Daily Archive: 06/29/2012

Jun 29 2012

Federal Reserve Lies About Foreclosures

While the attention was on the SCOTUS ruling on the affordable Care Act, this is what was going on under the radar at the Federal Reserve:

Federal Reserve, Regulators Arguing for More, Quicker Foreclosures

by David Dayen

The Federal Reserve has decided to put their thumbs on the scales of justice, explicitly attempting to overturn state-based anti-foreclosure laws on the spurious grounds that they hurt the economy.

This story by Tim Reid in Reuters cites the Fed arguing against the kind of laws in states like Nevada – and soon, California – that have saved hundreds of thousands of homes from foreclosure.

   “State and federal laws enacted to protect homeowners from eviction in the wake of the 2008 housing crash may be extending the slump, according to a growing number of economists and industry experts.

   Foreclosures have all but ground to a halt in Nevada, which passed one of the stiffest borrower-protection laws in the country last year. Yet the housing market is further than ever from recovery, local real estate agents say, with a lack of inventory feeding a “mini-bubble” in prices that few believe is sustainable.

   A recent U.S. Federal Reserve study found that in states requiring a judicial review for foreclosure, delays associated with the process had no measurable long-term benefits and often prolonged the problems with the housing market.”

There’s been a concerted effort to overturn due process in these judicial foreclosure states, on the theory that foreclosures must be quickly flushed through the system so the market can “clear.” Incredibly, house organs like the Fed still express this opinion even after years of documented evidence of illegal foreclosures using false and forged documents in court. The explicit recommendation from the Federal Reserve is to react to systematic foreclosure fraud by closing the courthouse doors to troubled borrowers.

The entire premise that judicial foreclosure states are prolonging the housing slump is completely spurious. Nothing furthers the housing slump more than a spate of foreclosures flooding the market, increasing the supply of distressed homes that sell cheaply and bringing down property values in a particular area. That’s what the Fed is arguing for.

Yes, they’re serious. This is basically siding with the banks, giving fraud as pass and screwing the homeowners and housing market with a flood of foreclosures. And Reuters and other trade publications have decided to publish the propaganda that keeping people in their homes is causing the market to slump and the solution is more foreclosures.

Freelance writer and attorney who helped expose the foreclosure fraud, Abigail Field takes on the Reuters “b.S.” sentence by sentence, shredding the propaganda that the housing crisis was caused by homeowners but by the banks themselves who created the shadow market of foreclosed homes and the underwater crisis. She makes these four points:

  • First, en route to committing mass securities fraud the banks dishonored their contracts and failed to document the mortgage loans as they promised investors they would. As a result, they’ve had to fabricate nonsensical, obviously fraudulent and often sworn statements to try to foreclose. It’s that swamp of fraud that’s causing the delays.
  • Second, banks are manipulating housing market inventory, letting properties they own rot, not listing them for sale, and when auctioning them, sometimes outbidding third parties.
  • Third, bankers’ securities fraud broke the secondary market for non-government backed mortgages. As a result, there’s a lot less capital to lend wannabe homeowners.
  • Fourth, lender-driven appraisal fraud led to such inflated prices that the underwater problem is directly attributable to them.
  • Rather than deal in the reality that our housing crisis is banker driven and dare push the meme that bankers must be held accountable, Reuters is helping bankers (and their government allies) push the idea that if only we made it easy for bankers to use their fraudulent documents, the housing market would heal quickly.

    There’s even more that exposes not just the Federal Reserve’s pass on bank fraud but the how the Obama administration’s so called homeowner bail out is just more hand outs to the banks:

    Sentences ten and eleven:

    “The increasing doubt about the impact of anti-foreclosure laws on the long-term health of the housing market calls into question a basic principle of the Obama Administration’s approach to the housing crisis.

    Many Democrats, including Obama, say struggling homeowners should get more time to make good on their mortgage arrears, or have the breathing room to renegotiate their loans with lenders, especially in the wake of the “robo-signing” scandal in which banks were found to have falsified foreclosure paperwork.”

