Posts tagged with 'colorlines'
Weekly Mulch: Politics Confuse Public Perception of Climate Change
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By Sarah Laskow, Media Consortium blogger
Americans don’t know what to think about climate change anymore. A few years ago, the public more or less trusted the science that said human activity was raising global temperatures, but now that Congress and the Obama administration have hemmed and hawed about climate issues, we’re not longer so sure.
Forty-eight percent of Americans—more of us than ever before—believe that reports of global warming are “generally exaggerated,” according to a new Gallup poll. Climate science hasn’t changed, so it’s not crazy to look at these numbers and think that conservatives’ incessant critiques of climate change may be working. (more…)
Weekly Audit: More Jobs Please
By Zach Carter, Media Consortium Blogger
One year after President Barack Obama secured passage of his critical economic stimulus package, the U.S. Senate is finally taking anther look at how to create jobs and repair the economy. These issues are more important than ever, but absurd Republican obstructionism and timid Democratic negotiation are once again threatening good public policy.
Not really bipartisan, is it?
As Steve Benen notes for The Washington Monthly, the Senate Finance Committee reached a “bipartisan” agreement to supposedly spur job creation last week. Republicans demanded billions in tax cuts for wealthy people, but kept on caterwauling about the federal budget deficit. In exchange for $80 billion to dedicate to jobs—an extremely modest figure given the state of the labor market—Republicans asked for hundreds of billions in giveaways for the rich. And that’s just to get the bill through the Finance Committee, much less the full Senate. (more…)
Weekly Diaspora: Immigration Impacts Everything
By Nezua, Media Consortium Blogger
While many pundits and political analysts are musing about what Tuesday’s mixed bag election results mean for Obama administration, New America Media reports that “there’s another trend to watch; the surprising prominence of immigration politics.”
Even in states where other concerns “like small farms and forestry management” are far more immediate, “immigration has become a litmus test issue for the conservative movement,” and the expectation is, oddly, a “lockstep” goal toward opposing legalization. One has to wonder how the self-destructive choice to oppose immigration at any cost came about.
ColorLines‘ Leticia Miranda asks “What’s next?” now that the infamous Hutto immigration detention center, notorious for myriad human rights violations such as keeping children in prison-like conditions, is closing. Detainees are simply being moved to another detention center in Pennsylvania. So how will we know that substandard conditions and alleged sexual abuse will not be repeated? The problem is not location. The problem is that a class of people have been isolated and assigned lesser worth. making it easy to exploit them. Still, the closing of Hutto is an accomplishment for the ACLU and other activists that worked so hard to make it happen. It’s also a sign that our nation will not tolerate such conditions.
Another positive sign of progress is the reversal of what the Washington Monthly dubbed “a senseless ban” that prohibited HIV-positive individuals from migrating or traveling to the US. Author Steve Benen notes that progress in overturning the ban, which was imposed by the Reagan administration 22 years ago, began with Sen. John Kerry (D-MA) and then-Sen. Gordon H. Smith (R-OR) in 2008.
In negative news, the anti-immigration group Americans for Legal Immigration PAC (ALIPAC) have released a bizarrely antagonistic press release calling Rep. Gutierrez (D-IL) a “traitor,” as The Washington Independent reports. The full press release is here. In it, William Gheen, President of ALIPAC, happily warns that ALIPAC is “ready to organize and channel the backlash wave of anger that is coming into peaceful civic action” and for no apparent reason, employing a Dirty Harry quote beseeching an unnamed person to “Make my day, punk!” People like Gheen and Lou Dobbs are forever talking about a culture war and are obviously not interested in human beings.
It is far too easy to get the same impression about the Department of Homeland Security’s Immigrations and Customs Enforcement (ICE). Reporting on an Associated Press analysis of previously undisclosed documents obtained under the Freedom of Information Act (FOIA), Wiretap declares ICE to be “critically flawed, replete with agents who have badly bungled ongoing cases.” This includes “covering up crimes and even interfering in a police investigation into whether one informant killed another.” The list of ICE’s violations of the public trust include “soliciting sex from witnesses, letting informants smuggle undocumented folks, sexual relationships with informants” and using their position improperly to accrue “personal gain.”
