Masters of the Universe category archive

Roger Lowenstein discusses the robber barons. A nugget:

Executive pay shouldn’t be set by government (or by op-ed writers). It should be set by shareholders. But shareholders don’t have a real voice. And the pay system is way out of line with any rational system of incentives that would serve their interest.

In the coming proxy season, you will see executives getting huge raises and justifying it on the basis that their stocks and profits are up. But a CEO’s impact is felt over many years — not just one. A single up year doesn’t warrant a big bonus if the longer-term performance was mediocre. Nor is simply riding a stock down and then up again cause for celebration. When a batter in baseball slumps to .200, he doesn’t deserve a bonus for getting his average back to .250.

Harold Meyerson commemorates the Triangle Shirtwaist fire: the factory owner’s resistance to workers’ demands for safer working conditions, the staircases locked to keep workers in, the fire escape that collapsed for lack of maintenance, the workers jumping to their deaths to escape the flames . . .

. . . and the reaction of business owners, who considered workers disposable, to the minimal safety regulations that followed (emphasis added):

“The best government is the least possible government,” said Laurence McGuire, president of the Real Estate Board. “To my mind, this [the post-Triangle regulations] is all wrong.”

Such complaints, of course, are with us still. We hear them from mine operators after fatal explosions, from bankers after they’ve crashed the economy, from energy moguls after their rig explodes or their plant starts leaking radiation. We hear them from politicians who take their money. We hear them from Republican members of Congress and from some Democrats, too. A century after Triangle, greed encased in libertarianism remains a fixture of — and danger to — American life.

Two former executives of a failed Stockbridge (Georgia) bank have been indicted by a federal grand jury on charges including bank fraud, federal prosecutors said Monday.

(snip)

Probes into Georgia failed bank cases now have returned criminal indictments or convictions in four of the state’s nation-leading 57 failures since mid-2008.

The Messrs. BIg, though, are still on the loose. And will likely remain that way.

Online activist group Anonymous has released a cache of e-mails which it claims show impropriety at Bank of America.

The leak, which includes correspondence between staff at BoA subsidiary Balboa Insurance, details plans to delete sensitive documents.

Possible impropriety at a bank.

In other news, salt is salty.

Coming up, water is wet.

Where too much is never enough:

How much does it take to feel wealthy these days? For many millionaires, it’s about $7.5 million, according to a survey by Fidelity Investments.

“Wealth is relative, and to some extent the more you have the more you realize how much more you need,” said Sanjiv Mirchandani, president of National Financial, a subsidiary of Boston-based Fidelity, that provides clearing and custody services to broker-dealers, in an interview before the survey’s release today.

Follow the link for a glimpse of a whole nother world.

How to keep foreclosures up and foreclosers employed:

For more than a year, he’d (Phoenix Ackiss–ed.) been out of work, his three degrees and experience in fields from mental health to shipyard work spurned by employers.

Ackiss knew he’d have to vacate his compact home in Bayview. He’d stopped making mortgage payments last June. He just wasn’t sure when he had to get out.

Twice, his home had been scheduled for foreclosure. Both times it was delayed, without anyone notifying Ackiss. Once more, the foreclosure was set, though Ackiss said he’d won approval for a more flexible “deed in lieu” departure.

I got caught up in shell scripting last night. I checked for responsible fiscals after COB EST, but not after COB CST and later.

Turns out the FDIC recognized more of our banking community for their fiduciary acumen.

Bank no more on

Legacy Bank, Milwaukee, Wisconsin

First National Bank of Davis, Davis, Oklahoma

Allstate, which has already sued several banks, alleging that the banks sold Allstate mortgage-backed insecurities which the banks knew to be hinky, has allded Credit Suisse to its list of targets.

Credit Suisse is the latest target of Allstate’s litigation over mortgage-backed securities. The company last month sued JPMorgan Chase & Co. over $700 million of the securities the bank sold the insurer; Citigroup Inc., over more than $200 million; and Deutsche Bank AG, over about $185 million. Allstate said the banks misrepresented underwriting standards, owner occupancy data and loan-to-value ratios.

“The systemic (but hidden) abandonment of the disclosed underwriting guidelines led to soaring default rates in the mortgage loans underlying the certificates,” Allstate said in the Credit Suisse complaint. “The value of Allstate’s certificates has plummeted, causing Allstate to incur significant losses. These losses were not caused by the downturn in the U.S. housing market, but by the defendants’ faulty underwriting.”

I tend to root for Allstate, but not by much. I suspect that no big corporate players in the high-falutin finance field have clean skirts.

