For foreclosure relief, occupy the Legislature

Two years ago, California legislators bowed to bankers when they failed to pass legislation that would require mediation between a bank and borrower before banks could foreclose on the borrower’s home.

But a recent report by the U.S. Justice Department should cause the Legislature to take another crack at making a critical choice: Do they want to provide tools to reduce foreclosures, or do they want to keep kowtowing to bankers?

California remains among the hardest hit by foreclosures: third worst in the country.

While foreclosure rates are going down nationally, that’s more a reflection of the continuing mess in the foreclosure process itself rather than any fundamental restoration of health in the housing market.

So the problem hasn’t gone away by itself.

Federal efforts to help homeowners have been ineffective because they’re voluntary for the banks, with inadequate government oversight. For the feds, foreclosure reduction efforts have consisted mainly of offering banks modest incentives for loan modifications, incentives that are less than the profit the bank, in its role as loan servicer, makes from foreclosing on homes.

As demonstrated by the California legislators’ previous refusal to embrace mediation, government officials at all levels have so far lacked the political will to force banks to take the action needed to stem foreclosures. Two years ago, Assemblyman Pedro Nava spearheaded the foreclosure mediation effort,  AB 1639,  which passed the Assembly but died in the Senate under fierce banking opposition. Consultant on the bill was Los Angeles mediator Laurel Kaufer, chair of the State Bar's ADR committee.

Around the country, there  have been a host of mediation programs around the country, with mixed results. ¶

Programs in Connecticut and Philadelphia successfully settled about three of every four cases, avoiding foreclosures. In Nevada, officials reported that about 42 percent of the cases in mediation settled without foreclosure. Nevada also reported another significant finding – the banks dropped many of the foreclosure attempts during the mediation process because there paperwork wasn’t in order.

But in late December, the Florida Supreme Court closed down its foreclosure mediation program after state officials determined it wasn’t working because so few cases eligible for mediation ended in settlement.

Then, just a couple of weeks later, the U.S. Justice Department issued a promising report calling for wider federal use of mediation in foreclosure and more research into how well it works.

The details of foreclosure mediation programs vary widely. The most successful programs, the Justice Department explained, are those that begin early in the foreclosure process, require mandatory participation, include some form of financial counseling for homeowners, are well publicized and require a high degree of transparency by the banks  – meaning that banks have to disclose how their foreclosure process works, including the secretive, often confusing criteria by which they grant loan modifications.

Will the feds blow this opportunity to attack the foreclosure crisis, as they bungled their earlier efforts? Or will finally get a clue and start taking effective action?

In California, we shouldn’t wait to find out.

This Justice Department report should give a boost to a renewed effort to require mediation in California foreclosures, and offers some guidance to California in how to create a successful mediation program.

But it will only happen if people mobilize against the banking lobby, which is sure to oppose any attempt to weaken bankers’ complete control over the foreclosure process.

We keep hearing how the Occupy movement has changed the debate, how issues that couldn’t gain traction six months ago can now get a fuller hearing. We should seize the opportunity to give legislators the opportunity to get the bankers off our backs.


Foreclosures / Martin Column - 01/18/2012

Synthetic Tea

If you were looking for leadership of a real grass-roots movement for social change, Dick Armey might not be your first choice.

After he rose to become House Republican majority leader, he quit to cash in on his political connections with the top lobbying shop DLA Piper law firm. He’s also on the payroll of the Koch Brothers-funded Americans for Prosperity, one of the main sources of organizational backing of the Tea Party.

I’ve been critical of the Obama campaign’s hypocritical promises of a new kind of fundraising campaign that relies only on small donors, not fat cats, while he seeks donations from Wall Street.

But Obama’s nemeses in the Tea Party are no better, portraying themselves as a grassroots populist movement while relying on members of the Republican permanent government like Armey for leadership.

Armey actually had to quit his lobbying job because of his DLA  Piper clients favored Obama’s health care reform, after the president cut a deal to secure support from drug companies. The Tea Party, meanwhile, has been dead set against the Obama plan.

It’s not that somebody like Armey, with his vast knowledge gained from slithering through the corridors of power all these years, might not have something to offer an authentic grassroots movement. But wouldn’t he have to offer a renunciation of his past connections before he participate? Wouldn’t he have to acknowledge that he had been part of the problem before he could be part of the solution?

