The Rules!

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

Right now, all over America, there is a single perception. We, the people, live by one set of rules. The financial institutions of this nation live by another.

The one we live by requires that we obey the law and should we fail, there are many penalties which include fines, jail time and public disgrace.

The great investment firms live by laws that are flexible, that bend with circumstance and desire. When they commit crimes, the offenses are considered civil matters. When they are found liable in civil court, the amount of fines compared to their profits are laughably small. When they violate regulations, the violations are either ignored, minimized or papered over. And when finally they commit such acts as endanger the welfare of the nation and it people, even then the law is not applied to them and they receive money and not punishment.

And never, under any circumstances is the flow of their profits and in particular, their bonuses, to endangered at any time under any circumstances.

The nation is bleeding.

It bleeds every day.

It’s bleeding credibility.

It’s bleeding honor, morality and ethics.

To many in this society, these are all jokes, the subject of humor.

To the great financial houses, the flag means the convenient locale with the least regulations. They live here and obey the rules here only when it is convenient. They are Americans of convenience.

We have spawned a series of institutions in this country that exist to its financial and ethical detriment.

They do not build value. They take it.

They do not limit risk. They increase it.

Can this nation long survive with two standards?

I do not believe this nation can long survive, half held to rules and half not.

It will either become all of one or all of the other.

Which one?

James Pilant

White House Claims Amusing

On By southwerkIn business ethics

Andrew Leonard writing in Slate makes fun of the White House’s claims of there not being any serious problem with the foreclosure system. (But he doesn’t have anywhere near as much fun as I did.)

But in the same press conference he (HUD Secretary Shaun Donovan) also asserted that “we have not found any evidence at this point of systemic issues in the underlying legal or other documents that have been reviewed.”

That is simply nonsense. The widespread use of robo-signers, the epidemic of lost paperwork, the proliferation of lawsuits, the potential invalidation of mortgage-backed securities — everything points to a systemic problem. The only real question is how big the mess will get. The White House should be far more out in front. Right before an election, the administration couldn’t have asked for a development that better illustrates the necessity for tight government supervision of the financial sector and industrial-strength consumer protection.

But maybe Obama’s just afraid of being called “anti-business” again.

I’m Not The Only One Who Believes The Banks Don’t Have The Documents.

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

William K. Black and L. Randall Wray call for putting the Bank of America into receivership!

How about that! Seize the bank and the government go through their books to find out what’s really going on. That’ll stand some CEO’s hair on end. It might get their attention. I’d like to see that.

I’ve talked for the last several days about my suspicion now hardening into belief that the banks do not have proof of ownership tens of thousands of foreclosures. I am not the only one who believes that.

Read –

Nothing short of removing all senior officers who directed, committed, or acquiesced in fraud can be effective against control fraud. We repeat: Foreclosure fraud is the necessary outcome of the epidemic of mortgage fraud that began early this decade. The banks that are foreclosing on fraudulently originated mortgages frequently cannot produce legitimate documents and have committed “fraud in the inducement.” Now, only fraud will let them take the homes. Many of the required documents do not exist, and those that do exist would provide proof of the fraud that was involved in loan origination, securitization, and marketing. This in turn would allow investors to force the banks to buy-back the fraudulent securities. In other words, to keep the investors at bay the foreclosing banks must manufacture fake documents. If the original documents do not exist the securities might be ruled no good. If the original docs do exist they will demonstrate that proper underwriting was not done — so the securities might be no good. Foreclosure fraud is the only thing standing between the banks and Armageddon.

I can’t say it better.

James Pilant

Dating And Money

On By southwerkIn ethics2 Comments

Okay, Americans are getting stupid. At least that is what you would believe if you watch the news. For mindbendingly stupid, banal, pointless articles, the American press is setting some records.

Well, take a look at CBS’s Moneywatch. That’s right we can’t call that part of the web site, business, because it doesn’t have that fresh marketing edge. So we say we’re watching money, in case the green stuff runs amok.

