Banks: We’re breaking the law, OK?

60 Minutes (2/15/09)

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.

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Bank on America

Bank on this.

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. 

The Nation

 

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 …

 

 

 


Tyrants of the world, unite!

“Let the winds of doctrine blow me.” (Milton)

Russian treason bill could hit Kremlin critics

By DAVID NOWAK, Associated Press Writer

MOSCOW – A new law drafted by Prime Minister Vladimir Putin’s Cabinet would allow authorities to label any government critic a traitor — a move that leading rights activists condemned Wednesday as a chilling reminder of the times under Soviet dictator Josef Stalin.

The draft extends the definition of treason from breaching Russia‘s external security to damaging the nation’s constitutional order, sovereignty or territorial integrity. That would essentially let authorities interpret any act against the interests of the state as treason — a crime prosecutable by up to 20 years in prison.

Prominent rights activists said passage of the bill would catapult Russia’s justice system back to the times of Stalin’s purges.

“It returns the Russian justice to the times of 1920-1950s,” the activists said in a statement, urging lawmakers to oppose what they described as the “legislation in the spirit of Stalin and Hitler.”

Stop, you’re killing me

Letter to a friend:

As you have rightly intuited, the inflammatory politics is merely symptomatic of a larger crisis — the end of the time we know and the beginning of another — as presaged by war, famine, fire, flood and reality TV.

This just in:

NATIONAL (NBC ) – Does the financial crisis have you feeling stressed out? Well, you’re not alone.

A newly released survey by the American Psychological Association shows the declining economy is causing stress levels to skyrocket.

The annual report takes a look at the stress level of Americans, and this year, stress is on the rise.

As things get worse on Wall Street, it seems Americans are hitting the wall. They’re stressed out and letting it show.

Dr. Katherine Nordal, the Executive Director for Professional Practice, says they have “irritability, depression, sleeplessness, problems concentrating…”

A new survey by the American Psychological Association finds eight out of ten Americans say the economy is now a significant source of stress.

Almost half say their stress has increased in the past year and they are now increasingly worried about their ability to provide even their families basic needs.

Dr. Nordal says, “What we’re seeing is more and more people coming in because they are more stressed about financial situations, having homes foreclosed on.”

According to the survey, women are being hit the hardest, feeling more stress than men about money, the economy, job stability, housing costs and health problems.

Since I’m the canary in the coal mine when it comes to stress, I can tell you with an uncertain amount of authority that exercise, rest, vitamins, meditation, prayer, soothing music and talking things over with trusted friends are all terrific for smoothing you out. Humor, where appropriate, can also work wonders.

That said, the sheer numbers of wobbling blobs of bobbling blubber among us — I speak, of course, of our fellow Americans — tell us that not everyone “gets” this. We therefore have a lot on our plate. Not as much as them, but you see my point.

The foregoing does not cover all those who resort to drugs and alcohol, of course, who can be counted upon to spiral out into all sorts of lunacy, not all of them comical.

You can, again, mightily empower yourself, being such a good ear and wise counsel, by helping others at this time of crisis, always bearing in mind the final temptation.

Now is my way clear, now is the meaning plain:
Temptation shall not come in this kind again.
The last temptation is the greatest treason
To do the right deed for the wrong reason.

My love to you and the gang!

Our transcendent splendor,

Brian J. Flanagan

It has happened here

 

List of Journalists Arrested at the RNC

Posted on September 10.2008 by Josh Stearns

During and before the Republican National Convention police in St. Paul arrested numerous journalists, including Democracy Now! host Amy Goodman and her staff, members of a number of independent video groups, an AP photographer and staff from local broadcast stations and newspapers around St. Paul.

Arresting and detaining journalists for doing their jobs is a gross violation of free speech and freedom of the press. Journalists must be free to do their jobs without intimidation. On September 5th, local citizens delivered more than 60,000 letters to St. Paul City Hall calling on Mayor Chris Coleman and local law enforcement officials to drop all charges against journalists arrested while covering protests outside the Republican National Convention.

Below we have begun collecting names of journalists who were charged and links to news reports about their arrests. This is a growing list. If you have information about a journalist who is not listed here please email Josh Stearns at jstearns@freepress.net.

