The criminality of the megabanks caused the present recession, yet the Federal government treats them as too big to fail and too big to jail. But what if the states were to sue individual bankers accused of defrauding the public? How sweet that would be! And California's Attorney General is contemplating doing just that. Support her!

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Will JPMorgan Chase Bankers Finally Pay the Piper?

By Richard Eskow

Will California Attorney General Kamala Harris hang tough in her new lawsuit against JPMorgan Chase, the first to target individual bankers accused of defrauding the public? If so, it would be the first time in five years that executives at a major bank have personally paid a price for their misdeeds.

Weekend at Jamie’s

Recent revelations have shown the world that JPMorgan Chase comes as close as any institution in America to embodying all that is corrupt, contemptible, and criminal about today’s megabanks.  This is gratifying, at least on a personal level, since that was not a popular assessment when we first started writing about JPM and CEO Jamie Dimon a few years back.

In those days Dimon was help up as the “good banker” by the president and the press. His institution was considered well-managed and ethical by some of the more shallow members of the popular press, despite the plethora of scandals and crimes like the Alabama bribery case.

Since then we’ve had a variety of Chase revelations: the “Burger King kids” details behind its massive foreclosure fraud; its confessed criminal mistreatment of active duty military personnel; its deeds in fraudulently propping up a failed mortgage lender (it was like a financial Weekend at Bernie’s); and (speaking of “Bernies”) its negligence (at best) in the handling of the fraudulent Madoff accounts, which should have triggered all sorts of red-flag warnings.

Now there’s the London Whale scandal and what appears to be a subsequent case of investor deception.

The bank wound up paying a staggering $16 billion in fines and settlements over a four-year period, more than 12 percent of its net income during that time.

The Scandal of Our Time

An ethically healthy society would never have lionized a CEO like Jamie Dimon or an institution like JPMorgan Chase. That’s why we’ve called it “the scandal of our time.” What explains Dimon’s inability to stem the lawbreaking and correct his organization’s broken ethical system? The most generous interpretation is that he’s an incompetent manager — so incompetent that, even after numerous suits, revelations, and settlements, “Jamie didn’t know“ about all the illegal and unethical behavior that continued unabated in his institution.

Jamie Dimon

Needless to say, there are more plausible explanations.

And yet, in those cases where the bank has been called to account with fines and settlements, it has been shareholders and not the wrongdoing bankers themselves,who have paid cost. Ironically, that even happens when the shareholders themselves are the ones who were defrauded. That’s why we say that bank fraud is the only crime on Earth in which the victims make restitution on behalf of the wrongdoers.

Is this ugly pattern finally changing?

Meet the Does

Blogger and finance expert Yves Smith thinks so. California Attorney General Kamala Harris is suing JPMorgan Chase and individual bankers (named as “Does 1 through 100″) for “commit(ting) debt collection abuses” against Chase credit card holders, “flooding California’s courts with… collection lawsuits based on patently insufficient evidence.”

The Harris suit calls on the Court to assess $2,500 against each defendant for each violation of “Business and Professions Code section 17200,” and an additional $2,500 penalty for each violation perpetrated against a senior citizen or disabled person.

That may not sound like a lot of money for a banker but, as Smith points out, there are more than 100,000 potential violations. Smith writes: “If (Harris) can get the individuals who were supervising the robosigning operations (better yet, the C level execs ultimately responsible) and the complicit law firms, she might bankrupt some well-placed people. This could be extremely entertaining.”

Indeed. In fact, I’ll buy the popcorn.

Walking the Walk

From Yves Smith:

“Now Harris has been widely depicted as an opportunist. But she’s kicking up more dirt on the banking front right now than any other official … This case has enough headline value that Harris might go a few rounds before settling. JP Morgan is known for throwing vast amounts of lawyers at opponents to bury them in legal costs and busywork, so this case, sadly, is unlikely to go to trial. But if she can get the goods on the right sort of DOES, she might make some individuals pay in a serious way, which would have far more deterrent effect.

Adds Smith: “If nothing else, we should applaud what she’s so far and press her to keep going.”

I generally agree with all of the above. But some of us have been burned by even the most cautious cheerleading for seemingly promising Wall Street investigations and lawsuits.  That’s especially been true when the actions in question are being conducted by elected officials with any sort of connection to the Obama White House, an institution which has become synonymous with efforts to protect bankers and restrict their punishment to the merely symbolic.

