Category: Corporate Statism

Too poor to go bankrupt

~ susie ~ 3 Comments

Yes, thanks to senators like Tom Carper Joe Biden, the former senator from MBNA, the bankruptcy “reform” act was like killing off any chance at all for poor people to recover from their debts. It also made credit card companies more powerful – and profitable, so as far as the politicians are concerned, win/win!

If there’s anything at all that I wish the Occupy movement would focus on, it would be overturning this travesty:

This year, hundreds of thousands of Americans are expected to be too broke to file for bankruptcy.
The average cost to file for Chapter 7 bankruptcy protection, the most common form of consumer bankruptcy, is more than $1,500, according to recent research submitted to the National Bureau of Economic Research.


As a result, anywhere between 200,000 and one million consumers are estimated to be unable to afford that steep cost this year.
The research, conducted by a group of professors from Columbia University, the University of Chicago and Washington University in St. Louis, examined how bankruptcy filings spiked after people received their tax rebates in previous years. They estimate that another 200,000 consumers, who would otherwise not have enough money to file, will use their tax refunds to pay for bankruptcy this year.


“For lots of people, bankruptcy has been taken off the table as an option because of the severe fees involved,” said Jialan Wang, co-author of the report.
Among those fees is a charge of about $300 just for filing the paperwork with the federal court, while the rest typically goes to bankruptcy lawyers, said Wang.
And there are other expenses on top of that, including fees for mandatory pre-bankruptcy credit counseling and a pre-discharge debtor education course. These average about $85 altogether, according to a recent study sponsored by the American Bankruptcy Institute.


That means many of the Americans who have seen their debt snowball out of control due to events like job loss, foreclosure or a medical emergency during the economic downturn are now left without their last financial lifeline, she said.


“It becomes harder and harder to pay off the debt as interest payments get higher, so your debt grows larger and larger,” she said.


The cost of filing for bankruptcy has risen in recent years as a result of the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act, which aimed to reduce the number of bankruptcies taking place by adding more requirements to the filing process — including additional paperwork and the credit counseling and debtor education.

Oops

~ susie

JPMorgan shares tanked with the news of their $2 billion loss:

JPMorgan Chase & Co lost $15 billion in market value and a notch in its credit ratings on Friday while a chorus of regulators and politicians reacted to its surprise $2 billion trading loss by demanding stiffer oversight for the banking industry.


The loss by one of Wall Street’s most respected banks embarrassed chief executive Jamie Dimon, a leader lauded for steering his bank through the fallout from the 2008 financial crisis without reporting a loss.


“We know we were sloppy. We know we were stupid. We know there was bad judgment,” Dimon said in an interview with NBC television to be broadcast on “Meet the Press” on Sunday.

Why you should care

~ susie

Matt Taibbi:

If you’re wondering why you should care if some idiot trader (who apparently has been making $100 million a year at Chase, a company that has been the recipient of at least $390 billion in emergency Fed loans) loses $2 billion for Jamie Dimon, here’s why: because J.P. Morgan Chase is a federally-insured depository institution that has been and will continue to be the recipient of massive amounts of public assistance. If the bank fails, someone will reach into your pocket to pay for the cleanup. So when they gamble like drunken sailors, it’s everyone’s problem.


Activity like this is exactly what the Volcker rule, which effectively banned risky proprietary trading by federally insured institutions, was designed to prevent. It will be argued that this trade was a technically a hedge, and therefore exempt from the Volcker rule. Not only does that explanation sound fishy to me (as Salmon notes, for Iksil’s trade to be a hedge, this would mean Chase had an equally giant and insane short bet on against corporate debt, which seems unlikely), but it’s sort of immaterial anyway: whether or not this bet technically violated the Volcker rule, it definitely violated the spirit of the law. Hedge or no hedge, we don’t want big, federally-insured, too-big-to-fail banks making giant nuclear-powered derivatives bets.

Union buster

~ susie

Isn’t that nice!

Madison – A filmmaker released a video Thursday that shows Gov. Scott Walker saying he would use “divide and conquer” as a strategy against unions.


Walker made the comments to Beloit billionaire Diane Hendricks, who has since given $510,000 to the governor’s campaign – making her Walker’s single-largest donor and the largest known donor to a candidate in state history.


The filmmaker has done work on Democratic campaigns and gave $100 in 2010 to Milwaukee Mayor Tom Barrett, Walker’s challenger in the June 5 recall election.


In the video shot on Jan. 18, 2011 – shortly before Walker’s controversial budget-repair bill was introduced and spawned mass protests – Hendricks asked the governor whether he could make Wisconsin a “completely red state, and work on these unions, and become a right-to-work.” The Republican donor was referring to right-to-work laws, which prohibit private-sector unions from compelling workers to pay union dues if the workers choose not to belong to the union.


Walker replied that his “first step” would be “to divide and conquer” through his budget-adjustment bill, which curtailed most collective bargaining for public employee unions.


Documentary filmmaker Brad Lichtenstein, who says he captures both sides in his work, videotaped the conversation that Walker had with Hendricks and Mary Willmer-Sheedy, a community bank president for M&I Bank. The filmmaker was recording what Willmer-Sheedy and others in Janesville were doing to try to create jobs in an area hard hit by the shutdown of its General Motors plant and related businesses.


In the video, Hendricks told Walker she wanted to discuss “controversial” subjects away from reporters, asking him:


“Any chance we’ll ever get to be a completely red state and work on these unions -”


“Oh, yeah,” Walker broke in.


“- and become a right-to-work?” Hendricks continued. “What can we do to help you?”


