Tag: Wall street

California breaks from 50-state probe into mortgage lenders – via Los Angeles Times

On By southwerkIn Economic Justice

This is very good news. The five major banks had been negotiating for a very broad immunity from their crimes during these last years of foreclosure. As I have pointed out many times before – here, here and here, signing false affidavits is a crime not a mistake. The banks were falsely swearing before a judge that the documents had been examined and everything was in order so that the cases could go forward. But by simply having a nobody sign a document they insured that people who owned their own homes and people that were up on the payments would be thrown out as well as those in default. That’s the idea behind affidavits, that we avoid injustice. The banks want immunity for having done these things.

The Obama Administration wants a quick settlement and no doubt is looking for “look forward, not back” scenario. I am too. I am looking forward to the day when I look back on the Obama years as an American aberration like the pet rock craze or maybe cabbage patch dolls.

The California Attorney General refuses to go along with the broad immunity agreement and wants more for the citizens of California so cruelly stolen from by these mortgage holders.  Justice has a small victory today.

James Pilant

From the Los Angeles Times –

California breaks from 50-state probe into mortgage lenders

California Atty. Gen. Kamala Harris will no longer take part in a national foreclosure probe of some of the nation’s biggest banks, which are accused of pervasive misconduct in dealing with troubled homeowners.

Harris removed herself from talks by a coalition of state attorneys general and federal agencies investigating abusive foreclosure practices because the nation’s five largest mortgage servicers were not offering California homeowners relief commensurate to what people in the state had suffered, Harris told The Times on Friday.

The big banks were also demanding to be granted overly broad immunity from legal claims that could potentially derail further investigations into Wall Street’s role in the mortgage meltdown, Harris said.

“It has been  a process of negotiating and sitting at a table in good faith, but ultimately I have decided that we have to go our own course and take an independent path. And that decision is because we need to bring relief to Californians that is equal to the pain California experienced, and what is being negotiated now is insufficient,” Harris told The Times in an interview.

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Screw Sam! Reconstruct the Mortgages with their Rightful Owners (via Deadly Clear)

On By southwerkIn business ethics1 Comment

There is a lot of anger in this article. But I too share disgust with this government’s willingness to help out every kind of financial institution while ignoring the needs of the Middle Class. These people no longer have a defender in the government just a facilitator of the predation

James Pilant

Screw Sam! Reconstruct the Mortgages with their Rightful Owners U.S.Seeks Ideas on Renting Out Foreclosed Property By EDWARD WYATT Published: August 10, 2011 WASHINGTON— Uncle Sam wants you — to rent a house from Uncle Sam. The Obama administration said on Wednesday that it was soliciting ideas on how to turn the federal government’s inventory of foreclosed houses into rental properties that could be managed by private enterprises or sold in bulk. The goal, the administration said, is to stabilize neighborhoo … Read More

via Deadly Clear

Today’s Gag (via Doodlemeister’s Weblog)

On By southwerkIn business ethics

I like the cartoon. jp

Today's Gag Jim is on vacation. This is a reprint of one of his "greatest hits." A new cartoon will post next Monday. To purchase reprint and/or other rights for this cartoon, buy a framed print, or have it reproduced on T-shirts, mugs, aprons, etc., visit the CartoonStock.com website by clicking the sidebar link. Copyright © 2011 Jim Sizemore. … Read More

via Doodlemeister's Weblog

Wall Street plunges after S&P downgrade (via Reuters)

On By southwerkIn business ethics1 Comment

Stocks plunged on Monday, with the S&P down more than 6 percent for its largest drop in nearly three years on rising fears of a recession exacerbated by the United States’ loss of its triple-A credit rating.

I wonder what would have happened if we had actually defaulted. I guess it would have been very entertaining from a news standpoint. Of course, from the point of view of an American trying to get by, it would have been less entertaining.

How bad is this going to be? I expected this to be the kind of response an actual default would have caused. So, I’m not that good a guide. Apparently these financial gurus bear more resemblance to an overpopulation of lemmings than to coldly analytical Ivy League grads.

The next shoe to drop will be the reaction of the overseas markets especially the Asian ones. If there is a sell off there. We may continue the sell off here.

Great fun. I tell my students we are in the midst of history being made. This history does not seem to me to be fairly similar to other historical eras. I think the self destructive tendencies of the Congress are worse then at any other time besides the Civil War. We could be creating a fiscal situation unprecedented in all of world history, a great power literally committing financial suicide – a great power giving up its planetary pre-eminence to avoid raising taxes on the rich.

James Pilant

 

Fiduciary Duty and Investment Brokers (via Pilant’s Business Ethics Blog)

On By southwerkIn business ethics1 Comment

A re-post of one of my essays from last year.

