03/14/2012 archive

“Punting the Pundits” is an Open Thread. It is a selection of editorials and opinions from around the news medium and the internet blogs. The intent is to provide a forum for your reactions and opinions, not just to the opinions presented, but to what ever you find important.

Thanks to ek hornbeck, click on the link and you can access all the past “Punting the Pundits”.

Wednesday is Ladies’ Day

Maureen Dowd: Don’t Tread on Us

Hillary Clinton has fought for women’s rights around the world. But who would have dreamed that she would have to fight for them at home

“Why extremists always focus on women remains a mystery to me,” she told an adoring crowd at the Women in the World Summit at Lincoln Center on Saturday. “But they all seem to. It doesn’t matter what country they’re in or what religion they claim. They want to control women. They want to control how we dress. They want to control how we act. They even want to control the decisions we make about our own health and bodies.

“Yes,” she continued to applause, “it is hard to believe that even here at home, we have to stand up for women’s rights and reject efforts to marginalize any one of us, because America needs to set an example for the entire world.”

As secretary of state, Clinton is supposed to stay out of domestic politics. But this was a moment pregnant with possibility, a titanic clash of the Inevitable (Hillary) and the Indefensible (Republican cavemen).

Katrina vanden Heuvel: Giving Dennis Kucinich His Due

A certain kind of politician is becoming a dwindling breed. I’m not thinking of the over-praised and frequently eulogized centrist, the kind who spends a career watering things down and gets lionized for having done so. I mean the bold, politically courageous people who make real the cliché, “Speak truth to power.” The ones who are, perhaps, a little too righteous, who don’t compromise easily, but who prove again and again a tendency to be correct. They are the ones who are harder to dismiss, no matter how much the pundits or corporate media try. They insert themselves into the national conversation, pushing their ideas and their vision into the debate.

Dennis Kucinich is one of those politicians. At least, he was. Last week, thanks in large part to Republican gerrymandering, he lost his bid for reelection. In his loss, the country loses something too. Whatever your view of Kucinich’s politics or style, he mattered a great deal.

Kucinich was never afraid to take the positions that should have been at the core of the Democratic party. He opposed the Patriot Act when few brave Democrats would join him. He was opposed to the Iraq war from the outset, whipping his colleagues against it, with the result that three-fifths of House Democrats voted against that immoral, illegal invasion. Once it began, he called on Congress to defund it, when few in his party were willing to go along. Despite almost no political support, he introduced articles of impeachment against Vice President Cheney, accusing him (rightly, I believe) of lying to the American people to get us into the war in Iraq.

So did anyone watch last night’s games?

Yup, that’s what I thought.  I do have the results-

Play In Day 1

Tonight’s contests-

Play In Day 2

I’ll be less available than usual as I have a meeting to attend.

Update: Nate Silver’s analysis.

This is your morning Open Thread. Pour your favorite beverage and review the past and comment on the future.

Find the past “On This Day in History” here.

March 14 is the 73rd day of the year (74th in leap years) in the Gregorian calendar. There are 292 days remaining until the end of the year.

On this day in 1885, The Mikado a light opera by W.S. Gilbert and Arthur Sullivan, had its first public performance in London.

The Mikado, or, The Town of Titipu is a comic opera in two acts, with music by Arthur Sullivan and libretto by W. S. Gilbert, their ninth of fourteen operatic collaborations. It opened in London, where it ran at the Savoy Theatre for 672 performances, which was the second longest run for any work of musical theatre and one of the longest runs of any theatre piece up to that time. Before the end of 1885, it was estimated that, in Europe and America, at least 150 companies were producing the opera. The Mikado remains the most frequently performed Savoy Opera, and it is especially popular with amateur and school productions. The work has been translated into numerous languages and is one of the most frequently played musical theatre pieces in history.

Setting the opera in Japan, an exotic locale far away from Britain, allowed Gilbert to satirise British politics and institutions more freely by disguising them as Japanese. Gilbert used foreign or fictional locales in several operas, including The Mikado, Princess Ida, The Gondoliers, Utopia, Limited and The Grand Duke, to soften the impact of his pointed satire of British institutions.

The Mikado is a comedy that deals with themes of death and cruelty. This works only because Gilbert treats these themes as trivial, even lighthearted issues. For instance, in Pish-Tush’s song “Our great Mikado, virtuous man”, he sings: “The youth who winked a roving eye/ Or breathed a non-connubial sigh/ Was thereupon condemned to die / He usually objected.” The term for this rhetorical technique is meiosis, a drastic understatement of the situation. Other examples of this are when self-decapitation is described as “an extremely difficult, not to say dangerous, thing to attempt”, and also as merely “awkward”. When a discussion occurs of Nanki-Poo’s life being “cut short in a month”, the tone remains comic and only mock-melancholy. Burial alive is described as “a stuffy death”. Finally, execution by boiling oil or by melted lead is described by the Mikado as a “humorous but lingering” punishment.