As author M. Junaid Levesque-Alam makes clear, any agency will develop some degree of corruption that must be rooted out. But the dangers increase when you empower an agency “specifically created to target the vulnerable” with federal authority and weapons, all the while calling this population “illegal aliens.”
Also in Wiretap, Jamila King reports on San Francisco’s ongoing battle with Mayor Gavin Newsom regarding when deportation proceedings should be initiated against youth that have bee arrested but not tried for a crime. The city recently voted that juveniles accused of crimes must actually be convicted before they are deported.
Oddly, even in the face of “crowds of people gathered at city hall to celebrate the board’s decision to overturn” the “draconian mandate,” Newsom vetoed the change last Wednesday. Supervisor David Campos responded to the veto by saying it was a “sad day for San Francisco” and that Newsom had “chosen to be on the wrong side of history on this issue.” King reminds us, however, that Newsom’s move is toothless. The Board of Supervisors had enough votes to override his veto.
Deportation is a serious issue. Last week the Diaspora featured “Torn Apart” ColorLines‘ web-only series on deportation’s effects on families of color. Free Speech TV has posted an alert to protect families from deportation. It includes a link with actions you can take to help.
Finally, as The Real News reports, Mexico is offering amnesty to all undocumented immigrants within its borders, be they from the US or other nations (video below). Juan Ignacio Pedroza, Migratory Regulations Official for Mexico, makes clear why the country is making such a move. The government of Mexico sees immigrants as an economic boon, and wants to offer them a path to citizenship so that they can contribute and be part of the social fabric.
Mexico is an older nation and surely imperfect. But this decision demonstrates wisdom about how a people can come together that we might learn from here in the US.
This post features links to the best independent, progressive reporting about immigration by members of The Media Consortium. It is free to reprint. Visit the Diaspora for a complete list of articles on immigration issues, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, and health care issues, check out The Audit, The Mulch, The Pulse and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.
Weekly Diaspora: Legislating Hate
By Nezua, Media Consortium Blogger
Anti-immigration groups and pundits cling to phrases like “Illegal Alien” because they only focus on foreignness and danger. These extreme factions are all about casting immigrants as what ails our society, conjuring up demons upon which to focus national ire, and perpetuating a subhuman category of being. It’s a convenient distraction from things that are actually endangering our nation. A new web-only series from ColorLines called “Torn Apart by Deportation“ is the perfect antidote to people like CNN’s Lou Dobbs. (more…)
Weekly Diaspora: A Return to Reason
By Nezua, Media Consortium Blogger
After the shadowy Bush years, the emergence of reasonable policy can be a little surprising. Immigration law has suffered from a lack of planning and is often influenced by fear rooted in the Sept. 11 attacks. But the national dialogue on immigration has begun to grow healthier. Activists, immigration advocacy groups and Latino and Asian American communities dug in and are working toward reform. Right wing and anti-immigration voices have less sway. This week we see two tangible and positive developments on this front: An announcement from the White House regarding detention policy reform and a letter against aggressive enforcement sent to the White House from the Congressional Hispanic Caucus. (more…)
Weekly Immigration Wire: 287(g) Makes Hard Times Harder
By Nezua, TMC Mediawire Blogger
The number of undocumented immigrants coming into the U.S. is plunging, as The Washington Independent’s Daphne Eviatar reports. And yet, the White House is still ramping up harsh detainment measures like 287(g), which is already linked to abusive practices. If Obama continues to fall back on harsh stopgap measures and leaves comprehensive immigration reform for next year, he greatly increases the risk that it won’t pass at all.
