Category: Philosophy of Business

Woman Fired For Having Bad Credit

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

Four weeks after starting a temporary accounting position at Seattle Bank, Kristin Meaux, 36, says she received a call from the human resources director informing her that the bank had mistakenly forgotten to run a credit check on her before allowing her to work there. Meaux says she agreed to a new credit check, but explained to the bank that she had been laid off from her last full-time job in March 2008 and was still trying to pay off several medical bills from a few pregnancy complications that cropped up after she lost her health insurance.

When the results of the credit report came in several days later, Meaux says she was promptly fired and escorted off the premises.

The last few days have seen a number of articles written about the effects of credit checks on employment. When unemployment last a few weeks, the financial drain can seriously damage a credit rating. When the kind of unemployment we have now is the norm, people are often unemployed for months or years. That is devastating to a credit rating.

So, allowing businesses to use credit ratings as a screening technique rules out the unemployed as potential hires.

Wasn’t that a great idea! What don’t we look at their DNA and see if they might have long term problems? Why don’t we go look at their kids grades? Isn’t that a sign of how good a person is? What about relatives? political beliefs? voting habits?

Why do we as a people allow credit ratings (run by three major companies) to determine so much about our lives?

Tell me something. Is it worse to have a criminal record or a bad credit rating?

You can get a criminal record expunged.

It’s time to stop the practice of background credit checks for employment.

(And for that matter, allowing employers to require you provide your medical records, is another thing that should disappear.)

James Pilant

Sheldon Whitehouse Weighs In On The Foreclosure Crisis

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

There is deep concern in Washington over the damage the foreclosure crisis might do to banks and the “recovery” in the marbled halls of our elected representatives, their expensive lobbyists and the beltway media.

They worry about the banks. I don’t waste a moment on them. The poor banks. God, I’d hate to get up in the morning and be as friendless, attorneyless and helpless as a major financial institution.

Here what I would like to hear more of. From the Huffington Post –

I have heard from constituents being ignored and abused in the foreclosure process: documents repeatedly lost, inconsistent advice, hours trapped on the phone, and common sense turned on its head to reject fair modifications in favor of foreclosure. I have heard from mayors about the terrible collateral cost to communities from foreclosure. I have watched the big loan servicers drag their feet in the Obama Administration’s well-intentioned mortgage modification program. And most recently, we have all learned that these companies have been playing fast and loose in their foreclosure process, carrying out foreclosures in the cheapest manner possible, often outsourcing the process to a “foreclosure mill” document processing company.

Trapped in administrative purgatory, real families suffer when the big banks and their servicers force foreclosures. Children pack up their rooms; parents struggle to find a temporary roof. We owe these families a fair chance to stay in their homes, and a humane, logical and orderly foreclosure process if all else fails.

That’s what I want to hear.

James Alan Pilant

Due Process

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

When someone takes your house, you have a right to be heard. Okay, not really. You’re just supposed to.

The courts have held to a presumption that the banks acted responsibly when they sought a foreclosure. This is because for decades the banks had acted as reliable, responsible members of the community. Only 23 states require a judicial proceeding to take someone’s home.

Unfortunately in those states, the hearing was the merest formality, because once again, there was a presumption in favor on the banks. The banks did not have to produce the documents and prove their case, they only had to provide an affidavit that they had looked at the documents and the facts were as stated.

The banks are no longer stable, reliable members of the community. I’m sure some still are. Nevertheless, piracy is more a correct synonym for modern financial practices than the word, banking.

No one who has watched the financial casino betting of the last decade can have the kind of trust in banks that used to be the norm.

It’s time to change the rules.

If you steal a car or shoplift a $4.95 toy from a store, you are entitled to due process. You have to be arraigned and told what the charges are. The state is required to produce evidence to convict in open court. The defendant is able to produce evidence of his own and call his own witnesses.