Death is treated as a businesslike event in Gilbert’s Topsy-Turvy world. Pooh-Bah calls Ko-Ko, the Lord High Executioner, an “industrious mechanic”. Ko-Ko also treats his bloody office as a profession, saying, “I can’t consent to embark on a professional operation unless I see my way to a successful result.” Of course, joking about death does not originate with The Mikado. The plot conceit that Nanki-Poo may marry Yum-Yum if he agrees to die at the end of the month was used in A Wife for a Month, a 17th century play by John Fletcher. Ko-Ko’s final speech affirms that death has been, throughout the opera, a fiction, a matter of words that can be dispelled with a phrase or two: being dead and being “as good as dead” are equated. In a review of the original production of The Mikado, after praising the show generally, the critic noted that the show’s humour nevertheless depends on

“unsparing exposure of human weaknesses and follies-things grave and even horrible invested with a ridiculous aspect-all the motives prompting our actions traced back to inexhaustible sources of selfishness and cowardice…. Decapitation, disembowelment, immersion in boiling oil or molten lead are the eventualities upon which (the characters’) attention (and that of the audience) is kept fixed with gruesome persistence…. (Gilbert) has unquestionably succeeded in imbuing society with his own quaint, scornful, inverted philosophy; and has thereby established a solid claim to rank amongst the foremost of those latter-day Englishmen who have exercised a distinct psychical influence upon their contemporaries.”

Along with the Foreclosure Settlement documents it was agreed that the Housing and Urban Development Inspector General report was also released. The New York Times review of the report noted that, contrary to the denial by the banks, top bank managers were responsible for the criminal conduct:

   Managers at major banks ignored widespread errors in the foreclosure process, in some cases instructing employees to adopt make-believe titles and speed documents through the system despite internal objections, according to a wide-ranging review by federal investigators.

   The banks have largely focused the blame for mistakes on low-level employees, attributing many of the problems to the surge in the volume of foreclosures after the housing market collapsed and the economy weakened in 2008.

   But the report concludes that managers were aware of the problems and did nothing to correct them. The shortcuts were directed by managers in some cases, according to the report, which is by the inspector general of the Department of Housing and Urban Development […]

   “I believe the reports we just released will leave the reader asking one question – how could so many people have participated in this misconduct?” David Montoya, the inspector general of the housing department, said in a statement. “The answer – simple greed.”

Ben Hallman at The Huffington Post observed that the report fell short because of stonewalling by the banks lawyers who blocked interviews with but a handful of employees:

Though the report describes a pattern of misconduct that appears widespread, it fails to quantify the damage to homeowners or, ultimately, how many home loans were affected. It also clearly reflects the frustration that investigators felt in conducting the review. Even as negotiators for the banks were fighting to win the best possible deal, their lawyers were stonewalling other government investigators trying to ascertain the scope of the “robo-signing” abuses.

Wells Fargo provided a list of 14 affidavit signers and notaries — but then stalled while the bank’s own attorneys interviewed them first. The bank then tried to restrict access to just five of those employees. The reason? “Wells Fargo told us we could not interview the others because they had reported questionable affidavit signing or notarizing practices when it interviewed them,” the report says. [..]

Bank of America only permitted its employees to be interviewed after the Department of Justice intervened and compelled the testimony through a civil investigation demand. Even so, the review was hindered, the report says.  [..]

The investigation into Citigroup’s mortgage division was “significantly hindered” by the bank’s lack of records. Citigroup simply did not have a mechanism for tracking how many foreclosure documents were signed.

Both JPMorgan Chase and Ally Financial refused to provide access to some employees or documents or otherwise impeded the investigation, according to the report.

Hallman also noted some of what was uncovered by investigators:

Wells Fargo employees testified that they signed up to 600 documents a day without attempting to verify whether any of the information was correct. [..] The bank also relied on low-paid, unskilled workers to do the reviews: a former pizza restaurant worker, department store cashier, and a daycare worker, to name a few.

A vice president at Bank of America testified that she only checked foreclosure documents for formatting and spelling errors. Employees in India supposedly verified judgment figures in foreclosure documents, but none of the U.S. employees interviewed by the inspector general could explain how that process was supposed to work. One former employee described signing 12 to 18 inch stacks of documents without review.

