Tag: White House

BP Cleared By Presidential Inquiry

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

lol

Right! The President covered for the oil company for months. They restricted press access to the affected waters. The declined the recommendations of their own scientists. They underestimated the amount of oil leaking from the disaster.

We already know that BP was drilling deeper than they were supposed to. We know they had accumulated an awesome number of violations of regulations and had violated the regulations on a regular basis. We know their conduct in the 2002 gas explosion and their maintenance of the Alaska pipeline were disastrous. We know that they had good reason to believe their cement was substandard, this cement being one of the causes of the incident.

In short, the White House has a strong interest in giving British Petroleum a clean bill of health.

We also know that considering BP’s conduct that such a clean bill of health is not credible.

I am far more interested in the outcome of the lawsuits by the states and individuals harmed by this disaster.

The tragedy is that these findings may not be public for at least seven years. By that time, the heat on the government and that corporation will have long dissipated.

Whatever, you may think of the finding, in the long term it will be effective in blunting criticism and, more important, buying time.

Cynicism is merited.

James Pilant

Mortgage Companies Get Public Money For Properties They Don’t Own?

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

Mortgage companies enrolled in the Obama administration’s signature foreclosure-prevention initiative may be receiving taxpayer funds despite not having a legal right to the home or to the mortgage, a top Treasury Department official revealed Wednesday.

But despite faulty or missing paperwork, the Obama administration allows mortgage companies to boot homeowners from the program, sticking the borrowers with massive bills that often leave them worse off.

During an oversight hearing, Phyllis Caldwell, Treasury’s housing rescue chief, acknowledged during questioning that Treasury doesn’t know whether mortgage companies and the owners of mortgages are receiving public money under “false pretenses.” Treasury is investigating, she said.

The contradiction highlights what many critics of the past two administrations’ policies have claimed for some time: they exert overwhelming force when it comes to saving financial institutions, but merely modest assistance when it comes to distressed homeowners.

So, let me get this straight, the federal government in this case the Treasury Department, has been kicking hundreds of thousands of people out of their program (HAMP) to keep their homes but the mortgage companies have been getting the money whether or not they owned the homes?

Actual human beings have had to fill out tons of paperwork (my understanding is that the initial application is a seventy page document), provide endless reams of evidence of income, etc., get relatively little aid and more often than not get kicked out of the program.

On the other hand, the banks who have been receiving federal funds (HAMP funds), have not had to prove they owned the property to collect benefits?

At what point, did the phrase, double standard, become the Administration’s sole approach for mortgage foreclosures?

They can’t be troubled to find obvious bank problems but happily squish homeowners for the smallest application fault? Thanks a lot, White House, for lining up with the little guys!

James Pilant

The Definition Of Success Depends On Whether Or Not You Work For The Treasury Department

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

President Obama said the program would help three to four million people modify their mortgages. But through September, 728,686 struggling homeowners have been kicked out of the program; just 640,300 remain, the Treasury Department reported on Monday.

That doesn’t strike me as a success. If the intention was to keep people in their homes, it doesn’t seem to be working very well.

“The most specific of TARP’s Main Street goals, “preserving homeownership,” has so far fallen woefully short, with TARP’s portion of the Administration’s mortgage modification program yielding only 207,000 (out of a total of 467,000) ongoing permanent modifications since TARP’s inception, a number that stands in stark contrast to the 5.5 million homes receiving foreclosure filings and more than 1.7 million homes that have been lost to foreclosure since January 2009.”

That little quote is from the Special Inspector General for the Troubled Asset Relief Program (SIGTARP).  He has some more to say though –

“SIGTARP, along with the other TARP oversight bodies (GAO and the Congressional Oversight Panel), has long argued that Treasury should adopt meaningful benchmarks and goals for HAMP – permanent modifications that offer secure, sustainable relief to the program’s intended beneficiaries.  Remarkably, Treasury has steadfastly rejected these recommendations, and now finds itself defending a program that is failing to meet TARP’s goal of “perserving homeownership”.  As a result, a program that began with much promise must be counted among those that risk generating public anger and mistrust.”

