The Wrongologist

What’s
Wrong Today:

Today’s
New York Times reports about the CIA’s moves to curry favor with Hamid
Karzai and high ranking members of Afghanistan’s government through direct cash
payments dropped off at Karzai’s office:

All told,
tens of millions of dollars have flowed from the CIA to the office of
President Hamid Karzai, according to current and former advisers to the
Afghan leader.

Perhaps
the most disturbing aspect of these cash payments is that they seem to have
been designed in large part to pay off Afghan warlords:

One warlord
who is still on the payroll is Abdul Rashid Dostum, an ethnic Uzbek whose
militia served as a CIA proxy force in 2001. He receives nearly $100,000 a
month from the palace, two Afghan officials said.

Mr. Dostum
was quoted in a 2009 interview with Time magazine:

Although
this influence-buying program has cost us tens of millions of dollars over the last
10 years, it is chump change compared to the real theft of US funds in
Afghanistan. The Special Inspector General for Afghanistan Reconstruction (SIGAR)
noted in the January, 2013
report that huge sums of cash exit Afghanistan through the Kabul airport:
(emphasis by the Wrongologist)

Where does
the all the cash come from? The largest flow of money into Afghanistan comes
from the US and the biggest program that we fund supports Afghan security
forces. Congress created the Afghanistan
Security Forces Fund (ASFF) to provide the Afghan National Security Force
(ANSF) with equipment, supplies, services, and training, as well as facility
and infrastructure repair, renovation, and construction.

This chart
from the SIGAR report shows how lavishly the ASFF has been funded by the US Congress:

It shows that
the US has been providing well over $8 billion a year to fund Afghan security
forces every year since 2010. This adds up to more than $44 billion since 2005.
So, that $4.5 billion that left by plane in 2011 is 10% of what we have “officially” put into the country in the past 8 years!

So these are your tax dollars at work.

It is laughable
when Congress tells the American public that it’s now time for belt-tightening,
while they continue to throw billions of dollars at another endless, undeclared
war.

Meanwhile,
we must accept chained CPI because social security will only be able to pay 75%
of benefits in 2033. Medicare must be cut so that the deficit shrinks faster than
it is already shrinking.

Our
lawmakers’ priorities remain misguided. We have an abundance of unemployed
Americans, a declining middle class, failing schools, decaying infrastructure, apparently,
none of which we are able to fund.

But, we
have millions of dollars to give to a corrupt politician and dictator in
Afghanistan. We allow billions of dollars to be skimmed off the top and moved
out of Afghanistan and into tax-haven bank accounts.

What a
sham.

We will
leave Afghanistan in 2014 after thirteen years of occupation. Our latest military
guru on the ground, General Joseph Dunford, Jr., who the Times
noted this week, offered up this happy talk:  

Bull. In
2014, Afghanistan will have elections, a new president, a military transition and the same old Taliban. In November
2012, the Wrongologist said:

Karzai
& friends will be gone will $Billions of our money. The Afghans who remain will have no
money to maintain what we’ve tried to build. Their plan is Karzai’s: To remain
on our payroll.

Absent
that, they will have little choice but to skim money from the opium trade, and
we’ll have little choice but to look the other way.

Forget the
money. Has this been worth the lives of 2033 Americans?

 

Bangladesh, Bush Library, Sequester Fix. Another difficult week. Enjoy your weekly dose of irony.

Obligatory Bush Library cartoon:

Fiction Section of Bush Library:

Congress’ FAA Fiasco:

Bangladesh Sweatshop building collapse hits home in the US:

The real gun problem is “law-abiding” gun crazies:

And finally, an obligatory poke at a guy who seems to have rehabilitated himself:

Ritchie Havens died on April 22. Everyone
has seen him sing “Freedom” at
Woodstock, a song he improvised when he was out of material, thrust by
an accident of history into the role of a 2 hour opening act before a crowd of
400,000 on a hot afternoon in a soaking wet orange dashiki.  