Today, there is a piece by Kathy Kristof, explaining how to get the girl. Let’s look at the opening –

Guys, it may not be fair, but if you want to get the girl, you’re going to have to pick up the check.

Well, I guess this type of writing has its place. I was more thinking of Cosmo than the business, oops, I mean Moneywatch section of CBS web site. But I guess as long as nothing else is going on that’s newsworthy, this kind of coverage is okay.

Oh, wait a minute. You tell me that a banking crisis that might very well require a bailout like the one two years ago is going on right now. Whoa, let’s not get critical. It’s not like we’re in the worst economic downturn since the great depression. It’s not like the world is shivering in fright over the possibility that one bank collapse, one nation’s default to the IMF, could drop the world’s banking system into a large garbage can. It’s not like we’re in a crisis in the United States where the government seems to have lost all semblance of competence or dignity. Nah, it’s not like that.

Let’s get some more Cosmo writers for the business, sorry!, Moneywatch parts of their web sites. Covering real news is tiring anyway.

James Pilant

Dollar$ for Doc$ (via Pharmaregulations – Also Known As – Your Daily Dose: The Ethics Behind Pharmaceutical Marketing)

On By southwerkIn business ethics, Capitalism, ethics, White Collar Crime

My good friends at pharmaregulations have one hot off the press written with their usual style. They are kinda’ knocking me out of this area of reporting, their stuff is so good. And that is just fine. I have plenty of ground to cover and they cover this brilliantly. It’s not a long post. Give it a read. It’s good stuff.

James Pilant

Dollar$ for Doc$ The pharma blogosphere is exploding today with breaking news about a marketing practice by drug companies: your doctor might be on their payroll. Propublica, a company dedicated to "journalism in the public interest", compiled a report of all doctors in all states that received kickbacks from pharmaceutical companies to prescribe their name-brand (more expensive) drug even if there is a generic form available. The data is only on seven companies … Read More

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White House Decides To Look Forward Not Back!

On By southwerkIn business ethics, Capitalism, Government Failure

In these modern times, looking back and dealing with offenses is old fashioned and out of place in modern society!

Read (from the Huffington Post) –

The HUD secretary said, however, that the administration is focused on ensuring future compliance, rather than on looking back to make sure homeowners and investors weren’t harmed during the reckless boom years. The administration is “committed to forcing institutions to change the way that they conduct business,” Obama’s top housing official said, “to make sure these problems don’t happen again.”

So, if a bank took your house without actually owning it or charged you for payments you already made or broke a refinance agreement with you, that’s okay but if they do it in the future that will be bad and something will have to be done. Get the logic. Look forward not back.

Now, you may remember something else that the HUD secretary said. It goes like this – “Where any homeowner has been defrauded or denied the basic protections or rights they have under law, we will take actions to make sure the banks make them whole, and their rights will be protected and defended,”

That’s just odd. You see, one statement contradicts the other. We can’t have justice for past events if we’re not going to deal with past events.

Maybe you don’t understand. I don’t either.

To be frank, I don’t think they understand.

I think we better look to the States for enforcement, because these guys just don’t seem interested.

James Pilant

Department Of Housing And Urban Development Leaps Into Action?!

On By southwerkIn business ethics, ethics, Government Failure, White Collar Crime5 Comments

U.S. Housing and Urban Development Secretary Shaun Donovan had this to say on behalf of the Obama Administration.

Get a load of this! –

“Where any homeowner has been defrauded or denied the basic protections or rights they have under law, we will take actions to make sure the banks make them whole, and their rights will be protected and defended,” Donovan said at a Washington press briefing. “First and foremost, we are committed to accountability, so that everyone in the mortgage process — banks, mortgage servicers and other institutions — is following the law. If they have not followed the law, it’s our responsibility to make sure they’re held accountable.”