Some are inclined to give the President a degree of lenience, considering the great challenges facing the nation. After all, shouldn’t Obama prioritize the legal citizens? That kind of thinking is problematic. When human beings in our midst are abused, their citizenship is a moot point. The United States’ most revered documents, such as the Bill of Rights, recognize this truth by noting the existence of inalienable rights. These rights must be vociferously defended, especially when the most vulnerable are deprived of them.
But as RaceWire accounts, a new report reveals that “[Immigration and Customs Enforcement] (ICE) agents routinely violate constitutional guarantees by illegally entering homes using physical force, seizing upon innocent people” and target people based “solely on their race.” One would think this would be quite a teachable moment, but the White House has been silent so far. ICE projects 400,000 arrests next year.
Sojourners reveals how the 287(g) program plays out in places like Guilford County, North Carolina. Immigration opponents are in a fury, and families are terrified of being locked up or bearing the brunt of that anger in some other way. Unfortunately, “such images and stories are becoming commonplace” in the towns where 287(g) is enacted. And it gets worse. Families go without medical care and suffer. Crimes are committed on a vulnerable population that fears reporting crimes to police in case of deportation. “As we await substantive immigration reform, what kind of community do we want to be,” asks author Julie Peoples.
Do we want to be a community that covers the uninsured? Do we want to be a community that covers the uninsured but not the undocumented? Even when “it’s simply more expensive to do nothing?” Are we comfortable deporting a man paralyzed with brain damage for being poor? In even the most optimistic of current proposals for healthcare reform, “universal” clearly does not mean “human.”
Some ethnic communities face higher risks of certain disease. Asian Pacific immigrants (API) “face serious health disparities,” according to New America Media’s Sara Sadhwani. As Sadhwani notes, “South Asians and Pacific Islanders face high rates of chronic disease such as diabetes and heart disease.” And yet the API community—legal immigrants with green cards, in this context—would be ineligable for federally funded public benefits for a five-year waiting period, according to current healthcare proposals.
But what about those who are neglected by the current immigration dialogue? WireTap’s Nina Jacinto says we must make this dialogue representative of the queer undocumented who do not fit the “heteronormative framework” of the conventional narrative. “Queer immigration reform activism must also contend with the relationship that exists between immigration reform and the preservation and uniting of family,” writes Jacinto. While she concedes the strategic value of employing a heteronormative, family-focused framework in current U.S. culture, one unfortunate result of the “broken family” narrative is that the marginalized continue to be left out of the conversation, and are even further shut out.
Finally, both Racewire and Wiretap make the case that everyone should be counted for the 2010 census. It’s a controversial argument for a couple reasons. While many lawmakers, as well as the Congressional Hispanic Caucus, promote participation, many do not. The National Coalition of Latino Clergy and Christian Leaders, an immigrants rights group, hopes to use a boycott threat to leverage fairer treatment and legislation for the immigrant community. Also urging a boycott are hate groups like the Federation for American Immigration Reform and the Center for Immigration Studies. But no irony in the latter cases; these factions subscribe to the notion that a person’s moral worth is dependent on pieces of paper. No surprise they want to keep the undocumented uncounted!
This post features links to the best independent, progressive reporting about immigration. Visit Immigration.NewsLadder.net for a complete list of articles on immigration, or follow us on Twitter. And for the best progressive reporting on critical economy and health issues, check out Economy.NewsLadder.net and Healthcare.NewsLadder.net. This is a project of The Media Consortium, a network of 50 leading independent media outlets, and was created by NewsLadder.
Weekly Audit: Ending the Economic Status Quo
by Zach Carter, TMC MediaWire Blogger
The banking lobby still holds enough sway inside the Beltway to torpedo sensible consumer protection rules, even after releasing a flood of predatory mortgages that kicked off the current economic crisis. On issues ranging from payday loans to subprime mortgages, the banking industry continues to successfully defend itself against new regulations that would protect the consumer. As if that weren’t outrage enough, the finance lobby has also joined other corporate interest groups to fund misinformation campaigns that smear unions and block wage growth.