He just started strumming in that rhythmic
way only he could and just chanted the word “freedom” until it
started to sink into the crowd’s collective consciousness.  He brought the
verses of an old spiritual to the riff in a way that couldn’t have been more
appropriate. 

Listen to it today and it can move
you to tears.

In
the BBC’s
discussion of Havens’ career, Havens says about Woodstock:

It
is appropriate that Havens died on Earth Day. He devoted much of his life to
educating children about ecological issues, from co-founding The Northwind Undersea
Institute (an oceanographic children’s museum in the Bronx) to creating The
Natural Guard, which is described on his website as:

Havens took his teeth out to sing. Apparently he
cared more about how he sounded than how he looked. If you have that much
talent, you don’t need teeth. He just sat up there with his guitar and simply
sang his songs. He didn’t have a persona, he
had no guile.

Havens
was also political. Often at concerts, he told the story of being an avid
follower of comic book superheroes, especially, Superman, who fought for
“Truth, Justice, and The American Way.” He would say that it was only
when he was much older that it occurred to him:

Richie
represented the soul of what we were fighting for in the 1960’s and 1970’s:
Freedom for the oppressed in our society, freedom from mindless obeisance to
authority, freedom to pursue our unalienable rights as proclaimed by Dr. Martin
Luther King Jr. in his “I Have a Dream” speech. Rights which remain elusive
today. Havens’ pleas for harmony, equality, and fairness are as applicable now as
they were at the end of the 1960’s

Ritchie
Havens’ first album was “Mixed Bag”, which includes his song, Follow.
It joined a short list of essential ’67 vinyl, (remember vinyl?) with “Are You
Experienced?”, “Fresh Cream”, and a few others. The late, great Pete Fornatale’s program
on WFUV-FM was titled “Mixed Bag” as a tribute to Havens.

Ritchie
Havens was a warrior for peace and decency for all people; no similar saints exist
in pop music today.

Rest
in peace, soul man and thanks for the music. You will be missed.

What’s
Wrong Today:

The
Wrongologist didn’t think yesterday’s market research on air traffic delays
would change anything and while correlation is not causality, Roll Call reported
that, last night, before leaving town for a week-long recess, the Senate passed
a bill that allows transfers of funding from airport projects to offset the cost
of keeping all air traffic controllers working and airplanes flying near to schedule.

The agreement
came together after most senators had already made plans to leave town. They passed
the bill with no debate and no objections.

Today, the
House also passed the bill. The House approval was 361-41. Lawmakers then
headed for the exits (and airports) for their week-long spring recess.

White
House spokesman Jay Carney said Obama would sign the bill.

Another stunning show of bipartisanship by
Congress!
We need to remember this the next time one of these morally and intellectually
bankrupt pols says they can’t possibly vote on an issue because they need more
time to study the matter.

The FAA fix was sold
as an effort to ensure that sequestration does not interfere with
“essential” government services.

When lawmakers say
“essential,” they apparently mean “essential to people like
me.”

This shows which problems
Washington takes seriously. The FAA problem is bad for the entire economy, but
it particularly hurts people who fly a lot and they tend to be affluent.

Members of Congress
themselves also happen to fly a lot. As
a result, we’ve gone from problem onset to legislative solution in about five
days.

Meanwhile
sequestration is forcing an 11%
reduction in benefits to approximately 1.8 million long-term unemployed
Americans. It has also caused state and local housing agencies to stop issuing
Section 8 housing vouchers to families on waiting lists. Congress has not
rushed to fix those problems.

The core of the
Republicans’ long-term fiscal plan is to sharply reduce programs that aid the
poor. Last year’s House budget proposal cut
$800 billion from Medicaid over 10 years, on top of a repeal of the
Medicaid expansion and the rest of the Affordable Care Act, and it cut a
further $800 billion from income security programs such as food stamps.