But it gets better – at a meeting with administration officials for bloggers – Well, read the following –

On HAMP, officials were surprisingly candid. The program has gotten a lot of bad press in terms of its Kafka-esque qualification process and its limited success in generating mortgage modifications under which families become able and willing to pay their debt. Officials pointed out that what may have been an agonizing process for individuals was a useful palliative for the system as a whole. Even if most HAMP applicants ultimately default, the program prevented an outbreak of foreclosures exactly when the system could have handled it least. There were murmurs among the bloggers of “extend and pretend”, but I don’t think that’s quite right. This was extend-and-don’t-even-bother-to-pretend. The program was successful in the sense that it kept the patient alive until it had begun to heal. And the patient of this metaphor was not a struggling homeowner, but the financial system, a.k.a. the banks. Policymakers openly judged HAMP to be a qualified success because it helped banks muddle through what might have been a fatal shock. I believe these policymakers conflate, in full sincerity, incumbent financial institutions with “the system”, “the economy”, and “ordinary Americans”. Treasury officials are not cruel people. I’m sure they would have preferred if the program had worked out better for homeowners as well. But they have larger concerns, and from their perspective, HAMP has helped to address those.

You see, HAMP is designed to help the banks not the homeowners. It enabled the banks to manage their foreclosures during a period in which it would have been difficult to keep up the pace.

So, success is defined as making sure the banks are successful.

Gives you a warm feeling doesn’t it?

James Pilant

The Vast Majority Of Foreclosures Were Done Correctly?

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

We have been told over and over again during the last few weeks that the vast majority of foreclosures were done correctly. The White House and the various cabinet departments have echoed this claim.

This is all very odd. Since, the foreclosure documents were in hundreds of thousands of cases not even looked at, how would the banks or the Obama Administration know how many were done correctly?

They can’t. It’s impossible for them to have such knowledge.

Why would they say so? I suppose it’s a matter of faith, a belief that these huge institutions are run by competent, moral people. Faith is not a good substitute for factual data.

Well, new information is coming in. I have predicted that this kind of data would be coming in and here is the first.

From the New York Daily News –

Thousands of foreclosures across the city are in question because paperwork used to justify the seizure of homes is riddled with flaws, a Daily News probe has found.

Banks have suspended some 4,450 foreclosures in all five boroughs because of paperwork problems like missing and inaccurate documents, dubious signatures and banks trying to foreclose on mortgages they don’t even own.

So, 4,450 botched mortgage foreclosures have been found in five boroughs. That hardly squares with the idea that virtually all foreclosures were done correctly.

Here’s what one of the judges said, (again from the article) – Schack told The News he expects to see more paperwork snafus. “It’s like an onion we keep peeling,” he said. “It seems to be layers and layers of problems.”

Do you believe that the vast majority of foreclosures were done correctly?

I expect much more data to come out and it will not be to the foreclosure industry’s benefit. Nor will the Obama administration escape blame for its ridiculous unsupported claims about the crisis.

James Pilant

HAMP (Home Affordability Modification Program) Disastrous!

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

What a shock!

The Administration’s signature program to help homeowners is not working.

The banks get a 700 billion dollar bailout with no questions asked and the homeowner goes through mountains of paperwork and winds up getting nailed for late payments and fees they didn’t even incur!

From the article –

The Obama administration’s signature anti-foreclosure effort, unveiled in 2009 with the promise of helping three to four million homeowners modify their mortgages, is such a failure that it now risks “generating public anger and mistrust,” according to a federal audit released Monday.

Far from helping at-risk homeowners, the Home Affordable Modification Program has actually made some homeowners worse off, according to the Special Inspector General for the Troubled Asset Relief Program — also known as the Wall Street bailout. The Treasury Department set aside $50 billion from TARP, plus another $25 billion from taxpayer-owned Fannie Mae and Freddie Mac, to give mortgage servicers thousand-dollar incentives to reduce monthly mortgage payments by modifying eligible homeowners’ loans. But more people have been bounced from the program than have been helped by it.