    How I wish the Obama Administration’s approach had really been about helping struggling homeowners. Instead it has been mostly theatrics with gifts to the banks thrown in. Most recent example – the latest refinancing program has become a fee/profit center for the big banks. Moreover, if homeowners did “make good”, that would be better for everyone involved, including the broader market, but in the era of maximally predatory servicing, it’s not easy. Ditto with mortgage mods that work – and when they include principal reduction that’s meaningful, they work.

    Hey, look! In sentence 11 we get the first whiff of banker wrongdoing. And wow, he not only uses the misleading “robo-signing“, but he also says “falsified foreclosure paperwork.” Foreclosure “paperwork” doesn’t sound that serious, though, does it? How about “falsified documents affecting property title”? Or, “lied under oath about how much borrowers owed and to whom?”

    And as Yves Smith at naked capitalism notes in her article the lies get repeated ad nauseum:

    The way Big Lies get sold is by dint of relentless repetition. In the wake of the heinous mortgage settlement, foreclosure fatigue has set in. A lot of policy people want to move on because the topic has no upside for them. Nothing got fixed, the negotiation process took a lot of political capital (meaning, as we pointed out, it forestalls any large national initiatives in the near-to-medium term), and Good Dems don’t want to dwell on a crass Obama sellout (not that that should be a surprise by now). But the fact that this issue, which ought to be front burner given its importance both to individuals and the economy, is being relegated to background status creates the perfect setting for hammering away at bank-friendly memes. When people are less engaged, they read stories in a cursory fashion, or just glance at the headline, and don’t bother to think whether the storyline makes sense or the claims are substantiated.

    Just look at the headline: “Evidence suggests anti-foreclosure laws may backfire.” First, it says there are such things as “anti-foreclosure laws.” In fact, the laws under discussion are more accurately called “Foreclose legally, damnit” laws. Servicers and their foreclosure mill arms and legs have so flagrantly violated long-standing real estate laws in how they execute foreclosures that some states have decided to up the ante in terms of penalties to get the miscreants to cut it out. [..]

    And that is perhaps the most remarkable bit, the failure to consider that gutting the protections to the parties to a contract undermines commerce. Borrowers in judicial foreclosure states paid higher interest rates due to the greater difficulty of foreclosure. So now they are to be denied what they paid for because the banks recklessly disregarded the procedures they set up and committed to perform? What kind of incentive system is it when we reward massive institutional failure with a bank-favoring settlement and supportive messaging from central bank economists? As Dayen stated:

       “So when these officials argue against laws like those in Nevada, which merely criminalize a criminal practice, or California, which provides due process for people having their homes taken from them, they’re arguing in favor of what amounts to a dissolution of justice.”

    I don’t think you’ll read anything like this at Reuters. Shameful

    Jun 29 2012

    ACA: The Good, the Bad & the Truly Ugly

    First, this morning House Majority Leader Eric Cantor (R-VA) made the rounds of talk shows spouting how the Affordable Health Care bill can be repealed with a simple majority in the House and Senate since the bill was passed under reconciliation. Without a filibuster proof majority in the Senate, Ryan Lizza at The New Yorker points out the obstacles for that to happen:

    Many Republicans, especially in the blog and talk-radio swamps, would cry, “Use reconciliation!” Readers familiar with the congressional debates of 2009-2010 will remember that this procedure allows certain budgetary measures to pass through the Senate with a simple majority. [..]

    But reconciliation wouldn’t work here-the process can only be used for policies that have budgetary effects and a C.B.O. score. Much of the A.C.A., such as the insurance exchanges and subsidies, would fall under these categories. But a lot of it, including the hated individual mandate, does not. Repealing the exchanges and subsides without repealing the mandate and the other regulations and cost controls in the law would create a health-care Frankenstein that a President Romney would be rather nuts to support.

