Banks Starting to Walk Away on Foreclosures

Banks Starting to Walk Away on Foreclosures Sally Ryan for The New York Times Mercy James’s rental property in South Bend, Ind., was in foreclosure, but a sheriff’s sale was canceled at the last minute. By SUSAN SAULNY Published: March 29, 2009 SOUTH BEND, Ind. — Mercy James thought she had lost her rental property here to foreclosure. A date for a sheriff’s sale had been set, and notices about the foreclosure process were piling up in her mailbox. Enlarge This Image Sally Ryan for The New York Times After Ms. James had her tenants move out, vandals hit the home. It is set for demolition, but the title is still in her name. Ms. James had the tenants move out, and soon her white house at the corner of Thomas and Maple Streets fell into the hands of looters and vandals, and then, into disrepair. Dejected and broke, Ms. James said she salvaged but a lesson from her loss. So imagine her surprise when the City of South Bend contacted her recently, demanding that she resume maintenance on the property. The sheriff’s sale had been canceled at the last minute, leaving the property title — and a world of trouble — in her name. “I thought, ‘What kind of game is this?’ ” Ms. James, 41, said while picking at trash at the house, now so worthless the city plans to demolish it — another bill for which she will be liable. City officials and housing advocates here and in cities as varied as Buffalo, Kansas City, Mo., and Jacksonville, Fla., say they are seeing an unsettling development: Banks are quietly declining to take possession of properties at the end of the foreclosure process, most often because the cost of the ordeal — from legal fees to maintenance — exceeds the diminishing value of the real estate. The so-called bank walkaways rarely mean relief for the property owners, caught unaware months after the fact, and often mean additional financial burdens and bureaucratic headaches. Technically, they still owe on the mortgage, but as a practicality, rarely would a mortgage holder receive any more payments on the loan. The way mortgages are bundled and resold, it can be enormously time-consuming just trying to determine what company holds the loan on a property thought to be in foreclosure. In Ms. James’s case, the company that was most recently servicing her loan is now defunct. Its parent company filed for bankruptcy and dissolved. And the original bank that sold her the loan said it could not find a record of it. “It is what some of us think is the next wave of the crisis,” said Kermit Lind, a clinical professor at the Cleveland-Marshall College of Law and an expert on foreclosure law. For older industrial cities like South Bend, hard times in the mortgage market began before the recent national downturn, as did the problem of bank walkaways. In the case of Ms. James, a home health care administrator, the foreclosure proceedings began in the summer of 2007, when she could not keep up with the adjustable rate on her mortgage. In Buffalo, where officials said the problem had reached “epidemic” proportions in recent months, the city sued 37 banks last year, claiming they were responsible for the deterioration of at least 57 abandoned homes; the city chose a sampling of houses to include in the lawsuit, even though the banks had walked away from many more foreclosures. So far, five banks have settled. In Kansas City, Rachel Foley, a lawyer who handles housing cases, said bank walkaways were “a rare occurrence two to three years ago.” “We’re seeing them dumped more and more at the moment,” she said. Experts suggest the bank walkaways are most visible in states where foreclosures are processed through the courts and therefore tend to be more transparent. Other states, like Indiana and New York, have court-mandated foreclosures, but roughly half of the states allow foreclosures to proceed without court intervention, making it difficult to accurately count the number of bank walkaways in recent months. The soft housing market and the vandalism that often occurs when a house sits empty are the two main factors influencing the mortgage holders’ decisions to walk away, said Larry Rothenberg, a lawyer for Weltman, Weinberg & Reis, one of the larger creditors’ rights firms in the country. “Oftentimes when the foreclosure starts out, it’s a viable property,” Mr. Rothenberg said, “but by the time it gets to a sheriff’s sale, it might not have enough value to justify further expense. We’ve always had cases where property was vandalized or lost value, but they were rare compared to these times.” Published: March 29, 2009 (Page 2 of 2) The problem seems most acute at the bottom of the market — houses that were inexpensive to begin with — and with investment properties, where investors and banks want speedy closure by writing off bad loans as losses. Banks and investors typically lose 40 percent to 50 percent of their investment on every foreclosure. Guy Cecala, publisher of Inside Mortgage Finance, an industry newsletter, said some properties had become such liabilities for investors that it was not even worth holding on to them to strip valuable fixtures, like kitchen appliances, toilets and hardware. “The whole purpose of foreclosure is to take title of the property, sell it and recoup what money you can,” Mr. Cecala said. “It’s just a sign of the times that things are so bad no one wants to take possession of the property.” In South Bend, boarded-up houses for whom no one has stepped forward are dotting the landscape, adding a fresh layer of blight to communities that were already scarred from the area’s industrial decline. The city is hoping to create a new type of legal mediation process that would bring together the homeowners and the mortgage holders to settle their disputes while allowing the owners to remain in the home — considered crucial to any stabilization effort. “I’d say in the last three or four months, we’ve seen dozens of these cases,” said Chuck Leone, the South Bend city attorney. “We see it one of two ways. One is that the bank will simply dismiss the foreclosure complaint. The other is that the mortgage holder will follow through and take a judgment of foreclosure, but then not schedule the property for sheriff’s sale.” In Ms. James’s case, it has been impossible to determine who canceled the sheriff’s sale, since her last mortgage holder went out of business. Even the city clerk’s records did not provide an answer. “Nobody has any idea who owns what or who’s responsible,” said Judy Fox, Ms. James’s lawyer at the Notre Dame Legal Aid Clinic. “It’s a very common story.” Mayor Stephen J. Luecke of South Bend added: “It’s just a crime the way it puts people in limbo. They first off have gone through the grief of losing their house, then they move out and find out that they still own it and have responsibility for it.” In Jacksonville, Fla., Sylvester Kimbrough Jr. found himself caught in the limbo between foreclosure and ownership last year, 10 years into his 30-year mortgage on a $42,000 two-bedroom house. Mr. Kimbrough, 56, a former driver for a car dealership who is now unemployed, had already moved out when he learned that the foreclosure had been stopped. “That move really almost destroyed us,” Mr. Kimbrough said. “It was all for nothing.”

AIG Was Responsible For The Banks’ January & February Profitability

AIG Was Responsible For The Banks’ January & February Profitability

Posted by Tyler Durden at 6:35 PM
Zero Hedge is rarely speechless, but after receiving this email from a correlation desk trader, we simply had to hold a moment of silence for the phenomenal scam that continues unabated in the financial markets, and now has the full oversight and blessing of the U.S. government, which in turns keeps on duping U.S. taxpayers into believing everything is good.

I present the insider perspective of trader Lou (who wishes to remain anonymous) in its entirety:

“AIG-FP accumulated thousands of trades over the years, all essentially consisted of selling default protection. This was done via a number of structures with really only one criteria – rated at least AA- (if it fit these criteria all OK – as far as I could tell credit assessment was completely outsourced to the rating agencies).

Main products they took on were always levered credit risk, credit-linked notes (collateral and CDS both had to be at least AA-, no joint probability stuff) and AAA or super senior portfolio swaps. Portfolio swaps were either corporate synthetic CDO or asset backed, effectively sub-prime wraps (as per news stories regarding GS and DB).

Credit linked notes are done through single-name CDS desks and a cash desk (for the note collateral) and the portfolio swaps are done through the correlation desk. These trades were done is almost every jurisdiction – wherever AIG had an office they had IB salespeople covering them.

Correlation desks just back their risk out via the single names desks – the correlation desk manages the delta/gamma according to their correlation model. So correlation desks carry model risk but very little market risk.

I was mostly involved in the corporate synthetic CDO side.

During Jan/Feb AIG would call up and just ask for complete unwind prices from the credit desk in the relevant jurisdiction. These were not single deal unwinds as are typically more price transparent – these were whole portfolio unwinds. The size of these unwinds were enormous, the quotes I have heard were “we have never done as big or as profitable trades – ever”.

As these trades are unwound, the correlation desk needs to unwind the single name risk through the single name desks – effectively the AIG-FP unwinds caused massive single name protection buying. This caused single name credit to massively underperform equities – run a chart from say last September to current of say S&P 500 and Itraxx – credit has underperformed massively. This is largely due to AIG-FP unwinds.