As Mary Kane explains for The Colorado Independent, the push to rein in predatory mortgage lending appears to be losing steam on Capitol Hill. An extremely complex mortgage reform bill that is conciliatory to the finance lobby passed the House last month, angering consumer advocacy groups. Among the problems: the bill pre-empts many stronger state predatory lending laws and protects the Wall Street investment banks that gorged themselves on mortgage-backed securities.
Consumer protection shortfalls are not limited to messy mortgages. Lagan Sebert and David Murdoch detail the payday loan industry’s continued assault on U.S. consumers for the American News Project. By offering small loans, typically in amounts ranging from a few hundred to a few thousand dollars, payday lenders target consumers who need money for basic necessities, then charge them outrageous interest rates (as in, above 700%).
For years, newspaper editorials have denounced payday lenders for systematically exploiting the most vulnerable members of society, including members of the U.S. military, who are often targeted as a result of their reliable paychecks. The solution to the problem is as simple as the business is repulsive: Capping annual interest rates on all consumer credit products at 36% would make this kind of predation impossible.
Nevertheless, the payday loan industry has been able to escape a regulatory crackdown via an intense and sustained lobbying effort. Senate Banking Committee Chairman Chris Dodd, D-Conn., is now parroting payday lending lobbyists. Since payday loans are supposedly paid back within a matter of weeks, Dodd and the payday lending lobby say that it’s unfair to hold them subject to the same standards as a 30-year mortgage.
The argument is insane. No bank would ever get away with charging a 36% interest rate on a mortgage. Even the most predatory subprime mortgages didn’t have interest rates anywhere near that high. But Sebert and Murdoch go further, highlighting a report from the Center for Responsible Lending which found that payday lenders make 90% of their revenue from borrowers who do not pay their loans off on time. The loans are structured to be so expensive that consumers become trapped into making payments for the long-term, often spending thousands of dollars over multiple years to get out from under an initial loan of just a few hundred dollars.
Dodd has received major campaign contributions from the banking industry, but sometimes the lobbying effort is much more subtle. Several major corporate lobby groups have united under the misleading moniker of “Alliance to Save Main Street Jobs” to finance shoddily researched projects that defend the interests of the executive class in economic policy. An Alliance for Main Street Jobs report written by Anne Layne-Farrar has received quite a bit of attention for its claim that the Employee Free Choice Act (EFCA) would kill 600,000 jobs by making it easier for employees to organize. Several major news outlets have cited the allegation, including Fox News, MSNBC, The Wall Street Journal, and CBS News. As Art Levine reveals for In These Times, however, this research relies on completely meaningless statistical trends and disingenuous research design that render its findings utterly hollow.
Corporate executives are not afraid of EFCA because they think it will kill jobs or disenfranchise workers. They are afraid because it will empower workers to fight for living wages and provide safe working conditions—things that leave less money around for big executive bonuses at the end of the year and give workers a greater say in how companies operate.
In some respects, EFCA also represents the other side of the predatory lending problem. It is important to ban abusive loans, but it is just as important to make sure people are paid fairly for their work to ensure they don’t need to seek out shady credit just to make ends meet.
When so many brewing legislative battles relate to the economy, it’s easy to forget about the programs that have already been enacted. Some of the tax cuts included in the economic stimulus package were aimed at fostering investment in low-income and minority neighborhoods—a worthy goal. But as Michelle Chen notes for ColorLines, the program has some significant flaws. Chen highlights a report from the Government Accountability Office (GAO) which found that minority-owned community development entities are largely being excluded from the program, with approval rates about 67% lower than other applicants. The GAO could find no reasonable explanation for why minorities were not making the cut, especially when some recipients of the tax credits have a history of consumer exploitation. Capital One Bank, for instance, is receiving $90 million of these tax credits, despite its long history of abusive subprime credit card lending.
There have been some successes this year in the push for an economy that answers to workers and consumers. Much of the stimulus bill is designed to make sure important jobs don’t disappear during the recession, and Sen. Dodd’s credit card reform bill passed both chambers of Congress by comfortable margins and included some very strong improvements. But we know what caused the economic crisis: stagnant wages and predatory lending. A true recovery will have to empower workers and protect consumers, both of which will require breaking with the corporate status quo.