“Well, we’re going to start in a couple weeks with our budget adjustment bill,” Walker said. “The first step is we’re going to deal with collective bargaining for all public employee unions, because you use divide and conquer. So for us, the base we get for that is the fact that we’ve got – budgetarily we can’t afford not to. If we have collective bargaining agreements in place, there’s no way not only the state but local governments can balance things out . . . That opens the door once we do that. That’s your bigger problem right there.”


The entire conversation was not released Thursday with a video trailer of the documentary, but Journal Sentinel reporters were allowed to view the raw footage, in which the governor goes on to talk about curbing liability lawsuits and government regulations.

Jamie Dimon is a tapeworm

~ susie ~ 2 Comments

Remember last month, when I wrote about JPMorgan Chase gambling heavily on high-risk credit derivatives, and Jamie Dimon said it was all fine?

Oops.

JPMorgan Chase disclosed on Thursday that a trading group had suffered “significant” losses in a portfolio of credit investments, with the chief executive, Jamie Dimon, estimating losses at $2 billion in a conference call.

“These were egregious mistakes,” Mr. Dimon said on the call. “They were self-inflicted and this is not how we want to run a business.”

And yet, apparently this is exactly how you run a business, Jamie!

The troubles at the unit, the so-called Chief Investment Office, which makes trades to balance the bank’s assets and liabilities, are expected to weigh on the bank’s broader earnings.

For example, the corporate group, which includes the Chief Investment Office, is now expected to lose $800 million in the second quarter, the company said in a filing. Previously, JPMorgan had estimated that the group would report net income of roughly $200 million.

Ultimately, JPMorgan said, the final tally will depend on the markets and other actions by the bank. Mr. Dimon added that it could “easily get worse.”

Shares of JPMorgan were down 5.5 percent in after-hours trading, dragging down other bank stocks.

The trading group has been a focus in recent weeks as questions surfaced about big bets the JPMorgan unit was reportedly making in credit default swaps. Reports emerged in April about a JPMorgan trader in London whose positions were so big that they were distorting the market.

Mr. Dimon played down the significance. In a conference call on April 13, he called the matter “a complete tempest in a teapot.”

“Every bank has a major portfolio. In those portfolios you make investments that you think are wise to offset your exposures,” Mr. Dimon said in the April call. “At the end of the day, that is our job — is to invest that portfolio wisely, intelligently over a long period of time to earn income and to offset other exposures that we have.”

Now, the portfolio is wreaking havoc at the bank. In its filing on Thursday, JPMorgan pointed specifically to problems with its bets on credit.

Now remember, these are exactly the kinds of transactions the banking industry lobbied so hard to protect.

The Chief Investment Office “has had significant mark-to-market losses in its synthetic credit portfolio, and this portfolio has proven to be riskier, more volatile and less effective as an economic hedge than the firm previously believed,” the company said in its regulatory filing.

“We have egg on our face,” Mr. Dimon said on Thursday. “We deserve any criticism we get.”

So if I point out that you’re a scum-sucking bottom feeder who helped crash the international economy, pushed millions of Americans into the poorhouse and that your attitude that moral hazard is only for the little people who bought the crap you so blatantly peddled to them, you’re acknowledging that you deserve it?

No, what you “deserve” is to be impoverished, left homeless and facing a long prison term. But we have a two-tiered justice system and that ain’t happening.

If I passed you on the street, it would be all I could do not to spit on you.

Protecting coal ash

~ susie

Coal ash, the residue left by coal-powered power plants, is some nasty stuff. Thank God we have ALEC trying to prevent the feds from regulating it:

At least 49 coal-fired power plants have acknowledged that one or more of their ash ponds or landfills have exceeded either Safe Drinking Water Act “Maximum Contaminant Limits” or state groundwater protection standards. The information was provided to the U.S. Environmental Protection Agency (EPA) in response to an information collection request, and obtained by the Environmental Integrity Project (EIP) through a Freedom of Information Act request.

The data indicates that multiple contaminants at 116 coal ash disposal units at the 49 plants exceed federal or state standards, including arsenic (a potent carcinogen) reported at no fewer than 22 sites; manganese (a metal that can damage the nervous system in high concentrations) at 22; boron (a pollutant that can cause damage to the
stomach, intestines, liver, kidney, and brain when ingested in large amounts) at 12; selenium (a toxic pollutant that causes adverse health effects at high exposures) at 13; and cadmium (a toxic pollutant that can damage the kidneys, lungs, and bones) at 10.

The problem is, there’s no uniform standard for measuring or reporting these contaminants. The EPA is trying to regulate coal ash, but our old friends at ALEC are trying to prevent any attempt to regulate it.

That’s where Rep. David McKinley (WV-1) comes in. He’s a member of the Tea Party caucus, the chairman of the West Virginia Republican Party, and also sits on the House Energy and Commerce committee.

McKinley, who’s running against Democrat Sue Thorn, has raised $1.5 million so far in his reelection campaign, the largest single category of contributions come from mining interests. McKinley introduced a bill to that prevents the federal government from regulating coal ash – and coincidentally, I’m sure, the bill also mirrors a coal ash resolution passed by ALEC.

He claims the responsible thing is to recycle the ash as building materials. (Of course! What could possibly go wrong?)

The Department of Homeland Security under Bush refused to release the dump locations, supposedly because an enemy could use the information to contaminate a large area. (Or they were afraid the locals would freak out after a 2008 Tennessee coal ash spill turned into a massive environmental disaster.)

Anyway, if you live in McKinley’s district, Sue Thorn looks like a much better alternative – and certainly better for your health.