    That said, the SCOTUS ruling has some rather complex ramifications and Chief Justice Robert’s ruling was rather sly. First was there are the three bit from SCOTUSblog that Lambert Strether pointed out at Corrente:

    First, here’s the reasoning:

       Essentially, a majority of the Court has accepted the Administration’s backup argument that, as Roberts put it, “the mandate can be regarded as establishing a condition — not owning health insurance — that triggers a tax — the required payment to IRS.” Actually, this was the Administration’s second backup argument: first argument was Commerce Clause, second was Necessary and Proper Clause, and third was as a tax. The third argument won.

    Second, here are the implications for the role of the State as we have understood it from the New Deal onward; what Phillip Bobbitt would call a change a Constitutional Order:

       The rejection of the Commerce Clause and Nec. and Proper Clause should be understood as a major blow to Congress’s authority to pass social welfare laws.

    Third, here is the new Constitutional Order:

       Using the tax code — especially in the current political environment — to promote social welfare is going to be a very chancy proposition.

    Chancy or not — and it will be the precariat that suffers mischance, and not the elite, in any case — that’s what they’re going to do.

    Next from Scarecrow at FDL News Desk who argues that Chief Justice Robert’s “incoherent decision” will “shackle congress” and “screw millions of uninsured:

    In the process, he did violence to constitutional law and logic.  Consider, for example, Robert’s logic on the “mandate.”  In saving the “mandate,” Roberts essentially defined it as not a mandate.  You are not really required to purchase insurance, he noted; instead, you may choose not to purchase insurance and instead pay a minor tax.  As we know, taxing is just a way to collect revenues, a contribution to the common, aggregate costs of public programs.  In this case, the program is paying for many people’s health care through a system of risk/cost sharing.

    But if the so-called mandate is not really a mandate but rather an option that can be avoided by paying a tax, and if a legitimate purpose of this tax, as government and amicus briefs argued, is to help cover aggregate costs across a pool of many insured and uninsured people, then what does that do to Robert’s argument about the Commerce Clause?  When arguing about the Commerce Clause, Roberts insists it’s a requirement to purchase a “product,” which forces you to take an action, and thus to engage in commerce when you would not otherwise have done that.  Regulating “inaction” is not permissible, Roberts argues.

    But if, as Roberts concludes, the “mandate” is not a mandate, and the tax’s purpose is to help cover pooled costs, and not to buy a “product,” then there is no “mandate” to purchase a “product.”  So no one is forced to engage in commerce as Roberts framed it.  Indeed the “commerce” is already there in the risk sharing system across millions of people, all engaged in commerce by paying premiums into a pooled risk scheme.  Robert’s entire premise for striking down the Commerce Clause rationale is thus contradicted by his argument about how it’s permissible for Congress to enact a tax to support funding of collective health care costs.  That’s what the tax does; but it’s also what paying insurance premiums does.

    Roberts’ reasoning on Medicaid is equally illogical. His premise is that Congress cannot expand an existing program administered by states that depends on shared state/federal funding by conditioning funding for the whole program on the states actually implementing the expansion.  As Brad DeLong observes, if Congress were just now creating a fully expanded Medicaid, to be implemented by states but mostly paid for by the feds, there would be no question that Congress could condition federal funding on the states actually carrying out the programs.  But if the program already exists for half the needy population, Congress cannot complete the program for the other half and use the same leverage to achieve the same degree of state cooperation.

    As per the CBO, if the states actually implement the expansion and make an effort to get those eligible to sign up, 16 to 17 million more people will have health care coverage. But without that leverage to get the states to accept Medicaid expansion it leaves the poor between around 50% and 133% of the poverty line in a real no man’s land, because they would both be ineligible for Medicaid AND the coverage subsidies in the exchanges.

    As for the states voluntarily opting in for the Medicaid expansion, David Dayen doesn’t think that will happen either, even though the cost for the states would only be responsible for less than 10% of the costs.

