Sunday, February 2, 2014
Our speaker was acclaimed Marxian historian and theorist Stanley Aronowitz. A review of his talk and a wav. file of it will be posted here shortly.
We held a working meeting from 3:15 to 5:15 (we rarely go after 5 like that, but we were being so damn productive). Most of the time was spent brain storming our new book project, Ethics, Finance, and Poverty. Updates of the current outline (to which the preceding hyper link takes your) should be posted shortly and will be reflective of our work product on Sunday. In the last half hour, small groups formed to talk about issues like our Public Bank for NY project, the Speaker Series, and what to do with the 2,000 some odd Occupy Finance books we recently got back from the printer — and which are beautiful.
Sunday January 26, 2014
Tom Adams spoke about the use of eminent domain to provide relief to under water homeowners. Notes and a link to his talk are below.
Tom Adams, an expert on securitization spoke to Alternative Banking on the use of eminent domain to help distressed homeowners who are “under water” on their mortgages and the communities.
The Problem: Ever since the financial crisis, millions of homeowners owe more on their mortgages than their houses are worth. This is called being “under water” on the mortgage. In addition to causing financial distress, this also makes it difficult for them to move if, for instance, they find an attractive job elsewhere. Foreclosures also cause a blight on the entire community.
The Solution: There is broad consensus that the only effective way to address this would be to reduce the amount owed on the loans. Some people argue that this shouldn’t be done because of fairness or moral hazard but it is common in similar situations such as corporate loans.
There have been federal programs that were supposed to help homeowners (called HAMP and HARP) but they didn’t allow the amount owed to be written down. There were also ineffective (perhaps by design) and so there are still millions of under-water homeowners five years after this was supposed to be addressed.
What Could Be Done: Some people have proposed that local governments use “eminent domain” to buy the mortgages and write down the amount owed. Under this plan, a city could repossess the mortgages and restructure the terms to get the homeowner above water. Under eminent domain, a city can take property in exchange for “just compensation” Eminent domain has been very broadly applied (including a US Supreme Court ruling “Kelo v City of New London”). It is likely it could be applied to mortgages. This has been promoted by a financial firm called Mortgage Resolution Partners and some related private equity firms. The city of Richmond California is trying to do this. They have identified about 600 loans in Richmond that would qualify. Wall Street firms have reacted very negatively to this idea. They’ve tried, unsuccessfully so far, to squelch it in court and have also applied intense political pressure. San Bernardino County considered this course and backed off. But the City of Richmond is proceeding.
It is possible this could work and give the homeowners relief at no cost to the community.
• It is not clear it will work. One big caveat is that it requires a judge to deem the “fair market value” of the mortgages, much less than the face amount – even for mortgages where the homeowner is making their payments.
• Eminent domain has a very checkered history. It is not clear we want to endorse its use, even if it would have a good effect in this case.
To hear much more, you can listen to the recording of Tom’s talk.
Sunday January 19
During the regular meeting the group first split into one session on what is happening in Detroit and another in which a representative from Strike Debt gave an informative presentation about what they are up to. We had some very good conversations about how our two groups might coordinate on our tremendous range of shared concerns, in particular perhaps initially by putting together small educational group sessions with indebted people.
In the second session, Moe spoke to part of the group (sort of a continuation of her talk), and a smaller group starting talking about a possible new long-term project, based on the outline that had been circulated in Cathy’s Saturday e mail (and can be downloaded here) concerning Ethics, Poverty and Finance. Much of the discussion centered on whether we should be looking to produce this as a second book, or as some other form of media.
Sunday January 12 was a very well attended if different that usual meeting.
Beginning at 2:30 we as a group watched the new movie Four Horsemen, put out by Renegade Economist, which ran until about 4:10, when we convened to discuss it. The general response of the group was at best mixed, with quite a bit of criticism .of the excessively certain, a bit too doomsdayish, and mildly conspiratorial aspects. Much of the negative response was provoked by the simplistic offering of a return to gold and shifting of taxation onto resources as near complete solutions to all the identified maladies. Other group-members were much more appreciative of the tremendous breadth of highly intelligent commentary offered in the various interviews of prominent progressives. And most viewers seem to have at least thought that it was a useful enterprise to see how another, presumably similar group, tried to get out a very similar message through a different medium.
The last half hour of the meeting was spent discussing the web-site with its image projected on a screen for all to see. We agreed to continue that conversation next week..
Sunday January 5 was a mellow and enjoyable first meeting of the year.