People who apply for modifications via HAMP sometimes “end up unnecessarily depleting their dwindling savings in an ultimately futile effort to obtain the sustainable relief promised by the program guidelines,” the report notes, putting the imprimatur of the federal government on a claim long made by housing experts and homeowner advocates. “Others, who may have somehow found ways to continue to make their mortgage payments, have been drawn into failed trial modifications that have left them with more principal outstanding on their loans, less home equity (or a position further ‘underwater’), and worse credit scores.

“Perhaps worst of all,” it continues, “even in circumstances where they never missed a payment, they may face back payments, penalties, and even late fees that suddenly become due on their ‘modified’ mortgages and that they are unable to pay, thus resulting in the very loss of their homes that HAMP is meant to prevent.”

But don’t worry. The administration has a defense.

Treasury officials are adamant that not only is the program helping those homeowners who remain in it, but it also has helped those homeowners who have been bounced. In fact, those homeowners who ultimately fell out of the program benefited from the equivalent of a “free tax cut” while they were in the program because over that period, they were paying less on their mortgage than was otherwise required. And, officials say, this came without cost to the taxpayer.

That’s right. Even if it didn’t work out for you and we threw you out of the program like yesterday’s garbage (You still lose your home.), you got a “free tax cut.” That makes it all better.

Let’s be clear. There is no amount of evidence, no lack of effectiveness or intelligence, that the current administration does not believe cannot be washed away by good public relations.

I don’t get it. Why even bother to create this program? It’s about ten percent of what the banks got. So, already you knew immediately, average Americans are at best an afterthought.

I supposed it’s better to demonstrate over time you generally loath the American people, than to tell them immediately?

“Oh, you say,” James, “You’re overreacting, the President is constrained from helping these people. It’s the political system.”

No, it’s not. These people are the real victims of an orgy of speculation and they only thing they’ve been getting for two years, is a continuous, mile thick, wall of lectures on personal responsibility.

The President has within in his authority, dozens, hundreds of actions he could take to help these people out, and those things are not being done. At the very least, the mortgage industry could have been held to the simple legal procedures necessary for a proper foreclosure and this administration was not only unable to do that, they see no crisis now.

Where are out political choices?

James Pilant

White House Refuses To Act! Administration Will Not Call For Foreclosure Freeze!

On By southwerkIn business ethics, Capitalism, Corporate Social Responsibility, ethics, Government Failure, Philosophy of Business, White Collar Crime2 Comments

What a shock! The White House siding with the banks! Who would have thought it? Well, me. I was shocked the President pocket vetoed the legislation that would have retroactively made the banks false affidavits a non problem, but I needn’t have worried this meant a change of policy.

The banks will be protected. Homeowners are not that big a deal, but banks, no matter what they’re doing (unethical, illegal, cruel, vicious, incompetent- those things), will be protected.

Well, the President figured he’d stand firm, conduct a cursory investigation, which would be kept well in hand, and it would all go away.

Wrong, the crisis keeps rolling and keeps getting bigger.

Now, listen up, this is not the fault of Rahm Emanuel, Larry Summers, the President’s Council of Economic Advisers, or the Fed. The President of the United States is making these decisions. There is only one guy in charge at the White House and unless they’re holding his family hostage, he is the architect of his own decisions.

The President once said, “My administration is the only thing between you and the pitchforks.” How about, “and the law, and justice and accountability?”

I think those ought to be in there too.

Well, the crisis continues. This is Jill Schlesinger from CBS’ Moneywatch –

Banks are against the moratorium because it could call into question larger documentation issues, which could in turn put the nation’s biggest financial institutions on the hook for breaches of representations and warranties made to buyers of mortgage-backed securities. If there were a breach, the buyers of the loans in question could “put back” the loans to the banks, forcing the banks to repurchase them for face value or to make the owner of the mortgage whole for the losses incurred. Some analysts have estimated the potential cost of putbacks to banks to be over $100 billion.

Let’s talk about this “putback” thing a little bit. Soon, you may hear about little else in the news!