This post features links to the best independent, progressive reporting about the economy. Visit StimulusPlan.NewsLadder.net and Economy.NewsLadder.net for complete lists of articles on the economy, or follow us on Twitter. And for the best progressive reporting on critical health and immigration issues, check out Healthcare.NewsLadder.net and Immigration.NewsLadder.net. This is a project of The Media Consortium, a network of 50 leading independent media outlets, and was created by NewsLadder.
Weekly Audit: Workers will build the recovery, not Wall Street
With new bailout plans for Wall Street being unveiled almost every week, it’s easy to forget that nearly all of the work that fuels our economy takes place outside of Manhattan. While reviving the financial sector is an important part of recovery, any lasting economic solution must also empower American workers and protect them from corporate abuses.
Workers’ rights are a core issue for our democracy, as progressive icon Noam Chomsky argues in an interview with Paul Jay of The Real News. The discussion covers the current economic crisis and its implications for the democratization of the U.S. economy. It’s a fascinating exchange. In the video below, Chomsky advocates for a much broader palette of reform than a simple clean-up the financial sector.
Chomsky notes that while the recent bank bailouts have brought a great deal of attention to the disconnect between public investment and private profit, it has become routine for the taxpaying public to foot the bill for important research that eventually creates big corporate profits. To ensure that we all reap the benefits of our investments, it is essential to make institutions accountable to their communities, rather than exclusively dedicated to maximizing shareholder returns.
The first step in democratizing the U.S. economy, according to Chomsky, is promoting unionization by enacting the Employee Free Choice Act, which makes it easier for workers to organize.
“The Employee Free Choice Act is always misrepresented,” Chomsky says. “It’s described as an effort to avoid secret elections. It’s not that. It’s an effort to allow workers to decide whether there should be secret elections, instead of leaving the decisions entirely in the hands of employers.”
EFCA would give workers more control over their circumstances, leading to improved wages and living standards for laborers. In a column for The American Prospect, Terence Samuel points out that even if Treasury Secretary Timothy Geithner’s plan to bailout Wall Street succeeds in stabilizing the banking sector, banks can do little to bring about recovery if U.S. citizens are all broke. If we want to get out of the bubble-and-bust cycle, we must establish a middle class that has money to spend. Fundamentally, that means raising wages.
Robert Eshelman puts the plight of today’s workers into focus in a devastating piece for Salon. Even where clear, straightforward laws to protect laborers from predatory employers exist, major corporations have been able to use the fear of being fired to push employees into “voluntarily” working under illegal conditions (Wal-Mart just agreed to pay out $640 million to settle charges that it intimidated its own employees into skipping mandatory breaks and accepting pay rates below the minimum wage).
“If corporations were able to exert such coercive power when the unemployment rate was around 5 percent, what can they do in a job market in which 14.8 percent of the population can’t find adequate work?” Eshelman asks.
Under the Bush administration, the U.S. Department of Labor systematically ignored its duty to enforce labor laws. Writing for Colorlines, Michelle Chen highlights a report from the Government Accountability Office that takes the Department to task for failing to even return phone calls from workers who complained about employer abuses.
Millions of jobs are hanging in the balance as President Barack Obama formulates his rescue plan for the U.S. auto industry. But while the administration has insisted that factory workers at GM and Chrysler have to accept wage cuts, they’ve almost bent over backwards to funnel bonus money to executives at failed insurance giant AIG. General Motors’ CEO Rick Wagoner has stepped down at the Obama administration’s request, and while it’s hard to feel sorry for an executive who lobbied aggressively against the environment and ran his company into the ground, his ousting reflects Wall Street’s privileged status in Washington. As Josh Marshall highlights in Talking Points Memo, it is astonishing that executives at Bank of America and Citigroup, who have put taxpayers on the hook for far greater sums of bailout money than GM and Chrysler, have not been subjected to the same treatment as Wagoner.