Attorney General Harris is considered close to the president. She’s undoubtedly being either cajoled or pressured (or both) to cave on this issue.

Reaching Out

So I’m going to emphasize the words “press her” in Smith’s last sentence.  If Harris is determined to see this through, her suit is potentially the kind of sea change in banker law enforcement we’ve been waiting for. But that means she’ll need emphatic expressions of support to strengthen her resolve (and to explain to the Administration why she can’t and won’t back down).

And if this is merely another publicity stunt, she needs to know that a choreographed cave-in will be very poorly received by her constituents.

Harris therefore deserves strong expressions of support, along with statements that citizens expect her to see this action through — at least far enough to ensure that the malefactors involved pay some personal penalty for their misdeeds.

(Contact information for Kamala Harris, Attorney General for the State of California, can be found here.)

RJ Eskow

Republished from Huffington Post with the author’s permission.
Saturday, 11 May 2013

AlterNet / By Joshua Holland
 

Many Americans Face Economic Catastrophe -- Why Do the Political and Media Establishments Ignore Their Suffering?

Our leaders appear to be oblivious to the profound economic pain the majority of Americans are experiencing. 

January 14, 2011 | This is what a broken economic model looks like: record profits for corporate America, Wall Street paying out fat bonuses to its execs and the wealthy doing well enough to create a surge in demand for luxury items, while most of the rest of us struggle just to make ends meet in a devastated economic landscape.

You've no doubt heard about the unemployment numbers and the alarming number of Americans losing their homes, but a series of reports that paint a stunningly vivid picture of the human toll of the meltdown – the intense pain felt by the unemployed, the under-employed and the working poor – have gotten less play, in large part because while most of the U.S. remains in the grip of what appears to be a Second Great Depression, the political and media establishment largely ignores -- or at least underplays – the economic catastrophe a huge number of families are experiencing.

Part of the reason for that disconnect is simply that corporate America is sitting on record profits, and the stock market has by and large rebounded from its bottom. It's also due to the fact that a country as large as the U.S. doesn't really have a single economy; we live and work in a number of state and regional economies. And the Washington DC metropolitan area is doing very well – its residents are living in an economy completely divorced from the one in which many Americans are desperately trying to stay afloat.

The unemployment rate in DC is 6 percent – more than a third lower than the nationwide rate of 9.4 percent. 

It added more net jobs in 2010 than any other area in the U.S. In 2008, before the crash, residents of the metropolitan area enjoyed the third highest incomes in the U.S.; since the meltdown, their wages have remained well above the national average. (It's worth noting, however, that according to the Washington Post, the political class's newfound obsession with cutting the deficit may put a damper on the DC area's fortunes in the coming years as tens of thousands of public sector jobs are killed off.)

Now consider how the capital region is doing compared to the rest of the country. Unemployment has stood at over 9 percent for 20 consecutive months, the longest stretch since the Great Depression. The Wall Street Journal reported that this persistently high level of joblessness is resulting in a “steep, lasting” drop in wages. “Between 2007 and 2009,” wrote the Journal's Sudeep Reddy, “more than half the full-time workers who lost jobs that they had held for at least three years and then found new full-time work ... reported wage declines” and over a third of those workers “reported the new job paid at least 20% less than the one they lost.” That kind of income drop dwarfs that of previous post-war recessions.

Some among that number have been forced to accept minimum-wage jobs. And according to Jeannette Wicks-Lim, a scholar at the University of Massachusetts' Political Economy Research Institute (PDF), almost nine out of 10 full-time minimum-wage workers can't afford the basic necessities of life, which she defined as making enough “to protect them from serious economic hardships such as worrying about food, relying on a hospital emergency room to meet their health care needs, and having their utilities shut off.”

What many don't understand about the grim reality of the American labor market is that its impact on workers who have faced extended unemployment can reverberate for decades – long after the economy has recovered. Columbia University labor economist Till von Wachter studied the fortunes of workers who faced sudden lay-offs during the 1981-1982 recession in the period since that time. He found that even after 15 to 20 years, those workers' wages were still 20 percent lower than comparable workers who had held onto their jobs in the early 1980s downturn.