Piecemeal Sequestration
fixes offer an alternative way for Republicans to achieve their goal: Break the
government and then see who has the clout to get the programs they care about
fixed. Republicans wanted budget cuts focused on programs for the poor; with
the FAA fix, the affluent are off the hook, and Sequestration achieves that
goal.

In coming months, as the
Sequestration continues to unfold, defense contractors and military communities
will be next to seek relief from Washington. These are powerful lobbies and the
Obama administration must tie any piecemeal solution for them to one that solves
overall budgetary issues, like help for the poor and the unemployed.

Who
do you think is hurt by cutting school breakfasts or Section 8 housing
subsidies, and who do you think is helped by fixing the FAA controllers issue?
Class warfare much?

As
a piece of strategy and political theater, Mr.
Obama should veto this bill: Then let the Senate override his veto, but when
he vetoes it he should call upon Congress to work for the people and fix the Sequestration,
which is the real issue.

But, he will not.

Here you
see the Republican strategy in action: Cut government! Cut government! Cut
government! Wait, don’t cut that: I’m using that.

You only
need to know one thing to understand politics: Follow the money.

Today, the Wrongologist is fact-finding
about the Sequester’s impact on flight times between NYC and Chicago. So far,
one hour on the runway between LaGuardia and O’Hare, but the flight landed only
10 minutes late. There is a LOT of slush in the schedule if we could make up 50
minutes in 770 miles!

The return flight spent 45 minutes on the
runway before taking off. It looks like it will land about 25 minutes late. Both flights were completely full.

We have Wi-Fi on the return flight, so here
we go, from a no blogging Thursday to a limited blogging Thursday:

What
‘s Wrong Today:

Niraj Chokshi wrote
in the National Journal about a Wednesday Senate hearing by the Joint Economic
Committee on the problem of the long term unemployed. The hearing was convened
by Sen. Amy Klobuchar (D-MN), the committee’s Vice Chair. The Joint Economic
Committee is one of a handful of committees whose members come from both
parties and both houses of Congress.

So, What’s Wrong?

Nobody
else attended the meeting!

Klobuchar was eventually joined by three
colleagues (in order of their appearance): Sen. Chris Murphy D-CT), Maryland
Rep. John Delaney (D-MD) and Rep. Elijah Cummings, (D-MD).

All four are Democrats; no Republicans could
make the time to attend, what with their other responsibilities, like maybe
passing the Ryan budget yet again.

We know that Congress Critters have busy
schedules, what with hearings, meetings, Sunday morning talk shows, press conferences, and the occasional
vote. By 10:30 am, when the long-term unemployment hearing began, more than
25 other hearings had already started in both the House and Senate.

But usually the pols try to show up, even
if only for a few minutes, for no other reason than to be seen. It stands to
reason that lawmakers who shake their jowls at the high jobless rate would want
to be seen publicly making a show of tackling the problem, right?

For a group that often bickers over how to
solve the nation’s biggest economic problems, Wednesday’s hearing represented a
perfect chance to do just that: Be seen discussing how to tackle the
intractable problem of long-term unemployment.

Readers of this blog know that the
Wrongologist thinks that long-term unemployment is our number one economic and
social problem.  Read about why long-term
unemployment is a long-term problem here.

The ranks of the long-term unemployed have
swelled in recent years, accounting for a growing share of the total
unemployed; the problem is compounded by eroding skills; and the psychological
effects that unemployment can take on the individual and their families.

In a 2010 Pew survey, close to half of the
people out of work for six months or longer said being unemployed for so long
had strained family relations and more than 40% said they’d lost contact with
close friends. 

We know that just being unemployed for a
long period makes individuals less employable.

The purpose of the Klobuchar meeting was to
explore possible bipartisan solutions to the problem, including: equipping the
unemployed with new skills; encouraging the private sector to hire more of the
long-term unemployed by providing incentives, such as tax breaks or subsidies;
improving the economy; and improving education.