James Pilant

Fiduciary Duty and Investment Brokers “When I was growing up in the shadow of the Edgar Thomson Works of U.S. Steel a half century ago, it was easy to tell the bookies from the bankers — and it wasn’t just by the clothes they were wearing. If you wanted to place a bet, you went to a bookie; if you wanted to invest, you went to a banker or stock broker.” This is the lead paragraph from Tom Michlovic’s opinion piece in the Pittsburgh Post-Gazette. It’s a dead on call. The Wall Street … Read More

via Pilant’s Business Ethics Blog

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KPMG Study Shows Company Bosses Increasingly Commit Fraud (vis Ethics Sage)

On By southwerkIn business ethics2 Comments

The invaluable Ethics Sage has a new article.

I, in particular, like this paragraph –

I find it astonishing that corporate fraud continues to increase and top management is leading the way. The increase in the FRP statistic seems to bear out the spread of the cancer that has been attacking the capitalistic system during the past 20 years or so. Remember the “Greed is Good” mantra in Wall Street? Well it’s instructive to look at the entire quote by Gordon Gekko: “The new law of evolution in corporate America seems to be survival of the unfittest. Well, in my book you either do it right or you get eliminated…The  point is, ladies and gentleman, that greed, for lack of a better word, is good. Greed is right, greed works. Greed clarifies, cuts through, and captures the            essence of the evolutionary spirit. Greed, in all of its forms; greed for life, for money, for love, knowledge has marked the uoward surge of mankind.”

I won’t spoil the article by revealing more. But I promise you if you subscribe and favorite the Ethics Sage, you will have little cause for regret and many reasons to be pleased with your good judgment.

James Pilant

Not All Pirates Are in Somalia (via Off the Top o’ My Head)

On By southwerkIn business ethics1 Comment

This is some great writing. Many people are upset by the enormous salaries that CEO’s are pulling down and have conveyed their rage online. But few have explained the mechanics of the corporate system that make these salaries possible.

I visited “Off the Top o’ My Head.” I was impressed by the writing. This is a thoughtful author and he brings legal elements into his reasoning but not too much. The writing is very approachable. You should give this site a visit.

This is his business page.

James Pilant

General Electric Co. made news last month when it reported U.S. profits of $5.1 billion and worldwide profits of $14.2 billion, but paid no federal corporate income tax. GE even reaped a net tax benefit of $3.2 billion. What the newsies do not mention is that the government additionally subsidized the ridiculous wealth GE and other corporations lavish on their executives. Uncle Sam must miss a lot of sleep staying up nights to figure out how to p … Read More

via Off the Top o My Head

The Ethics Sage Responds to the Post: Maybe It’s Time For A Movement – A Movement That Moves Beyond Doing Good To Doing Right (via First Friday Book Synopsis)

On By southwerkIn business ethics

Steven Mintz

The Ethics Sage, Steven Mintz, comments on an earlier post.

Yes. We can do what is difficult but the first step is recognizing there is a problem. I haven’t seen that from any of our leaders and it’s certainly not discussed in the media. The work ethic and hunger for learning that once existed no longer is there. We have become a soft nation; too many have had it too good for too long. It used to be young people were motivated to succeed at least in part to have it better than their parents. Since they have been given everything they need and want, what’s left? The problem is exacerbated by our instant access culture. Press a button and you have what you want. Go on the Internet and download what you need. We are not a doing society anymore. We are a let others do it for us society. It has taken its toll and those of us who are trying to educate young people are constantly frustrated by the prevailing mentality of students — tell me what I need to know to get the highest grade or best job. I don’t have any answers because I don’t think many people recognize the problem or, if they do, it’s easier to just make believe it doesn’t exist.

Good Words. I, too, see a lack of leadership on moral issues. But we really can’t have a national dialogue without enforcement of the law against the financial sector. When we read daily of the profits of investment bankers against a back drop of investigative reports showing their culpability in financial disaster, it is difficult to tell anyone that high ethical standards are important. Just the opposite. The great investment banks live for profit without any consideration of any moral or ethical principle. They are willing to participate in the destruction of democracies, economies and the, occasional, forest; if it makes money.

In the next life they will be punished. I find that cold comfort when their actions are solid evidence that an immoral corporate culture can make you rich.

These people do not deserve their money. They do not deserve the high opinion in which they are held. They do not deserve the influence they have over the lives of others.

