This may strike some readers as off topic (you’ve been warned!), but I find this exchange intriguing in a perverse way.
I have featured some of this story in Links. By way of background, various news sites reported that the internet group Anonymous had said it was going to mount cyber attacks on the Westboro Baptist Church, which among other things hosts the website GodHatesFags. Anonymous is best known for making life difficult for various players who have undermined Wikileaks, such as banks that have stopped processing donations to Wikileaks, but it has also played a role in supporting the rebellion in Tunisia by attacking non-essential government websites.
A couple of weeks ago, a letter was published, supposedly by Anonymous, warning that if the Westboro Baptist Church didn’t shut down its public website, they would be targeted. It turns out Anonymous not did issue that letter, begging the question of whether it actually came from the church itself, as some have speculated, or a third party.
David Parkman arranged for representatives of the church and Anonymous to interact with each other.
Although banks are having to pay fines or make settlements now and again that are grossly inadequate relative to the damage they’ve inflicted on consumers and communities, I thought I’d single out this example.
An article by ‘Abu Atris’ on Al Jazeera (hat tip Richard Kline) confirms an argument made by Matt Stoller in recent post, namely, that the rebellion in Egypt is not merely political but economic, and specifically in opposition to neoliberal policies. This so-called “Washington Consensus” reached its apex of influence in the 1990s
The article focuses on the individuals and groups that profited handsomely during the implementation of “reforms” that syphoned money to the top of that society at the expense of the rest, and how the one beneficiary that remains in a position of influence, the military, might play its cards. In addition to providing a window in some of the dynamics at work in Egypt, it also provides a vivid description of the nature and destructive impact of a neoliberal economic program. It is not hard to see that America has already gone a long way down that dark path.
The astonishing part is that the banking industry continues to maintain that it really didn’t do anything wrong, all it did was make some technical errors. That so grossly understates the degree of its recklessness and malfeasance as to be beyond relief.
It’s no surprise that the so-called Foreclosure Task Force which spent a mere eight weeks reviewing servicer activities and didn’t find much. The timeframe of its exam assured that it would not verify servicer records and accounts against borrower experience and records. It is almost certain that they also did not look at how servicer software credited payments and charges, when there is widespread evidence of violations of agreements with borrowers and RESPA.
And to the extent they looked at “improprieties” in foreclosure documents, it’s a given that they did not go beyond robosigning, when that is arguably the least significant form of malfeasance. There is ample evidence of fraud to cover for the failure to convey notes to securitization trusts, ranging from the misuse of lost note affidavits to document fabrication (bogus allonges being the most common fix).
In addition, pooling and servicing agreements also have specific provisions as to level and procedures for charging certain fees. Yet studies have determined that a specific servicer will apply the same charges across all borrowers and investors, irrespective of the requirements of particular securitizations. So it’s blindingly obvious that this exam was cursory, looking at one or two points of failure in a slapdash fashion and completely ignoring other issues that are at least as important.
Is the old Gillian Tett back? The one-time Financial Times capital market editor has taken to writing less frequently (understandable now that she has head the US operation) and less intrepidly (much of her commentary was prescient, particularly on my pet topic, collateralized debt obligations).
But her latest piece sounds a wee warning, and it’s one we’ve commented on as well, namely, that central banks are vulnerable to losses, and just like the banks they mind, may need a rescue by taxpayers if the err badly enough.
Her object lesson is the Swiss National Bank. Unlike most central banks, the SNB is quite transparent, and publishes periodic statements of the value of its assets on a mark to market basis. The usually conservative SNB made a uncharacteristically aggressive move last year, intervening in currency markets in an effort to suppress the value of its levitating franc.
Even though the locals applauded the move, the central bank was outgunned by currency traders and threw in the towel mid year. As the swissie continued to rise, the bank showed losses at the end of 2010 of SFr 21 billion. The only saving grace was that the gains on the bank’s hefty gold positions exceeded the damage. But that does not reassure its shareholders, who have become accustomed to annual payments out of bank “profits”, and are concerned that the profits this year will be too meager for them to enjoy their customary level of income.
By Matt Stoller, a fellow at the Roosevelt Institute. His Twitter feed is http://www.twitter.com/matthewstoller.
