Category: Corporate Statism

Another set of dominoes falling…

~ susie ~ 3 Comments

The entire house of cards constructed by the banks and the mortgage industry is falling down, and it’s not going to be pretty. By the time it’s all over, this could make 2008’s previous banking failures look mild in comparison. This latest lawsuit is a civil suit, not criminal. But that doesn’t mean the feds won’t get in on the case if it heats up — and I’m guessing it will:

Citigroup Inc. and Ally Financial Inc. units were sued by homeowners in Kentucky for allegedly conspiring with Mortgage Electronic Registration Systems Inc. to falsely foreclose on loans.

The lawsuit, filed as a civil-racketeering class action on behalf of all Kentucky homeowners facing foreclosure, also names as a defendant Reston, Virginia-based MERS, the company that handles mortgage transfers among member banks. The suit claims that through MERS the banks are foreclosing on homes even when they don’t hold titles to the properties.

“Defendants have filed foreclosures throughout the state of Kentucky and the United States of America knowing that they were not the ‘owners’ or beneficiaries of the loan they filed foreclosure upon,” the homeowners wrote in their complaint filed Sept. 28 in federal court in Louisville, Kentucky.

The homeowners claim the defendants filed or caused to be filed mortgages with forged signatures, filed foreclosure actions months before they acquired any legal interest in the properties and falsely claimed to own notes executed with mortgages.

[…] “RICO comes in because the fraud didn’t just happen piecemeal,” Heather Boone McKeever, a Lexington, Kentucky-based lawyer for the homeowners, said in a phone interview today. “This is organized crime by people in suits, but it is still organized crime. They created a very thorough plan.”

As I’ve noted previously, some of the biggest title insurance companies are refusing to insure mortgages in foreclosure — because they can’t be sure who actually has title. Because lenders won’t underwrite a mortgage without it, this will have the likely effect of driving down home prices even more.

This is as serious as it gets.

The only people happy about this are the lawyers, who will be billing for untangling this whole mess. See, this is why you want a tightly-regulated derivatives market. Now the banks don’t even know who owns the mortgages used as collateral. In fact, this can even affect homeowners who are attempting to pay off their mortgages. Who will assign them a clear title?

Watch for the banks for fight any attempt to impose a foreclosure moratorium. This mess is so bad, the administration may finally have to do what Obama was trying so hard to avoid: Nationalize the banks. Stay tuned.

Aren’t you glad we sold out?

~ susie ~ 6 Comments

So we compromised with the insurance companies at every turn, and now we learn they (gasp!) weren’t negotiating in good faith and are joining forces with the Republicans and their junior varsity to overturn the very legislation that was written to keep them happy:

Health insurance companies, after funding tens of millions of dollars in attack ads aimed to kill health reform, are now funding Republican candidates promising to repeal or water-down the bill. A report today notes that insurance companies have massively shifted their campaign giving to Republicans, and that health professionals have “quietly become the biggest supporters of the nascent Tea Party Caucus” with donations of “more than $2.7 million to Tea Party Caucus members.”

Additionally, a report today by the Center for Public Integrity republished by National Journal reveals that veteran Republican lobbyist Scott Reed has stepped up to create a $25 million dollar front group to run ads against Democrats, and that it will be funded partially by insurance companies:

Meanwhile, lobbyist Reed’s fledgling Commission on Hope, Growth and Opportunity, a 501 (c) (4) raised over half its $25 million goal to run ads in 20 House districts and a few Senate contests, Reed says. Where’s the dough coming from? “The big three stepping into the batter’s box are the financial services industry, the energy industry, and the health insurance industry,” Reed said.

Reed credits the recent Supreme Court ruling knocking down nearly a century of campaign finance laws with the increased fundraising haul for Republican attack groups. “Citizens United opened the door for the unparalleled participation by corporations at the financial level,” Reed told reporter Peter Stone. Earlier this year, Bloomberg reported that the health insurance industry met and planned a $20 million dollar “war chest” to be used against its opponents during the election this year. It is still unclear if Reed’s group or the Tea Party caucus donations are part of that fund.

Big Oil is still quite oily

~ susie ~ 1 Comment

Remember when Ronald Reagan used to tell us it was fine to deregulate industry, because what businessman would take a risk that could end up costing him money?

I’m pretty sure he was already senile:

NEW ORLEANS — Oil industry and government officials could get caught flat-footed again by another deep-water blowout in the coming months because they have yet to incorporate many of the lessons learned during the BP disaster, experts inside and outside the business tell The Associated Press.

