Break the Banks; By Eliot Spitzer

[babsbunny]

http://www.slate.com/toolbar.aspx?action=print&id=2231088

Why don't any of the Obama administration's financial reforms help middle-class Americans?

Posted Thursday, Oct. 1, 2009, at 11:29 AM ET

The Obama administration, which has spent much of the past year bailing out banks and protecting the markets, has done shockingly little to help the middle class that has borne the brunt of the financial meltdown. Two acts are particularly revealing. First, the administration failed to go to the mat to give judges the power to reform mortgages in the bankruptcy context. The administration barely winced as the Senate caved to the banks on this critical issue, risking no political capital to protect one of the few reforms that could have totally transformed the mortgage crisis. As the foreclosure wave continues, and as adjustable-rate mortgages hit reset points that are going to cause havoc for millions of additional families, this failure of political leadership by the administration stands as one of the early warning signs that things were amiss.

The second act is the recent—equally difficult to understand—concession to the banks, allowing them not to be required to offer what are called "plain vanilla" mortgages and other products to consumers. These products are simpler, more understandable, less ridden with fees, and less prone to long-term risk than most of what banks try to sell consumers on a regular basis. These are the very products consumers need.

[thunder rising]

1. A dual with the opponents pistol already pressing your temple is not a good starting point

[Gabi Hayes]

2. this is why they finally got around to publicizing his little 'girlie' problem.

if he hadn't had that thing going on, he'd probably've met with some sort of unfortunate 'accident'

[wolfgangmo]

14. Fact

A democrat, especially one who is populist or progressive, is 6 times a likely to have a fatal airplane accident as a republican.

[Deja Q]

18. and you have proof of that, because...

?

[Name removed]

42. Deleted message

Message removed by moderator. Click here to review the message board rules.

[Name removed]

43. Deleted message

Message removed by moderator. Click here to review the message board rules.

[BrklynLiberal]

36. My first thought was.."Now you know why he was targeted to be brought down..."

Can you imagine if he ever got into the Justice Dept in DC????? The repukes would leave the country.

[Nikki Stone1]

38. It would be nice if we could get to the point where we stopped caring about hookers

or girlfriends or boyfriends and started supporting people on the issues.

[corpseratemedia]

3. The United States of Bank of America

.

[Lorien]

7. The United states of Goldman Sachs nt

[wolfgangmo]

15. The United Banks of America

"We won't rest until every billionaire can afford solid gold faucets on their 3rd yacht and in their 4th airplane." - motto of the UBA

""Fuck anyone poorer than me." - unofficial motto.

[jotsy]

27. United, they are. Nearly 100 banks closed this year is the big fish eating up the little ones.

The large banks IMO are shoring up to monopolize, and heaven only knows what they think they can assert if they get to accomplish that.

Yes indeed, they see themselves as sheiks without the garb, and we are as relevant as the weather on another continent.

I firmly believe that many of us view our sense of value through visibility and that, through viability, which has been like a carrot, pushed further and further out in front of the work horse as a means to someone else's end. Forming effective resistance to the consuming nature of the corporatocracy and its choke hold on our citizenry is a generation's task. Checklist item of priority is stop the flow of money in their direction on as many levels as possible. Close bank accounts in unison, in favor of regional or local credit unions.

Eliot Spitzer sacrificed his political life to shine a light on the collusion disguised as confusion that we call a free market economy. Well, for most of us it's cost quite a bit more. Until steps are taken to make a free market a fair market, the ravenous wolves and hungry sharks will continue to feed on what is left of us.

[AntiFascist]

34. I've seen this happen with Chase...

where they gobbled up a bunch of other banks, and now they are acting like Citibank did last year, trying to reduce their exposure. The best way to fight back is to close those accounts and patronize credit unions.

[DLnyc]

4. "The message we should be sending is clear: If banks want

to participate in the high-risk activity that generates outsize bonuses but also outsize risk, they must do so only with their own capital, separated from guaranteed deposits and a taxpayer backstop to their debt and borrowing capacity."

