How did the mortgage industry destroy itself and set off an economic collapse that ruined the finances of millions of Americans? Executives tend to hold themselves blameless, saying that no one could have seen the disaster coming.
Well, judge for yourself after you hear the story of Paul Bishop, who worked at the nation’s second largest savings and loan. World Savings Bank was among the industry’s most admired mortgage lenders. But Bishop says the kind of lending practices he saw were leading to a world of trouble that would ultimately result in billions in losses and a federal investigation.
What does Paul Bishop say he told executives at World Savings, three years before the crash?
“We’re breaking the law, okay? We’re breaking the law. You know we’re breaking the law. I know we’re breaking the law. What the hell do you think is going on here? You know, you’re granting too many people loans who simply can’t qualify,” Bishop told 60 Minutes correspondent Scott Pelley.
Bishop’s story is a rare inside look at forces that tore the economy apart, as seen by a plain-spoken loan salesman who is now suing World Savings, claiming that he was fired for telling executives what they didn’t want to hear.
“I definitely talked to him about Enron. I said, ‘We’re sitting on an Enron.’ This is…bigger than Enron. I mean, we’re doing four billion a month in loans. If housing drops, housing value drops, people start to default, you know? This is a nightmare. These people will not survive it,” Bishop told Pelley.
Bishop was a mortgage salesman at World Savings San Francisco Loan Origination Center. He’d been a top salesman at IBM and spent years as a stock broker. Most everywhere he went, he had a reputation for speaking his mind and ruffling feathers. He joined World in 2002, in part, because of its history.
Bishop says the owners were Herb and Marion Sandler.
“And their reputation at the time was what?” Pelley asked.
“It was flawless, near as I could tell,” Bishop said.
In fact, Herb and Marion Sandler were legendary. In 1963, they started Golden West Financial and grew to 285 branches under the name World Savings. The Sandlers’ were known for careful, conservative lending. They’ve given away millions of dollars to charity and started an advocacy group for low income borrowers called the Center for Responsible Lending.
In 2006, just before the housing crash, the Sandlers sold their bank to Wachovia and pocketed $2.3 billion.
Trouble is, some of their money came from people like Betty Townes, who is financially ruined after being sold a series of World Savings mortgages she couldn’t afford.
Asked how many times she refinanced, Townes said, “Well we refinanced practically every year.”
World salesmen convinced Betty to refinance her mortgage four times in four years. She got about $20,000 each time. “Well, all I know that they told me this loan was best for me,” she told Pelley.
But how could it be best when Betty’s pension couldn’t qualify her for the loans?
“They told me that they would go by my husband’s payroll,” she said.
“Even though he’d been laid off from the shipyard?” Pelley asked.
“No, he’d passed away,” Townes replied.
Banks: We’re breaking the law, OK?
February 16, 2009 — bjflanaganBanks buy politicians — on sale, now!
February 14, 2009 — bjflanaganBill Moyers on PBS, February 13, 2009
On Tuesday, February 10, 2009 Treasury Secretary Timothy Geithner unveiled the Obama administration’s plan to address the crisis in the financial sector. The strategy he outlined calls for the largest Federal intervention in banks and finance since the Great Depression, flooding as much as $2.5 trillion into the system. Given its size and scope — the bill’s lack of detail drew a widely negative response from analysts and economists.
Although he thinks the details are important, Simon Johnson, Professor of Economics at MIT, worries more that Geithner and the Obama administration won’t address a big underlying problem and be tough enough on the politically powerful banking lobby.
Too Big To Fail?
Johnson explains to Bill Moyers on the JOURNAL that the U.S. financial system reminds him more of the embattled emerging markets he encountered in his time with the International Monetary Fund than that of a developed nation. As such, Johnson believes that the U.S. financial system needs a “reboot,” breaking up the biggest banks, in some cases firing management and wiping out shareholder value. Johnson tells Bill Moyers that such a move wouldn’t be popular with the powerful banking lobby: “I think it’s quite straightforward, in technical or economic terms. At the same time I recognize it’s very hard politically.”Without drastic action, Johnson argues, taxpayers are merely subsidizing a wealthy powerful industry without forcing necessary systemic changes: “Taxpayer money is ensuring their bonuses. We’re making sure that banks survive. And eventually, of course, the economy will turn around. Things will get better. The banks will be worth a lot of money. And they will cash out. And we will be paying higher taxes, we and our children, will be paying higher taxes so those people could have those bonuses. That’s not fair. It’s not acceptable. It’s not even good economics.”
IBM, Smart; Forbes…
February 9, 2009 — bjflanagan
Nissan smart roads
Infrastructure
IBM’s ‘Smart’ Moves
by Andy Greenberg
Company revamps its infrastructure offerings just as the Senate is expected to approve billions in IT spending.
First came the lofty pronouncements. Now, comes the products–and the timing couldn’t be better.
Since November, IBM Chief Executive Sam Palmisano has been making futurist statements about the need for a “smarter” national infrastructure, using information technology to upgrade the nation’s roads, electric grid and health care system in a bid to increase their efficiency; to make America more internationally competitive and to create thousands of jobs.