Employees at Wells Fargo and Bank of America testified that they complained about the pace and lack of care given to reviews, but instead of relief, were told to sign even faster. One Bank of America notary said his target was set at 75 to 80 documents an hour, and he was evaluated on whether he met that target. One notary even notarized her own signature on a few documents.

Abuses at the other banks — JPMorgan Chase, Citigroup and Ally Financial — appear just as pervasive. Citi, for example, routinely hired law firms that “robo-signed” documents. An exhibit included with the report shows eight different versions of one attorney’s signature — all apparently signed by different people.

In signing off on this 49 state agreement the banks did not have to admit to any wrongdoing despite the damning evidence of fraud that was directed by top management. No other sanctions beyond a few billion dollars and certainly no criminal prosecutions. If I were Bernie Madoff, I’d be really pissed.

The Foreclosure Fraud Settlement documents were filed in federal court and released to the public. There is a lot to wade through but the intrepid David Dayen at FDL News Desk breaks them down in a series of four articles that highlight just how easy these banks are getting off and what they are getting away with. Some of it will really make your blood boil:

Foreclosure Fraud Settlement Docs (I): Ally’s Side Deal

What accounts for this? Probably this little nugget buried in a Reuters article on the settlement:

  Some banks negotiated separate requirements.

   Ally Financial, for example, negotiated a steep discount on the fine part of its settlement, based on an inability to pay it, according to people familiar with the matter.

   It was expected to pay some $250 million, but the Justice Department cut it to around $110 million, these people said.

   In exchange, it committed to solicit all borrowers in its own loan portfolios and to offer to cut principal for delinquent borrowers down to 105 percent of the home’s value. It also offered to refinance underwater borrowers who are current on their payments.

Gee, I didn’t know that federal and state civil penalties had a “pay what you can” quality to them. [..]

About those state funds: there is nothing to stop state AGs from using them in any way they see fit. Note the weasel words in this language (which I’ve bolded):

Each State Attorney General shall designate the uses of the funds set forth in the attached Exhibit B-1. To the extent practicable, such funds shall be used for purposes intended to avoid preventable foreclosures, to ameliorate the effects of the foreclosure crisis, to enhance law enforcement efforts to prevent and prosecute financial fraud, or unfair or deceptive acts or practices and to compensate the States for costs resulting from the alleged unlawful conduct of the Defendants.

   No more than ten percent of the aggregate amount paid to the State Parties under this paragraph 1(b) may be designated as a civil penalty, fine, or similar payment. The remainder of the payments is intended to remediate the harms to the States and their communities resulting from the alleged unlawful conduct of the Defendant and to facilitate the implementation of the Borrower Payment Fund and consumer relief.

You have that strong word “shall” competing with “to the extent practicable.” And indeed, several states have already made clear that they will be diverting much of the settlement into their state budgets. More make it clear in the settlement docs, more on that later.

Foreclosure Fraud Settlement Docs (II): Giving Homes to Charity as a Penalty

Another part of the document explains that any modification under any government housing program can qualify under the settlement credits:

   Eligible modifications include any modification that is made on or after Servicer’s Start Date, including:

   i. Write-offs made to allow for refinancing under the FHA Short Refinance Program;

   ii. Modifications under the Making Home Affordable Program (including the Home Affordable Modification Program (“HAMP”) Tier 1 or Tier 2) or the Housing Finance Agency Hardest Hit Fund (“HFA Hardest Hit Fund”) (or any other federal program) where principal is forgiven, except to the extent that state or federal funds paid to Servicer in its capacity as an investor are the source of a Servicer’s credit claim.

   iii. Modifications under other proprietary or other government modification programs, provided that such modifications meet the guidelines set forth herein.

Presumably those programs weren’t all going to shut down. So banks doing what they’ve been doing, meeting the minimum requirements of those other programs, will help them complete the settlement requirements.

Foreclosure Fraud Settlement Docs (III): “Internal Review Group”

Page E-3 details the “internal review group”:

   Servicer will designate an internal quality control group that is independent from the line of business whose performance is being measured (the “Internal Review Group”) to perform compliance reviews each calendar quarter (“Quarter”) in accordance with the terms and conditions of the Work Plan (the “Compliance Reviews”) and satisfaction of the Consumer Relief Requirements after the (A) end of each calendar year (and, in the discretion of the Servicer, any Quarter) and (B) earlier of the Servicer assertion that it has satisfied its obligations thereunder and the third anniversary of the Start Date (the “Satisfaction Review”). For the purposes of this provision, a group that is independent from the line of business shall be one that does not perform operational work on mortgage servicing, and ultimately reports to a Chief Risk Officer, Chief Audit Executive, Chief Compliance Officer, or another employee or manager who has no direct operational responsibility for mortgage servicing.