Exactly the point. We don't necessarily need to stop people from gambling billions of dollars. We just need to stop them from doing it with OUR money.

[Historic NY]

5. I'd stand behind Eliot...he knows.

[defendandprotect]

19. Right ... and where is RE-REGULATION of capitalism?

Unregulated capitalism is merely organized crime -- !!

[Jackpine Radical]

30. Hell, REGULATED capitalism is merely organized crime

(with regulations).

[Lorien]

6. The rich want our houses

they gave us lousy mortgages and home equity lines just for that reason; they HOPE that we lose our jobs when we're only 20k from paying them off.

[katkat]

8. houses/money

I don't think the banks actually want the houses (around here houses in foreclosure are selling for practically nothing and do not sell quickly) I think the banks want the stream of money that comes in because of the usurious mortgage provisions. I can remember when usury was illegal, who's responsible for that changing?

[JDPriestly]

28. Bank interest rates to depositors are down to 0.5% in many cases.

Meanwhile, banks are charging as much as 27% on credit card debt (plus fees), exorbitant overdraft charges and earning fees on the turnover of foreclosed houses as well as, as you point out, getting high interest rates on the high-risk mortgages and, in addition, profiting from risky gambles on the excessive risks they incur with their crazy mortgage schemes.

The problem is that if the U.S. forces its banks to give up all of these schemes for making paper profits, we taxpayers will have to face the reality of our economy: we are destitute.

If the U.S. forces its banks to give up all of these schemes, the best and brightest math geniuses in our country will be forced to find some socially more productive but perhaps personally less remunerative use for their God-given gifts. Can you imagine what kind of world we could live in if one-half of the geniuses at Goldman Sachs started doing research in fixing the global economy instead of in robbing it?

[Demeter]

32. Credit Card Companies (aka Banks Chase, B of A, GM, GE)

they are also the driving force behind the punitive bankruptcy laws recently passed.

Instead of denying credit to the not credit-worthy, the banksters wanted to punish people for buying the sizzle off the frauds.

[Deja Q]

16. Yep. They love having all those houses...

with broken windows, boarded up doors, et cetera...

Those will NEVER sell.

I've seen more dilapidated business buildings refurbished for lease.

But to lease to? If business is about making money and nobody's got it to spend... the core problems are not being addressed.

[conscious evolution]

23. Its not the houses

Its the land they sit on that they want.

[sabrina 1]

40. They are becoming huge land-owners

If they didn't see this as a benefit, they would be renegotiating loans for people who fit the criteria for doing so. Instead, the biggest banks who got the biggest bail-outs are ignoring and giving the run around to people who COULD afford to pay, but whose interest rates sometimes doubled their mortgage payments, asking for a renegotiation of their loans. Wells Fargo is one of those banks, and I know for a fact that while that was part of the deal when they received the bail-out, they are not keeping their part of the bargain.

And not all homes are falling apart, not that it matters as the property is what matters, some are multi-million dollar homes in very good condition.

And not all banks are holding onto those properties. Realtors are finding new customers, from places like China eg. Tours are being arranged for foreign home-buyers to come and 'pick up a bargain' in the US as its citizens are forced out of their homes, and it appears to be a growing market.

So, as Americans sink further into poverty and despair and homelessness, there IS a silver lining. We can sell even more of this country to foreign investors. Who cares about those people who DID play by the rules but got caught up in the scam of predatory lending practices. It's patriotic, well under a capitalist system such as we have here, to confiscate their homes, blame them, and sell them to the Chinese ~

All those flags, what exactly do they mean? Well, they are made in China so someone's making a profit from all the patriotic flag-waving. Too bad it isn't Americans.

[katkat]

44. I don't doubt you

but I'd like to see some numbers.

I mean, who do you think is going to buy land in the inner cities? What would they do with it? Not start businesses when no one has money to buy things. Ditto apartment buildings or condos or houses.