Name Outlet Arrested Charge
Sharif Abdel Kouddous Democracy Now! Sept 1 and Sept 4 Suspicion of felony riot and unlawful assembly
Nicole Salazar Democracy Now! Sept 1 Suspicion of felony riot
Amy Goodman Democracy Now! Sept 1 Obstruction of a legal process and interference with a peace officer.
Matt Rourke Associated Press Sept 1 Gross misdemeanor riot charge
Edward Matthews Univ. of Kentucky (journalism student) Sept 1 Riot charge
Britney McIntosh Univ. of Kentuky (journalism student) Sept 1 Riot charge
Jim Winn Univ. of Kentuky (journalism advisor) Sept 1 Riot charge
Lambert Rochfort PepperSpray Productions Sept 3 Held without charge
Joe LaSac PepperSpray Productions Sept 3 Held without charge
Stephen Maturen Minnesota Daily Sept 4 Peppersprayed and ziptied – only held momentarily.
Jonathan Malat KARE 11 Sept 4 Unlawful assembly
Tom Aviles WCCO Sept 4 Unlawful assembly
Amy Forliti Associated Press Sept 4 Unlawful assembly
Jon Krawczynski Associated Press Sept 4 Unlawful assembly
Dean Treftz U-Wire (national college wire service) Sept 4 Unlawful assembly
Jeff Schorfheide Badger-Herald Sept 4 Unlawful assembly
Matt Snyders University of Iowa / former reporter for Daily Iowan Sept 4 Unlawful assembly
Christopher Patton Daily Iowan Sept 4 Unlawful assembly
Rick Rowley Big Noise Films Sept 4 Unlawful assembly
Jon Wise MyFox Sept 4 Unlawful assembly
Alice Kathloff MyFox Sept 4 Unlawful assembly
Art Hughes Public News Service Sept 4 Unlawful assembly
Jerry Snook Westwood One Sept 4 Unlawful assembly
Ben Garvin St. Paul Pioneer Press Sept 4 Unlawful assembly
Jason Nicholas New York Post Sept 1 Unlawful assembly and obstructing the legal process
Wendy Binion Portland IndyMedia Sept 2 Felony conspiracy to riot
Geraldine Cahill The Real News Sept 4 Unlawful assembly
Ania Smolenskaia The Real News Sept 4 Unlawful assembly
Suzanne Hughes The Uptake Sept 4 Unlawful assembly
Ted Johnson Variety Sept 4 Unlawful assembly
Alice Kalthoff MyFoxdfw.com Sept 4 Unlawful assembly
John P Wise MyFox Sept 4 Unlawful assembly
Eileen Clancy I-Witness Video August 26 Unknown
Anita Braithwaite Glass Bead Video Collective August 26 Unknown
Olivia Katz Glass Bead Video Collective August 26 Unknown
Nick Brooks Downtown Express Sept 4 Unlawful assembly and interfering with legal process
Sam Stoker Association of Alternative Newsweeklies Sept 4 Unlawful assembly
Paul Demko Minnesota Independent ? Unknown
Emily Forman I-Witness video group ? Unknown
Malisa Jahn I-Witness video group ? Unknown
Elizabeth Press Democracy Now! ? Unknown
Sheila Regan Twin Cities Daily Planet ? Unknown
Seth Rowe Sun Newspapers ? Unknown
Mark Skinner University of Nevada Las Vegas Rebel Yell reporter ? Unknown
Vlad Teichberg Glass Bead Video Collective ? Unknown
Nathan Weber Chicago Freelance Photographer ? Unknown
Tony Webster Twin Cities Independent Media ? Unknown
Alex Lilly Portland Indymedia ? Unknown
Charlie B MTV Think blogger ? Unknown
Andy Birkey Minnesota Independent ? Unknown
Matt Nelson University of Iowa Photojournalism student ? Unknown
Mark Ovaska Rochester freelance photographer ? Unknown
Chad Davis Freelance Photographer ? Unknown
Dawn Zuppelli Rochester IndyMedia ? Unknown

Save the Internet: Take Action

Look at it this way: If the fat cats take over the Net, it will start to look like prime time TV — full of vacuous “reality” programs featuring no-talent buffoons fattening the wallets of brain-dead producers.

Noooooooo! It’s too horrible to contemplate. Act now, before it’s too late!

Save the Internet: Take Action:

How convenient for them

Your Pain, Their Gain

Peter J. Schwartz 05.05.08, 12:00 AM ET

Crumbling home prices and $100 oil helped Wall Street’s Highest Earners pull in $19 billion last year

Problems paying the mortgage, filling the gas tank and feeding the family have eroded living standards for millions of Americans during the past several months. Not so for people who manage big piles of money–many of them made a fortune betting correctly on the housing debacle and rising commodity prices last year.

Our second annual look at the pay of folks who run hedge and private equity funds shows that the top 20 took home a collective $18.7 billion last year, 43% more than in 2006. To even make the list you needed minimum earnings of $350 million, which is $90 million higher than the year before. No chief executive of a traditional Wall Street investment bank even came close.

Our top-ranked earner, hedge fund manager John Paulson ($3.3 billion), reaped much of his bounty from shorting the ABX Index, which tracks the strength of the subprime mortgage market. Paulson earned an estimated $2.3 billion from his share of fees charged to investors and $1 billion from the appreciation of his own capital invested in Paulson & Co. funds.

Fund manager Philip Falcone, who ranked third with $1.7 billion, posted triple-digit returns by shorting subprime credit, resulting in $11 billion of growth for his two Harbinger Capital funds, excluding assets raised from new investors. John Burbank, who runs San Francisco hedge fund Passport Capital, made $370 million last year, also in large part by shorting home mortgage companies and mortgage-related debt ( see story).

Some members of our list, like Texans T. Boone Pickens ($1.2 billion) and John Arnold ($700 million), made their fortunes the old-fashioned way: betting on energy. Pickens’ $2.7 billion BP Capital Equity Fund grew by 24% after fees, while his $590 million Commodity fund grew 40% thanks to large positions in Suncor Energy (nyse: SU news people ), ExxonMobil (nyse: XOM news people ) and Occidental Petroleum (nyse: OXY news people ). For hedge fund billionaires Pickens and second-ranked George Soros ($2.4 billion), whose own investments compose a significant portion of their funds, there’s more to be made from asset appreciation than from fees. Soros made $2 billion from the growth of personal investments within his $17 billion Quantum Endowment Fund, which returned 32% for the year.

http://www.forbes.com/forbes/2008/0505/038.html