But a bank can take a half million dollar home based on the affidavit of former supermarket checker with no knowledge of the mortgage process at all (who didn’t look at the documents anyway). The bank does not have to provide supporting documents, and many judges are uninterested in hearing the problems of “dead beat” homeowner.

Now I recognize the difference between a criminal and a civil matter. However, that a criminal has far more rights than a law abiding homeowner should be a matter of concern.

It is time for banks to bring the documents to court. It is time for a full hearing of the homeowners claims.

No more “sworn” affidavits. Since the foreclosure industry has lied in these affidavits hundreds of thousands of times, I find them valueless.

Now, you might say, “James, just because these people lied on their affidavits doesn’t mean that we should change the system. After all most people who swear out an affidavit are telling the truth.”

I would say, “Okay, if you want to keep affidavits, you have to make them believable.”

You would respond, “How would we do that?”

“You jail or fine those who have filed false affidavits. Only then will the system have the necessary integrity.”

That’s what I want. Penalties for those that deliberate lie to the court for the financial gain of their employer and I want penalties for the banks that engaged in these practices.

Can you tell me that these companies had hundreds of thousands of these affidavits signed over two years and didn’t notice it? What definition of the word, affidavit, is a mystery to the attorneys of the banking industry?

As ridiculous as it may sound, I want justice.

James Pilant

Katherine Porter to Senate: No Non-Judicial Sales While System Is In Doubt (via Livinglies’s Weblog)

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

I found this site about foreclosures. It has case law and a great deal of useful information for those in foreclosure. I recommend you give it a look.
On the other hand, if you are an attorney, it’s a good place to start your hunt for the case law on this issue. And I promise you the case law is developing very rapidly in this area.
James Pilant

10.27.2010 KATHERINE PORTER SENATE testimony-102710-porter see also 10.27.10 OHIO AG ROBO AMICUS BRIEF ParmaForeclosureBrief Katherine Porter is a visiting law professor at Harvard. Her 2007 study was the seminal work on mortgage and foreclosure irregularities. She found that 40% of the notes had been "lost" or destroyed. The following is an excerpt from her testimony today before a Senate Committee. The entire transcript is in the link above. Du … Read More

via Livinglies's Weblog

More Evidence That Foreclosures Were Done Incorrectly – 55,000 Times!

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

Remember everybody including the White House says there is no systematic problem with the mortgage industry. Wells Fargo is apparently not cooperating with the narrative

From MSNBC Real Estate –

Wells Fargo admitted Wednesday it made mistakes in the paperwork for thousands of foreclosure cases and promised to fix them.

The San Francisco-based bank said it plans to refile documents in 55,000 of the cases by mid-November. The company said not all those cases included errors but didn’t say how many thousands did.

Wells Fargo described the mistakes as technical and said it has no plans to halt the foreclosure process, though filing new paperwork will cause some delays.

“We don’t believe that there are instances in which the foreclosures would not have occurred otherwise,” said Teri Schrettenbrunner, a Wells Fargo spokeswoman. The documents are being refiled in the 23 states where a judge’s approval is needed to complete a foreclosure.

I guess there isn’t any real problem. Oh! and they think so too – (from further down in the article) –

On a conference call with investors this month, Stumpf said the bank is “confident that our practices, procedures and documentation” are accurate.

Well, that’s reassuring. Except for those, well, 55,000 mistakes, they’re accurate.

I teach. By their standards, not only did all my students pass with A’s, they passed and got full credit for all the classes meeting nearby. They may have passed courses in other dimensions and forms of reality.

I hate to tell them this, but 55,000 mistakes is a lot of mistakes! Further, it doesn’t make claims that A) “We don’t believe that there are instances in which the foreclosures would not have occurred otherwise,” and B) “the bank is confident that our practices, procedures and documentation are accurate,” sound very convincing.

It’s kind of like a married man being caught with another woman. He didn’t really cheat except for those 55,000 times. Both he and Wells Fargo want you to know that it isn’t that big a deal.

James Pilant

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

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

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

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