I can only guess/extrapolate what sort of PnL this put into the major global banks (both correlation and single names desks) during this period. Allowing for significant reserve release and trade PnL, I think for the big correlation players this could have easily been US$1-2bn per bank in this period.”

For those to whom this is merely a lot of mumbo-jumbo, let me explain in layman’s terms:
AIG, knowing it would need to ask for much more capital from the Treasury imminently, decided to throw in the towel, and gifted major bank counter-parties with trades which were egregiously profitable to the banks, and even more egregiously money losing to the U.S. taxpayers, who had to dump more and more cash into AIG, without having the U.S. Treasury Secretary Tim Geithner disclose the real extent of this, for lack of a better word, fraudulent scam.

In simple terms think of it as an auto dealer, which knows that U.S. taxpayers will provide for an infinite amount of money to fund its ongoing sales of horrendous vehicles (think Pontiac Azteks): the company decides to sell all the cars currently in contract, to lessors at far below the amortized market value, thereby generating huge profits for these lessors, as these turn around and sell the cars at a major profit, funded exclusively by U.S. taxpayers (readers should feel free to provide more gripping allegories).

What this all means is that the statements by major banks, i.e. JPM, Citi, and BofA, regarding abnormal profitability in January and February were true, however these profits were a) one-time in nature due to wholesale unwinds of AIG portfolios, b) entirely at the expense of AIG, and thus taxpayers, c) executed with Tim Geithner’s (and thus the administration’s) full knowledge and intent, d) were basically a transfer of money from taxpayers to banks (in yet another form) using AIG as an intermediary.

For banks to proclaim their profitability in January and February is about as close to criminal hypocrisy as is possible. And again, the taxpayers fund this “one time profit”, which causes a market rally, thus allowing the banks to promptly turn around and start selling more expensive equity (soon coming to a prospectus near you), also funded by taxpayers’ money flows into the market. If the administration is truly aware of all these events (and if Zero Hedge knows about it, it is safe to say Tim Geithner also got the memo), then the potential fallout would be staggering once this information makes the light of day.

And the conspiracy thickens.

Thanks to an intrepid reader who pointed this out, a month ago ISDA published an amended close out protocol. This protocol would allow non-market close outs, i.e. CDS trade crosses that were not alligned with market bid/offers.

The purpose of the Protocol is to permit parties to agree upfront that in the event of a counterparty default, they will use Close-Out Amount valuation methodology to value trades. Close-Out Amount valuation, which was introduced in the 2002 ISDA Master Agreement, differs from the Market Quotation approach in that it allows participants more flexibility in valuation where market quotations may be difficult to obtain.
Of course ISDA made it seems that it was doing a favor to industry participants, very likely dictating under the gun:
Industry participants observed the significant benefits of the Close-Out Amount approach following the default of Lehman Brothers. In launching the Close-Out Amount Protocol, ISDA is facilitating amendment of existing 1992 ISDA Master Agreements by replacing Market Quotation and, if elected, Loss with the Close-Out Amount approach.

“This is yet another example of ISDA helping the industry to coalesce around more efficient and effective practices, while maintaining flexibility,” said Robert Pickel, Executive Director and Chief Executive Officer, ISDA. “The Protocol permits parties to value trades in the way that is most appropriate, which greatly enhances smooth functioning of the market in testing circumstances.”

And, lo and behold, on the list of adhering parties, AIG takes front and center stage (together with several other parties that probably deserve the microscope treatment).

So – in simple terms, ISDA, which is the only effective supervisor of the Over The Counter CDS market, is giving its blessing for trades to occur (cross) below where there is a realistic market bid, or higher than the offer. In traditional equity markets this is a highly illegal practice. ISDA is allowing retrospective arbitrary trades to have occurred at whatever price any two parties agree on, so long as the very vague necessary and sufficient condition of “market quotations may be difficult to obtain” is met. As anyone who follows CDS trading knows, this can be extrapolated to virtually any specific single-name, index or structured product easily. In essence ISDA gave its blessing for below the radar fund transfers of questionable legality. The curious timing of this decision and the alleged abuse of CDS transaction marks by and among AIG and the big banks, is striking to say the least.

This wholesale manipulation of markets, investors and taxpayers has gone on long enough.

http://zerohedge.blogspot.com/2009/03/exclusive-aig-was-responsible-for-banks.html