So the bank can take their own employees out of another part of the bank and have them conduct a quarterly review, which then gets passed to the monitors and becomes the initial basis for enforcement. Even if you believe these will be “independent” internal reviews, we’ve seen with the OCC foreclosure reviews that those independent reviewers paid for and hired by the banks typically write bank-friendly reports. In fact, a later note indicates that “The Internal Review Group may include non-employee consultants or contractors working at Servicer’s direction.”

Foreclosure Fraud Settlement Docs (IV): Association of Mortgage Investors Planning to Challenge in Court

At any rate, if there’s one group who does not agree with HUD that investors won’t end up footing the bill for a substantial portion of the settlement, it’s… the Association of Mortgage Investors. The trade group representing investors in mortgage-backed securities fully believes they will be on the hook for losses, and so they will challenge the settlement in federal court.

   As the federal court reviews the final settlement, AMI asks that the following changes be made on behalf of all investors:

   Transparency. The NPV (net present value) model incorporated into the settlement must consider all of a borrower’s debts, be national in scope, transparent, and publicly disclosed; the NPV model must be developed by an independent third-party. An incorrect NPV model likely will lead to further re-defaults and further harm distressed homeowners.

   Monetary Cap to Protect Public Institutions. As intended, the settlement causes financial loss to the abusers (the bank servicers and their affiliates). Unfortunately, the settlement is expected to also draw billions of dollars from those not a party to the settlement, including public institutions, unions, and individual investors. It places first and second lien priority in conflict with its original construct thereby increasing future homeowner mortgage credit costs. It is unfair to settle claims against the robosigners with other people’s funds. While we request that it not be done, at a minimum we request that a meaningful cap be placed on the dollar amount of the settlement satisfied by innocent parties. Again, restitution should come from those who are settling these claims, and

   Public Reporting. We ask that the settlement Administrator be required to make reports public and available on a monthly basis, reporting progress on clearly defined benchmarks and detailing on both a dollar and percentage basis whether the mortgages modified are owned by the mortgage servicers or the general public.

Over at naked capitalism, Yves Smith points out The Legal Lie at the Heart of the $8.5 Billion Bank of America and Federal/State Mortgage Settlements

HUD Secretary Donovan, the propagandist in chief for the Federal/state mortgage pact, has claimed he has investor approval to do the mortgage modifications that are a significant portion of the value of the settlement. We’ll eventually see what is actually in the settlement, but the early PR was that “no less than $10 billion” of the $25 billion headline total was to come from principal reductions. Modifications of mortgages not owned by banks, meaning in securitized trusts, are counted only 50% and before Donovan realized he was committing a faux pas, he said he expected 85% of the mods to be from securitizations, so that means $17 billion. [..]

But what about this investor approval that Donovan says he has? He has told both journalists and mortgage investors directly that the bulk of the mods will come from Countrywide deals and he has consent via the $8.5 billion Bank of America/Bank of New York settlement. Huh? First, it seems more that a bit cheeky to rely on a major piece of a program via a deal that has not yet gone through (the Bank of America settlement was removed to Federal court and has now been sent back to state court, and there will be discovery in the state court process, so approval is not imminent).

But second and more important, investors approved nothing. Bank of New York is trying to act well outside its authority as trustee for the 530 Countrywide trusts in the settlement. It’s tantamount to having a friend that you gave a medical power of attorney claim that it gave him the authority to sell your car and write checks on your account.

The terms of Countrywide PSAs vary, but all appear to restrict mods. The prohibitions varied by credit quality of the deal. Alt-A and early vintage (2004 and earlier) deals often barred mods completely; subprime and later vintage deals generally allowed for a higher limit on mods, with 5% the top amount across these deals. The idea was that some mods were expected in the dreckier mortgage pools. Nevertheless, all of them, as well as the few that had no caps, also required Bank of America to buy the modified loans back at par. That is something the battered Charlotte bank would be very keen to avoid doing.

This comment by Synoia sums it all up pretty nicely:

The Banks won’t be held accountable

The Banks won’t fix their past behavior

The Banks won’t change their behavior

The Banks won’t stop bribing our politicians

The Banks won’t stop gouging consumers

The Banks won’t tell the truth about any facet of their business

The Banks won’t stop taking enormous risks with other people’s money

The Banks won’t stop paying their worthless executives too much money

Need one continue?

And this settlement won’t change a thing.

Thank you, President Obama