It’s no coincidence that the only members of
Congress who showed up for the hearings were Democrats.  Republicans are
only worried about guns, the deficit and the debt.

Their priorities do not include unemployment.

What’s
Wrong Today:

You
say our Congress can’t act in a bi-partisan way and quickly pass something that
the President will sign?

Consider
the bill that modifies the transparency requirements under the STOCK Act. It was introduced
on April 11, 2013 and was signed by the President on April 15, 2013.

What
is the STOCK Act? Back in 2012, amid pressure from Mr. Obama including an
appeal for its passage in his 2012 State of the Union address, Congress passed
the Stop Trading on Congressional Knowledge (STOCK) Act, a bill
prohibiting the use of non-public information for private profit, including
insider trading by members of Congress and other government employees. The Act
was passed by a 96-3 vote in the Senate, and by 417-2 in the House.

It is unclear why,
prior to 2012, it was perfectly legal for congress to trade on inside
information, but apparently, it was.

Yet
even before the law became effective, the United States House and Senate voted
unanimously to repeal one of its provisions. The repealed provision
required that all financial
disclosure forms be accessible online.

The
provision would have required 28,000 senior government officials to post their
financial information on a publicly available online database. It had come
under harsh criticism from federal government employee unions.

Under
the new law, the elements of the STOCK Act that were removed include:

• Creation of searchable, sortable
  disclosure of the information contained in financial disclosure reports even for Congress, the
  President, Vice President, the President’s cabinet and congressional
  candidates.

• Electronic filing for
  Congress, the President, Vice President, the President’s cabinet and
  congressional candidates, as well as high-level executive and
  congressional branch employees. Even images of the staffers’ filings will
  not be available for viewing on the web.

So, more hurdles that concerned Americans will have to jump to get the information.

Congress
twice had passed legislation to delay its implementation. As part of a previous
delay, Congress asked the National Academy of Public Administration (NAPA), to
study the implications of the requirement. Their report,
released in March, found the provision should be repealed, because it could threatened national security, the safety of government employees abroad, as well as make
it difficult to attract and retain talent in the public sector:

In other
words, according to the “nonpartisan and independent” NAPA, having
Congressional financial documents online represents a national security risk,
since terrorists will terrorize the US even more when they know on what days
Nancy Pelosi bought and sold the S&P 500.

Surely
this explains why the bill was rushed and voted in the matter of days: We can’t
have a debate over matters of “national security” especially if the
financial well-being of Congress is at risk. As the Washington Times recapped:

In other
words, while the STOCK Act passed nearly unanimously in 2012, showing how
“honest” congress was, this follow up legislation, which effectively undoes a
key reporting requirement of said anti-inside trading law, passed just as
unanimously.

Amending the STOCK Act was not a victimless
crime:
Those who truly would benefit from the lost transparency are the American
people and the media, or at least those few in the media who have not yet been
bought by Congress and who are willing to uncover which members of Congress might
be violating the STOCK law.

This is known as “security through obscurity.” Rather than
fixing the system’s flaws, you just make the system opaque or unusable enough that
those flaws never surface. If someone wants the public information badly
enough, they will jump through whatever hurdles were created to get it.

Congress
could have carved out exceptions for individuals in sensitive jobs. That would
actually be smarter than hoping that no one would bother to look for the
information on paper instead of online.

Security
through obscurity as a justification to repeal important transparency
provisions of the STOCK Act starts us down a slippery path where any government
action or information could be taken offline in the name of safety.

Why
is it that the public can use the Internet to research everything except what
their government is doing? We know that Congress is not tech savvy, but
how can its twisted wisdom be that information is sufficiently transparent if journalists,
academics, advocates and citizens are forced to dig through file cabinets in
basements in Washington, DC to find it?

And
does anyone think that makes us safer?

We
must note that both houses of Congress acted quickly and in a bipartisan manner
in order to hide their shady dealings, their insider trading and, oh yea, “identity
theft.”