 

James Pilant

They do deserve salaries in proportion to what they produce, not a comical casino profit insured from blunder by the government, but salary based on value produced. Those among them who have committed crimes, prison sentences and confinement in real prisons with real prisoners. These captains of investment deserve to be rated according the their actual accomplishments and abilities not held up as examples to steer youth into ruthless pursuit of gain.

 

The culture I want rewards people based on their merits and at the very least values the common brotherhood of all human kind.

James Pilant

The True Grit Era

On By southwerkIn business ethics

This is from a Frank Rich column analyzing America in the light of the two True Grit films –

That kind of legal and moral cost-accounting seems as distant as a tintype now. The new “True Grit” lands in an America that’s still not recovered from a crash where many of the reckless perpetrators of economic mayhem deflected any accountability and merely moved on to the next bubble, gamble or ethically dubious backroom deal. When Americans think of the law these days, they often think of a system that can easily be gamed by the rich and the powerful, starting with those who pillaged Lehman Brothers, A.I.G. and Citigroup and left taxpayers, shareholders and pensioners in the dust. A virtuous soul like Mattie would be crushed in a contemporary gold rush even if (or especially if) she fought back with the kind of civil action so prized by the 19th-century Mattie.

Frontier justice. That would send the Wall Street gamblers packing, wouldn’t it? Of course, right now, I’d take just about any kind of justice. The current situation in the finance world if analogous to a movie would be Heaven’s Gate. In that film the villains after a murderous spree are tracked down by a posse from the local people and rescued by the cavalry on direct orders of the governor. That’s about the situations we have here.

James Pilant

Casino Banking

On By southwerkIn business ethics1 Comment

For most of American history, banking was a vital part of economic growth. Bank loans provided the capital for small businesses and government to build factories, stores, highways and other public works. This is no longer the bank’s major function. While bank lending is still a critical part of the function of banks as far as the welfare of the nation is concerned, the profits are elsewhere.

It is hardcore speculation, casino capitalism, where the real money is made. This is not wealth creation, it is more similar to the board game, monopoly, you try to make money speculating on property although in the modern sense this is more likely stocks, mutual funds, derivatives, etc. This is not a benefit to the economy. It is a drag and a danger to the larger economy. When the financial sector loses, the taxpayer picks up the losses, while taxpayers share nothing in the winnings. This is because the nation insures deposits and because changes in the law in 1999 allows banks to speculate with these federally insured funds – Corporate welfare on a scale of trillions of dollars.

This gambling has far reaching societal effects. Those who benefit from this no way to lose game make more and more money while those who insure them against loss make less and less.

From the New York Times Article – Scrutinizing the Elite, Whether They Like It or Not –

Olivier Godechot, a French academic on the sociology panel, presented research that quantified just how skewed the increase in wealth at the very top has become. Mr. Godechot, a researcher at the National Center for Scientific Research in France, said that two professions — finance and business services — accounted for almost all of the increase in income inequality.

Professor Godechot has put his finger on it. Our society has focused, fixated on finance as the only mode of economic growth. Everything else from services to manufacturing are poor relations whose share in the wealth and even the concern of the government continues to dwindle.

Because of these changes we have an enormous inequality of income in the United States. From wikipedia –

Americans have the highest income inequality in the rich world and over the past 20–30 years Americans have also experienced the greatest increase in income inequality among rich nations. The more detailed the data we can use to observe this change, the more skewed the change appears to be… the majority of large gains are indeed at the top of the distribution.

The big incomes in America are strongly aligned with the world of finance. So, many of the great incomes in the United States are associated with a socially negative activity that not only produces no value to the large economy but actively endangers the economy through its taxpayer guaranteed bets.

It this wasn’t bad enough, hundreds of thousands of graduates from the most expensive and prestigious universities in the United States pursue careers in this field often starting at a quarter of a million dollars in annual salary, a massive diversion of talent from every other field of endeavor. So, our focus on finance weakens the nation and diverts its future leadership into the same unproductive path resulting in further devastating losses to society as a whole.

What can be done? Well, we could consider making things. We could make actual products in this country, televisions, stereos, building materials, etc. We could base our economy on things of value. We could rise in morality and ethics to a point where the idea of making money by financial speculation becomes an abomination to any upright citizen with even a smattering of civic conscience.

We will do it. Either by choice or by necessity.

You see, the financial way of making money, this casino capitalism, when applied to a society like ours is a disaster that unfolds over the years. It hollows out our country diverting the money that would have built manufacturing and countless other useful investment, diverting the young from useful and productive enterprise and diverting the attention of society away from the important endeavors of life and nation building and into a life of profit based on speculation. Why work, when you can gamble with other people’s money?

When this cardboard edifice falls, once again we will find virtue in the making of value.

James Pilant

(This is a revised version of an earlier post.)