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Warning to fellow writers: I sent a query to the Silicon Valley editor at Forbes about a year ago, re: HoloGenomics.
He declined, saying it wasn’t the sort of thing they do very often.
Except he did — on the same subject, a few weeks ago.
I asked the editors at Forbes how they were going to make this right.
Thus far, their worships have not deigned to reply.
I also proposed a piece on why the old media are dying …
Evil bastards
February 2, 2009 — bjflanaganThe GM genocide: Thousands of Indian farmers are committing suicide after using genetically modified crops
By Andrew Malone
Last updated at 12:48 AM on 03rd November 2008
When Prince Charles claimed thousands of Indian farmers were killing themselves after using GM crops, he was branded a scaremonger. In fact, as this chilling dispatch reveals, it’s even WORSE than he feared.
The children were inconsolable. Mute with shock and fighting back tears, they huddled beside their mother as friends and neighbours prepared their father’s body for cremation on a blazing bonfire built on the cracked, barren fields near their home.
As flames consumed the corpse, Ganjanan, 12, and Kalpana, 14, faced a grim future. While Shankara Mandaukar had hoped his son and daughter would have a better life under India’s economic boom, they now face working as slave labour for a few pence a day. Landless and homeless, they will be the lowest of the low.
Published by The San Francisco Chronicle
India’s Debt-Ridden Farmers Committing Suicide
Nashik, India — On a recent afternoon, Seetabai Atthre heard a faint cry from the edge of a vineyard that her family has cultivated for more than 40 years. Through the furrows, she found her husband, Vishal, smoldering on the ground next to an empty can of kerosene. He had lit himself on fire and died three days later in a local hospital.
Atthre attributes her husband’s suicide to a $5,600 debt. The farm located on the arid plains of northern Maharashtra state near the town of Nashik had not turned a profit in more than two years, and 65-year-old Vishal could no longer secure a bank loan to pay off interest on the debt.”This is wrong, and it’s killing us,” Sanjay Gangode said at a gathering of debt-ridden grape farmers in the region. “There is no future here.”
While India’s economy surges forward on the crest of globalization, thousands of farmers are taking their own lives every year to escape mounting debt and an uncertain future. According to the National Crime Records Bureau, at least 87,567 farmers committed suicide between 2002 and 2006. In Maharashtra state, there were 4,453 suicides in 2006, the last year for which statistics were made available, an increase of 527 compared with 2005. Sharp increases have also been reported in Andhra Pradesh and Chhattisgarh states.
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Do you know what is in your food?
Is it genetically engineered?
Frequently Asked Questions
Question: Why don’t the food manufacturers and the biotech companies want you to know if your foods have been genetically engineered?
Answer: Because if they are labeled, you will start asking questions such as “Have these genetically engineered foods been safety tested on humans?” The answer to that question is NO!
Question: Doesn’t the U.S. Food and Drug Administration (FDA) require genetically engineered foods to be safety tested like they do for new drugs and food additives before they are sold to the public for consumption?
Answer: NO! With limited exceptions, under current FDA regulations, companies are not even required to notify the agency they are bringing new genetically engineered products to the market.
Question: How much of the food I buy in the grocery stores contain genetically engineered ingredients?
Answer: Since genetically engineered soy and corn are used in many processed foods, it is estimated that over 70 percent of the foods in grocery stores in the U.S. and Canada contain genetically engineered ingredients.
Question: Are people all over the world eating genetically engineered foods?
Answer: No, all of the European Union nations, Japan, China, Australia, New Zealand and many other countries require the mandatory labeling of foods that contain genetically engineered ingredients. As a result, food manufacturers in all those countries choose to use non-genetically engineered ingredients.
Bank on America
January 25, 2009 — bjflanagan
- Bank on this.
Community-based movements to halt the flood of foreclosures have been building across the country. They turned out in Cleveland once again in October, when a coalition of grassroots housing groups rallied outside the Cuyahoga County courthouse, calling for a foreclosure freeze and constructing a mock graveyard of Styrofoam headstones bearing the names of local communities decimated by the housing crisis. (They did not, unfortunately, stop the more than 1,000 foreclosure filings in the county the following month.) In Boston the Neighborhood Assistance Corporation of America began protesting in front of Countrywide Financial offices in October 2007. Within weeks, Countrywide had agreed to work with the group to renegotiate loans. In Philadelphia ACORN and other community organizations helped to pressure the city council to order the county sheriff to halt foreclosure auctions this past March. Philadelphia has since implemented a program mandating “conciliation conferences” between defaulting homeowners and lenders. ACORN organizers say the program has a 78 percent success rate at keeping people in their homes. One activist group in Miami has taken a more direct approach to the crisis, housing homeless families in abandoned bank-owned homes without waiting for government permission.
It’s unlikely, though, that any of these activists will be able to relax soon.
When I was a lad, I ran off to San Francisco, like hippies from all over, to be free and unconventional and rid of the whole corporate America trip.
I ended up working at the Bank of America, thanks to a pink collar stoner chick who fudged my typing test.