Obama “Heartbroken” Over Homelessness

Obama “Heartbroken” Over Homelessness by Shannon Moriarty Published March 24, 2009 @ 09:21PM PST Tonight, President Obama directly addressed the growing homelessness crisis during a prime time press conference, saying he’s “heartbroken” that any child is without a roof over their heads. In a bold and noteworthy move, he also called for a shift in the national perception of homelessness and an overhaul of our embedded judgments and beliefs. Do I sense change in the air? Reporter Kevin Chappelle of Ebony posed this question: A recent report found that, as a result of the economic downturn, 1 in 50 children are now homeless in America. With shelters at full capacity, tent cities are sprouting up across the country. In passing your stimulus package, you said that help was on the way. But what would you say to these families, especially children, who are sleeping under bridges and in tents across the country? And here is President Obama’s answer: Well, the first thing I’d say is that I’m heartbroken that any child in America is homeless. And the most important thing that I can do on their behalf is to make sure their parents have a job. And that’s why the recovery package said, as a first priority, how are we going to save or create 3.5 million jobs? How can we prevent layoffs for teachers and police officers? How can we make sure that we are investing in the infrastructure for the future that can put people back to work right away? How do we make sure that, when people do lose their jobs, that their unemployment insurance is extended, that they can keep their health care? So, there are a whole host of steps that we’ve done to provide a cushion for folks who have fallen on very hard times and to try to spur immediate projects that can put people back to work. Now, in the meantime, we’ve got to work very closely with the states to monitor and to help people who are still falling through the cracks. And, you know, the homeless problem was bad even when the economy was good. Part of the change in attitudes that I want to see here in Washington and all across the country is a belief that it is not acceptable for children and families to be without a roof over their heads in a country as wealthy as ours. And so we’re going to be initiating a range of programs, as well, to deal with homelessness. One area in particular I want to focus on is the issue of veterans. The rate of homelessness among veterans is much, much higher than for non-veteran populations. It’s refreshing to hear the President acknowledge so many of the things we advocates repeat until we’re blue in the face: Homelessness affects children. Families are the fastest growing segment of the homeless population. Homeless stereotypes are not representative of reality. Nobody should be homeless in a wealthy country like the United States. This problem existed even during good economic times. We must put an end to veteran homelessness. All in all, he handled the question well. Of course, it wasn’t perfect. There are many things I wish the President had mentioned in his response (housing) or answered more thoroughly (what would you say to a homeless family?). But at the same time, it’s a significant change that this issue is being discussed at a White House press conference. It’s relieving to know that the mainstream media and lawmakers are aware of the far-reaching scope of the homelessness crisis. And it’s empowering to hear the President deliver a compassionate and pointed, articulate response to a difficult question about the most vulnerable victims of our economic crisis. * Comments (64) * Stumble It * Add to Delicious * Digg This * Tweet This * Post to Facebook * Share this: Comments * * Check this box to subscribe to email updates when new posts are made to this thread. 1. Andrew Chow I think President Obama is trying to prevent homeless as oppose to dealing with it after it has occurred. For example, when the women who was about to lose her home asked him for help in one of the town hall meetings, she received help from the state governor’s wife. Helping the states to remain fiscally sound is important so social housing budget can be sustained over long terms. Individually speaking, as the President said, it is heartbreaking, and just not acceptable for anyone child or veteran to be homeless in a wealthy country. Posted by Andrew Chow on 03/25/2009 @ 04:37AM PST * Report close Please report any offensive or inappropriate content. Reason (optional) * Send a Compliment * Reply 2. reply to thread started by by Andrew Check Spelling * Email me when there are new posts to this thread * Comment Policy Cancel Reply 3. bob silvey Shannon, I posted this in another thread you started and think it fits here as well. Just my idea of what can be done to make the best of a bad situation. “Maybe I am just a dumb country boy but it looks like with all the houses that are sitting empty right now because of mortgage defaults and other issues. Why couldn’t the govt who is in essence the owner of these homes since they now control the banks take these homes and let vets rent/buy them at minimal cost? Looks like it would be a winning situation for all since the banks would have some sort of income and be getting a return on property that is doing nothing but gathering dust at the moment. If the vet has no income, let the VA issue vouchers for the mortgage/rent and it would help in all areas. Or does this make too much sense? Every vet is entitled to a VA loan for housing and it would jump start the economy in some ways. Why are the easiest problems to fix the ones that seem so frickin complicated?” Posted by bob silvey on 03/25/2009 @ 05:54AM PST * Report close Please report any offensive or inappropriate content. Reason (optional) * Send a Compliment * Reply 4. tangee ladson I agree,100% Posted by tangee ladson on 03/28/2009 @ 05:11PM PST * Report close Please report any offensive or inappropriate content. Reason (optional) * Send a Compliment 5. tangee ladson I agree,100% Posted by tangee ladson on 03/28/2009 @ 05:12PM PST * Report close Please report any offensive or inappropriate content. Reason (optional) * Send a Compliment 6. Reply to thread 7. reply to thread started by by bob Check Spelling * Email me when there are new posts to this thread * Comment Policy Cancel Reply 8. Danetta Amschler Part of why homelessness exists – and the part which it seems even the President doesn’t want to look at – isn’t just the economy (i.e. lost jobs, reduced hours, problem loans, lost insurance, etc.) – it’s the painfully broken nature of our “safety net” as is often mentioned over at the poverty blog. Housing assistance, for example, is basically non-existent and what does exist tends to involve hard to get onto wait lists that are painfully long and may still leave you living in bad housing – and like most of the safety net, the income and asset requirements for eligibility are often below dirt poor for the area. A realistic assessment of what constitutes poverty in this country, followed by a more accurate set of guidelines and funding for our safety net programs would go light years to helping many. For example, a large portion of the homeless I know would be helped immensely by access to public health care and public mental health care – but they can’t get that without Medicaid or Medicare and even if they could access either, even I’d agree that accessing local public health and for sure public mental health might not be advisable due to the poor quality of care provided and the lack of timeliness in the provision of said poor quality care. Not all people impacted by this mess, the group longest impacted by homelessness, are single though singles are by nature of the failures of the safety net the largest subgroup. All that said, if he honestly cares – and I think he may – perhaps we can finally get past lipservice, debates and insults about homelessness and assistance to those who need help. We might even make it to a point where this nation finally admits to what we accepted by joining the UN in the United Nations’ Universal Declaration of Human Rights and in particular its Article 25 (go read it some time, it speaks volumes to the failures of this nation’s safety net from medical care to housing). Posted by Danetta Amschler on 03/25/2009 @ 08:46AM PST * Report close Please report any offensive or inappropriate content. Reason (optional) * Send a Compliment * Reply 9. reply to thread started by by Danetta Check Spelling * Email me when there are new posts to this thread * Comment Policy Cancel Reply 10. kimberly L While I am encouraged by President Obama’s acknowledgement and desire to change the stigmas about homeless people, I am still skeptical about what will be done about this problem. While he says he wants to create/save 3.5 million jobs, I think there are larger social issues we need to examine and combat including aid for those with mental illnesses and disability. While he seems to want to prevent further homelessness, I think he must also look at those that are already homeless—how can we help them? Posted by kimberly L on 03/25/2009 @ 03:35PM PST * Report close Please report any offensive or inappropriate content. Reason (optional) * Send a Compliment * Reply 11. reply to thread started by by kimberly Check Spelling * Email me when there are new posts to this thread * Comment Policy Cancel Reply 12. Andrew Chow Homelessness is a complex issue with a variety of causes, from mental illness as kimberly L pointed out, to poverty of single parent households, to veterans inability to re-intergrate back to society. These complex causes require different solutions. There is not a single solution to all homelessness. For mental illness and disability, in addition to universal health care, additional state funding for social housing and the socail safety net requires a healthy economic base to support it. I believe President Obama is heading in the right direction. Granted, there will be specific issues needed at the state and agency levels, but until there is funding available, little can be done. For poverty and joblessness, the economic recovery and re-investment plans are directly helping to prevent homelessness. One of the major cause of homelessness in the last eight years has been the increase of those in poverty, the working poor. It is simply wrong when people work at two jobs and still cannot afford a decent living. For