The Chinese etc. buying foreclosed properties is news to me. I can see them buying those WhatTheHeckAreThoseSplitPackagedMortgage packages, but would you buy a foreclosed house in a neighborhood full of them? The only people I know doing this are lower income people who can finally afford a house and preservationists who want to bring back the neighborhoods.

[sabrina 1]

45. Well, as far as buying properties in the inner cities

go back to the eighties and see how people like Donald Trump eg, made their fortunes. They bought up properties like that and basically changed the neighborhoods (gentrified them it is called airc) and then resold them when the neighborhoods were made safe for business or upscale residential homes. You cannot rent anything in Manhatten anymore, unless you're doing really well financially.

Here's some info on the Chinese buying foreclosed homes:

http://www.realestateproarticles.com/Art/3386/265/Chinese-Tourists-Buying-Foreclosure-Properties.html

Chinese Tourists Buying Fore-closed Homes

More and more Chinese are joining tour groups especially organized for house-hunting and home-buying in the U.S. to take advantage of the bargain prices of foreclosed properties. The Chinese government has relaxed its U.S. visa and foreign investment regulations to enable its people to buy real properties abroad.

Among the most popular destinations are Los Angeles, San Francisco and Las Vegas, the cities with the highest foreclosure rates. According to Jamie Lee of the Los Angeles Convention & Visitors Bureau in Beijing, Chinese investors have been buying properties quietly in Southern California for years. Now they are going around buying repo homes in large groups.

Meanwhile, even Chinese local governments have become involved in the buying spree. Government officials from the southern province of Guangdong are scheduled to fly to Los Angeles to establish a regional office to assist residents of Guangdong in their home-buying efforts.

Sad as in many cases these are the homes of the middle class who can no longer afford them. We won't need to be invaded militarily by anyone, the criminals who caused these problems, imo, are traitors, as they were selling this country to the highest bidders long before their whole corrupt schemes collapsed. They do not care about this country, not anyone who participated in the destruction of the middle-class and the economy.

[Honeycombe8]

22. My rich bosses have no interest in your itsy bitsy house. It's the banks who are demanding

that you step up to the plate and honor the commitment you signed.

It's an UNFAIR commitment that you may have been duped into signing.

But it's incorrect to say "the rich" want the middle class's houses. They don't give a flip about your li'l ol' house. Only the banks do.

[secondwind]

9. Michael Moore's newest movie tells a shitload of stuff that is going on behind our backs.

[Deja Q]

17. Most of which that people on DU have been talking about. In some cases, for years.

Most of Moore's fanbase knows this stuff too. Why pay good money to have one's emotions wanked?

[JDPriestly]

29. Why go to Moore's movie? Why listen to music? Why plant a garden?

Because knowing something and feeling moved enough to do something about it are two different things.

Instinct may cause us to be physically attracted to another person, knowledge may inform our judgment about whether that person has a positive or negative effect on our life, but our emotions make us fall in love, marry and raise a family.

Action does not result from knowledge. It results from a combination of instinct, knowledge and emotion. The Moore movies involve us on all of these levels. That is why they are so great.

If we know something needs to be changed, but have not been able to change it, we need to check our feelings, our emotions. Because we act mostly out of our emotions, very little out of our knowledge.

[bertman]

35. I paid good money to learn things I did not know before AND to see an entertaining,

enlightening, and funny movie, Deja Q.

For instance, I never knew that Marcy Kaptur is one of the most astute members of our Congress and that she has the gigantic set of nads that Harry Reid was supposed to get.

I also found out that there was an official memo from CitiGroup extolling the virtues of plutonomy and how it had to be protected.

I had no idea that the geniuses who are graduating from our best universities are going to Wall Street because that's where all the big bucks are. I was under the illusion that there were other excellent opportunities for employment for the best and brightest.

There are lots of other important and non-emotional things that I learned from the movie.

But the one thing that really stands out in my mind is that President Roosevelt and the Governor of Michigan called out the National Guard to PROTECT THE STRIKERS from the corporate bosses. That must be the first time in the history of the United States that happened. And it was probably the last. Normally the police and National Guard get to stand around and watch the workers get their asses beaten to death by strike breakers. Or they get to do some beating on the workers themselves.

