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Move Your BIG Money
The foreclosure crisis has pounded cities across America and New York City is certainly no exception. In 2009, there were 50,000 foreclosures in the entire state-nearly half were in the Big Apple. And just as we are seeing in communities everywhere, the crisis is getting worse, not better. New York City foreclosures were up 16 percent in the first quarter of 2010 compared to the same period last year. According to the Mortgage Bankers Association, over 265,000 mortgages-13 percent of the mortgages in New York State-are now past due or in the foreclosure process. Meanwhile, banks have made less than 12,000 permanent modifications in the state since May 2009.
On Wednesday, at a press conference at the Manhattan Municipal Building, the most powerful local union presidents and the city's chief financial officer told the Big Banks enough is enough. Rather than wait on the Obama Administration to finally put some teeth into its voluntary mortgage modification program (that the banks are voluntarily taking a pass on), these leaders are taking matters into their own hands.
Call it the Move Your BIG Money campaign.
City Comptroller John Liu and the union leaders described a letter they sent to the Banksters laying out specific concerns and demanding answers by September 1. They want to know what the banks are doing to increase the number of modifications including principal write-downs? What's being done to expedite the modification process and stop foreclosure proceedings while applications are being reviewed? What's being done to improve performance so that homeowners stop receiving multiple requests for already-submitted documents, and then are foreclosed on because banks erroneously say that they never got those same documents?
In short, what are the banks doing to address the various stages of hell homeowners find themselves in due to the banks' unwillingness to strike a fair deal?
The threat made implicitly in the letter-and explicitly by some of the union leaders-is that these institutional investors will move their pensions and other monies to alternative financial institutions if the Big Banks don't improve their responsiveness to this crisis in a hurry. If money talks, this is a message that packs a wallop-we're talking BIG unions representing over 500,000 working families-with BIG resources: 1199 SEIU is the largest of all union locals in the US; DC 37 is the largest public employees local in the US; the United Federation of Teachers is the largest teachers local in the US; Transport Workers Union Local 100; the New York Hotel and Motel Trades Council; the Retail, Wholesale and Department Store Union; and 32BJ SEIU is the largest property service workers union in the US.
Joining the signatories of the letter at the press conference was New York Communities for Change (NYCC), a coalition of low- and moderate-income working families fighting for social and economic justice throughout New York State.
"Our banking institutions are employing the same practices that led to the foreclosure crisis while ignoring borrowers stuck with troubled mortgages and the imminent threat of being thrown out of their homes," said Jon Kest, executive director of NYCC. "Banks continue to take advantage of our most vulnerable communities by refusing to modify mortgages or even respond to loan modification proposals. The action taken by New York City's Comptroller and labor leaders signifies the need across the country for a dramatic shift in how the banks deal with borrowers. These institutions have the ability to use their offices and resources to finally force the banks to get right and we are encouraged to see this significant first-step."
Kest is absolutely right, this is indeed a significant first step. Banks are permitting a vicious cycle to continue which is harmful to all of us: families are losing homes, neighbors who remain behind see declining property values, local and state revenues plummet, and the economy continues to drag with 15 million Americans out of work and Depression levels of unemployment in minority communities.
Here's hoping other civic and labor leaders follow the New York City lead-it's time to Move the BIG Money.
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32 Comments so far
Show AllKnow your enemy.
http://coyotesings.wordpress.com/
I'm glad to see such an initiative. Nothing speaks like money to the bankster class; so this is an action they will be forced to "read" and respond to. I hope more like it soon follow!
Finally, some actions that might have real traction!
Unions today are not the unions of yesterday. Although these actions are needed, they are both late and narrowly focused.
"Although these actions are needed, they are both late and narrowly focused"
and better than doing nothing. At least unions are not puppets of Wall Street, like Obama.
> They want to know what the banks are doing to increase the
> number of modifications including principal write-downs?
> What's being done to expedite the modification process and
> stop foreclosure proceedings while applications are being
> reviewed? What's being done to improve performance so that
> homeowners stop receiving multiple requests for already-
> submitted documents, and then are foreclosed on because
> banks erroneously say that they never got those same
> documents?
Even if all the questions get answered, does that guarantee that anything will be done on those banks? The answers are already written on the wall and people are moving away from failures states like California and New York into fiscally disciplined states in comparison such as Utah, upper Nevada, Colorado, Arizona, New Mexico, Texas, Georgia, Florida, Virginia, North Carolina, and Tennessee.
Just one clarification about people moving to red-state Arizona. It is in seriously red budget doo-doo too. That's why they've resorted to a regressive sales tax increase, now at 9.3% in Phoenix and higher in other burgs. And, adding injury to insult, these compassionate cons have also brilliantly extended this higher sales tax to food as well, for the first time in decades. So, where grocery budgets for lower income families can be a quarter of their income, this amounts to a tax increase on the poor of 2-3% of total income. Clever recessionary strategy, yes?