veterans, in addition to helping those already back from their tours and suffering, we need to help those who are only just returning, and prevent them from slipping through the cracks. This means sufficient health care, job training, and jobs. Housing through the foreclosed units is a workable idea, and that can be done through the Private-Public Investment Plan that was just announced. A charitable organization can be created to purchase these foreclosed units on behalf of the veterans, who would live in them for as long as they need, and pay whatever they can. It would be self-sustaining. Thanks for the great idea, Bob Silvey. Now if someone would go and do it, that’s the hard part. Posted by Andrew Chow on 03/25/2009 @ 09:07PM PST * Report close Please report any offensive or inappropriate content. Reason (optional) * Send a Compliment * Reply 13. reply to thread started by by Andrew Check Spelling * Email me when there are new posts to this thread * Comment Policy Cancel Reply 14. jan Lightfootlane Homelessness is so complex, sorry learned people who make homelessness seem more complex then it is. Homelessness id LACK of Adequate income. Yes, for 90% of Americans homelessness, its basic cause is Poverty. The mentally ill with funds can live in a motel. The active alcoholic with enough funds are not homeless. Until they run out of funds. Even fights with someone you are living with, being kick out of house does not cause intolerable homelessness if the Person has $4,000 in the bank. But its much easier to say this is a complex matter, then we get to keep social workers so called allies aiming for ending 50% of poverty, instead of addressing the need and Reaching for 100%, to keep their jobs, and their well paying jobs. When we give according to the need Homelessness will end. Its a simple idea found in most of the good books of this world. Posted by jan Lightfootlane on 03/26/2009 @ 07:48AM PST * Report close Please report any offensive or inappropriate content. Reason (optional) * Send a Compliment * Reply 15. Andrew Chow Give a man a fish, he eats that day. Teach a man to fish, he eats as long as there is fish. The problem of a roof over one’s head is simple. The cause of keeping that roof is complex. Different people require different solutions. Addicts require more than just subsidized social housing. Poor single parents require more than just subsidized social housing. Veterans require more than just subsidized social housing. I also believe in keeping things simple. But as Einstein said, the solution should be as simple as it can be while still solving the problem. Oversimplifying it will not solve homelessness. Just my opinion. Posted by Andrew Chow on 03/26/2009 @ 10:35AM PST * Report close Please report any offensive or inappropriate content. Reason (optional) * Send a Compliment 16. Reply to thread 17. reply to thread started by by jan Check Spelling * Email me when there are new posts to this thread * Comment Policy Cancel Reply 18. kimberly L i too, think President Obama is heading in the right direction. However, I still think homelessness is a complex issue. Yes, the mental ill with funds and the alcoholic with funds can afford housing. But, I think that is failing to incorporate those that never had the resources to gain access to funds. What I’m trying to say, is that our current economic and social system does not allow for those who’ve grown up in poverty to obtain adequate resources (education, opportunities) to rise above these unfortunate instances. I think issues like funding for education and healthcare availability for those who just cannot afford it are also issues that directly relate to homelessness. They are just as important and they are complex. Posted by kimberly L on 03/26/2009 @ 10:42AM PST * Report close Please report any offensive or inappropriate content. Reason (optional) * Send a Compliment * Reply 19. Danetta Amschler There’s a huge problem that many of the mentally ill face – it’s how the long promised but STILL not delivered system of easy to access community based mental health care is ACTUALLY delivered to those who need it. What tends to actually happen in a growing number of jurisdictions is that the patient (or whomever hopes to become a patient) of community/public/county mental health care must go get Medicaid and/or Medicare to actually USE the services but if they don’t have dependent children who live with them, they have to get declared disabled and a growing number of states not only use the Social Security Administration’s definition of disability to determine if you’re disabled but they even want the Social Security Admin. to make the determination….which means that just to see a psychiatrist, get a diagnosis (or have their diagnosis verified) and get medications they have to get declared unable to work at whatever is the current Social Security Administration Substation Gainful Activity amount for at least a year (a far subpoverty income) – just to get what is quite often very horrid mental health care provided by people who shouldn’t be seeing live patients. So ultimately we’re FORCING the mentally ill to go SSI or SSDI in many cases just so they can see a psychiatrist. Which is the first of several steps toward homelessness for many – if they weren’t headed that direction already – and it’s certainly not going to improve the odds for those already homeless since being disabled by mentally illness AND homeless pretty much means you WILL NOT get space in a shelter. Posted by Danetta Amschler on 03/27/2009 @ 10:25PM PST * Report close Please report any offensive or inappropriate content. Reason (optional) * Send a Compliment 20. Joan Mershon Danetta, let’s not forget that if you do not have adequate medical and/or mental health records to start with, you will most likely be denied SSD/I – and you can’t get the records because you do not have medical coverage. It can take 2-4 years for someone to successfully navigate the disability process…if everything goes well and you know what you are doing. What are people supposed to do in the meanwhile? In today’s disability system, you pretty much need a TRAINED advocate to walk you through the process and keep things on track. (Well-intentioned is not enough) How many of the homeless have access to that kind of help? Heck, how many people in general have that help? Posted by Joan Mershon on 03/29/2009 @ 08:39AM PST * Report close Please report any offensive or inappropriate content. Reason (optional) * Send a Compliment 21. Reply to thread 22. reply to thread started by by kimberly Check Spelling * Email me when there are new posts to this thread * Comment Policy Cancel Reply 23. jan Lightfootlane Yes Kim and other’s, Bad paying jobs and a poverty level that only counts the cost of food on a economic budget, since 1965 is not complex enough. It is an inadequate formula raised by inflation for 40+ years. It does not account for the basics of live required to make life tolerable. There is a utiitly Poverty level Congress is considering. This includes rent, transportation to work ect. Heat, electricity, cooling, clothes, Health Care plus food. That is what we should be doing call for a change from the mollies follies of 1965 when Mollie Orshansky decide to count just the cost a food because Employers paid Health care and rent was cheap. She made a mistake, but the government liked keeping 2/3 of the poor HIDDEN,by her artificially low figures. We need everyday folks to cry out to fix the poverty level then bring up the minimum wage to the cost of living. That will undo the homeless. Check out the site www.WhiteHouse.gov . Go to the bottem of the page, hit contract. Scroll down to the message space. email thw president. Need 2,000 mail or emails to him asking for the FPL federal poverty level, to be raised to an adequate level. Posted by jan Lightfootlane on 03/26/2009 @ 01:41PM PST * Report close Please report any offensive or inappropriate content. Reason (optional) * Send a Compliment * Reply 24. Sharon Blasingame It seems to me that everytime the minimum wage goes up, so does everything else.. i.e. rents, housing prices, consumer goods etc. It has too. If your a business owner paying out more to your employees then you have to raise your prices. That solution is like a cat chasing its tail. It doesnt work. Posted by Sharon Blasingame on 03/28/2009 @ 01:04PM PST * Report close Please report any offensive or inappropriate content. Reason (optional) * Send a Compliment 25. Joan Mershon These are two different ideas – The Federal Poverty Level should be raised to a number that reflects the reality in this country. The only reason I can see to keep it low is to mask just how many people are living in poverty. I’m with you Sharon – Raising the minimum wage as a way to help people out of poverty doesn’t work. I live in a state that has a minimum wage much higher than the Federal one…and people still cannot cover basic expenses. I don’t know what the answer is, but this doesn’t work. We need to quit hanging on to it as “the answer” and find an answer that will work. Something that rarely makes it into these conversations are the inadequacy of disability payments (SSI) – People are supposed to live on $674/mo everywhere in the country. That is about 75% of what working for minimum wage will get you (or 46% our State’s min wage). I’d love to see whoever came up with that number try living on it for a month or two. Posted by Joan Mershon on 03/29/2009 @ 08:59AM PST * Report close Please report any offensive or inappropriate content. Reason (optional) * Send a Compliment 26. Danetta Amschler I’m torn about the minimum wage. It helps and it hurts as the same time. That said, we do need to be honest and admit (ideally publicly) it is NOT a livable wage. Actually it is far from being one. Jan is right about that much. But everyone is very right about the Federal Poverty Line. Jan is right to point out that it was flawed from its beginning. What few now know is that when Mollie Orshansky wrote the report in 1963-64 she used data gathered in 1955 by the USDA that wasn’t even about poverty. That 1955 data was the USDA’s Household Food Consumption Survey. From its data she made all sorts of assumptions, presumptions and extrapolations with NOTHING besides food expenses being based on fact and food expenses were based solely on that USDA report and the USDA’s “economy food plan”. She made presumptions like that because rent should be 1/3 of income it always WOULD be 1/3 of income. Now how many of the poor can HONESTLY find a place to rent for 1/3 of their income? Personally my studio apartment (in a crime infested building) is 48% of my SSDI and I’m at just below what is currently 100% of the FPL. That this flawed report has for over 40 years remained at the center of how this nation figures poverty is just mind blowing. 