We’ve all seen the grim statistics indicating how severe the current economic crisis really is, but the proliferation of roving tent, shack and lean-to communities along U.S. railways underscores the true costs of the recession more grimly than any consumer spending metric or gross domestic product projection. All over the United States, people who cannot afford even rental housing are living in makeshift structures without access to basic amenities. It’s much like the rise of Hoovervilles in the late 1920s and 1930s, where out-of-work laborers took up residence anywhere they could.
While these squatter communities are growing as the crisis deepens, the worst part of the whole phenomenon is that they were common before the current downturn, as Scott Bransford notes for High Country News.
Whatever happens on Wall Street, fixing the economy will mean making sure ordinary people have access to basic amenities, and guaranteeing that workers have the power to prevent abuses from corporate America’s executive class.
This post features links to the best independent, progressive reporting about the economy. Visit StimulusPlan.NewsLadder.net and Economy.NewsLadder.net for complete lists of articles on the economy, or follow us on Twitter. And for the best progressive reporting on critical health and immigration issues, check out Healthcare.NewsLadder.net and Immigration.NewsLadder.net. This is a project of The Media Consortium, a network of 50 leading independent media outlets, and was created by NewsLadder.
Weekly Audit: Progressive Pressure is Repairing the Economy
Progressive media is sounding the alarm on the AIG bonus scandal, demanding that policymakers stop repeating Bush administration mistakes and offering concrete solutions to the dire economic situation those missteps have created.
Former Secretary of Labor Robert Reich describes the bonus insanity in a blog distributed by AlterNet. “Had AIG gone into chapter 11 bankruptcy or been liquidated, as it would have without government aid, no bonuses would ever be paid,” Reich writes, noting that institutions like AIG “are no longer within the capitalist system because they are no longer accountable to the market.” If AIG is not accountable to the Treasury Secretary of the country that owns an 80% stake in AIG, then the company has unlimited access to taxpayer coffers without being accountable to anyone at all.
The government’s first set of actions after it took control of its AIG stake back in September should have been to identify and renegotiate every important contract the company was tied up in. Whether those contracts were guaranteed bonuses with current employees or complex credit default swap transactions with Goldman Sachs, the extraordinary assistance the government had agreed to provide would have been a perfectly legitimate legal justification to demand new contractual terms. In short, the government should have exercised the benefits of ownership—exactly what progressive economists, columnists and bloggers have been demanding since the bailout debate began.
But while the uproar over AIG’s bonuses vindicates progressive calls for more stringent action to rein in the financial predators, President Barack Obama inherited an economy in very real danger of collapse, with the banking crisis is the epicenter of the economic earthquake.
While most economists are warning of the worst recession since the Great Depression, Robert Kuttner reveals for The American Prospect why this one might actually be worse. When the stock market crashed in 1929, the U.S. financial system was still generally healthy. It took another three years for unemployment and general economic malaise to overwhelm the banking world. Today, the banking system is already broken and could get even worse without swift and dramatic action from the Obama administration. The U.S. is not a major international creditor as it was in 1929, but rather the world’s largest debtor, and today far more Americans have their life savings tied up in the value of their home and in the stock market than in the early years of the Depression. Millions of Americans have already seen their nest eggs decimated in the current recession, a process which took years during the Herbert Hoover administration.
Kuttner emphasizes that the situation is not hopeless—it will simply require a bigger set of policy tools than the Bush administration was willing to wield. “All of these economic calamities have solutions, but each is more radical that what’s currently on offer,” Kuttner writes. Temporarily nationalizing big banks has become inevitable if recovery is going to be taken seriously. We’ll also have to get used to very large federal deficits—World War II deficits were nearly triple the deficit we will see this year. If foreign creditors decide to stop footing the bill, the U.S. may need to finance its economic salvation by selling recovery bonds to our own citizens just as we sold war bonds in the 1940s war bonds.