But that's okay, the mad tea-potters love this stuff. Even now, they're ventilating their own feet by chasing itinerant brown-skinned carpenters out too, wtih popular apartheid laws like SB 1070, while the infamous Sheriff Joe struts through elections like an alpha cock. People might want to think twice about a move to AZ.
AZ's economy was expected to tank but it's much better than California's and New York's where it's all borrow, tax, and spend. It's much cheaper to live in AZ than NY or CA. What is the state sales tax in NY or CA and how do their steep income taxing levels compare to AZ's?
"It's much cheaper to live in AZ than NY or CA."
Sure it is. You've had the benefit of all that cheap immigrant labor. What happens to your cost of living when they're all gone? It goes up to match the c.o.l. in NY and CA.
Cheap immigrant labor is much higher in NY and CA and that same cheap immigrant labor there is responsible for higher unemployment. They're moving to our states. If cheap immigrant labor went down, it would only offset some of the rise in c.o.l. .
My point wasn't necessarily contradicting yours about cost of living, only noting that Arizona is one of the more regressive states in taxation and other policies. It is a red state that puts a greater cost burden on lower income than most other states.
AZ ranked #7 in 2009 for regressive taxation nationwide, according to the Institute on Taxation and Economic Policy: http://www.itepnet.org/whopays3.pdf. It is now worse, with the sales tax increase, and especially now in sharing the dubious distinction with only a small handful of states that fully tax food, putting a far greater tax cost on lower income earners.
If you're a plutocrat, by all means, move to Arizona. It's Shangiri-La (well, except in summer at 112-degrees).
"Martian Bachelor"
Your list of "fiscally disciplined states" seems suspicious to me. Most of these states seem more sadistically disciplined to me.
Would you rather be broke and homeless without a job hopeless in NY or CA or would you rather move to where you can afford the basics and live to confront corporate tyranny?
Why not a similar, personal, and courageous move for single payer health care. All the progressives who voted for Obama need only stop paying their premiums. That would get some attention, and make insurance giants deathly ill.
Yep, cause your not going to get decent health care in the end anyway. Learn to live a natural life and prepare to have a natural death. If not expect that everything you have will go to these entities and then they will dump you in some attractive looking hell hole.
KVH writes "...these institutional investors will move their pensions and other monies to alternative financial institutions if the Big Banks don't improve their responsiveness to this crisis in a hurry... this is a message that packs a wallop-we're talking BIG unions representing over 500,000 working families-with BIG resources:.."
I hope she's right, but it's awfully hard to picture the plutocratic banksters quaking in their boots before emasculated unions. Consider what the plutocrats' quisling Uncle Tom did for them on corporate wealthcare or on the employee free choice act (NOT). The idea of unions pressuring banksters is sadly laughable with the MIC's Great Deceiver in the WH. But, as reagan taught us, as long as it looks like we're doing something, that's all that really counts.
Sorry, KVH, you're just not writing about the world as it is.
While reading this I thought of a few questions.
Whose 12,000 mortgages have been "modified"? I suspect they are not the people who most need a modification.
If these unions and other groups CAN move their monies, why haven't they done so already, and, what are they willing to accept as improved "responsiveness" from these banks?
I know people (liberals all!) who continue to bank at Wells Fargo even after I have pointed out to them how corrupt that bank is and even though we have a number of good, smaller, local banks and Credit Unions in this area.
I hope these groups follow through with their threat, but I doubt that they will.
The article should have been called "Thinking About Moving Big Money."
Why make this idle threat? Why wait till September?
I understand that this strategy is based on some undefined negotiated settlement, where these banksters have the upper hand in all negotiations, but what do you really hope to accomplish here? They will water down any agreement and pay lip service to their profound changes.
On the hand, I would suggest a strategy of action. Pull the money out now and send a very clear message. Don't make idle threats. It's a position of weakness.
Pull the money out now. Reinvest in local alternatives. Decentralize.
I don't know the specifics, but maybe the wait is in part due to "penalties" incurred if you pull money out...example, "certificates of deposit". Of course, the bottom line is that unions should have done this over a year ago, but, maybe too many within the union leadership believed that President Obama was "on their side". Reality of what and who President Obama represents (the corporate and military industrial complex first), may slowly be coming to light for them.
Richm, ditto here. The plan in this article sounded more like just asking the banks a few questions but nothing about what actions to take. KVH is also a tool for lining up the feminist votes for Democrats instead of good guys like Nader and likes.
> And the unions? How much power do they have? Not enough to even
> take care of their own supposed function of defending the interests
> of working people. The unions weren't able to defend against
> hemorrhaging of jobs, savaging of working conditions, corporate
> plundering of pensions. Even under a Democratic president, they
> didn't even get the Employee Free Choice Act, & or extensions
> of unemployment compensation!!!