100%-ish of the FPL is quite difficult to live on, I can’t imagine trying to get by on SSI. Posted by Danetta Amschler on 03/29/2009 @ 10:41AM PST * Report close Please report any offensive or inappropriate content. Reason (optional) * Send a Compliment 27. Reply to thread 28. reply to thread started by by jan Check Spelling * Email me when there are new posts to this thread * Comment Policy Cancel Reply 29. Rob Robinson Pass it on. God bless you all, RobThe truth, http://video.google.com/videoplay?docid=7535755025025800195 Posted by Rob Robinson on 03/26/2009 @ 04:01PM PST * Report close Please report any offensive or inappropriate content. Reason (optional) * Send a Compliment * Reply 30. DARLENE MATTHEWS i’m thinking that’s not what he’ll do with you. you do- robthe truth Posted by DARLENE MATTHEWS on 03/27/2009 @ 05:09PM PST * Report close Please report any offensive or inappropriate content. Reason (optional) * Send a Compliment 31. Reply to thread 32. reply to thread started by by Rob Check Spelling * Email me when there are new posts to this thread * Comment Policy Cancel Reply 33. jan Lightfootlane Its just if we pay worker a livable wage which is $17.16 in Maine, They will be able to pay their bills. Hunger, Homelessness,Violence, and imposed silence protecting the government will be nightmares of the past. It is as simple as that. If the worker IS supreme, why are they paid less then it actually costs to pay for even a modest living? That is how simply it is! But poverty workers at the top of national organizations get large paychecks. They want us to believe it is complex. Then they do not lose their job because no one is poor anymore. Hope this is much clearer then before. Posted by jan Lightfootlane on 03/26/2009 @ 07:51PM PST * Report close Please report any offensive or inappropriate content. Reason (optional) * Send a Compliment * Reply 34. reply to thread started by by jan Check Spelling * Email me when there are new posts to this thread * Comment Policy Cancel Reply 35. jan Lightfootlane Pay a “decent wage” to the fisherman, and he has a roof, vegetables and whatever else is required. Posted by jan Lightfootlane on 03/26/2009 @ 07:53PM PST * Report close Please report any offensive or inappropriate content. Reason (optional) * Send a Compliment * Reply 36. reply to thread started by by jan Check Spelling * Email me when there are new posts to this thread * Comment Policy Cancel Reply 37. HEAR US It’s a refreshing change to hear the word “homelessness” mentioned by a president, and even more unusual to have children’s homelessness acknowledged. But a drastic change in the federal approach to homelessness is needed. Get over the 10-year plan to address homelessness. Address poverty as mentioned above–living wages, the way we measure it, and get people without housing into those vacant houses. That’s a start, not the whole shebang. Check my Change.org post: http://uspoverty.change.org/blog/view/family_values_take_a_hit_while_shenanigans_get_the_headlines Posted by HEAR US on 03/27/2009 @ 06:52AM PST * Report close Please report any offensive or inappropriate content. Reason (optional) * Reply 38. Andrew Chow You are right on, Diane. Homelessness is the symptome of poverty and children are among its victims. We cannot allow minor distractions taking the focus away from the bigger picture of “shared prosperity” because poverty and homelessness are the result of the concentrated wealth and inequitable distribution of opportunities in society as a result of the policies of the last eight years. Fixing all the problems inherited as a result of eight years of neglect is not easy nor simple. It takes patience, preseverance, and most of all, cooperation. Rage and outrage is justified for the moment, but solves nothing at the end of the day. We want to be part of the solution, not part of the noise. Posted by Andrew Chow on 03/27/2009 @ 09:21AM PST * Report close Please report any offensive or inappropriate content. Reason (optional) * Send a Compliment 39. Reply to thread 40. reply to thread started by by HEAR US Check Spelling * Email me when there are new posts to this thread * Comment Policy Cancel Reply 41. Stephen Wider The biggest bottom line in the U.S. regarding Poverty and Homelessness is that the “Super Wealthy” (Top 2%) of our Population control over 60% of the entire Financial, Corporate & Realty Resources in the Nation. And they are constantly trying to keep wealth OUT of the hands of the general population! Yet most of them are “Christians” (As I am), yet they do not care about other people, that is, unless they are also Rich! That is the BIGGEST Single Root Problem in the USA today! And even in the Middle Class, look at all of the Contractors paying immigrants like Mexicans $9 per hour for work, which, even with two incomes, cannot support even a small family these days. People scream “It’s Communism, or Socialism” when one suggests paying everyone a “Living wage”. Yet what did Jesus SAY that we should do in the Bible? Help the poor … that’s what he said. In Norway, there’s relatively very little Poverty, because there are very few Rich People! Everyone’s guaranteed a Job, a Home, Education and Medical Care. How? They have a partially Socialized System. But it WORKS well there (Or at least it did up till when George W. Bush allowed the Global Economy to be taken down by HIS Criminal Acts & Negligence). There is no ONE Answer to ending Poverty & Homelessness. But establishing Rent Control, Building significant amounts of Affordable Housing and passing a Living Wage Law are good starts. As well as that Congress should pass HR-676, the Universal Single Payer Health Care Bill, which would cover every American with quality & comprehensive Medical Insurance for LESS money than is spent today (http://www.hr676.org/)! And we could also someday have College paid for by the Government, as well. But there’s too much Greed & Corruption in the U.S., and right now, instead of people being helped here in the U.S., most money (Including our taxes), is going towards Corporate Profits, not where it’s needed! Kids in K-12 Schools in poor cities don’t even get BOOKS, although the cost per Student is the higher of any place in those Districts. America is REALLY screwed up right now, and I’m afraid that until we suffer through a full Depression, a Revolution or a War that actually hits our land, people aren’t going to wake up and do what’s right. Did I miss something or isn’t this the Country where they say “All men are created Equal”? If so, what happened? Posted by Stephen Wider on 03/27/2009 @ 04:00PM PST * Report close Please report any offensive or inappropriate content. Reason (optional) * Send a Compliment * Reply 42. Andrew Chow At last count, over 20% of Americans still support the Republican propaganda machine led by Rush Limbough who would rather see the President fail, then to see any solution to rescue the world from the abyss. Why? Not because they are rich, or paid for by the rich. They are deep in delusion because they stopped thinking for themselves ever since Bush and company use “Patriotism” to convince them every Republican is right. More and more people are waking up from the delusions but there are still the small concentrations that feed on the radio talks shows instead of reading and thinking for themselves. Concentration of wealth, and power, has always been the curse of peace and prosperity. The rich and powerful will also use the pawns to keep themselves in power; the stronger they are, the more pawns they can sacrifice, the longer they remain. Posted by Andrew Chow on 03/27/2009 @ 08:26PM PST * Report close Please report any offensive or inappropriate content. Reason (optional) * Send a Compliment 43. Reply to thread 44. reply to thread started by by Stephen Check Spelling * Email me when there are new posts to this thread * Comment Policy Cancel Reply 45. John Nicol In the Constitution of the old Soviet Union, there was a guarantee of housing as a citizen’s right. Housing may not have been wonderful in the Soviet Union, but it was understood that one would always have a roof overhead. This gave rise to those grim and monotonous apartment towers endemic to the Soviet empire. My wife and I stayed in one as guests of a Czech family in 2001: They aren’t as bad as they look from the outside, but we as a society can do better. The point is, other societies have been far ahead of us in planning for the care of their citizens for quite some time. We should look at what it would take to guarantee quality housing for all, just as we are adamant about the need to provide quality health care for all, by examining the solutions that other societies have employed to address the housing question. Posted by John Nicol on 03/27/2009 @ 04:07PM PST * Report close Please report any offensive or inappropriate content. Reason (optional) * Send a Compliment * Reply 46. Andrew Chow I believe the old Soviet Union had long waiting lists to get an apartment, and even had corruption. You had to know someone in the party to get on the list. Then it’s months or years before you get a tiny apartment. For free or low cost, yes, but that’s not freedom nor prosperity. Socialism has many degress, from the Swedes, the Canadian, to the more extreme models. The key is to provide security while stoking the fire of individual motivation and ambition. There is no rule that says you cannot have individual drive and social justice. With proper balance, as President Obama said, when the government only does for the people what they must do collectively, and cannot do individually, there can be social justice AND individual responsibility. Once America experiments in the different states, there will be a right answer, eventually. Posted by Andrew Chow on 03/27/2009 @ 08:32PM PST * Report close Please report any offensive or inappropriate content. Reason (optional) * Send a Compliment 47. Reply to thread 48. reply to thread started by by John Check Spelling * Email me when there are new posts to this thread * Comment Policy Cancel Reply 