teaches. He talks about it with the same passion I bring to it. Read his stuff.

James Pilant

Ireland's Economic and Moral Crisis It has become clear to all but the very few that the heyday of Ireland's economic success of the past decade has come to an end. More than ten years of sometimes rapid growth in economies over Europe produced the illusion among speculators and investors of financial and economic invulnerability. So advanced was this delusion or group hysteria that Gordon Brown, the then Chancellor of the Exchequer of Great Britain, announced in the March 21st 200 … Read More

via homophilosophicus