The key is to keep the progressive pressure on high. In an interview with GritTV’s Laura Flanders, Barbara Ehrenreich emphasizes the importance of the current economic situation for the future of progressive ideals. Ehrenreich identifies as a socialist and is most famous for her book Nickel and Dimed about living on poverty-level wages. The fact that we have allowed Wall Street to drain hundreds of billions of dollars in public sector resources should be terrifying, according to Ehrenreich, and even those who do not share her ideological affiliations can see that the current loot-and-let-die arrangement is not only unfair, but not working.
“[Obama] needs a left on the economic issue,” Ehrenreich argues. “We’ve got to make the pressure real.”
The AIG debacle proves her point. Writing for The Washington Monthly, Steve Benen highlights Federal Reserve Chairman Ben Bernanke’s “I feel your pain” moment during Sunday’s 60 Minutes interview in which he voiced outrage over AIG’s destructive behavior. “If Bernanke thinks that’s going to dissipate the public anger, he’s likely to be disappointed,” according to Benen.
And indeed, a handful of commentators including Josh Marshall at Talking Points Memo laid into the government’s bailout engineers over the past couple of weeks for refusing to disclose AIG’s counterparties. The Treasury finally caved on Monday, so despite Geithner’s protests, we now know exactly who AIG paid with its bailout money from 2008, mostly European banks. But as TruthDig’s Ear to the Ground blog notes, even this victory is just a step in the right direction—Treasury is yet to explain how AIG bailout funds have been spent in 2009. Better still, the administration might also stop bestowing taxpayer largesse on Wall Street incorrigibles who, let’s not forget, created the economic problem in the first place.
Political discourse is not the only forum for progressive pressure. To that end, the NAACP has filed class-action lawsuits against subprime behemoths Wells Fargo and HSBC seeking some for discriminatory mortgage lending. As Michelle Chen explains for Colorlines, black Americans routinely pay more for their mortgages than white borrowers with identical qualifications, and are often denied loans entirely based on nothing but the color of their skin.
If you want social justice, this is the economic moment to demand it.
This post features links to the best independent, progressive reporting about the economy. Visit StimulusPlan.NewsLadder.net and Economy.NewsLadder.net for complete lists of articles on the economy, or follow us on Twitter. And for the best progressive reporting on critical health and immigration issues, check out Healthcare.NewsLadder.net and Immigration.NewsLadder.net. This is a project of The Media Consortium, a network of 50 leading independent media outlets, and was created by NewsLadder.
Weekly Audit: How Predators are Profiting from the Economic Collapse
While the economy sinks into the abyss, some of the financial industry’s most egregious scam artists are already back on the prowl looking to take advantage of troubled borrowers.
In a sickening turn of events, financial professionals who profited from the predatory Wall Street mortgage regime are now remodeling themselves as specialists to help consumers avoid foreclosure. The Nation Institute helped fund a devastating expose written by Alyssa Katz on the mortgage broker makeover. published in Salon.com. Katz details how an industry that once pushed people into unaffordable loans with deceptive marketing and misleading documentation is now raking it in by helping people who are behind on their mortgages obtain modified loan contracts.
“The problem is that the majority of loan mods are lousy deals for homeowners,” Katz writes. “Federal banking regulators recently determined that more than half of all mortgages that were modified by lenders in early 2008 ended up heading into foreclosure again in less than six months. Most loan modifications, in fact, dig borrowers deeper into debt.”
These predators cash in on setting borrowers up for a fall, and instead of being barred from the banking world or prosecuted, end up raking in again to help them renegotiate their mortgages. Loan modifications almost never reduce how much borrowers actually owe on their mortgages. Often, whatever amount a borrower is behind by is added to the overall debt burden, giving banks a bigger pool to collect interest on. Nearly half of all loans modified in the fall of 2008 did not even result in a lower monthly payment for borrowers.