But I sure as shootin’ want to see this go to trial.

The testimony in open court should be delicious.

Robert Kuttner of the American Prospect floats a proposal in the Boston Globe.

Here’s his summary of how the banks created this mess. Follow the link for his proposals:

Today, about one home in three carries a mortgage worth more than the underlying property, and some 7 million homeowners are at risk of foreclosure. The banking system is reeling under the weight of non-performing loans and depressed mortgage-backed securities.

To complicate the mess, during the bubble phase when lenders were on steroids, many banks neglected to do the paperwork properly. When a note (the promise to pay) or lien (the right to take the house if the loan defaults) is sold to a third party, the transfer must be fully documented.

But adrenalized banks got careless with paperwork as they sold off the loans. Today it’s not clear who, if anyone, has the right to foreclose. More and more foreclosures are tied up in court, and the average duration of a foreclosure case is now close to two years.

Meanwhile, the Obama administration’s main remedy, the 2009 Home Affordable Mortgage Program, is far too feeble. It has nudged the banks to give modest loan modifications to fewer than 700,000 homeowners — one-tenth of those at risk — and half of these are expected to go back into default. The program is voluntary for the banks, which often prefer to disguise their balance-sheet losses rather than offer homeowners enough relief to keep their homes.

Addendum, Later That Same Afternoon:

Interesting little report at Bloomberg:

Bank of America Corp. and Wells Fargo & Co., the largest U.S. mortgage firms, said they may face fines or enforcement actions from regulators amid investigations into foreclosure procedures.

Details at the link.

Responsible fiscals, indeed.

When will the FDIC run out of banks to shut down?

Only one in tonight’s crop:

Valley Community Bank, St. Charles, Illinois

This isn’t even news any more.

It is merely routine testament to the incompetence of an industry.

The FDIC munches on some appetizers:

Citizens Bank of Effingham, Springfield, Georgia

Habersham Bank, Clarkesville, Georgia

Dessert:

Charter Oak Bank, Napa, California.

Writing at Bloomberg, Michael Short analyzes the causes of the late and future panic depression recession.

The reasoning is dense and requires careful reading, but it’s worth a gander, maybe even a goose. A nugget:

AIG head Robert Benmosche has recently pointed out that the reason his firm has enjoyed such great success is precisely because it has avoided selling insurance to the large number of Americans who believe, as Benmosche put it, “that the government is responsible for what happens to me.” (As we know, the government is responsible only for what happens to AIG).

The CEO of JPMorgan, Jamie Dimon, has often called our attention to the outrageous amount of banker bashing by Americans outside the financial sector, who seek to blame their troubles on others.

Wall Street leaders now understand that they made a mistake, one born of their innocent and trusting nature. They trusted ordinary Americans to behave more responsibly than they themselves ever would, and these ordinary Americans betrayed their trust.

Amazingly, these ordinary Americans don’t even appear to feel guilty for their actions. Like wild animals that have lost their fear of humans, they continue to wander down from the hills to rummage through our garbage cans for sustenance.

One can only hope . . . .

Frustrated by a dispute with Wells Fargo Home Mortgage and by his inability to get answers to questions, the West Philadelphia homeowner took the mortgage company to court last fall.

When Wells Fargo still didn’t respond, Rodgers got a $1,000 default judgment against it for failing to answer his formal questions, as required by a federal law called the Real Estate Settlement Procedures Act.

And when the mortgage company didn’t pay – does something sound familiar? – Rodgers turned to Philadelphia’s sheriff.

The result: At least for the moment, the contents of Wells Fargo Home Mortgage, 1341 N. Delaware Ave., are scheduled for sheriff’s sale on March 4 to satisfy the judgment and pay about $200 for court and sheriff’s costs.

It’s not a foreclosure issue and the homeowner has enough resources to take on the bank.

The bank has been trying to force him to buy a much more expensive homeowner’s policy than the one he had before, a “replacement-value” policy rather than the standard market-value policy.

The purpose of the insurance requirement in a mortgage is to hold the bank harmless in case the house burns down. The bank has no reason to force the homeowner to buy more, unless they are also in the insur–but I speculate, just like a bankster, with no idea of what’s actually going on, just like a bankster. I’m just not too big to fail.

Read the full story at the link.

I missed last night’s ceremony in which the FDIC issued its weekly awards to the integrity of the banking industry, which has made our economy what it is today.