49. DARLENE MATTHEWS WE REALLY NEED TO EDUCATE THE PUBLIC MOST TRANSITIONAL SHELTERS ARE NOT ACCESSIBLE OR SAFE FOR DISABLED. either say rehab, families or able to work in 30 days. staff is not trained skilled to understand disabLed needs. and often barely in recovery low paid, WE are extra work or not as deserving. EMERGENCY SHELTERS THAT MAKE YOU WAIT HOURS TO GET IN A MAT ON THE FLOOR DUMPED BEFORE DAWN WORK are FOR THE HEALTHY. i fear for the disabled in sacramento tent city what will be forced as a solution? VETS ARE HOMELESS BECASUE THEY ARE DISaBLED! and the va mds phds and socsil workers mostly say homEless is not my job. I RECENTLY HAD A VA rep slander me and only a lawyer stopped the lie to cya no help her available – it was not my fault. i have scoop on several VA’S . VA i was told to come 500 miles PROGRAM WOULD HELP then left out in winter and there was NO advocacy- patient advocates quality control all the way up to the director. EITHER NO RESPONSE OR I CANT DO THAT OR NOT MY JOB. One ER social worker helped with some items. Then i was told by the md im not allowed to speak with him. i have months of emails shows MUCH cAn be uSed to repair FOR OTHERS none wants to SEE IT. DO IT.SORRY ON TYPOS SO -WHO IN POWER WANTS TO REALLY KNOW AND REPAIR?SEE ME. Posted by DARLENE MATTHEWS on 03/27/2009 @ 04:48PM PST * Report close Please report any offensive or inappropriate content. Reason (optional) * Send a Compliment * Reply 50. DARLENE MATTHEWS ps: bring a typist. Posted by DARLENE MATTHEWS on 03/27/2009 @ 05:12PM PST * Report close Please report any offensive or inappropriate content. Reason (optional) * Send a Compliment 51. Reply to thread 52. reply to thread started by by DARLENE Check Spelling * Email me when there are new posts to this thread * Comment Policy Cancel Reply 53. Doris Vician Agree with most of the above statements. As for Christians and all other faiths that believe they are supposed to help the needy, this has never been well practiced. Jesus preached a form of communism. He’d probably be hated if he arrived on the earth now, just as he was when he was on earth previously. Many reasons for homelessness and varied solutions will be needed. Let’s get to work!!! Posted by Doris Vician on 03/27/2009 @ 08:03PM PST * Report close Please report any offensive or inappropriate content. Reason (optional) * Send a Compliment * Reply 54. reply to thread started by by Doris Check Spelling * Email me when there are new posts to this thread * Comment Policy Cancel Reply 55. Andrew Chow It is fair to say the system has been busted for the past eight years, and possibly even longer in some cases, e.g. for the mentally ill. It is why President Obama has said repeatedly that the budget and the American Recovery and Reinvestment Act were matters of utmost urgency. The sooner the money can reach the states, and the federal agencies, the sooner the people who wants to help will have the resources to do some good. Write the Congress to tell them to stop delays and get on with the work to help people. Posted by Andrew Chow on 03/27/2009 @ 08:37PM PST * Report close Please report any offensive or inappropriate content. Reason (optional) * Send a Compliment * Reply 56. Sharon Blasingame Speaking as a person on SSDI…. living in CA… I have no hope for help. Sure the Feds/Obama gave SSDI recipients a $37 raise but the State of California is taking it back in May…. I can see from post that this will happen in other states also. The Federal government is giving States money but then the States decide where they think it should go. Just like AIG… Posted by Sharon Blasingame on 03/28/2009 @ 01:23PM PST * Report close Please report any offensive or inappropriate content. Reason (optional) * Send a Compliment 57. Reply to thread 58. reply to thread started by by Andrew Check Spelling * Email me when there are new posts to this thread * Comment Policy Cancel Reply 59. TOYIN OSHANIWA hope comes alive when we talk about the need for follow brothers and sisters,give hope to the homeless,a place for them to live and a have a since of life.God help president Obama Posted by TOYIN OSHANIWA on 03/27/2009 @ 08:42PM PST * Report close Please report any offensive or inappropriate content. Reason (optional) * Send a Compliment * Reply 60. reply to thread started by by TOYIN Check Spelling * Email me when there are new posts to this thread * Comment Policy Cancel Reply 61. leatrice brantley No American should be homeless in a country as rich as America. Mr. Obama inherited this financial crisis from the previous administration. He is moving a warp speed correcting the wrongs of the Bush Team. He has done more in 60 days than any other American President in modern history. Times are not easy for many Americans and their families but we will get through it. Posted by leatrice brantley on 03/27/2009 @ 08:56PM PST * Report close Please report any offensive or inappropriate content. Reason (optional) * Send a Compliment * Reply 62. Doris Vician I hope you are right. Worked in an Emergency Dept. in a low income area of Albuquerque, NM from 1980 till 2002 on the night shift. We cared for many homeless or near homeless people every night because they had no health care on top of being on the street. Personally, don’t see any light at the end of the tunnel. I regard myself as middle class but one bad injury or financial difficulty could put me on the street as it has many others. Posted by Doris Vician on 03/28/2009 @ 01:59PM PST * Report close Please report any offensive or inappropriate content. Reason (optional) * Send a Compliment 63. Reply to thread 64. reply to thread started by by leatrice Check Spelling * Email me when there are new posts to this thread * Comment Policy Cancel Reply 65. Cecily Westermann I think Obama is doing just fine. It is ridiculous that people who have committed violent crimes are housed–often in a room with a private half bath–with a library, television and three squares a day, while non-criminals and their children sleep on the streets and must give up their pets. Posted by Cecily Westermann on 03/27/2009 @ 09:30PM PST * Report close Please report any offensive or inappropriate content. Reason (optional) * Send a Compliment * Reply 66. Danetta Amschler Well said. Yes, even those we’ve sent to prison have human rights. However something is seriously broken in our society when we pay more attention to ensuring that those sent to our prisons (even those who’ll NEVER get out of them) have their full human rights to education, food and medical care than we pay attention to the human rights to the members of our society who are free. While we also should help others as we can, there’s something that’s wrong when we can help others while ignoring our own who suffer from things like starvation, homelessness and lack of medical care. Why do we see the needs of our prisoners and of people abroad, but not of those down the street or in the next town or next state? Something in that just disturbs me and particularly when fought as hard as most attempts at welfare reform get fought against… Posted by Danetta Amschler on 03/27/2009 @ 10:46PM PST * Report close Please report any offensive or inappropriate content. Reason (optional) * Send a Compliment 67. Sharon Blasingame Living on SSDI, I live in a bad neighborhood. I have heard criminals say they needed to go back in to the prison system just because they couldnt survive out here especially after having a criminal record. They wanted to go back to have a roof over their heads and food to eat. They see no other way to survive. Its a very sad situation… Posted by Sharon Blasingame on 03/28/2009 @ 01:29PM PST * Report close Please report any offensive or inappropriate content. Reason (optional) * Send a Compliment 68. Reply to thread 69. reply to thread started by by Cecily Check Spelling * Email me when there are new posts to this thread * Comment Policy Cancel Reply 70. Cecily Westermann I think Obama is doing just fine. It is ridiculous that people who have committed violent crimes are housed–often in a room with a private half bath–with a library, television and three squares a day, while non-criminals and their children sleep on the streets and must give up their pets. Posted by Cecily Westermann on 03/27/2009 @ 09:31PM PST * Report close Please report any offensive or inappropriate content. Reason (optional) * Send a Compliment * Reply 71. reply to thread started by by Cecily Check Spelling * Email me when there are new posts to this thread * Comment Policy Cancel Reply 72. Wendy Martin Yes, he has a heart, and that shouldn’t be big news – it should have been happening all along. Where is the compassion for everyone that should have been there all these years? The church didn’t do their job, neither did the schools. At least finally now some advances will be made in the direction of helping those that can’t help themselves. Posted by Wendy Martin on 03/27/2009 @ 10:30PM PST * Report close Please report any offensive or inappropriate content. Reason (optional) * Send a Compliment * Reply 73. Andrew Chow They were distracted by their passion to stamp out gay rights, abortion, illegal immirgrants, and other far right agenda. The trouble with dogma and doctrine is that they are words without heart. President Obama gives voice to the heart of America. Posted by Andrew Chow on 03/28/2009 @ 07:29AM PST * Report close Please report any offensive or inappropriate content. Reason (optional) * Send a Compliment 74. Doris Vician Actually, I’m replying to Andrew Chow. Sir, I totally agree with what you said about distractions. You and I seem to be made of the same cloth. Posted by Doris Vician on 03/28/2009 @ 02:05PM PST * Report close Please report any offensive or inappropriate content. Reason (optional) * Send a Compliment 75. Reply to thread 76. reply to thread started by by Wendy Check Spelling * Email me when there are new posts to this thread * Comment Policy Cancel Reply 77. Sumner Ferris What has happened in AMERICA ? The homeless problem first surfaced in the mid 70’s. Our approach has been 1-2 meals a day and a cot in a shelter at night. And god forbid these people should hangout anywhere public. We as a people are EMBARRASSED by them. So law enforcement is told to move them,hopefully out of our sight. Much like our welfare system,it has been a handout,not a handup. One of the very best goverment programs has been unemployment insurance. You go in knowing that YOU must