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Gary Edwards

Predatory lending with a smiley face; How tax payer subsidized "loan modification" prog... - 0 views

www.salon.com/...index.html

financial-crisis obama-socialism real-estate predatory-lending salon banksters

shared by Gary Edwards on 05 Mar 09 - Cached
  • Gary Edwards on 05 Mar 09
     
    They say California is a harbinger of the future. If so, we should all be thinking about possible safe havens. The article begins with a description of loan modification seminars attended by the same mortgage brokers whose predatory lending practices got us into this fix. At the seminars, these predators learn how to make even more money off of the exact same clients they pushed off the ledge. It's all about fees and high pressure churning techniques. With one very big difference: Obama is banking on tax payer funded "loan modifications" to help struggling homeowners. The ugly truth is that mortgage brokers are the real winners. Just like mortgage brokers, loan mod companies are under no obligation to act in borrowers' financial interests, short- or long-term. Under California's model contract, which brokers are encouraged to emulate in their dealings with borrowers, almost any change to a mortgage is an acceptable result, whether or not it saves a borrower money. And while the client has to accept the proposed deal in order for the company to get paid in full, the sales forces at these firms are veterans of pressure pitches to people in tough financial situations. Both Carlson and a spokesman for Mortgage Bailout Assistance indicate that their clients almost invariably take the offers they are given. The proverbial fox is helping the hens hold on to their coops, and not just in California. Seventeen states now have laws on the books effectively banning "foreclosure consultants," but most make an exception for mortgage brokers. As consumer complaints about fraudulent loan mod operations proliferate across the country, other government officials, including New York's City Council, are now following California's lead and exploring the creation of an official registry of mod brokers.
Paul Merrell

The College-Loan Scandal - Slashdot - 0 views

news.slashdot.org/...the-college-loan-scandal

banksters predatory-lending student-loans

shared by Paul Merrell on 17 Aug 13 - No Cached
  • Matt Taibbi writes in Rolling Stone about the economics behind college tuition. Interest rates get the headlines and the attention of politicians, but Taibbi says the real culprit is "appallingly high tuition costs that have been soaring at two to three times the rate of inflation, an irrational upward trajectory eerily reminiscent of skyrocketing housing prices in the years before 2008." He writes,
  • "For this story, I interviewed people who developed crippling mental and physical conditions, who considered suicide, who had to give up hope of having children, who were forced to leave the country, or who even entered a life of crime because of their student debts. ... Because the underlying cause of all that later-life distress and heartache – the reason they carry such crushing, life-alteringly huge college debt – is that our university-tuition system really is exploitative and unfair, designed primarily to benefit two major actors. First in line are the colleges and universities, and the contractors who build their extravagant athletic complexes, hotel-like dormitories and God knows what other campus embellishments. For these little regional economic empires, the federal student-loan system is essentially a massive and ongoing government subsidy, once funded mostly by emotionally vulnerable parents, but now increasingly paid for in the form of federally backed loans to a political constituency – low- and middle-income students – that has virtually no lobby in Washington. Next up is the government itself. While it's not commonly discussed on the Hill, the government actually stands to make an enormous profit on the president's new federal student-loan system, an estimated $184 billion over 10 years, a boondoggle paid for by hyperinflated tuition costs and fueled by a government-sponsored predatory-lending program that makes even the most ruthless private credit-card company seem like a "Save the Panda" charity. Why is this happening? The answer lies in a sociopathic marriage of private-sector greed and government force that will make you shake your head in wonder at the way modern America sucks blood out of its young."
Gary Edwards

Obama's Mortgage Modification: Just More Predatory Lending in Disguise - 0 views

www.businessinsider.com/ory-lending-in-disguise-2009-3

finacial-crisis real-estate mortgage-crisis

shared by Gary Edwards on 05 Mar 09 - Cached
  • Gary Edwards on 05 Mar 09
     
    The best evidence that Obama's new mortgage scheme won't end well: look at the people who are the most excited about it. It's the same, smarmy mortgage guys that profited handsomely from the subprime crisis. In a great bit of deep dive reporting over at Salon -- hardly an outfit you'd expect to be critical of Obama -- Alyssa Katz, with help from The Nation Institute (also very liberal), shows how modifications are hardly the paragon of progressive idealism:
Gary Edwards