For one thing, it could be another year before a bigger, better cap-and-siphon containment system is developed to choke off leaks many thousands of feet below the surface. Also, existing skimmers still don’t have the capacity to quickly suck up millions of gallons of oil flowing at once.

In interviews with the AP, environmental experts, industry veterans and government officials also said the industry needs better technology and more thorough testing and analysis to prevent blowouts from happening in the first place.

And despite an overhaul of the federal agency that regulates the industry, there are lingering doubts about whether the government can effectively police Big Oil at the same time it relies on the industry for revenue.

Greed is good

~ susie

Poor, poor corporations. If only we could figure out a way to funnel even more money in their direction — say, some more tax cuts for high income businessmen?

Corporate America finished the second quarter with “near-historic” profits, largely by cutting costs, laying off employees and streamlining operations, the Wall Street Journal reports.

Profits for companies in the S&P 500 soared 38 percent from the same period last year, hitting $189 billion, the WSJ says, the sixth-highest quarterly total ever. S&P analysts expect the trend to have continued in the third quarter.

Since 2008, corporate profits increased 10 percent — but revenue was down 6 percent, the WSJ says. To achieve the impressive quarterly results, companies have had, as the WSJ puts it, to “streamline” their operations. This means firing workers, outsourcing labor and shuttering unprofitable (or less profitable) divisions.

Mostly “less” profitable, but why quibble?

The robust state of corporate profits presents a paradox: companies won’t spend their money until the economy improves, but the economy won’t improve until they spend their money. An increase in hiring, for example, would help drive a recovery. The New York Times reports this “chicken-and-egg” phenomenon, noting that near-zero interest rates have encouraged companies to borrow money and simply hoard it because, as the NYT puts it, “they can.” Combined, companies have $1.6 trillion in cash, the paper notes. In the first quarter of this year, their cash reserves represented the highest percentage of assets since 1964.

“They are still holding on to more cash in the same way that Noah built the ark,” Gluskin Sheff chief economist David Rosenberg told the NYT.

A tax on poor people…

~ susie

A local coalition of progressive groups fought the opening of two casinos in Philadelphia tooth and nail for the past several years, opposed by residents, politicians and union members who wanted jobs. They stopped one, and they got this one reduced to a day-tripper casino instead of a complex with a hotel and shops. Well, it opened a few weeks ago and this report echoes what I already hear from people in the neighborhood:

The place is absolutely horrifying. Every type of drifter within a 50-mile radius of Philly was there — dudes with sleazy neck tattoos to the members of the local chapter of The Outlaws openly wearing colors.

I talked to one of the workers about what he’s seen there so far. His answer: “Everything.” I asked if he could get a little more specific. He said there hasn’t been a murder yet but there’s been everything else, which includes TWO separate incidents of people ODing in the bathroom after injecting themselves with heroin in the bathroom. So this casino is now a shelter of sorts for the local junkie community.

The carpet is nasty. Blankets in dog crates at the PAWS animal shelter are cleaner.

Policy is that you can’t order a shot and a beer at the same time for “safety” reasons. Also, they have employees who walk up to you at 2 am and force you to either pound or leave your drink. My wife couldn’t finish her drink so she just poured it on the floor. I swear to you, we are not some trailer trash clan who throw garbage on the floors in public places … But this place is so vile you can literally do that and not one person will bat an eye.

There is not one story that will emerge from this place that will shock me. Shootings? Stabbings? Intentional parking lot hit-and-runs? Random people throwing acid in the face of strangers? Everything is on the table at this hellhole.

Constitutional amendment

~ susie ~ 2 Comments

I wonder what the odds are of something like this passing:

As the Supreme Court returns today for its new term, a bipartisan group of law professors and prominent attorneys, including seven former state attorneys general, issued a letter criticizing the Court’s ruling in January in Citizens United v. FEC, which equated corporate spending in elections with free speech rights, and calling on Congress to consider a constitutional amendment to overturn the decision.

Free Speech for People and People For the American Way announced the release of the letter, which was signed by more than fifty leading law professors and attorneys, including former Massachusetts Attorneys General Frank Bellotti and Scott Harshbarger; former Mississippi Attorney General Michael Moore; former Arizona Attorney General Grant Woods; leading constitutional scholars; and numerous former federal and state prosecutors from across the country.