The group was small enough that we just discussed two topics, with the whole group participating. The first topic was the issue of respect for low wage workers and it elicited interesting, not always agreeing perspectives. On the one hand, the inability (or unwillingness) of affluent people to treat respectfully people providing a service for them at low wages is reflective of how money morally separates us from the acts being done for our benefit. If a teacher teaches a child to read, a good deed has been done in the world which merits respect; but in a financialized economy, it is not viewed that way. The teacher was paid to engage in the transaction so all moral norms of behavior are suspended. If the affluent person decides to all the same be disrespectful, the teacher has not been paid to avoid that, so all is supposedly good.
On other hand, towards the end of the discussion, a strong sentiment was expressed that too much attention on respect risks making it an excuse for paying people less. Yes, a worker would most like to be paid well and treated respectfully. But as between getting the rich guy’s respect or a good wage for a hard day’s work — there is no question which is going to feed the worker’s family.
In the second session, we discussed the appearance of Richard Fisher, head of the Dallas Fed, on EconTalk. There was considerable enthusiasm for his diagnosis of the Too Big To Fail problem, but not much for his tepid remedy of having banks sign a short public commitment not to ever again take federal money in the form of a bail-out for speculative investing. And if they breach that, what will we then ask from them the next time — to commit that, they “really, really,, cross my heart”, wont take any more? It is all just words, easily forgotten without real penalties (like personal financial liability) that would discourage the conduct that results in the banks being Too Big To Fail.
Sunday December 29th, we had another great meeting.
- Banks and commodity trading
Since 1956 bank’s business in commodities was highly regulated. The commodities business was not only deemed too risky but also as posting many conflicts of interest. Congress passed Gramm-Leach-Bliley in 1999 which, among other things, removed that restriction. In 2013, news came out suggesting that the original restriction was wise. Banks were caught doing questionable, and possibly illegal things such as shuffling commodities between warehouses to restrict it’s availability and drive up the price. The CFTC is investigating.
- 10 Worst (and 5 Best) Bank-related events in 2013
Most of the meeting was spent coming up with lists of the 10 worst and 5 best things that happened in 2013 (in U.S. Finance) for an article. Actually, the problem was restricting the list to 10. We started with 30. Here is the article.
- The topic to prepare for next week is “China — is a crisis on the way?”
- Actions in January. See also the Occu-Evolve calendar:
- January 1st – 11am:
Push Mayor-elect DiBlasio to keep his promises. 258 Broadway, just north of City Council Chamber
Participating: People’s Puppets, Labor Outreach
- January 18th – 12 noon:
Action related to 4th Anniversary of Citizens United
- January 20th – 5pm: Martin Luther King Day/ Occupy for economic justice
Participating: Walmart, Fast Food Forward, People’s Puppets
On Sunday December 22nd, we had a good meeting, with surprisingly good attendance considering the holidays … including new faces (great!)
1. Are we trying to repair the safety net, or work for structural reform? NY Times Op Ed.
- The ‘left’ shifted towards right and fails to say anything progressive. Can Occupy move the Democrats back to left agenda? No- Starting with the left’s loss in the Reagan/Mondale election, Democrats decided to market themselves as more centrist as reflected in shift to right with help of leadership council chaired by Bill Clinton. Goal has been reached and leadership council was recently desolved. Money is (controlling) the message now this that is what get’s elected, not repairing the social safety net.
- Since our group has a unique combination of street politics and policy expertise we can come to interesting insights and suggest solutions.
- Bring in speakers who know how funding works for social safety net and apply pressure to harmonize different levels of safety nets in New York City
- Reference the new Pope’s agenda, which is potentially very influential.
- Tap into shame of religious communities since all religious traditions promote being mindful of the poor
Don’t call me a Marxist, call me a Christian.
Members described how shelter system and social services work (don’t work), warehousing clients, making extra money, kicking people out on the street, sending them to job interviews that don’t match their abilities.
- People shouldn’t just have a safety net but society needs to provide an ethical and moral framework
- Everything works on cost benefit analysis i.e. calculating ‘sweatshop dangers’ against ‘legal fees’ resulting in slave labor that western countries profit from which is unethical
Contradictions are legit
- we can have arguments of shame and morality as well as arguments of bookkeeping…i.e. war on poverty too expensive …some measures didn’t make sense , they weren’t effective but it is best to have full employment.
- to stimulate flow of money “fund the bottom.”