You see the banks unloaded all these nasty securities packages on pensions funds, etc., selling them as if they were good values without disclosing their inherent flaws because the purchasers were “knowledgeable investors,” a legal status that is essentially a license for investment banks to lie to them. If the banks misrepresented these loans, the pension funds, etc. can demand their money back. What terrible thing could the bank have lied about that would get them in trouble? Well, they might have told the buyer that they owned the mortgages when they didn’t have the actual documents of ownership. Whoops! One hundred billion dollars! That a lot of money.

Remember that phrase, “putback.”

James Pilant

President Obama Is Lagging Behind Public Opinion

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

I’ve been saying this for several days. The public, the states, the courts, are all moving toward a consensus that a foreclosure freeze is necessary. The President does not think so and he has sent his minions to be sure we understand his position.

Andrew Leonard writing in Salon, an article entitled “Obama’s foreclosure nightmare,” describes the situation in terms very similar to mine.

Once again, the President lines up with the financial industry and the banks against the interest of middle class Americans.

Drawing on Leonard’s article and adding my own spin, the situation is like this. Now, generally speaking, I do not waste my time on the Wall Street Journal Editorial Page, but have heard a rumor that their take on this situation is that all this stuff about not having the proper documents is just a matter of procedure and is really not something to get that excited about.

This is the United States. In this country you cannot transfer any land whatsoever without a written contract, that’s LAW 101, the statute of frauds. If you can’t produce your paperwork, you don’t get the property. Why? Because in Western Civilization, land has been considered the primary measure of wealth and status for hundreds of years. Therefore, the law was made to protect those interests.

How come the banks don’t have good records of who owns the property? Well, that has to do with the enormous speculation(casino capitalism) of the latter part of this decade. The great wall street investment houses were buying and packaging mortgages into packages of securities. But if they followed careful procedures they wouldn’t have had as much as they wanted. So, they “cut some corners,” “skipped a few steps,” “overlooked a rule here or there,” to get those mortgages as quickly as possible. What was the result? Incomplete paperwork, missing documents, and general confusion were the result of that speculative era. So, the banks had a problem with foreclosures. If they followed proper procedures they were hit with a double whammy. First, there was no way they could process the number of mortgages they wanted foreclosed without hiring a lot more staff and spending a lot more time doing the work right. Second, if they examined the documents carefully they would run across all the problems bequeathed them by the previous financial speculators. So, they solved both problems. They processed the mortgages without looking at them. It was an elegant solution. It was thrifty, cost effective almost beyond belief, and not legal.

I am outraged. I’m not the only one. The general public is only at the edge of this issue. It’s only been running hot in the media for almost two weeks. This issue has built up power in a politically brief period of time. But it’s not hard to tell the direction that public opinion is going. On one side we have banks refusing to obey the rules, while on the other we have story after story of homeowners tossed from their homes without legal justification. How do you think it’s going to go? If this were a Western, who’s wearing the black hats and bushwhacking their enemies?

The President should declare a moratorium on mortgage foreclosures. It does not have to be a blanket ban. He could ban the ones where it is known that there have been problems with a provision to extend it to other firms if similar wrongdoing is found. That would be adequate. In my opinion, a full blanket ban is the smarter move politically but that’s really not important.

I know the President is worried that this will stall the recovery. Of course, if you follow my blog, you know that I believe this is a lull before more serious problems appear and not a recovery at all.

To the President I would say, “This nation can handle a steeper economic downturn better than the continued wrong doing by some of the most important and most influential people in the financial industry. At some point, justice has to take priority over economics.”

I might add.

“Mr. President, I can feel the anger out there. How much more can people take? The basic facts appear to be out. The financial industry breaks the rules and knows that nothing will be done. The money will continue to flow. Their stock will go up. The bonuses will get bigger. The great mass of American citizens do not believe that if they did these things that they would be handled so gently and rewarded so thoroughly.”

“So, what’s it gonna’ be. Are you going to confirm to the great majority of Americans that there are two kinds of law, one for them and another for the foreclosure industry?”

“At what point, will you decide to enforce the law, seek out the guilty and bring them to justice?”