The unions always make plenty of money from steep union fees to keep donating to the Democratic Party when that money could be used to take care of their members who joined. Contrary to what people say about southerners being anti-union, one worker I met in Georgia had this to say about unions in the state, "If the union fees were at least 50% lower, we'd be doing collective bargaining by now". I question whether the union leaders were interested in passing EFCA and unemployment compensation or just waiting for the Republicans to block it so they could join the Democratic Party and play the blame game to make more money out of it. Most union leaders are as good to their members as KVH is to a homeless man on the street.
Well, I was just about to write another poem satirizing KVH, but I'm holding back this time.
I agree, RichM, that the unions have a stake in the existing capitalist order, rather than in the common good. And certainly, unions are tied to the Democratic Party, even when that party has nothing to offer in return for union campaign donations. However, here I think KVH isn't really advocating for the Dems, as usual. She's arguing for a tactic that may or may not work.
Everything's worth trying that has some probability of success. A union certainly has more clout than you or I do. It's short of revolution, which may prove to be the only option in the end.
-TIA
The union leaders appear to be benefitting from the Democratic Party but not the rank and file union members themselves.
So.
What would a "Public Option" BANK look like?
The business-as-usual banks don't get it. Moving the money is a good idea. Just like eating right and staying healthy is a good idea. Or going to the Phillipines for major dental work.
Or joining a UNION...
It would probably look like the Bank of North Dakota, which is the only state owned bank in the US.
http://www.commerce.nd.gov/news/detail.asp?newsID=644
From the link:
"The bank had almost $4 billion in assets and a $2.67 billion loan portfolio at the end of last year, according to its most recent quarterly financial report. It made $58.1 million in profits in 2009, setting a record for the sixth straight year. During the last decade, the bank funneled almost $300 million in profits to North Dakota's treasury."
Strange the only state run bank in the US is doing just fine. How can this be? A public bank doing better than most private banks! This does not jive with Republican talking points!
Rush say it aint so!
Today's paper in my little town has a half column for jobs/employment (the homeless shelter needs a new office manager) and five full pages of public notices for foreclosures. It's like that everyday.
Local communities in Germany are printing their own currency.
www.npr.org/templates/story/story.php?storyId=128546325
and/or...
see the Monetary Reform Act at themoneymasters.com for a proposed solution on a national scale. The reviews and public comments at this site are worth reading.
The absolutely craziest aspect of this crisis, is that when a lender boots a family out of their "under water" home, the bank resells that home at or below its current depressed value--the lender takes a bath, but rather than doing so by writing down the loan balance and keeping the family in its home, it takes the loss but only after first throwing the borrowers out--its a crazy "sanctity of contracts" mindset, that only applies to the weak--there was no "sanctity of contract" when it came to bailing out Wall Street over all the swaps and derivatives that the banks either couldn't pay or collect on.
When Washington caved to the industry and prevented bankruptcy courts from writing down mortgages to levels that debtors could pay, it did a terrible disservice to our country, and our economy. Long term, it would have been better for the banks as well.
Perfect.
That is exactly how Americans can get their mojo back. We contol trillions in pension and retirement funds. We need to use that leverage.
That should go double for corporate bad actors. States and public pension funds should tell corporations that if they are going to destroy the environment, poison people, give them cancer or start resource wars, they'll have to do it with their own money.
Public pressure is the key on the large funds.
Launch some meaningful nationwide (worldwide?) boycotts, some effective PR like political theater and asking meaningful questions at shareholder's meetings, bannering, a liberal use of crime scene tape and Bob's your uncle!
There are fundamental flaws to the financial “activism” Katrina proposes here.
1.The banks in question are accountable to their shareholders to adopt practices and strategies that will maximize profits and minimize losses.
2.A successful loan modification/workout is more financially beneficial than forclosure (as has been pointed out).
3.Therefore, the banks already have financial incentive to diligently pursue successful loan modifications/workouts. One way to look at it is that investors already threaten to move their money every day if banks are not being sufficiently diligent in pursuing profits / avoiding losses.
The real issue is that in many cases loan modifications don't resolve the problem and are not successful, they mostly just delay the inevitable forclosure. Those delays are bad for banks because the more clarity they can achieve on their balance sheets, the stronger they become.
The bottom line is that we screwed up, every single one of us – even those of us who didn't over-extend ourselves to buy more house than we could afford, or make a buck writing mortgages that borrowers really couldn't afford. We're responsible because we, through our elected representatives, allowed the absence of adequate oversight. As a result, people lose those homes that they couldn't afford. It hurts them. It hurts communities. It hurts all of us. These are negative results that we are going to have to endure and ultimately recover from, but in a fiscally responsible way. Banks are already incentivized to make good business decisions, so lets not compound the problem by trying to pressure them into making bad business decisions.