Wow! So, let me get this straight. The foreclosure industry and many banks have been foreclosing on homes with false affidavits and, very often, little or no documentation. They have been doing this for more than two years.

You have never caught any of them doing anything wrong for that entire two year period.

Tell me, at what point in time, did you discover you were committed to accountability? ‘Must have been sudden!

After you have ignored countless stories in the press over the last two years and finally, days ago, after all fifty state Attorney Generals have announced action, you organize a posse, mount up and ride for justice?

Well, problem solved!! All we have to do is wait for you to bring ’em in!

I’m so pleased. I’m so impressed. I’m touched by your devotion to justice. I’m awed by your dogged pursuit of wrong doers.

Right! And here’s what I really think.

You couldn’t find your butt with a 50,000 watt searchlight.

James Pilant

Why Should We Have A Foreclosure Moratorium?

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

Ezra Klein from the Washington Post –

Ezra Klein: (Klein has just asked why should we do a moratorium, this is his follow up question.) But won’t that just freeze the markets and throw everything into more chaos? And as for the homeowners, most of them will end up being foreclosed on anyway. We’ll have delayed the inevitable, adding uncertainty to economic pain.

John Taylor: (John Taylor is president and chief executive of the National Community Reinvestment Coalition.) Those are people who don’t understand what’s happening in the crisis. The point of a moratorium is to give the counselors and the attorneys time to negotiate a fairer, more responsible mortgage product. Mortgages where properties have been abandoned and the banks are repossessing them should go forward. But in other cases, where people have just lost jobs, we can be more patient. Citibank has given those people six months to get back on their feet. That’s what we need, not greasing the skids of this process. People need to understand, every time there’s a foreclosure, if you’re near that house, your property value goes down.

Taylor goes on to discuss the time a moratorium should last. I’ve been calling for three months. I’m a piker. Taylor calls for 6 to 8 months.

But he makes sense, a moratorium would encourage banks to renegotiate the loans, not just foreclose. We could do with a little reason, a little intelligence in this process. As I have pointed out before, giving people BMW sport utility vehicles for signing record numbers of foreclosure documents without looking at them is not just illegal, it’s crazy. It doesn’t make any sense to game the system like that. Rewarding people for good performance is not a bad idea. Rewarding people for lunacy, rewarding people for things that get your sanity questioned is not good management practice.

We could do mortgage foreclosures like people, not like process. We can live as decent human beings. We have choices. We can try to keep people in their homes. We can try to make the best of a bad situation. We don’t have to live this way.

James Pilant

Reports

On By southwerkIn ethics

There were several visits today to a little used part of the blog called “reports.” I’ve never really done much with it. Well, since there have been some visits, I have gone and put some ethics reports in that section. So, if you visit there, it is no longer empty.

My apologies.

James Pilant

Jail Time For False Affidavits? Is It Possible For A Banker To Go To Jail?

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

Alain Sherter writing for BNET covers many of the angles in the foreclosure mess. In fact, his article is a good general guide to the controversy and the continuing crisis. Nevertheless, I am focusing on one part of that article.

The Following –

In looking into cases of improper foreclosure, federal officials are also raising the heat by exploring whether financial institutions broke the law in filing fraudulent paperwork. Such inquiries are usually left to the states, which usually have jurisdiction in real estate disputes. Since government housing agencies buy and guarantee bank mortgages, however, a criminal investigation could have teeth. And unlike private investors, obviously, the government has enormous power to compel banks to provide evidence of faulty documentation involved in originating and securitizing loans:

“In more than 25 years dealing with major financial crisis issues, I have never seen this many agencies focused on a single issue,” said Andrew Sandler, a lawyer who works on government investigations. “We are beginning to see signs of extensive governmental investigation that may also have criminal law implications.”

So, are we about to see some actual criminal justice? It would be a strange thing indeed to see justice done to those so high in their own estimation.

James Pilant