Whatever minor disagreements Armey’s former clients might have with the Tea Party agenda, their interests dovetail neatly. Demonizing government and railing against strong regulations will only mean fewer watchdogs for the drug companies and bankers DLA Piper serves, and fewer tools to hold them accountable.

 

Martin Column - 06/28/2011

Culture of Greed 1, Crackdown 0

When President Obama appointed his new chief of the Securities and Exchange Commission, he promised she would “crack down on the culture of greed and scheming.”

But that culture seems to be getting the better of Mary Schapiro after the resignation of her agency’s top counsel, amid allegations of questionable ethics.

That former top counsel, David Becker, is among those whose family actually made money from the massive frauds of Bernard Madoff.

As SEC general counsel, Becker recently argued for a change in policy that would have allowed his family to keep more of the fortune they made from Madoff, rather than turning it over to pay those who lost money.

Becker might have been considered a curious choice for a new tougher SEC, considering that during an earlier stint as a top SEC lawyer earlier in the decade, Becker was among those who failed to crack down on Madoff, despite highly publicized warnings.

Now Becker has decamped back to the corporate firm from where he came, leaving Schaprio, his former boss, sputtering about what she can and can’t say about what she knew about Becker’s Madoff investments and when she knew it.

This is, of course, catnip to the Republicans looking for any opportunity to embarrass the Obama administration. Never mind that they oppose any kind of regulation of the financial industry at all.

What a great gift Schapiro and Becker have handed Republicans: proof that the Obama administration’s promises to protect us from the “culture of greed and scheming” were nothing more than a sham. Meanwhile, Becker slams the swinging door in our faces and goes back to his real job – representing the interests of big banks and financial interests.

 

 

 

 

Around the Web / Martin Column / Securities and Exchange Commission (SEC) - 03/09/2011

The President's Odd Jobs Choice

About the only the job that Jeffrey Immelt would be less qualified for than jobs czar would be to lead a crackdown on the influence of big money lobbyists.

Oh wait- there is no crackdown on lobbying.

So Immelt, the CEO of General Electric, will have to make do with the job the president has given him as head of the administration’s reconfigured outside economic advisory council, which is supposed to focus on job creation.

I’ve written before about G.E. as a prime example of how major corporations benefited from the bailout without exhibiting any gratitude to taxpayers.

To say that Immelt is a weird choice for a job creation initiative is an understatement.

Under Immelt’s stewardship, G.E. has shredded thousands of jobs in the U.S. while outsourcing many jobs to India and China. In the years before the financial collapse, G.E. focused on building up its enormous credit operation, which melted down under the weight of bad loans along with the rest of the financial sector. If not for the generosity of taxpayers, who gave G.E. more than  $16 billion in low-interest loans to keep it afloat, Immelt himself probably wouldn’t have a job. In 2008, Forbes named Immelt one of the U.S. most overpaid executives.

His company has engaged in economic blackmail, threatening the state of Massachusetts that G.E. would close plants if state officials didn’t cough up tax breaks. It’s true that Immelt’s GE has embraced green technology – but only wherever there is a substantial government subsidy involved.

Meanwhile, GE is spending more than any other firm on lobbying, while it pays little or no taxes.

If Immelt has had any previous innovative ideas about substantially reducing unemployment, he’s kept them to himself. This is the person our president chooses to lead his jobs effort? For Immelt and other corporate and financial titans, the “too big to fail” bubble has never really burst. They’re continuing to rake in profits and shape government policies in their own interests, while the majority who don’t have access to power are shut out from financial security as well as political influence. Rather than challenging this unequal equation, our president has chosen to try to climb into the bubble himself.

Around the Web / Executive Pay / Martin Column / Too Big To Fail - 02/02/2011

Our "jackass" moment

September 21, 2009

One thing we can all agree on about our president: He chooses his words v-e-r-y carefully.

So I wondered about his choice of language and timing when, on the same day he traveled to Wall Street to deliver the bankers a gentle scolding, he got caught on videotape labeling the rapper Kanye West a “jackass” for his behavior on a televised awards show.

You don’t mess with the president: Kanye West got himself right onto Jay Leno’s couch to perform an apology.

Executive Pay / Martin Column / President Barack Obama - 09/21/2009