Fed Held Back as Evidence Mounted on Subprime Loan Abuses - washingtonpost.com - 0 views

www.washingtonpost.com/...AR2009092602706.html

financial-crisis subprime federal-reserve banksters

shared by Gary Edwards on 19 Oct 09 - Cached
  • Gary Edwards on 19 Oct 09
     
    In depth story about the Federal Reserve failure to act as an unregulated subprime mortgage industry raced out of control, and major banking and financial institutions bought into the wild wild west of high interest rate - predatory lending. excerpt:  during the years of the housing boom, pleas from consumer advocate groups failed to move the Fed, the sole federal regulator with authority over subprime mortgage businesses. Under a policy quietly formalized in 1998, the Fed refused to police lenders' compliance with federal laws protecting borrowers, despite repeated urging by consumer advocates across the country and even by other government agencies. The hands-off policy, which the Fed reversed earlier this month, created a double standard. Banks and their subprime affiliates made loans under the same laws, but only the banks faced regular federal scrutiny. Under the policy, the Fed did not even investigate consumer complaints against the affiliates.
Paul Merrell

Why You Should Care About Predatory Shadow Banking | nsnbc international - 0 views

nsnbc.me/...care-predatory-shadow-banking

banksters payday-loans regulation CFPB

shared by Paul Merrell on 02 Feb 15 - No Cached
  • According to the Consumer Financial Protection Bureau (CFPB), the shadow banking industry (SBI) is largely unregulated and functions outside of proper oversight and accountability. The CFPB estimates that the $46 billion payday loan or cash advance industry has no oversight, refuses to give full disclosures of interest and fees involved, and takes an annual percentage of an excess of 300% against borrowers.
  • For the first time the CFPB has suggested regulating the SBI because of their dubious practices and products. The SBI refers to a loan of $500 or less wherein the borrower “provides a personal check dated on their next payday for the full balance or give the lender permission to debit their bank accounts. The total includes charges often ranging from $15 to $30 per $100 borrowed. Interest-only payments, sometimes referred to as rollovers, are common.” The Consumer Federation of America (CFA) counts 32 states in the US that “permit payday loans at triple-digit interest rates, or with no rate cap at all.” Shockingly 80% of payday loans are rolled over within 14 days while an estimated 50% of these loans are “in a sequence at least 10 loans long.” David Silberman, associate director for market research and regulation explained: “Our research has found that what is supposed to be a short-term emergency loan can turn into a long-term and expensive debt trap.”
Paul Merrell

News Summary: HSBC unit ordered to pay $2.46B - Businessweek - 0 views

www.businessweek.com/...-unit-ordered-to-pay-2-dot-46b

banksters financial-collapse HSBC litigation

shared by Paul Merrell on 21 Oct 13 - No Cached
  • THE ORDER: A division of Europe's HSBC bank has been ordered to pay about $2.46 billion in a class action lawsuit claiming that it violated federal securities laws. HSBC plans to appeal.THE DETAILS: Household International Inc., now HSBC Finance Corp., and three former executives were named in the lawsuit that claimed the company fraudulently misled investors about its predatory lending practices, the quality of its home loans and its financial accounting from March 23, 2001 through Oct. 11, 2002.THE JUDGMENT: The payment includes $1.48 billion in damages and nearly $1 billion in prejudgment interest.
Paul Merrell

US Military Uses IMF and World Bank to Launder 85% of Its Black Budget | Global Researc... - 1 views