I never knew that President Roosevelt proposed a second Bill of Rights.

Perhaps you're one of those gifted individuals who has been pre-enlightened and already knows everything that one needs to know about EVERYthing. The rest of us aren't so lucky.

[Nostradammit]

39. You could not be more transparent if you tried.

[EmeraldCityGrl]

10. MERS might throw a kink in foreclosure rates

Landmark Nat’l Bank v. Kesler decision
On August 28, 2009, the Kansas Supreme Court in Landmark National Bank v. Kesler, 2009 Kan. LEXIS 834 (Aug 28, 2009), issued a landmark ruling regarding the standing, rights and interests of MERS. The court took note of the argument that has been espoused by national consumer advocates that all indispensable parties must be identified and the actual lender identified in foreclosure actions to protect defendants' rights. The decision also addressed the role MERS plays in providing an opaque veil that clouds not only the actual ownership of the promissory note, but also title to the property.

If it becomes impossible to distinguish ownership of the promissory note, title homeowners can remain in their homes if at the very least as squatters,
I hope someone is looking to make this a Federal law.

[fasttense]

11. The only way to STOP the banks is to get out and PROTEST.

America is rapidly turning into a corporate bank controlled society. The only way to stop it is to get out for months and protest. A couple of days will not do it. Breaking up the protests into small groups around the country will not do it. We have to march on DC for months. A constant stream of protests swelling every weekend will get our government's attention.

ACORN isn't doing much now that their funding has been pulled, we could use them to organize.

We sent Obama to the WH with our small donations. True he had funding from some corporations and CEOs, but without our money, would have have had enough to have won the elections? NO, I honestly believe our small donations put him over the top. So, if you can't protest, if you can't come out and join, you can give a small donation we can use to recruit the people destroyed by this economy - the unemployed and underemployed.

One thing good about this 2nd Republicon Great Depression is it has given a lot of people extra time. Since a lot of people are NOT fully employed, we can get them to protest.

We can advertise the protests through twitter, cell phones and the internet. We could do this.

[Stumbler]

12. Not only did we fail to fire the corrupt banking executives

we let them stay in their jobs and reap million dollar bonuses from our tax-payer bailouts. Those crooks should not be working today, they should be in jail trading cigarettes for their lives. Just more proof that we're no longer a "representative democracy," but a Corporatist State with fascistic tendencies.

Heck, even China executes corrupt business leaders. Why can't we import THAT?

[KharmaTrain]

13. A Shit Sandwich

I agree that the Obama administration has done little to ease the problems of what's left of the middle class...especially not clamping down on the predatory interest rates by banks and other lenders that has dug many people in a big hole with little hope for any immediate relief. As long as these obscene lending rates remain high and little is done to ease the credit crunch, there won't be a true recovery.

While bailing out the banks is not a poplar thing, it was like hanging 9 toes over the cliff. If they failed, the economic fallout would have been far greater...making the Depression of the 30s look like a slight recession. Keeping those banks solvent prevented many companies from going under (at least temporarily) and the firming up of the stock market has helped restore money to many retirees and other investors who had seen their life savings vanish...something you don't hear about or is reported, but the consequences of letting banks fail would have prevented a lot of things we're debating now...such as healthcare.

The matter now is to reregulate the banking system to clear out the speculation and prosecute those who abused the system...a job not that not only belongs to the President but Congress as well. We need to prevent banks from getting "too big to fail" and force competition among lenders that will drive lending rates down and start putting money back into the economy that will benefit all.

[BrklynLiberal]

37. " Life is a shit sandwich.The more dough you have, the less shit you have to eat."

[midnight]

20. Eliot I have those same two concerns. President Obama I hope

you are reading this.