James Pilant

“Foreclosure Freeze”

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

Well, it has alliteration. I guess that’s better than a moratorium on foreclosures. It lacks rhythm.

Foreclosure Freeze is the phrase I’m hearing more and more in the news.

Words are the way we design our thoughts. Strangely enough, this simple change of title probably is a significant turning point in the debate.

It was probably easier to argue against a moratorium, all legal and unfriendly, than it it to argue against a freeze, all simple and temporary sounding.

I suspect whether you call it a moratorium or a freeze, it’s become an avalanche and it’s going to happen.

The White House is as usual about a mile behind public opinion. While every elected official who could walk, run or crawl has got themselves to a microphone to declare something must be done, the White House is trying to cut a deal with the villains. They look like fools. Forgive me, the look is not just a look. It is apparent that political wisdom is not a resident at the White House – apparently it’s not even allowed to visit.

Now, I want you to understand. I don’t attack the White House with any joy in my heart. I’m angry, very angry. I mean look at the situation. Nobody had any concern for the homeowner. The government provided the banks with 700 billion dollars and gave the homeowners a program so pathetic it has virtually no participants. The mortgage companies acted totally irresponsibly and illegally for at least two and probably the better part of three years. So, the President’s press secretary announce that a moratorium is unnecessary, we’re going to have the mortgage companies take a second look. Okay, what do they have to do, run kittens through a blender? sacrifice virgins to satan? What gets these guys in trouble? I promise you if I went to court and told the Judge I looked over the paperwork and I am ready to proceed and I’m not, hell is coming to breakfast. I would probably be found in contempt of court and my case thrown out. These guys didn’t lie about that just once but hundreds of thousands of times.

So, I wait for the President to punish the wrong doers and he negotiates with them. I’m sorry. I don’t get it.

James Pilant

White House Has Supernatural Powers!

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

“White House doubts need to stop all home foreclosures” reads the headline. David Axelrod spinning the story like a top explains… well, let’s just let him tell us – from Yahoo News –

A top White House adviser questioned the need Sunday for a blanket stoppage of all home foreclosures, even as pressure grows on the Obama administration to do something about mounting evidence that banks have used inaccurate documents to evict homeowners.

“It is a serious problem,” said David Axelrod, who contended that the flawed paperwork is hurting the nation’s housing market as well as lending institutions. But he added, “I’m not sure about a national moratorium because there are in fact valid foreclosures that probably should go forward” because their documents are accurate.

Axelrod said the administration is pressing lenders to accelerate their reviews of foreclosures to determine which ones have flawed documentation.

“It’s a serious problem.” he says. I get that. So, since the story broke in the middle of last week you are dismissing a moratorium based on virtually no real information? Unless you, kind reader, think a giant national crisis, has run its course and everything is out on the table in the seven days since the story broke. If you don’t, you are with me in the disbelief column. Apparently the White House can see into the future and knows that no information will come out meriting action. I don’t know whether Axelrod has the “sight.” Perhaps, the White House has the super deluxe, limited edition, one of kind, ultimate ouija board. I hear it’s got a presidential seal on it.

But don’t worry, the White House has a plan. Let me run that line past you again – Axelrod said the administration is pressing lenders to accelerate their reviews of foreclosures to determine which ones have flawed documentation That’s right. They are going to go to the guys who lied to the court system roughly one million plus times and ask them to check their numbers. The people who have profited billions of dollars by cutting out those inconvenient legal requirements are gonna’ fix everything.

Fool me once, shame on you. Fool me twice, shame on me. – Maybe someone should send that in to our President?

“Hey, Mr. President, a massive wrong has been done to the American people. Send out the Attorney General! Mobilize the federal government, your regulators, your advisers, every friend you can muster! Let justice fall from Heaven like rain!”

“Oh? You can’t do that, Mr. President? Wouldn’t be prudent? Might upset the financial markets? That justice thing overrated anyway? Oh, I’m sorry I didn’t understand the burdens of your office. I’m sorry to bother you. Thanks for the engraved napkin.”

Yeah, everything going just fine.

James Pilant