    And being on the hook for even a small amount of funds isn’t going to make any of these governors happy. Heck, here’s a Democrat, former West Virginia Governor and current Senator Joe Manchin, making the argument for them:

       We should all recognize that the health care challenges that many West Virginians and Americans face are not going to go away unless Congress takes additional action to repair this bill. Now that the Court has ruled, we can move forward with fixing what is wrong with this bill and saving what is right. I have always been determined to reduce the burden on states from the Medicaid expansion, and this ruling affirms my position – and makes clear that states must have the flexibility to live within their means by determining Medicaid eligibility as each state sees fit. I have always said one size doesn’t fit all.

    That’s going to be a compelling set of logic for a non-trivial number of governors. They’ll also distort how much the expansion would put their states “on the hook.” 26 states sued to eliminate the Affordable Care Act entirely, and they almost got there. Why wouldn’t they jump at the chance to eliminate the portion that creates half of the coverage benefits?

    This isn’t going to be universal. New Mexico’s Republican Governor Susanna Martinez, for example, certainly sounds like she’ll take the money. But Southern states in particular, who paradoxically house the citizens most in need of the Medicaid expansion coverage, will be likely resisters at the outset. And it’s not like a lot of success in modern America comes from rallying at the grassroots level for poor and disenfranchised people.

    As was noted by Ezra Klein of the Washington Post, opponents of the ACA see this as a win:

    “We won,” said Georgetown law professor Randy Barnett, who was perhaps the most influential legal opponent of the Affordable Care Act. “All the arguments that the law professors said were frivolous were affirmed by a majority of the court today. A majority of the court endorsed our constitutional argument about the Commerce Clause and the Necessary and Proper Clause. Yet we end up with the opposite outcome. It’s just weird.”

    Yes, it’s weird but so was the whole ACA bill from the very start.

    Jun 29 2012

    Punting the Pundits

    “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”.

    Follow us on Twitter @StarsHollowGzt

    Paul Krugman: The Real Winners

    So the Supreme Court – defying many expectations – upheld the Affordable Care Act, a k a Obamacare. There will, no doubt, be many headlines declaring this a big victory for President Obama, which it is. But the real winners are ordinary Americans – people like you.

    How many people are we talking about? You might say 30 million, the number of additional people the Congressional Budget Office says will have health insurance thanks to Obamacare. But that vastly understates the true number of winners because millions of other Americans – including many who oppose the act – would have been at risk of being one of those 30 million.

    So add in every American who currently works for a company that offers good health insurance but is at risk of losing that job (and who isn’t in this world of outsourcing and private equity buyouts?); every American who would have found health insurance unaffordable but will now receive crucial financial help; every American with a pre-existing condition who would have been flatly denied coverage in many states.

    Richard (RJ) Eskow: Don’t Kid Yourself. It’s Still a Corporate Court. Here Are 10 Lessons From CEO Roberts

    Was today’s ruling a victory for justice over corporate power? Did Chief Justice John Roberts rise above partisan differences because that’s where an honest reading of the law took him?

    Nah. The majority on this Supreme Court is a wholly-owned subsidiary of Corporate America. Call it SCOTUS™ Inc., and it’s brought to you by the same fine folks that gave you Citizens United and Bush v. Gore. John Roberts is its CEO, not its chief justice.

    The point isn’t to reinforce anybody’s cynicism. The point is to act more effectively on behalf of our ideals, by seeing things as they really are.

    Robert Reich: Roberts’ Switch

    Today a majority of the Court upheld the constitutionality of the Affordable Care Act, otherwise known as Obamacare in recognition of its importance as a key initiative of the Obama administration. The big surprise, for many, was the vote by the Chief Justice of the Court, John Roberts, to join with the Court’s four liberals. [..]

    Unfortunately for President Obama – and for Chief Justice Roberts, to the extent his aim in joining with the Court’s four liberals was to reduce the public appearance of the Court’s political partisanship – the four conservatives on the Court, all appointed by Republican presidents, were fiercely united in their view that the entire Act is unconstitutional. Their view will surely become part of the Romney campaign.