2. Should we plan certain meeting topics in advance, so we can read up and be informed? What topics?
Voted In: In addition to speaker series we will chose 1 topic for next meetings off the topics on the board.
For next week that will be: JPMorgan – Fed- Commodities
Off Limits, but Blessed by the Fed
by Gretchen Morgenson
(from: NYT biz section)
Also,read about Enron
3. Reactions to the Volcker Rule–Mathbabe (Tom Adams) and NY Times.
- The main rule that prevented too big to fail was interstate banking not Glass Steagall.
- Different tools work on different margins, regulations are not the answer because financial industry is sophisticated and will find way around and reconfigure to work in concert with the regulation
Secret History of the Credit Card
4. Should we plan small local actions or build to state/national actions?
In favor of local focus
- too many actions to feel responsible for one…prefer to just have one big action a month
- all our grievances are related, but group would be more effective to have focus
- we should not support all actions since some actions get too small and end up being irrelevant
We should attend many actions:
- We are collaborating for the 3rd year, too many actions?? no way…this is Occupy. “we are meeting with the puppets tomorrow”
- Looking at our mission (on our website) we need to educate and we also want to support other OCCUPY groups’ agendas
- Because of our location a local action is a global action
- Depends on the issue…some issues are national/some state
conflict of action plans, proposal to coordinate between groups (i.e. with strike debt) to build bigger presence
- Interfacing with media is crucial. we need to have the events covered otherwise it’s futile.
- Work everyone with a press pass ..that was very successful
media is important and so are actions. Otherwise we are just a meeting group
- We should have local action and build towards national
Proposed positions for 2014:
- Jamie Dimon into jail 2014
- Alternative banking solutions
- Video version of our book Occupy Finance / Chapter 7-10 need people who discuss it on camera. Boogie available to film the next 2 weeks.
- Foodstamp cuts for 6 million people
call Schumer 202-224 6542hungercliff.org
Call Schumer and Gillebrand, numbers at congress.org
- Updates to website
Great team effort that moved us quickly. looking for someone with php knowledge for wordpress customizations.
Call to action: visit website at www.altbanking.net (you made it 🙂 )
Submit comments and suggestions via reply buttons on bottom of pages apply to team via Alt.Banking.OWS@gmail.com
Topics not voted in/we didn’t discuss:
5. Campaign to divest from one or more big banks?
6. JPMorgan – fed- commodities
7. Atlantic express bankrupt
See you all next week! Happy Ho Days 😉
–On December 15 we had a productive working meeting
Here is Cathy’s announcement from December 14.
- Actions – lessons learned from JP Morgan and New Day New York
- Report card for the CFPB?
- The recent success of Occupy the SEC and what we can learn
- Editing the Gensler piece for our monthly Alt Banking essay
- Website improvements
- Initiative on public banking? There’s info here and here.
- Other ideas for next projects
We were also given an unexpected treat. Michael Crimmins from Occupy the SEC (OSEC) joined us and we could not help but veer off plan to hear a report from him about the great success of OSEC’s 400 or so page comment on the Volcker Rule. It got no fewer than 284 citations in the explanatory material accompanying the release of the final rules last week. We should all be inspired by the initiative this audacious group of 7 Occupiers showed in deciding to take on the banking lobby to get taxpayers some decent (if not perfect) protections to stop us from ever again having to involuntarily insure banks’ speculative trading operations. If anyone asks you again where is Occupy these days? — tell them to check-out Occupy the SEC.
Our working groups focused on improving the web site, finalizing the Gensler Op Ed, and coming up with a plan to get an affiliation with a credit union.
-On December 8, we had a great meeting.
Merlyna Lim gave a great presentation to kick-off our speaker series. She discussed her research into the role of new media in the Mid and Far east protest movements with fascinating observations about where it is — and is not– actually helpful. For example, contrary to popular conception, these movements did not just erupt in the past few years, but had long development stages going back to the late 90s during which the social connections necessary for their recent “eruptions” were laid. Texting took the place of face–to–face meetings in countries like Malasia, where severe government regulation of social gatherings was in place. However, social media, such as Twitter and Facebook, were much more important as a way of getting different sectors of society (rather than individuals) to communicate. In this sense, these media served as “brokers” between different, otherwise disconnected, parts of the society.
Interestingly, the success of these media often turned on their being used by traditional community groups, such as soccer clubs in Egypt, which had huge followings quite accustomed to taking the streets (if for other purposes). We learned a lot with the above being just a smattering. Cathy blogged about Merlyna’s talk on Mathbabe on Dec. 9.