Stealth
elimination of government transparency = bilateral shame.

The
entire Congress chose to act against the public interest in favor of their self-interest.

What’s
Wrong Today:

The
Obama administration is seemingly hell bent on cutting social security benefits
through chained
CPI, but they do nothing to deal with the loss of tax revenues from big
business and individuals who use pass through tax business entities to avoid
taxes. 

Here is Nathaniel Popper in the NYT:

Popper is speaking
about the real estate investment trust, (REIT). The REIT became law in 1960 during
the Eisenhower administration. When they were created, they were meant to be
passive investment vehicles, like mutual funds, that buy up a broad portfolio
of real estate, whether shopping malls, warehouses, hospitals or even
timberland and derive almost all of their income from those holdings. One of
the bedrock principles (and the reason for the tax exemption) was that the
trusts do not do any business other
than owning real estate.

Now, changing from a standard
corporation to an REIT has become a corporate trend. The poster boy of
domestic government outsourcing, the Corrections
Corporation of America, which owns and operates 44 prisons and detention
centers across the nation, has received permission from the IRS to convert to
REIT status and as a result, will save many millions on taxes. They expect to
save $70 million in 2013.

Today, there are more
than 1,000 real estate investment trusts, about 10% of them are publicly traded.
Investors like them because, by law, they must distribute at least 90% of their
taxable income to their shareholders, an alluring prospect today, given the low
interest rates paid by other basic investments.

So,
What’s Wrong?

This
is just another tax avoidance scheme enabled through the 72,000 page IRS tax
code that contains thousands of tax preference items like the REIT and carried
interest provisions. Corporations and their tax lawyers are clipping coupons from a IRS tax code written by the rich, for the rich and enabled by
corporate campaign funding.

The
graph below from the OMB shows how low corporate tax revenues are as a
percentage of the total taxes that the government collects. It is the lowest level
in 25 years:

Corporate
profits, on the other hand, are at a 60 year high.

The GAO
issued a new
report which shows that corporate tax breaks cost the US government $181.4 billion in 2011 alone. The GAO calls these breaks “tax
expenditures”. The Center for Tax and Budget Accountability defines
tax expenditures as: (emphasis by the Wrongologist)

In 2011,
the Treasury Department estimated 80 tax expenditures resulted in the
government forgoing corporate tax revenue totaling more than $181 billion. 56
of the 80 tax expenditures used by corporations in 2011 were also used by
individual taxpayers, which include businesses not organized as corporations:

In the
chart below from the GAO, parking corporate money offshore is the #2 cause of
lost tax revenues.  The table includes the top seven reasons corporate tax
collections were $181.4 billion short for 2011:

With so
many loopholes in the corporate tax code, multinationals never pay the official
35% corporate tax rate.  Many instead get money from us in the form of tax
credits and rebates. These same
corporations are the ones lobbying for austerity, to cut social safety nets like
Medicaid, Medicare and social security, while they demand Congress lower
further the corporate tax rate and add even more loopholes.

And
the beat goes on: The Huffington Post reported that America’s ten most
profitable corporations paid an average income tax rate of just 9% last year.
The top two corporations not paying their fair share in taxes are ExxonMobil (the
most profitable corporation in the history of the world) paying a mere 2%
income tax rate and Chevron paying 4%.

A
report earlier this year by The New York Times
found that state and local governments are providing $80 billion a year in tax
breaks and other subsidies in a race to attract companies. The Citizens for Tax
Justice (CTJ) found that 30 major corporations made billions of dollars in
profits while paying no federal income tax between 2008 and 2010. The CTJ
updated that report to add their 2011 tax bill to the total, and 26 of them have still managed to pay
absolutely nothing over that four year period.

This
loss in corporate tax revenue will be made up by slashing education, transportation
and social services.

This is prima facie
evidence of corporate interests hijacking the tax code. These are the greedy sociopaths
who are slowly drowning the New Deal (and later) programs in a Randian bathtub.
 