    George Zornick: Ruling Could Allow Republicans to Deny Medicaid to Millions of Poor Americans

    The Affordable Care Act didn’t survive entirely as passed-somewhat lost amidst the intense focus on the individual mandate was a ruling that part of the law’s Medicaid expansion was unconstitutional. The Supreme Court’s modification of the law probably won’t have a fundamental, long-term impact, but does make it easier for rogue Republican governors to exempt their states from participating in the expansion-and could cost millions of low-income, uninsured Americans a chance at government health care. [..]

    The decision is only hours old, and as yet, no Republican governor has announced that he or she will reject the Medicaid expansion. But if anyone does it will have real impacts on many uninsured in that state-in Texas, for example, Rick Perry could yank Medicaid away from 1.8 million people who would get it under an expansion. The biggest question for healthcare reformers and the uninsured going forward is whether Perry and his cohorts will actually pull the trigger.

    John Nichols: Bernie Sanders, Nurses: We Still Need ‘Medicare for All’

    There has been few steadier Congressional hands throughout he debate over healthcare reform than that of Vermont Senator Bernie Sanders. Principled in his support for the real reform of “Medicare for All,” yet pragmatic in his advocacy for Affordable Care Act provisions that expand public health programs and allow states to experiment with single-payer options, Sanders has been in the thick of every fight over President Obama’s signature reform. And the ensuing legislative and legal battles over its implementation.

    What Sanders says about Thursday’s Supreme Court decision upholding the ACA provides important insights for progressives as they respond to a complex decision that, in the words of the National Nurses United union, “should not be seen as the end of the efforts by health care activists for a permanent fix of our broken health-care system.”

    Robert Sheer: Supreme Court Leaves Romney in the Cold

    Mitt Romney is an idiot or, even worse, is pretending to be one. His tantrum of a response on Thursday to the Supreme Court’s health care decision was pure playground: As president I will own the ball, and the game will be played by rules that leave me a winner.

    That game has already been called in a decision written by the top-ranking conservative jurist, and shorn of the constitutional objection; Barack Obama’s health care plan now will be judged by its practical outcomes. Romney’s promise that “I will act to repeal Obamacare” from “my first day as president of the United States” is a prescription of destructive gridlock for a program already well under way.  

    Jun 29 2012

    Remind me why we whale again.

    Japan’s appetite for whale meat wanes

    Justin McCurry in Osaka, The Guardian

    Thursday 14 June 2012 05.19 EDT

    Junko Sakuma, a freelance journalist, said the body responsible for selling meat from Japan’s controversial “scientific” whaling programme had failed to sell 908 tonnes of the 1,211-tonne catch, despite holding 13 public auctions since last October.



    Sakuma said the oversupply of whale meat, despite pockets of demand for the highest quality produce, had made Japan’s lethal research programme unsustainable.



    Late last year, it was revealed the government used 2.28bn yen (£18.5m) from the 11 March earthquake recovery fund, on top of its existing $6m (£3.87m) annual subsidy, to pay for the most recent Antarctic hunt.

    The fisheries agency said the use of the fund was justified because one of the towns destroyed by the tsunami was a whaling port.

    This is about the 3rd year in a row of declining catches and failure to sell even a majority of the harvest.

    Complex thinking goes beyond primates: Dolphins understand zero, elephants rescue each other

    By Associated Press

    June 24

    Dolphins are so distantly related to humans that it’s been 95 million years since we had even a remotely common ancestor. Yet when it comes to intelligence, social behavior and communications, some researchers say dolphins come as close to humans as our ape and monkey cousins.

    Maybe closer.

    “They understand concepts like zero, abstract concepts. They do everything that chimpanzees do and bonobos can do,” said Lori Marino, a neuroscientist at Emory University who specializes in dolphin research. “The fact is that they are so different from us and so much like us at the same time.”

    Jun 29 2012

    On This Day In History June 29

    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.

    Click on images to enlarge.

    June 29 is the 180th day of the year (181st in leap years) in the Gregorian calendar. There are 185 days remaining until the end of the year.