make some effort to help yourself. There is a regular check to see that you are attempting to find employment. And it is ONLY for a set period. Our current welfare and homeless programs do not fully address the needs. There needs to be manditory education and work skills training to give these people dignity and the chance to be a productive person and provide for themselves. What we currently do strips them of their dignity and makes them CONTINUE to rely on a handout. OUR SHAME IS NOT THEM,BUT THE FACT WE DO NOT SUPPLY THEM WITH TOOLS TO ESCAPE homelessness Posted by Sumner Ferris on 03/28/2009 @ 06:25AM PST * Report close Please report any offensive or inappropriate content. Reason (optional) * Send a Compliment * Reply 78. Andrew Chow I think it’s fair to say that we didn’t know how to help those in need. So we helped by giving material things, and neglected the more important things. Those who claim religion as their bedrock forgets that it’s not enough to just give the daily bread. The handouts of the seventies assume that each person will take responsibility to take care of themselves with the resources given, when in fact, they became homelessness BECAUSE they lost that ability, whether through drug addiction, mental illness, social circumstances (unemployment, divorce, death in family etc). The last thirty years have been a painful lesson learning about homelessness as a part of society, and about ourselves. What matters now is what do we do about it? Posted by Andrew Chow on 03/28/2009 @ 07:33AM PST * Report close Please report any offensive or inappropriate content. Reason (optional) * Send a Compliment 79. Reply to thread 80. reply to thread started by by Sumner Check Spelling * Email me when there are new posts to this thread * Comment Policy Cancel Reply 81. Gary D. Harris I think the problem started with too many people making too much money. As salaries rise for the few and ‘elite’, the result is that the prices of everything go up causing the cost-of-living to rise for the working class without the benefit of adequate pay increases. Those people running the businesses and corporations in the United States have become so absorbed with their quest for more profit, that they are eternally seeking ways to cut expenses, which translates into lower pay for those few jobs that don’t get shipped overseas. Now, the two segments of society, (those ‘with’ and those ‘without’), are becoming more and more polorized. If you think about it…a lot of people have been seperated from everything they own. Their homes, funishings, cars, cash, savings, I wonder where did all this property and cash go to? Did it all just evaporate into thin air? Posted by Gary D. Harris on 03/28/2009 @ 06:49AM PST * Report close Please report any offensive or inappropriate content. Reason (optional) * Send a Compliment * Reply 82. reply to thread started by by Gary D. Check Spelling * Email me when there are new posts to this thread * Comment Policy Cancel Reply 83. Ralph Dreifus Barrack Obama may be hartbroken but the US congres is utterly clieless. The culture if arogance ineptnes and grees is functiooning in the same manner it has for the [asy rlrvrn yrars and until that is changed there will not be any chnage that is based on common sense ethics and integrity. Not today, not tomorrow not next week nextr month or next year. It is that simple Posted by Ralph Dreifus on 03/28/2009 @ 06:58AM PST * Report close Please report any offensive or inappropriate content. Reason (optional) * Send a Compliment * Reply 84. Andrew Chow In his book, The Audacity of Hope, Obama wrote about the culture in Washington that turned decent, well-intentioned folks into politicalpartisan gamesters who lost sight of the real purpose of government, to do for people collectively what they cannot do for themselves individually. The promise of the new President is to bring change to that culture, that forgetfulness, and I think we are seeing that in action even during the first few months. Posted by Andrew Chow on 03/28/2009 @ 07:37AM PST * Report close Please report any offensive or inappropriate content. Reason (optional) * Send a Compliment 85. Reply to thread 86. reply to thread started by by Ralph Check Spelling * Email me when there are new posts to this thread * Comment Policy Cancel Reply 87. Laura Schleifer No human being deserves to live without a roof over their head in such a wealthy country, be they man, woman, child, single, family, vet, whatever. I am glad to FINALLY, for the FIRST TIME IN MY LIFE, hear a U.S. president address the issue of homelessness and assume some responsibility for that problem rather than ignore it altogether or else scapegoat homeless people as a socially-acceptable object for national ridicule and patronization by telling them to stop relying on “public handouts” and pick themselves up by their non-existent bootstraps. I do wish that he had brought it up sooner than this, as I was getting sick of hearing only about the travails of the “middle class” during the many months on the campaign trail…but better late than never. And I do also wish that he would make a firm commitment to ending ALL homelessness in this country, not just that of families with children. I’m also glad that he brought up the national stigma associated with homelessness, and hope he continues to look into that, because if he does, he’ll find that in many states, that cultural stigma has actually been turned into laws and policies that persecute and penalize people who are already suffering so horribly. For example, in Nevada and parts of California, anyone giving food or money to a homeless person can be arrested! And in NY, simply closing your eyes and leaning back while sitting upright in a park bench can also get you arrested–if you look poor, that is. Under Giuliani, it was even worse: a homeless person could not get into a shelter unless they could prove they were employed, homeless families were separated and the children were immediately placed in foster care while the adults were left to fend for themselves, and any homeless person found on the streets was subject to arrest. (But then again, how could they not be on the streets when they couldn’t get into a shelter unless they had a job?). So many homeless advocates wring their hands over hand-outs vs. hand-ups. But what about the current policy of hand (and face) slaps? How can you use a hand to give out OR to lift up if all it’s doing right now is slapping and punching and beating?? If President Obama (or anyone on this board, for that matter), is truly concerned about the crisis of children living on the streets of America, they might want to also look into the situation in Los Angeles, in which roughly 40% of all family shelters will not accept children over the age of 11. I recently wrote an article exposing this situation for Scenario Magazine ( www.scenario.sc ), and was told by Shelter Partnership, Beyond Shelter, and other orgs. that monitor the homeless population there that a recent bill (the Hearth Act) that would have provided far more emergency funding, and that would have banned the practice of age discrimination in family shelters that receive govt. aid, was shot down by the senate just this past fall. Meanwhile, 10,000 + children under 18 are roaming the streets of L.A., often on their own, and with no protection from pedophiles and others who would prey on vulnerable children. Then there are the kids who’ve grown up in the foster care system and are turned out at age 18 without ever having been taught so much as to tie their own shoelaces, but are somehow now miraculously supposed to all get jobs and apartments. Homelessness is far more of a long-term problem in this country then simply the current economic crisis, although that is certainly exacerbating it. If we really want “change” as opposed to just damage-control, then we need to eradicate it and to ensure that EVERY person has an adequate living space, once and for all. Posted by Laura Schleifer on 03/28/2009 @ 07:33AM PST * Report close Please report any offensive or inappropriate content. Reason (optional) * Send a Compliment * Reply 88. Andrew Chow Children services, the foster care system, these are agencies that have been stretched thin during the past decades. There is a lot that needs to be changed. That’s for sure. I hope you find someone who will listen in LA to help with the problems there. It sounds like a complex issue relating to gangs and drugs as well. Teenagers have their own particular sets of needs. Perhaps in addition to those family shelters who do not take children over 11, there can be special family shelters who ONLY accept families with teeagers. It’s back to funding again, however. Posted by Andrew Chow on 03/28/2009 @ 07:42AM PST * Report close Please report any offensive or inappropriate content. Reason (optional) * Send a Compliment 89. Reply to thread 90. reply to thread started by by Laura Check Spelling * Email me when there are new posts to this thread * Comment Policy Cancel Reply 91. jan Lightfootlane We need to tell Mr Obama Poverty, the number one cause of homelessness “Ends Here.” www.WhiteHouse.gov Click Contact at the bottom right. Tell him in an e mail to fight to end 100% of poverty. To raise the poverty level. Homeless children, and adults did NOT start in the 1970’s. Perhaps the terms began then. But back in 1892 Jacob A Riis release a book called “Children of the Poor”. It dealt with lodging houses what we call shelter’s. There was a drawing of rope hammocks lined up. It showed children sleeping in the rough, in sewers. And outside. The book told of the Children Aid Society shipping New York Orphans, out west. These were children put out by parents not able to feed them, and of children working at making buttons or other jobs when they were 6 years old. Back about 1950 my mother was told by social workers to give me up because society didn’t pay my dad enough to pay the bills. Luckily she did not. In the 1930’s we called homeless men and women tramps and hobos. And in his books Jacob Riis says homelessness has been with us since the day of the knight in armor if not before. Tell Obama that every working, or disabled human being every mother and child deserves to get a wage large enough to cover all the bills. And we do not want this in 5 or even 2 generation we want a livable wage NOW. He can be recalled as the president who wiped out the 4 headed monster of poverty Posted