www.globalresearch.ca/...5469097

Dark-State black-budget banksters IMF World-Bank WTO CIA Fitts

shared by Paul Merrell on 24 Aug 15 - No Cached
  • hough transparency was a cause he championed when campaigning for the presidency, President Obama has largely avoided making certain defense costs known to the public. However, when it comes to military appropriations for government spy agencies, we know from Freedom of Information Act requests that the so-called “black budget” is an increasingly massive expenditure subsidized by American taxpayers. The CIA and and NSA alone garnered $52.6 billion in funding in 2013 while the Department of Defense black ops budget for secret military projects exceeds this number. It is estimated to be $58.7 billion for the fiscal year 2015. What is the black budget? Officially, it is the military’s appropriations for “spy satellites, stealth bombers, next-missile-spotting radars, next-gen drones, and ultra-powerful eavesdropping gear.” However, of greater interest to some may be the clandestine nature and full scope of the black budget, which, according to analyst Catherine Austin Fitts, goes far beyond classified appropriations. Based on her research, some of which can be found in her piece “What’s Up With the Black Budget?,” Fitts concludes that the during the last decade, global financial elites have configured an elaborate system that makes most of the military budget unauditable. This is because the real black budget includes money acquired by intelligence groups via narcotics trafficking, predatory lending, and various kinds of other financial fraud.
  • The result of this vast, geopolitically-sanctioned money laundering scheme is that Housing and Urban Devopment and other agencies are used for drug trafficking and securities fraud. According to Fitts, the scheme allows for at least 85 percent of the U.S. federal budget to remain unaudited. Fitts has been researching this issue since 2001, when she began to believe that a financial coup d’etat was underway. Specifically, she suspected that the banks, corporations, and investors acting in each global region were part of a “global heist,” whereby capital was being sucked out of each country. She was right.
  • As Fitts asserts, “[She] served as Assistant Secretary of Housing at the US Department of Housing and Urban Development (HUD) in the United States where I oversaw billions of government investment in US communities…..I later found out that the government contractor leading the War on Drugs strategy for U.S. aid to Peru, Colombia and Bolivia was the same contractor in charge of knowledge management for HUD enforcement. This Washington-Wall Street game was a global game. The peasant women of Latin America were up against the same financial pirates and business model as the people in South Central Los Angeles, West Philadelphia, Baltimore and the South Bronx.” This is part of an even larger financial scheme. It is fairly well-established by now that international financial institutions like the World Trade Organization, the World Bank, and the International Monetary Fund operate primarily as instruments of corporate power and nation-controlling infrastructure investment mechanisms. For example, the primary purpose of the World Bank is to bully developing countries into borrowing money for infrastructure investments that will fleece trillions of dollars while permanently indebting these “debtor” nations to West. But how exactly does the World Bank go about doing this? John Perkins wrote about this paradigm in his book, Confessions of an Economic Hitman. During the 1970s, Perkins worked for the international engineering consulting firm, Chas T. Main, as an “economic hitman.” He says the operations of the World Bank are nothing less than “pure economic colonization on behalf of powerful corporations and banks that use the United States government as their tool.”
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  • In his book, Perkins discusses Joseph Stiglitz, the Chief Economist for the World Bank from 1997-2000, at length. Stiglitz described the four-step plan for bamboozling developing countries into becoming debtor nations: Step One, according to Stiglitz, is to convince a nation to privatize its state industries. Step Two utilizes “capital market liberalization,” which refers to the sudden influx of speculative investment money that depletes national reserves and property values while triggering a large interest bump by the IMF. Step Three, Stiglitz says, is “Market-Based Pricing,” which means raising the prices on food, water and cooking gas. This leads to “Step Three and a Half: The IMF Riot.” Examples of this can be seen in Indonesia, Bolivia, Ecuador and many other countries where the IMF’s actions have caused financial turmoil and social strife. Step 4, of course, is “free trade,” where all barriers to the exploitation of local produce are eliminated. There is a connection between the U.S. black budget and the trillion dollar international investment fraud scheme. Our government and the banking cartels and corporatocracy running it have configured a complex screen to block our ability to audit their budget and the funds they use for various black op projects. However, they can not block our ability to uncover their actions and raise awareness.
Gary Edwards

Swimming with the Sharks: Goldman Sachs, School Districts, and Capital Appreciation Bon... - 0 views