Over at Colorlines, Dom Apollon highlights the rise of a new mortgage company called PennyMac run by former Countrywide executives—the same Countrywide that is being sued by local governments for destroying communities with abusive subprime loans. PennyMac plans to buy delinquent mortgages on the cheap, alter the terms of the loans to keep borrowers in their homes, and pocket the difference between the new mortgage payments and what it paid for the loans as profit. If you think that is going to end well for the homeowners, then I’ve got a few condos in south Florida to sell you.
People who cause massive problems are not usually the best people to solve them. That’s why when the U.S. government agreed to bail out the world’s largest insurance company, AIG, policymakers kicked out CEO Martin Sullivan. But even after being nationalized, AIG has continued to drain taxpayer coffers, coming back to the bailout trough twice for a total of over $160 billion. To put that number in context, it’s about what the entire savings and loan crisis cost taxpayers back in the late 1980s and early 1990s.
Josh Marshall has a series of excellent posts on the AIG drama for Talking Points Memo. When the Federal Reserve and the Treasury Department refused to let AIG fail back in September, it was supposedly because letting AIG default on its enormous credit default swap business would be a disaster for the financial system. Credit default swaps were originally designed as insurance for loans. If a Goldman Sachs made a loan to Bank of America, Goldman could get AIG to insure the loan against default. Goldman would pay AIG a few dollars a month in insurance premiums, but if Bank of America failed to pay up, AIG would reimburse Goldman for the entire value of the loan. Eventually, however, the process got crazy. Companies started taking out “insurance” on transactions they had no involvement with. JPMorgan could go to AIG and agree to pay a few dollars a month in case Bank of America defaulted on its loan from Goldman Sachs– essentially betting with AIG on whether Bank of America would pay Goldman back. The same contracts could be used to insure mortgage-backed securities against default. Wall Street eventually put more money in credit default swaps than an entire year’s worth of global economic output.
By keeping AIG running on taxpayer support, Marshall notes, the government is essentially using the company as a conduit to funnel tax dollars to other major financial firms who made credit default swap bets with AIG. Who is getting the AIG bailout money? Neither the Treasury or the Fed will say, and Marshall points out, the government refuses to even explain why it will not tell us who is getting money. Maybe the government is worried that investors will pull their funds out of companies who are scoring big paydays from the AIG bailout, deeming them nonviable without government support.
That may very well happen. But indefinitely pouring federal money into Wall Street companies through AIG is not a solution, and taxpayers deserve to know how their money is being spent.
But at least one system for fleecing taxpayers seems to be on its last legs if President Barack Obama has his way. About four-fifths of student loans are made by private lenders who are subsidized by the government, while the remaining 20% are made directly to students by the Department of Education. The problem with the private-sector partnership plan is its inefficiency: a lot of that subsidy money goes to paying student loan company executives, while some of it simply ends up as profits for the bank. How much? According to Aaron Tang of Wiretap Magazine, Obama’s budget proposal would kill the subsidy program and instead invest that money in the direct loan program, freeing up $4 billion a year, enough to help millions of students pay for a college education.
The Obama administration’s willingness to end irrational financial policies should not end with the student loan program. Predatory lenders who created the mortgage meltdown should be barred from the banking industry, and the Treasury needs to be honest with taxpayers about who it is paying off.
One Last Note
The unemployment numbers keep getting worse: after losing almost 600,000 jobs in January, the U.S. economy shed another 651,000 in February, sending the unemployment rate all the way to 8.1%. As Steve Benen notes for The Washington Monthly, the accelerating job losses may not be surprising at this point, but they are painful nevertheless. The only good news for the labor market over the last week was the roll-out of CanMyBossDoThat.com, a site dedicated to informing workers on their legal rights on everything from COBRA health insurance benefits to getting employers to actually deliver final paychecks workers have already earned. The site, which is funded and managed by Interfaith Worker Justice, comes at an important moment, according to Wendy Norris of The Colorado Independent, who highlights that the unemployment rate would be a massive 14.8% if it included people who have been looking for a job for more than a year and people who want full-time work but are can only get a part-time position.
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