We
should call it the IRS tax evasion code since it is becoming a complete mockery
of fairness and decency.

We
no longer live in a republican democracy of, by and for the people, but a corporatocracy
run by the plutocracy. We have a Congress, of, by and for corporations and the special interests
of the 1%, who every four years anoint a President, while the
rest of the 99% of us continue to pay the taxes to support them, just as in the
time of King George III in the 1700s.

No
one has what it takes to say “no more” and then do the right thing.  

Where and when will we say: Enough is enough?

What’s
Wrong Today:

You
may have missed it last week, given that the explosions in Texas and Boston required
all of the available oxygen in the media, but a bipartisan blue-ribbon panel published
its conclusion that President George W. Bush and his top advisers bear
“ultimate responsibility” for authorizing torture in violation of domestic and international
law.

The Task Force
was sponsored by the Constitution
Project, a legal and advocacy group. The Task Force was headed by former
congressmen James R. Jones, D-Oklahoma, an ex-ambassador to Mexico, and Asa
Hutchinson, R-Arkansas, who also served as an under-secretary of Homeland
Security during the Bush administration.

Other
members were prominent Americans from the fields of military, academia, law,
ethics and diplomacy – including former FBI Director William Sessions and
longtime senior diplomat Thomas Pickering, Brigadier General (Ret.) David
Irvine and Lieutenant General Claudia Kennedy. Here are the
bios of the panel members.

The panel concluded
that:

• “Torture occurred in many
  instances and across a wide range of theaters”

• There is “no firm or persuasive
  evidence” that the use of such techniques yielded “significant information
  of value”

• “The nation’s highest officials
  bear some responsibility for allowing and contributing to the spread of
  torture”

•  “Publicly acknowledging this grave error,
  however belatedly, may mitigate some of those consequences and help undo
  some of the damage to our reputation at home and abroad”

The New
York Times indicates that the core of the report, however, may be an
appendix: a detailed 22-page legal and historical analysis that explains why
the task force concluded that what the United States did was torture. It offers dozens of legal cases in which
similar treatment was prosecuted in the United States or denounced as torture
by American officials when used by other countries.

At a press conference
at the National Press Club in Washington, co-chair Hutchinson said:

Hutchinson went on to
say: (emphasis by the Wrongologist)

The United States is in
a difficult moral position and is subject to criticism when it criticizes
another nation for engaging in torture and then justifies the same conduct using
national security as its argument.

The Task Force concluded
that after 9/11, the nation’s highest officials approved actions for CIA and
Defense personnel based upon legal guidance that has since been repudiated. And
in the Task Force’s opinion, the Bush Administration relied not only on a very
narrow legal definition of torture, but also on representations by the
government about how the techniques would be implemented, that later proved
inaccurate.

The most important decision was to
declare the Geneva Convention did not apply to al-Qaeda and Taliban captives in
Afghanistan or Guantánamo.

Hutchinson concludes:
(emphasis by the Wrongologist)

The
question is, what should the American people and their government do now with this
information?

The logical
answer would seem to be: Prosecute Bush and his cronies (or turn them over to
an international tribunal if the US legal system can’t do the job). After all,
everyone, including the current and all former presidents, possibly even Mr.
Bush himself, would agree with the principle that “no man is above the law.”

For
instance, we’re told that Pvt. Bradley Manning may have had good intentions in
exposing US government wrongdoing to WikiLeaks, but he still must be punished
for taking the law into his own hands. The only question seems to be whether he
should be imprisoned for 20 years or life.

The US
soldiers at Iraq’s Abu Ghraib prison had to face justice. Eleven were convicted
at court martial, and two enlisted personnel – Charles Graner and Lynndie
England – were sentenced to ten and three years in prison, respectively. A few
higher-level officers had their military careers derailed.