While working at their headquarters, I learned about the proud heritage of the bank, which had rebuilt San Francisco in the early 20th century, in the wake of its great earthquake.
Today, of course, bankers are universally regarded as monuments to heroic greed, spectacular corruption and epic incompetence–one short step above child molesters on the social scale. Adrift in their bubbles, intoxicated by their own emissions, only they remain unaware of this downward turn in public perception.
When a reporter for the AP politely asked them what they were doing with billions of dollars of the taxpayers’ bailout ransom, they sniffily replied to this effect: “Listen, you tawdry little man–we don’t give a fig about you and your shabby readers. We have parties to attend. Kindly pay up and shut up. Then find your way out.”
Men have short memories. It wasn’t so long ago in the long view of history that, faced with a similar situation, the rabble roused themselves in the streets of Paris and handed the nobility their heads. Good times.
Today, gun shops can’t keep up with demand.
Being a peaceful sort and averse to noise, I got to thinking that maybe it doesn’t have to come to bloodshed and armed insurrection.
Is it conceivable that bankers today are capable, if only in theory, of once again doing the right thing? Could they ever, even in an imagined world, earn their fat paychecks and lead us out of the mess that is largely their own creation?
Trying to wrap my head around that wild notion, I am once again transported back to a more innocent era.
All across the nation
Such a strange vibration …
Camelot
January 22, 2009 — bjflanagan
You are One, under the stars.
That’s it… and look upon this moment. Savor it! Rejoice with great gladness! Great gladness! Remember it always, for you are joined by it. You are One, under the stars. Remember it well, then… this night, this great victory. So that in the years ahead, you can say, ‘I was there that night, with Arthur, the King!’ For it is the doom of men that they forget.
- Merlin, Excalibur
Letter to a friend
January 14, 2009 — bjflanaganHere’s an item from today’s Washington Post that might interest you.
Sorry to hear you have to lay off people — that’s a hellish amount of stress on all sides. On the other hand, I’m glad it’s you and not some heartless bastard who will make the situation even worse and possibly cause the other party to go postal.
I look around me when I’m out running errands and I see lots of people whose faces are frozen masks of pain, anger and resentment. A reporter on a news program recently said how the people he interviews on the street are incensed at what’s been going on — and that the anger is beginning to turn to fear. Not good.
Entering “multiple robberies” on Google News returns pages and pages of results.
So, yes, you’re quite right about the possibility of a severe recession and that would be bad enough — add in all the effects of economic distress and … Well, you get the picture. Not to add to your troubles, but … forewarned is forearmed, right?
On the other hand, I’m mindful of the danger of self-fulfilling prophecies and of the fact that what happens tomorrow depends on what we do today.
As for me, I try to do everything I can to buck people up — including myself, ‘cuz it’s hard to be around people who are stressed out without absorbing some of their distress. Humor and kindness can work wonders, of course, as can helping people vent so that they can move past their anger toward problem-solving.
Do you know about all the networking sites like ecademy and LinkedIn? They’re among the oldest and the best of their kind — like Facebook, for adults, they can go a long way toward helping the unemployed find new opportunities and also alleviate social isolation, with all the problems that brings.
Anyway, those are my thoughts for the day. Please take good care of yourself, OK?
Dream on!
December 29, 2008 — bjflanagan
Bridge to the Future
I was watching the News Hour a few days ago. Two economists were talking.
One was a thoroughly dismal character (no doubt a lot of fun at parties), who saw only boondoggles coming out of Obama’s economic stimulus package — more bridges to nowhere.
The other was more optimistic, reminding listeners that previous programs had given rise to marvels of modern engineering, such as the Golden Gate Bridge — investments in infrastructure which continue to pay dividends today and which are also totally bitchin’ cool.
That got me to thinking: Given what we can do in the 21st century and given the crying needs before us, isn’t this an excellent opportunity to dream big — to envision a bold, beautiful, sustainable future that we and our posterity can take pride in?
We can do this.
We can make it better.
Hey! Ho! Let’s go!
In a dark hour
December 22, 2008 — bjflanagan
Journey of the Magicians
It is late, and I am sitting alone by the window, watching the snow fall on a midnight shift at the Children’s Home. The kids are all in bed and sleeping. The other night I dreamed I taught one of them how to hold fire in his hand.
Winter and darkness bring solitude, strange thoughts. The psalmist writes that night with night shares its knowledge. Above the obscuring clouds and the drifting snow the stars might appear to turn in hand with wandering travelers of long ago. At night we still wonder, what can it mean? What signify, the half-heard music above the hillside? To what destination might the lights make their way in the sky?
Winter’s darkness has fallen again. The earth on its axis is turned. In the fastness of night we remember the magi, imagine them murmuring to themselves while they poke about in their dens, kneeling at the hearthside stirring the embers and smiling in memory of another time when, on a foreign plain and in the company of shepherds, expending much enchantment, they drew themselves together before the child. The obscurities of prophecy had been made plain then in the skies breathing auroras over them, the air beat with wings on fire. And the stillness of it, the unearthly calm that had given voice to the question, so that we said aloud to one another, what have we done? What are we that we should be taken notice of so?