The regular meeting discussion of the use of eminent domain to write-down underwater mortgages was very engaged and instructive. Cathy gave a great description of the basic idea, with many other folks adding content. There appears to be a lot of indicia that public welfare would be greatly enhanced through a mechanism that re-set the terms of presently hugely mis-priced mortgages, both because homeowners would have an incentive to remain in their homes (rather than abandoning them, thereby hurting their neighbors home-values too), and investors would get some payments, rather than just having a bunch of mortgages in default. This isn’t happening now either because banks have incentives to prevent write-downs due to the fees they are collecting on the current arrangements, or because the collective action problem of finding and getting the agreements to the write-downs from all the investors owning bits and pieces of the packaged and re-packaged debts is next to impossible.
The problem with the current proposed solutions via eminent domain is that they seem to rely on a capital infusion from a firm, like a private equity fund, that would enable the State to make the eminent domain-facilitated purchase of these mortgages. The private equity firm would get the property at a reduced price (i.e. current, rather than say 2006 “fair market value”), and re-issue mortgage debt to the homeowners on terms that keep them in their houses, even as the private equity firm makes a profit because it picks up the property for less than it sells it back to the homeowner.
Sounds great as long as the private equity firm does not end up with all the value. For more on this check out Robert Hockett’s talks and articles.
Here is some other content from Cathy’s Dec 7 e mail.
- Our JP Morgan action was awesome, especially when the platinum lamborghini rolled up to the curb in a fantastically unscripted moment. Tommy took the opportunity to offer it in an Occupy raffle, and of course Marni took full advantage of the photo op. I’ve blogged some of the pictures from the protest here. There are lots more!
- Subprime MBS with a Government Guarantee
- CFPB and student loans
- Another Batch of Wall Street Villains Freed on Technicality (Matt Taibbi)
- Minimum wage has been in the news alot. I wrote a related article about what are Walmart’s incentives.
- LIBOR rate rigging fines versus jailtime
- Volcker Rule stuff from Occupy the SEC: a letter, another letter, and a press release.
- Eminent domain – I’ve learned more about this.
- Liz Warren tells banks to disclose money sent to think tanks.
- Ideas for our next project?
Summary from December 1, 2013.
We had no 2:00 speaker, having decided to take a week off after the very successful run of our book-club presenters from the Occupy Finance publication. At the 3:00 regular meeting we made signs, hand-outs, and other props for our December 4 protest at JP Morgan – Chase in support of the New Day New York protests in which we are participating. It was good to hang-out a bit without the regimentation of stack. And our material came out great. For some pictures of the signs visit our blog.
If you missed Cathy’s announcements from Saturday November 30, here they are:
- The “skin in the game” rule of Dodd-Frank for mortgages and banks is being watered down. This is huge.
- The subprime loan market is booming.
- Here’s a nice explanation of leveraged super senior synthetic CDO’s
- The IMF might have just “relearned” that austerity doesn’t work.
Summary from November 24, 2013
The meeting, was, as usual, excellent, with a very well-attended 2:00 session led by Natasha about Alternative Banking resources. The regular session included discussions of municipalities’ use of eminent domain to facilitate write-downs of underwater mortgages, as well as a fascinating talk by a guest, Marion, regarding efforts by NYC to increase financial literacy among NYCHA and other low-income City residents.
.For those who missed it, the always informative Saturday e-mail “Announcements” from Cathy (sent on the 23rd) are below (or at least the ones that are still relevant).
- Let’s work on our December 4th plans. The flyer for “New Day New York” is attached and contains a framework and calendar.
- There have been multiple attacks on the effort to use eminent domain to help homeowners in Richmond, CA. Where do we stand?
- Banks are busy gaming the new rules regulating swaps. For example, who would you answer this question: If a swap trader does business in New York, is he or she was actually in the United States?
- Loans are getting riskier than ever. Because banks don’t remember or don’t care?
- There’s talk that the bankruptcy of Jefferson County, Alabama, will become a template for other such bankruptcy.
- Service members and Payday loans.
- JP Morgan and $13 Billion. When is $13 billion not $13 billion?
- The Swiss are having lots of interesting ideas. Latest thing: “ring fencing” their banks.
- The CFPB is investigating possibly racist policies by car dealers who set up financing. I find this WSJ response pretty amazing too. If you can’t read it, it ends with this: “Careful” is an interesting way for Mr. Cordray to describe what he’s doing. It sounds like he wants to proceed with sentencing before anyone knows whether there will e