But the
buck stopped there. It didn’t extend to Defense Secretary Rumsfeld, White House
counsel Alberto Gonzales, Vice President Cheney and President Bush. They simply
engaged circular excuse-making, claiming that they had relied on
Justice Department legal guidance and thus their own actions really weren’t
criminal at all.

The Report
challenges that line of defense by detailing how the Bush administration’s
lawyers offered up “acrobatic” legal opinions to justify the acts that
constituted torture. Lawyers from the Justice Department’s Office of Legal
Counsel, particularly John Yoo and Jay Bybee, who collaborated closely with senior
administration officials in choreographing these legal gymnastics.

In other
words, Bush’s team had arranged its own legal opinions that empowered the
President do whatever he wanted.

The Yoo/Bybee
legal opinions gave the President carte
blanche by citing his supposed “plenary powers,” meaning that he
could do literally anything he wished during “wartime,” even a war as
nebulously defined as the “war on terror.”

Yet, the panel’s Report demands no
meaningful accountability from Bush and his top aides, as former Ambassador
Pickering made clear in a WaPo
Op-ed on Friday.

So, the
logical, legal remedy is unthinkable. If the Holder Justice Department moved
against Mr. Bush and other ex-officials, the Washington Establishment, from the
Republican Party to the mainstream news media to much of the Democratic Party, there
would be warnings about the terrible precedent being set that could mean that
each time the White House changes hands the new administration would then “go
after” the former occupants.

This Report
from the Constitution Project can declare that torture is incompatible with
democracy, but if the President can torture anyone he chooses and then walk
away and celebrate his presidential library and pose for the cover of “Parade”
magazine, we are not living in a real democracy.

When
the founders wrote the Constitution and Bill of Rights, not only were they
telling us that the ends do not
justify the means, the founders were also telling us that the MEANS themselves
ARE the ends.

It
was a stressful week. The Boston Marathon, West, Texas and the manhunt on Friday. Background checks for gun sales were defeated in the Senate despite a majority of
Senators voting in favor of them. Immigration reform started on a path through
the House and Senate.

A Meditation
from the Church of Wrongology:

Boston gives us all terror all the time while DC is just another pain in the backside:

The Senate approves of certain background checks:

Is there really a path to citizenship for illegals?

Finally, more from Public Shaming: Apparently
the Internet is filled with angry idiots who think North Korea is behind everything including the Boston Marathon
bombing. (Damn you, Homeland Security, you couldn’t catch that guy on the
secret plane from North Korea?)

OK, that was sad, not funny.

What’s
Wrong Today:

On April 9th,
the Office of the Comptroller of the Currency (OCC) announced the payout terms of the Mortgage Fraud/foreclosure settlement
covering 2009 and 2010. Most people get less than $1,000 out of the deal.
 

4.2
million Borrowers are part of this settlement. 

Payments
to the 4.2 million begun on April 12 are part of the agreement reached by the OCC
and the Federal Reserve Board with 13 mortgage servicers. That agreement provides
$3.6 billion in cash payments to borrowers whose homes were in any stage of the
foreclosure process in 2009 or 2010 and whose mortgages were serviced by:
Aurora Bank, Bank of America, Citibank, Goldman Sachs, HSBC, JPMorgan Chase,
MetLife Bank, Morgan Stanley, PNC, Sovereign, SunTrust, U.S. Bank, and Wells
Fargo.

According
to the American
Prospect, the money is a product of the Independent Foreclosure Reviews
(IFRs), part of the enforcement action against 14 banks. The IFRs, shepherded by
the OCC and the Federal Reserve, were supposed to give anyone in foreclosure
during 2009 or 2010 the chance to have their case investigated by an
independent reviewer, and to be compensated if the review revealed harm.

For context,
the banks paid the third-party
consultants who performed the reviews (and according to whistleblowers, helped deliberately minimize evidence of borrower harm)
roughly $20,000 a review, a windfall of $2 billion.