nsnbc.me/...and-capital-appreciation-bonds

Banksters Goldman-Sachs

shared by Gary Edwards on 21 Feb 15 - No Cached
  • In 2008, after collecting millions of dollars in fees to help California sell its bonds, Goldman urged its bigger clients to place investment bets against those bonds, in order to profit from a financial crisis that was sparked in the first place by irresponsible Wall Street speculation. Alarmed California officials warned that these short sales would jeopardize the state’s bond rating and drive up interest rates. But that result also served Goldman, which had sold credit default swaps on the bonds, since the price of the swaps rose along with the risk of default.
  • In 2009, the lenders’ lobbying group than proposed and promoted AB1388, a California bill eliminating the debt ceiling requirement on long-term debt for school districts. After it passed, bankers traveled all over the state pushing something called “capital appreciation bonds” (CABs) as a tool to vault over legal debt limits. (Think Greece again.) Also called payday loans for school districts, CABs have now been issued by more than 400 California districts, some with repayment obligations of up to 20 times the principal advanced (or 2000%).
  • The controversial bonds came under increased scrutiny in August 2012, following a report that San Diego County’s Poway Unified would have to pay $982 million for a $105 million CAB it issued. Goldman Sachs made $1.6 million on a single capital appreciation deal with the San Diego Unified School District.
  • ...10 more annotations...
  • . . . AB1388, signed by then-Gov. Arnold Schwarzenegger in 2009, [gave] banks the green light to lure California school boards into issuing bonds to raise quick money to build schools. Unlike conventional bonds that have to be paid off on a regular basis, the bonds approved in AB1388 relaxed regulatory safeguards and allowed them to be paid back 25 to 40 years in the future. The problem is that from the time the bonds are issued until payment is due, interest accrues and compounds at exorbitant rates, requiring a balloon payment in the millions of dollars. . . . Wall Street exploited the school boards’ lack of business acumen and proposed the bonds as blank checks written against taxpayers’ pocketbooks. One school administrator described a Wall Street meeting to discuss the system as like “swimming with the big sharks.” Wall Street has preyed on these school boards because of the millions of dollars in commissions. Banks, financial advisers and credit rating firms have billed California public entities almost $400 million since 2007. [State Treasurer] Lockyer described this as “part of the ‘new’ Wall Street,” which “has done this kind of thing on the private investor side for years, then the housing market and now its public entities.”
  • The Federal Reserve could have made virtually-interest-free loans available to local governments, as it did for banks. But the Fed (whose twelve branches are 100% owned by private banks) declined. As noted by Cate Long on Reuters:
  • The Fed has said that it will not buy muni bonds or lend directly to states or municipal issuers. But be sure if yields rise high enough Merrill Lynch, Goldman Sachs and JP Morgan will be standing ready to “save” these issuers. There is no “lender of last resort” for muniland.
  • Among the hundreds of California school districts signing up for CABs were fifteen in Orange County. The Anaheim-based Savanna School District took on the costliest of these bonds, issuing $239,721 in CABs in 2009 for which it will have to repay $3.6 million by the final maturity date in 2034. That works out to $15 for every $1 borrowed. Santa Ana Unified issued $34.8 million in CABs in 2011. It will have to repay $305.5 million by the maturity date in 2047, or $9.76 for every dollar borrowed. Placentia-Yorba Linda Unified issued $22.1 million in capital appreciation bonds in 2011. It will have to repay $281 million by the maturity date in 2049, or $12.73 for every dollar borrowed.
  • In 2013, California finally passed a law limiting debt service on CABs to four times principal, and limiting their maturity to a maximum of 25 years. But the bill is not retroactive. In several decades, the 400 cities that have been drawn into these shark-infested waters could be facing municipal bankruptcy – for capital “improvements” that will by then be obsolete and need to be replaced.
  • Then-State Treasurer Bill Lockyer called the bonds “debt for the next generation.” But some economists argue that it is a transfer of wealth, not between generations, but between classes – from the poor to the rich. Capital investments were once funded with property taxes, particularly those paid by wealthy homeowners and corporations. But California’s property tax receipts were slashed by Proposition 13 and the housing crisis, forcing school costs to be borne by middle-class households and the students themselves.
  • According to Demos, per-student funding has been slashed since 2008 in every state but one – the indomitable North Dakota. What is so different about that state? Some commentators credit the oil boom, but other states with oil have not fared so well. And the boom did not actually hit in North Dakota until 2010. The budget of every state but North Dakota had already slipped into the red by the spring of 2009.
  • One thing that does single the state out is that North Dakota alone has its own depository bank.
  • The state-owned Bank of North Dakota (BND) was making 1% loans to school districts even in December 2014, when global oil prices had dropped by half. That month, the BND granted a $10 million construction loan to McKenzie County Public School No. 1, at an interest rate of 1% payable over 20 years. Over the life of the loan, that works out to $.20 in simple interest or $.22 in compound interest for every $1 borrowed. Compare that to the $15 owed for every dollar borrowed by Anaheim’s Savanna School District or the $10 owed for every dollar borrowed by Santa Ana Unified.
  • How can the BND afford to make these very low interest loans and still turn a profit? The answer is that its costs are very low. It has no exorbitantly-paid executives; pays no bonuses, fees, or commissions; pays no dividends to private shareholders; and has low borrowing costs. It does not need to advertise for depositors (it has a captive deposit base in the state itself) or for borrowers (it is a wholesale bank that partners with local banks, which find the borrowers). The BND also has no losses from derivative trades gone wrong. It engages in old-fashioned conservative banking and does not speculate in derivatives. Unlike the vampire squids of Wall Street, it is not motivated to maximize its bottom line in a predatory way. Its mandate is simply to serve the public interest.
  • Gary Edwards on 21 Feb 15
     
    " Remember when Goldman Sachs - dubbed by Matt Taibbi the Vampire Squid - sold derivatives to Greece so the government could conceal its debt, then bet against that debt, driving it up? It seems that the ubiquitous investment bank has also put the squeeze on California and its school districts. Not that Goldman was alone in this; but the unscrupulous practices of the bank once called the undisputed king of the municipal bond business epitomize the culture of greed that has ensnared students and future generations in unrepayable debt."
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