According to the Journal, the impact of this kind of joblessness can span generations:

Research shows that children of workers who lose jobs and go back to work at lower wages appear to suffer from lower wages, too. In a 2008 study, a group of economists tracked the wages of 60,000 father-child pairs from 1978 to 1999. Children whose fathers went through mass layoffs in the 1982 recession ended up with 9% lower earnings than similar children whose fathers didn't experience the job cuts.

The toll lengthy unemployment takes can't be overstated. Six of 10 jobless Americans report having to borrow money from friends or family; more than a quarter have been forced to change their living arrangements – taking roommates or moving to cheaper places – a third have missed mortgage payments; almost one in 10 have declared bankruptcy and nearly 20 percent have “sought professional help in the past year for a stress-related disorder or depression,” according to research conducted by the John J. Heldrich Center for Workforce Development at Rutgers' University.

Those holding onto their jobs aren't doing that well, either. According to the same study, almost four in 10 say the recession has had a “major” impact on their lives, a majority characterize their personal financial situation as “fair” or “poor,” and almost six in 10 have taken on debt to get by.

This year, the Census Bureau responded to criticism that its poverty measure tended to undercount the poor by releasing a new, more comprehensive metric. According to the new “supplemental” measure, almost 16 percent of Americans are living in poverty today. But the official rates still don't tell the full story of American poverty; according to the 2009 threshold, a family of four struggling to get by on $22,500 – a “poor” family by any estimation – fell above the official poverty line. The Organization of Economic Cooperation and Development uses a rather straightforward measure – anyone making less than half of the media income is considered to be living in poverty. By that standard, long before the crash, in the mid-2000s, our poverty rate ranked third among OECD countries – bested only by that of Mexico and Turkey – at over 17 percent.

The housing market is clearly in Depression territory. In November, real estate prices fell for the 53rd straight month, and CNBC reports that average values have now dropped by 26 percent since 2006, just edging out the decline in home prices between 1928 and 1933. “What’s worse,” notes the business news service, is that “it’s not over yet: Home values are expected to continue to slide as inventories pile up, and likely won't recover until the job market improves.” And the job market isn't expected to improve significantly for several years. 

We're stuck in a vicious cycle -- consumer demand is in the tank and likely to stay that way until the jobs crisis begins to ebb and the housing market stabilizes, and yet neither of those things is likely to happen until consumer demand picks up and spurs companies to start hiring.

The public rejects the Right's explanation for this dismal reality. According to the Rutger's study, 90 percent of the population believe that the unemployed really want to work; 54 percent said “the federal government should fund programs that create jobs for the unemployed even if the debt goes up” as a result.

But they also reject the standard Keynesian remedy for such a bleak outlook – about three-quarters of those surveyed dismissed the idea of an additional stimulus package out of hand.

That leads to the question of what, exactly, can pull the economy out of this kind of downturn. Last year, economist Robert Reich wrote that the “economy can't get back on track because the track we were on for years -- featuring flat or declining median wages, mounting consumer debt, and widening insecurity, not to mention increasing carbon in the atmosphere -- simply cannot be sustained.” 

Since the 1981-'82 recession, the economy has been on a roller-coaster of boom-and-bust – starting with the 1980s financial boom fueled by corporate raiders leading to the 1992 recession, which gave way to the dot-com bubble of the 1990s, which led to the 2000-2001 recession, which we got through riding the housing bubble that eventually deposited us where we find ourselves today. Economists are at a loss predicting where a new and sustainable engine of job growth might emerge.

A new economic model for the 21st century is necessary, and will require bold ideas that may not hew neatly to our traditional left-right paradigm. But that kind of thinking can only come with a sense of urgency – an appreciation for the destructive depth of this Depression. With Washington ensconced in a serviceable, even relatively healthy economy, that urgency just hasn't been forthcoming.

Joshua Holland is an editor and senior writer at AlterNet. He is the author of The 15 Biggest Lies About the Economy (and Everything else the Right Doesn't Want You to Know About Taxes, Jobs and Corporate America). Drop him an email or follow him on Twitter.

SYONARA AMERICAN DREAM: SEE IT FOR YOURSELF. TENT CITIES SPRINGING UP ALL OVER THE COUNTRY...