And the peeps got just $3.6
billion total. Borrowers who suffered the loss of their homes
netted less than $1,000 on average. Regulators could not even give Congress an accurate percentage of
borrowers harmed by illegal foreclosure processes, calling into question how they arrived at the $3.6
billion compensation figure in the first place.

The
settlement detail indicates that the banks foreclosed on members of the active military,
even though that is clearly illegal. The best deal under this settlement that a
foreclosed military person can get is a maximum of $125,000.  However, most
people who were illegally foreclosed upon while in bankruptcy are getting much
less than that.  

About 30%
(~1.2 million borrowers) whose properties were foreclosed on by the banks, had
to battle potentially wrongful efforts to seize their homes despite not having defaulted on their
loans, being protected under a host of federal laws, or having been in good
standing under bank-approved plans to either restructure their mortgages or
temporarily delay required payments.

More than
244,000 of those borrowers eventually lost their homes.

The details:

• The banks seized 1.1 million homes
  after they were approved for
  refinancing. Since the average foreclosed home was worth $191,000, the banks stole $210 billion in
  home value. Under the “landmark settlement,” these wrongfully evicted Americans
  will receive $300 or $500 each, or two-tenths of one percent of their loss.
• 900,000 borrowers who were
  entitled to refinancing under Mr. Obama’s Make Home Affordable program were
  denied help and lost their homes. They get $300 or $600.
• 420,000 homeowners who lost their
  homes while the banks intentionally “lost” their paperwork get $400 or
  $800.
• 28,000 families who were entitled
  to protection against foreclosure under federal bankruptcy law, but got thrown
  out of their homes, get $3,750 to $62,500.
• 1,100 soldiers entitled to
  protection against foreclosure because of their military status get
  $125,000.
• 53
  families who weren’t late on their mortgages, never missed a payment, but
  got thrown out anyway, get $125,000.

This is an
astounding number of people that were treated badly by the Too Big To Fail banks.
 Now those same people have added insult to their injury with tiny payouts. The settlement leaves them on their own to sue in
civil court to recover any real damages. Hard to do with the $1000 they just received.

The OCC
and the Federal Reserve allowed the banks to determine who had been harmed and
in what manner. The OCC said it “spot checked” the work by the banks. When
asked how the results could be legitimate if the OCC reviewed only 100,000
foreclosure files out of 4 million for errors or fraud, (not a statistically
reliable sample), the OCC spokesperson said
the injuries were only hypothetical and might have happened.

The Feds
have clearly been captured by the players in the industry they are supposed to
regulate. Who knew you could settle with the government and then write your own
terms, complete with a tally of your victims!!

Some historical
perspective:

The banks entered
the market previously regulated only by the states. They captured the national mortgage
market after the Gramm-Leach-Bliley
Act, passed in 1999. The law said the banks could ignore state mortgage laws
and be free from prosecution.

The banks
had no “fiduciary” duty to anyone unlike
someone licensed under state real estate laws. They hired people to robo-sign,
faked notary stamps and failed to keep records. It was a pass-thru process with
the banks selling unreviewed mortgages to investors who were buying blind.

After ten
years of undocumented mortgage creation, it is impossible to convert this toxic
dump site into a legal process. Those foreclosed on by the sheriff were collateral
damage of no concern to our government which has continued to allow the banks to
write and package mortgages and sell derivatives based on those mortgages.

Between
the government undertaking settlements with the big banks for chump change,
having freedom from future prosecution, and given the statute of limitations,
the banks hope to run out the clock, continuing business as usual.

Most of
the toxic mortgages have now been shifted to the federal government. It is
arguably “the biggest heist in history” and the banks got away with
it.

What would happen to
you if you walked into Tiffany’s and stole a $200,000 watch?

How do we
explain that furious mobs haven’t burned these banks to the ground?

Only in
America can people be fraudulently foreclosed on, lose their homes, have their
credit ruined and be compensated with an average of less than $1,000 for their
trouble.  

Those 53 families
should own Citibank, JPMorgan Chase and Bank of America.