This week’s honorees, honored in their no-longer-being-ness:

Canyon National Bank, Palm Springs, California

Badger State Bank, Cassville, Wisconsin

Peoples State Bank, Hamtramck, Michigan

Sunshine State Community Bank, Port Orange, Florida

Tom Engelhardt writes in the Asia Times that the revolts in Tunisia and Egypt presage the end of American hegemony. After discussing American militarism (Iraq and so on), he moves on financial globalism, which he considers as destructive as random wars.

He sees two waves of American economic unilateralism masquerading as “globalism.”

An excerpt:

Though we all know this first wave well, we don’t usually think of it as “unilateralist”, or in terms of the Middle East at all, or speak about it in the same breath with the Bush administration and its neo-con supporters.

I’m talking about the globalists, sometimes called the neo-liberals, who were let loose to do their damnedest in the good times of the post-Cold-War Bill Clinton years.

They, too, were dreamy about organizing the planet and about another kind of American power that was never going to end: economic power. (And, of course, they would be called back to power in Washington in the Obama years to run the US economy into the ground yet again.) They believed deeply that we were the economic superpower of the ages, and they were eager to create their own version of a Pax Americana. Intent on homogenizing the world by bringing American economic power to bear on it, their version of shock-and-awe tactics involved calling in institutions like the International Monetary Fund to discipline developing countries into a profitable kind of poverty and misery.

The irony was that, in the economic meltdown of 2008, they finally took down the global economy they had helped “unify”. And that occurred just as the second wave of unilateralists were facing the endgame of their dreams of global domination. In the process, for instance, Egypt, the most populous of Arab countries, was economically neo-liberalized and – except for a small elite who made out like the bandits they were impoverished.

Talk about “creative destruction”! The two waves of American unilateralists nearly took down the planet. They let loose demons of every sort, even as they ensured that the world’s first experience of a sole superpower would prove short indeed. Heap onto the rubble they left behind the global disaster of rising prices for the basics – food and fuel – and you have a situation so combustible that no one should have been surprised when a Tunisian match lit it aflame.

At Comically Vintage.

Bank of America settles the claims, agreeing to pay claimants $400,000,000.00.

Miami resident Ralph Torres described in his suit against Bank of America how he opened an account in 2000 after seeing advertisements for “free checking.” Torres alleged he was tricked into believing he had more money in his account than was the case, and that Bank of America debited his funds in a way that made it more likely he would incur overdraft fees.

“The bank actively provides false or misleading balance information to these customers, including plaintiff, that in turn deceives these customers into making additional transactions that, in turn, will generate even more overdraft fees for the bank,” Torres’s lawyers wrote in the complaint.

The FDIC is honoring responsible fiscals once more. Early start this week.

Disappearance at Roswell–Georgia, that is. Among the missing:

American Trust Bank, Roswell, Georgia

Updates throughout the evening.

Also disappeared:

North Georgia Bank, Watkinsville, Georgia

That seems to be the crop so far.

One of these days, they will run out of banks to fail.

Baptism by foreclosure:

Of 113 churches currently listed for sale in metro Atlanta, at least 33 are foreclosures or churches in serious financial trouble, estimated Rick Arzet, an associate broker with Prudential Georgia Realty, who specializes in churches. Although that’s just a small fraction of the churches that dot the Atlanta landscape, the situation is the worst he’s seen in 40 years.

“Churches are the tail on the dog,” Arzet said . “The people in churches are the same people who are your neighbors,” he said — the same people who are losing jobs and cutting back on spending and that includes donations to the collection plate.

Poor judgment and even ambition sometimes play a role, as well.

As the economy tanked, so did offerings. Persons no longer had as much to offer. As the offerings diminish, so too do the community services, such as youth leagues, day camps, and shelters.

Folks whose concept of churches is derived secondhand, from bible-thumping pastors promoting hate, wingnut lobbyists-in-collars, and only-in-it-for-the-money publicity hounds on the telly vision often don’t realize how much small and medium sized religious institutions do in and for their communities, often with no strings attached and no recognition.

Cynthia Tucker speaks the unspeakable at the Atlanta Journal-Constitution. A nugget:

This may be heresy, but here it is: The interests of Big Business and the needs of regular working Americans don’t always coincide. As just one example, General Electric CEO Jeffrey Immelt, newly appointed as the White House jobs czar, heads a company which relies increasingly on foreign markets for its profits and its workforce. Since Immelt took over in 2001, GE has shed tens of thousands of jobs here while adding tens of thousands abroad.

That trend is likely to continue, not just at GE but also at thousands of other U.S. companies as their managers find they can manufacture more cheaply abroad. They can also outsource accounting, engineering and technical support services, among others.