Tent cities spring up in LA



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Southern California Shanty Town / Tent City
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Foreclosed and homeless.
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Tent Cities: We're headed for a new Global Society aka Prevailing World Order
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Those Jobs Americans Will Not Do? - Tent Cities
MarcusCMarcellus

Obama's True-Grit Moment: His Veto of a Bill Passed in the Dead of Night by a Gutless, Heartless, or Brainless Congress at the Behest of the Criminal Mortgage Industry

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Elizabeth Warren Helped Shoot Down Bill That Would Have Sped Foreclosures, Calendar Shows

First Posted: 11-24-10 05:13 PM | Updated: 11-24-10 05:37 PM

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Read More: Bureau Of Consumer Financial Protection, Cfpa, Cfpb, Consumer Financial Protection Agency, Consumer Financial Protection Bureau, Elizabeth Warren, Foreclosure Crisis, Foreclosure Fraud, Foreclosuregate, Fraudclosure, The Financial Fix, Business News


Elizabeth Warren was the first senior Obama administration official to recognize the potentially incendiary impact of a bill that would have made it significantly easier for mortgage companies to foreclose on homes, and her subsequent warnings played a crucial role in persuading the President to veto the measure, according to freshly released documents and people familiar with the deliberations.

The disclosure that Warren was instrumental in halting a bill that would have streamlined the foreclosure process comes as she confronts fierce criticism from Republicans on Capitol Hill for the way she was appointed to construct a new consumer financial protection bureau, and characterizations that she is inclined to take an overly punitive tack with Wall Street.

A long-time advocate for greater regulation of the financial system and a prominent critic of predatory lending, Warren now finds herself at the center of an intensifying debate over the relationship between the Obama administration and the business world.

For consumer advocates, who have long decried what they portray as Wall Street's outsized influence in Washington, Warren represents their greatest hope that big banks will be more tightly supervised following the worst financial crisis since the Great Depression. For a vocal group of business leaders and their Republican allies, Warren has become Exhibit A in their case that the Obama administration is anti-business.

The decisive way in which she labored behind the scenes to stymie a bill that would have eased requirements for documentation in the foreclosure process underscores how her arrival has altered the administration's relationship with major banks.

The bill, which passed both houses of Congress and awaited President Obama's signature to become law, essentially would have compelled notaries to accept out-of-state notarizations, regardless of the rules in those states.

State officials across the country--who have been pursuing probes looking into wrongdoing within the foreclosure process-- feared that those jurisdictions with lax standards could have become hotbeds for foreclosure documentation fraud. Lenders and mortgage companies could have used those states as central clearing houses to produce bogus foreclosure paperwork, and then export those documents to other states with more stringent regulations--an expedient bypass around the strictures.

Obama ultimately declined to sign the law, and the House of Representatives failed to override the veto.

Officials said Warren was among the first federal officials to recognize the significance of the notary bill, titled the Interstate Recognition of Notarizations Act of 2010. She met with authorities from several states and then relayed their concerns to influential administration officials.

During the morning of Oct. 6, Warren's team at the Treasury Department wrote the first memos on the bill, raising questions about the possible consequences if it became law, these people said.

That evening, Warren met for 30 minutes with Peter Rouse, Obama's interim chief of staff, her calendar shows. She later spent an hour on the phone with Illinois Attorney General Lisa Madigan, who once sued Countrywide Financial and exacted an $8.4 billion multi-state settlement.

The next day, Warren participated in an afternoon meeting on the bill, her calendar shows. During that meeting one of Obama's top spokesmen, Dan Pfeiffer, posted an entry on the White House Blog explaining why Obama would not sign the bill.

On Oct. 8, Obama declined to sign the bill into law, citing the need for "further deliberations about the possible unintended impact" of the bill on "consumer protections, including those for mortgages."

Documents released Wednesday show that Warren met or spoke with at least eight state officials leading a 50-state investigation into possibly-fraudulent mortgage documentation practices.

The state attorneys general, secretaries of state and bank supervisors are probing the way in which major mortgage companies have pushed through thousands of foreclosure cases at a time, as if on a factory assembly line, by short-cutting the required documentation process.

Recent weeks have featured a host of unsavory disclosures about how mortgage companies employed so-called robo-signers-- people whose sole job was to sign foreclosure documents without reading them or confirming basic facts, as required by law. The volume of cases and shoddy handling of paperwork is reflective of the messy and indiscriminate lending practices that characterized the nation's housing boom, as Wall Street eagerly handed mortgages to seemingly anyone willing to sign off.