    On this day in 1928, The Outerbridge Crossing and Goethals Bridge in Staten Island, New York are both opened.

    The Outerbridge Crossing is a cantilever bridge which spans the Arthur Kill. The “Outerbridge”, as it is commonly known, connects Perth Amboy, New Jersey, with the New York City borough of Staten Island and carries NY-440 and NJ-440, each road ending at the respective state border.

    The bridge was named for Eugenius Harvey Outerbridge (sometimes pronounced “ooterbridge”) the first chairman of the then-Port of New York Authority and a resident of Staten Island. Rather than call it the “Outerbridge Bridge” the span was labeled a “crossing”, but many New Yorkers and others mistakenly assume the name comes from the fact that it is the most remote bridge in New York City and the southernmost crossing in New York state.

    It is a steel cantilever construction, designed by John Alexander Low Waddell and built under the auspices of the Port of New York Authority, now the Port Authority of New York and New Jersey, which currently operates it.

    It opened simultaneously with the Goethals Bridge on June 29, 1928. Both spans have similar designs. Neither bridge saw high traffic counts until the opening of the Verrazano-Narrows Bridge in 1964. Traffic counts on both bridges were also depressed due to the effects of the Great Depression and World War II.

    The Outerbridge Crossing carried 32,438,000 vehicles (both directions) in 2006, or approximately 90,000 each day. Tolls are collected in the eastbound direction only. In early 2009, the cash toll was $8 for passenger vehicles. Users of E-ZPass pay a toll of $6 during off-peak hours (outside of 6-9 am and 4-7 pm).

    In 2003, the Port Authority raised the speed limit for the three inner E-ZPass lanes at the toll plaza from 15 mph to 25 mph, separating these lanes from the rest of the eight-lane toll plaza by a barrier. Two years later, the tollbooths adjacent to the 25 mph E-ZPass lanes were removed and overhead gantries were installed with electronic tag readers to permit E-ZPass vehicles to travel at 45 mph in special high-speed lanes.[9] Motorists using the high-speed E-ZPass lanes cannot use the Page Avenue exit, which is located immediately after the toll plaza.

    In recent years, the bridge has undergone numerous repair jobs as a result of the high volume of traffic that crosses the bridge each day.

    The Goethals Bridge connects Elizabeth, New Jersey to Staten Island (New York City), near the Howland Hook Marine Terminal, Staten Island, New York over the Arthur Kill. Operated by the Port Authority of New York and New Jersey, the span was one of the first structures built by the authority. On the New Jersey side it is located 2 exits south of the terminus for the New Jersey Turnpike-Newark Bay Extension. The primary use for this bridge is a connection for New York City to Newark Airport. The bridge has been grandfathered into Interstate 278, and named for Major General George Washington Goethals, who supervised construction of the Panama Canal and was the first consulting engineer of the Port Authority.

    A steel truss cantilever design by John Alexander Low Waddell ], who also designed the [Outerbridge Crossing. The bridge is 672 ft (205 m) long central span, 7,109 feet (2,168 m) long in total, 62 feet (19 m) wide, has a clearance of 135 feet (41.1 m) and has four lanes for traffic. The Port Authority had $3 million of state money and raised $14 million in bonds to build the Goethals Bridge and the Outerbridge Crossing; the Goethals bridge construction began on September 1, 1925 and cost $7.2 million. It and the Outerbridge Crossing opened on June 29, 1928. The Goethals Bridge replaced three ferries and is the immediate neighbor of the Arthur Kill Rail Bridge. Its unusual mid-span height was a requirement of the New Jersey ports.

    Connecting onto the New Jersey Turnpike, it is one of the main routes for traffic between there and Brooklyn via the Staten Island Expressway and the Verrazano-Narrows Bridge. Until the Verrazano-Narrows Bridge was completed in 1964 the Goethals Bridge never turned a profit. The same happened to the Outerbridge Crossing. The total traffic in 2002 was 15.68 million vehicles.