[Honeycombe8]

25. He presented the amendment for BR judges to modify mtges (Durbin did on W.H. behalf).

It was the usual suspects who prevented the amendment from being passed:

No Republican members voted for the amendment. The Democrat no votes include Senators Max Baucus (D-MT), Michael Bennet (D-CO), Robert Byrd (D-WV), Tom Carper (D-DE), Byron Dorgan (D-ND), Tim Johnson (D-SD), Mary Landrieu (D-LA), Blanche Lincoln (D-AR), Ben Nelson (D-NE), Mark Pryor (D-AR), Arlen Specter (D-PA) & John Tester (D-MT).

(The House of Rep. passed it. And all but those listed above voted for it in the Senate. Apparently the W.H. has NO control over the Blue Dogs.)

[Honeycombe8]

21. I thought I read that BR judges COULD alter mortgages in BR actions. ????

Maybe I read that it was up for debate. But I thought that BR judges had been given that power.

Although....it would help SOME people, but not many. Not many people filed for BR, compared with how many lost their homes.

[Honeycombe8]

24. The Admin. and Durbin put forth an amendment for BR judges to modify mtges....

The House of Rep. passed it. Yay!

But, like the health care bill, the Senate would not pass it. Here are the evil doers who did not vote for the White House's amendment:

No Republican members voted for the amendment. The Democrat no votes include Senators Max Baucus (D-MT), Michael Bennet (D-CO), Robert Byrd (D-WV), Tom Carper (D-DE), Byron Dorgan (D-ND), Tim Johnson (D-SD), Mary Landrieu (D-LA), Blanche Lincoln (D-AR), Ben Nelson (D-NE), Mark Pryor (D-AR), Arlen Specter (D-PA) & John Tester (D-MT).

THE USUAL SUSPECTS, apparently.

[live love laugh]

26. This criticism is on point. These decisions will cost Obama.

The mortgage crisis is one that has claimed me as a victim. I couldnt sell my home and needed to relocate and faithfully paid the mortgage for 18 mos. while no longer residing in the house. Mortgages are so hard to get that in that period I have had 3 offers. And I cannot claim a loss, or get help with any of the mortgage aid stimulus stuff because (a) I don't live in that house (b) my middle class income is too high (not really high at all).

There is no help anywhere to get out of this. So I am about to foreclose. I will not carry the heating, lawn/snow, morgage costs for another winter. I am kissing my hard earned A1 credit rating goodbye.

[pokercat999]

31. In defense of the banks:

Huge numbers of big, medium and small banks are realistically insolvent. The only thing that keeps them from declaring bankruptcy is the failure of regulators to require them to mark to market the assets (houses and commercial property) that they hold as collateral.

What's a greedy banker to do once he or she has screwed the pooch and lent 14 times their reserves on collateral that is worth half as much as the loan they hold. The only choice in years past would have been to belly up and have the FDIC take over or sell to a bigger, stupider bank. Today because the mark to market accounting rules have been suspended or removed they can just hold the assets, even non-performing assets at the false value on their fake records and everyone including the Obama Administration just winks and goes along with the game. Only the very worst get taken over by the FDIC, and those are sold after the tax payer eats the 40-50 or 60% loss on the collateral.

So any money given to the banks is held in reserve to shore up the loan to reserve ratio, just in case someone (bank regulators) actually looks at the cooked books. The real SOLUTION to the problem was to force the banks to account for their misdeeds and bankrupt those that could not meet their obligations. Yes it may have meant a depression but I think it would have been short and recovery would be on the way. Now we are looking at a multi-decade long recovery from a very deep recession or another "dip" by 2012 into the depression we SHOULD HAVE HAD last year. Now the problem will be the depression will be deeper and longer than what we should have experienced.

Of course some miracle could happen, there could be another technological invention, another internet, or some presently unforeseen industry to drive our economy to the 5%-7% growth rate needed for a recovery under the current circumstances but I have no faith in that.

[ooglymoogly]

33. Elliot is as usual pointing out the truth.

O is playing 10 dimensional donkey kong; It is only debatable, on whose side he is working, with the deluded who have closed their eyes and ears to reality.

[Odin2005]

41. Spitzer is right, as usual. That's why they forced him out.

Using his normal human failings as an excuse.