The states' investigation and a parallel multi-agency federal probe are now roiling the mortgage industry, heightening the possibility that major lenders could face potentially huge fresh losses as bad loans continue to emerge. With legal and regulatory uncertainty now enshrouding the industry and public outrage trained on foreclosures, the banks could have trouble limiting those losses by selling off the homes pledged against bad mortgages.

The nation's biggest lender, Bank of America, has seen its share price drop 18 percent through yesterday's market close since the day before the states announced their joint inquiry.

Warren serves as an assistant to Obama and a special adviser to Treasury Secretary Timothy Geithner as she leads the effort to create the new Bureau of Consumer Financial Protection, a watchdog designed to protect borrowers from abusive lenders. Her calendar from Sept. 20 to Nov. 2 was released per a Freedom of Information Act request.

The longtime Harvard Law School professor and consumer advocate met or spoke with the state attorneys general from Iowa, Illinois, Texas, North Carolina, Massachusetts and Ohio, her calendar shows. She also met with Ohio Secretary of State Jennifer Brunner, and spoke with New York's top banking regulator, Richard H. Neiman. They are among the leaders of the combined state probe.

Warren has long chided federal regulators for their lax oversight of the financial industry and slipshod protection of consumers. She's championed state regulators, however, who have often been ahead of their federal counterparts when it comes to consumer finance issues.

Warren's calendar also shows numerous meetings with bankers and their representatives. Financial executives and lobbyists have noted that Warren was reaching out to them more than they initially expected. The calendar confirms her outreach.

On Sept. 20, the same day she took a photo for her Treasury Department badge, Warren spent an hour and a half meeting with bankers from Oklahoma, her calendar shows. She spent an hour having lunch with Geithner that day as well.

Since then she's met with the chief executives of the nation's largest banks, including Vikram Pandit of Citigroup; Jamie Dimon of JPMorgan Chase; John Stumpf of Wells Fargo; James Gorman of Morgan Stanley; Richard Davis of U.S. Bancorp; W. Edmund Clark of TD Bank Financial Group; David Nelms of Discover Financial Services; Niall Booker of HSBC North America Holdings; and Kenneth Chenault of American Express.

The calendar entry for Chenault's one-hour meeting on Oct. 13 notes that "He's flying here for us."

Warren also met with officials from Goldman Sachs and Deutsche Bank, Germany's biggest lender and one of the world's biggest financial institutions.

Notably absent from Warren's calendar are officials from Bank of America, the biggest bank in the U.S. by assets and branches, including its chief executive, Brian Moynihan.

Warren's calendar includes meetings with investors and trade groups, like the Consumer Bankers Association, the Independent Community Bankers of America, the Financial Services Roundtable and the Securities Industry and Financial Markets Association.

Though Warren is known for her vigorous advocacy on behalf of consumers, she's spent more time with bankers and their lobbyists than with consumer groups and advocates during her roughly two months on the job.

Warren's 2007 journal article calling for the creation of a dedicated consumer agency inspired policymakers to enact it into law. Big banks opposed it.

Warren has also met with nearly two dozen members of Congress from both sides of the aisle, including the likely incoming chair of the House Financial Services Committee, Rep. Spencer Bachus, and the top Republican on the Senate Banking Committee, Richard Shelby. The Alabama Republicans have been particularly critical of Warren and her new agency.

Warren's calendar features numerous White House meetings, like a two-hour dinner on Sept. 23 with top Obama adviser David Axelrod and breakfasts and lunches with another top Obama counselor, Valerie Jarrett. She's also met with the heads of all the major federal financial regulatory agencies, including Federal Reserve Chairman Ben Bernanke.

Among Warren's early initiatives are efforts to make credit card disclosure forms shorter and easier to read, and simplifying mortgage documents. Her first major speech since joining the administration was a Sept. 29 address to the Financial Services Roundtable, a Washington trade group representing firms like JPMorgan Chase, BlackRock and State Farm. She asked the assembled executives to work with her to create a new system of consumer regulation focused on core principles rather than a mountain of specific rules.

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Shahien Nasiripour is the business reporter for The Huffington Post. You can send him an e-mail; bookmark his page; subscribe to his RSS feed; follow him on Twitter; friend him on Facebook; become a fan; and/or get e-mail alerts when he reports the latest news. He can be reached at 646-274-2455.