Today, the city of Providence, Rhode Island sent out layoff notices to every single teacher in the city. Every single one of them. If you want to understand why this is happening, why wages in the US keep getting cut, this chart tells the story.
That’s the number of strikes since 1947. What you’ll notice is that people in America just don’t strike anymore. Why? Well, their jobs have been shipped off to factory countries, their unions have been broken, and their salaries until recently have been supplemented by credit. It’s part of a giant labor arbitrage game, that the Federal Reserve and elites in both parties are happy to play. Strike, and you’re fired. Don’t strike, and your pay is probably going to be cut. Don’t like it? Sorry, we can open a plant abroad. And we have institutions, like the IMF, to make sure that we get goods from those factory-countries, and get them cheap.
Judge says WikiLeaks’ Assange can be extradited Washington Post. This is clearly over my pay grade. I though you could be extradited if the crime you are accused of is a crime in the country from which you are to be extradited. I didn’t think having a condom break during sex and then refusing a DNA test was a crime in England. But Assange’s counsel didn’t argue that, apparently. Perhaps the form of the writ from Sweden does not allow such fine points to be raised.
American leadership is reliable in one respect: it consistently undershoots my already low expectations.
Or maybe I have it backwards because I keep forgetting who the authorities are really serving, and it clearly isn’t you and me. As we will discuss below, the latest scam is that the banking regulators are finalizing a mortgage “breakdown” settlement, and they’ve evidently decided to let the industry off the hook for a mere $20 billion.
In Saudi Arabia, the royal family has just offered $36 billion worth of concessions in an effort to placate an increasingly unruly public (this appears to be in addition to pledges to spend $400 billion on education, health care, and infrastructure by 2014). This is in a country with a population just under 26 million, including over 5 million non-nationals who presumably aren’t eligible.
Now you can easily pooh pooh this comparison, since Saudi Arabia is an autocratic country desperately throwing around money to buy off dissidents, right? But this is the kind of money a leadership group will shell out when pressed to defend an existing order. And the US was very quick to hand out funds right, left, and center during the financial crisis. It’s continuing to do so now in less obvious ways, by continued life support for the mortgage market through Fannie and Freddie, the Fed’s super low interest rates and QE2, and non-monetary measures, most important its refusal to make any sort of serious investigation into what happened in the crisis and prosecute key actors.
I wonder if solar flares or something in the ether is prompting officials under attack to have unusually open conversations with people in the opposition. We’ve just had Governor Walker speak to “David Koch”, and I had a mini version of the same experience with MERS’ general counsel, except in my case, I was the recipient of the phone call. But the underlying assumptions of MERS and the Wisconsin executive were similar, in that each is confident of support from powerful allies.
Given that I am a vocal MERS critic, though testimony I have given, opinion pieces I have written and the work on legislation I have done over the last year decrying the legal standing and operational sloppiness of MERS, I was more than a little taken aback to get a call from Richard Anderson of the MERS legal team yesterday.
I was alerted about and listened to this recorded phone conversation between a caller claiming to be David Koch and Walker a couple hours ago and did not post it then over concern that might not be real. However, the governor’s office has issued a press release attempting to defend the governor’s half of the conversation. Per reader Doug Smith, who pinged me about the official statement:
Yves here. I thought this post was useful not only in describing how high food prices posed a particularly difficult policy problem for North African countries, but also in providing important background.
World food prices are now even higher than their peak just before the global crisis. During periods of high commodity prices, North African and Middle Eastern governments have a long tradition of subsidising food and fuel products. But this column shows that food price inflation and consequently subsidies were also high during periods when global commodity prices were falling. Now these countries have an opportunity to correct this.
Plank after plank of the mortgage recording company MERS’ business model has come under attack. To date, the results do not look good for the embattled company.
MERS has repeatedly insisted that its operations are legal. It would be more accurate to say that insufficient attention was paid to legal issues when the firm was created and the permissibility of its operations were under the radar and hence in a legal grey area for many years. Now that they have been challenged in court, MERS has had to retreat from many positions it took in public. Despite its protestations that everything it did was kosher, the database firm has now retreated from one of its widespread practices, of allowing foreclosures to be made in the name of MERS, after a number of state supreme courts and Federal bankruptcy courts issued rulings to the contrary.
Not surprisingly, MERS has the look of a company in trouble.