by jan Lightfootlane on 03/28/2009 @ 09:52AM PST * Report close Please report any offensive or inappropriate content. Reason (optional) * Send a Compliment * Reply 92. Danetta Amschler You bring up very good points. Problems are not “wiped out” by changing words or how things are figured. Problems are “wiped out” by actually correcting and removing the problem. If you want to get rid of “hobos and tramps”, you don’t keep giving them new names, you figure out how to help them and get them into whatever will best do that whether it’s a transitional housing program to get them back on their feet while they receive a bit of welfare or similar till they can rent an apartment, or help them get the help and care they need for disabilities and disability related income and appropriate housing or when needed you may have to point a few toward institutions or at least intensive housing because they literally can’t care for themselves well enough without help. But renaming problems don’t make us have fewer homeless. Just like refiguring how we figured the unemployment rate didn’t magically reduce the number of unemployed – it just made the numbers look better. I knew that happened in the 40’s and 50’s. It was how my husband became available for adoption. That’s just wrong on so many levels. If we’re the civilized nation we like to pretend we are, then it’s time to do more for the impoverished than point fingers and spout platitudes while actively harming them with ineffective help. What we do now and what we’ve long done is as cruel as (if not crueler than) not helping at all. Posted by Danetta Amschler on 03/28/2009 @ 10:53AM PST * Report close Please report any offensive or inappropriate content. Reason (optional) * Send a Compliment 93. Reply to thread 94. reply to thread started by by jan Check Spelling * Email me when there are new posts to this thread * Comment Policy Cancel Reply 95. Sherilyn Yeley I would like to comment on homeless from another perspective,myself and my daughter are victims of the flood of 2008,we are still in the flooded home waiting on a gov buyout through the hazard mitigation dept of homeland security,Fema came they had inspectors who did not do a good evaluation of properties,I spent my repair money on items for repairing my struture then the county came in and formed new flood plane codes and zoning orders and permits are required,I was told at a town hall meeting that monies spent on repair items since we were told to immediatly to clean up and fix could be reimbursed with receipts now instead of taking it off the buyout amount.Yes, all repair money will be taken off the fair market value (preflood) of your home & property if you don’t have receipts,Thank God I DO ! I wanted to relocate to Florida after the flood since Family and friends are their fema would not help on rental assistance out of state even though I signed up and still waiting for buyout program, The 203 H program for disaster victims is a joke since No Bank or FHA Approved Lender will do them.I tried approximately 600 in Indiana and Florida total ! I was told by case manager they brought in for long term flood recovery we would be out of this house by January and they lie !They say 1 thing it turns out to be something else,there was only 3 Fema trailors brought in for flood victims in our county the rest set at Camp Atterbury the grant money given to county is as if it is coming out of their own pockets,They will help us with unmet needs but my daughter and I can’t have anything from that until we show proof of a new permanant home,and that is for 4,500 in merchandise from a store they select .Even though we have flood insurance, they will not let us,even though others have been getting stuff and we see the lowes trucks from our yard delivering it. Our house is a shell with water,hot and cold,stove and refrigerator,bathroom,we sleep upstairs in 1 room. We were told they could not do any more for us (FEMA) Which is fine but we are stuck and cannot doing anything until our home is bought and we have the money in bank to buy another home our hands are tied .I am disabled and I worked Part-Time for 6.5 years at Fed-Ex but lost my job a month after flood due to doctors not faxing in documentation I lost a truck and a Harley Davidson but got no transportation grant which was a unmet need because I did not have insurance at the time due to being off work from having my ankle fused I could not afford it at the time my surgey was 1-22-08,my husband died 3 years ago thats why the need for us to relocate with family and friends was best for us I have recently been told the buyout is 120 days out and someone wants Board of Health to condemn our house even though we are in the buyout program.My SS is not enough without the 203 H program to purchase a new home for us and they won’t provide proper documentation or an exact date of when we will have funds for other mortgage programs to even consider us and my credit scores are not bad but I am going to need a substantial amount of money down to afford decent housing so here we are stuck on the verge of being homeless so my heart goes out to those that are homeless as we may be joining them soon! Posted by Sherilyn Yeley on 03/28/2009 @ 10:13AM PST * Report close Please report any offensive or inappropriate content. Reason (optional) * Send a Compliment * Reply 96. reply to thread started by by Sherilyn Check Spelling * Email me when there are new posts to this thread * Comment Policy Cancel Reply 97. Danetta Amschler Sherilyn, I hope something works out for you soon. Have you tried contacting any of your Congressional Reps or Senators out of curiosity? They sometimes will help with stuff. Or even write President Obama through the whitehouse.gov link and let him know that FEMA still has stuff it hasn’t appropriately handled from the aftermath of the flood. Back when the series of disasters started, I remembered something I’d said to myself and my husband back in a comparatively minor disaster. “If this is how FEMA and the Red Cross respond to disasters, we’re in trouble…” We lived on a boat back in the Los Angeles Storm of 1995 and that storm had troubles that led to culverts dumping lots of water at high speed into L.A. harbor. Our boat was in the first marina in L.A. Harbor. The marina was basically trashed, our boat was washed away, it suffered body damage, damage to the underwater steering (esp. the prop and shaft), and internal water damage from a hatch that opened who-knows-how – plus of course all the damage to all the stuff inside from being slammed around. Now this was our home and all we owned was inside it (with the exception of the 2 of us and our car). FEMA and the Red Cross decided together that people don’t live on boats and that boats are purely recreational and wouldn’t even replace our food. Which left us with a boat that wouldn’t move, clothes we couldn’t wear, and upholstery that all needed replaced due to mold – on one income. I also get the fight of trying to survive on SS. I’m now trying to live in Seattle (probably not the brightest decision I ever made). I’m currently trying to figure out how to move toward the TX Panhandle. That’s where most of my family lives. Again, I wish you the best! Posted by Danetta Amschler on 03/28/2009 @ 11:07AM PST * Report close Please report any offensive or inappropriate content. Reason (optional) * Send a Compliment * Reply 98. Andrew Chow Sherilyn, thank you for sharing your heart wrenching story. Sometimes people forget that the disaster lingers even after the floord water recedes. It’s unimaginable that FEMA, a federal agency would find moving out of state an exception to funding. That’s just simple red tape that has to go. Artificial boundaries like that has no place in a natural disaster agency. I hope you will write to President Obama. He reads ten letters everyday from ordinary citizens. I hope your get relief soon. Posted by Andrew Chow on 03/28/2009 @ 11:28AM PST * Report close Please report any offensive or inappropriate content. Reason (optional) * Send a Compliment 99. Reply to thread 100. reply to thread started by by Danetta Check Spelling * Email me when there are new posts to this thread * Comment Policy Cancel Reply 101. Cecily Westermann Sherilyn and Danetta: I empathize. As far as FEMA and the rest of the alphabet soup goes you can’t count on much. I don’t know how old y’all are. But I was relieved to hit 65 after working more than 35 years. Why? So we could qualify for senior housing. Nothing has happened to our house but it’s only a matter of time. Made up my mind a long time ago that if anything did happen we were going to walk away with just what we could carry–including our cat. Posted by Cecily Westermann on 03/28/2009 @ 11:34AM PST * Report close Please report any offensive or inappropriate content. Reason (optional) * Send a Compliment * Reply 102. reply to thread started by by Cecily Check Spelling * Email me when there are new posts to this thread * Comment Policy Cancel Reply 103. jan Lightfootlane We need more people willing to point out how governmental programs fail those in the most need. Sherilyn I do hope you reach our president Obama. I also hope someone on his staff is reading this thread, and reports it to the president. It would be great if people who understand poverty are flown to Washington DC, to share ideas and a meal or two with the president. A half dozen of us and one of our loved ones could show the presdent how to fix humanity. Then we could be given complimentary room at a fine motel for 4 days or so. We can tell him and his staff about the failuire of dole Programs, including FEMA. I run a Homeless Hotline. Had women tell me she waited all day in line in New Orleans to be given a check for $250. Instead of being given the $700 credit card. She was forced to sign a paper that she received all her aid, or get nothing. I have many people in Maine calling, where their displacement could have been avoided if Town Welfare or general Relief was properly applied. No one of the Middleclasses seems to care. They would rather PRETEND the system works as advertised. Us battered by bad application of laws, most be heard. We must be brave enough to speak out and have a place to be heard. I would like to have just one meal to speak to the president. I think he might understand the need-less hardship, the system promotes. It would be nice to have Obama recalled as the president, who wiped out poverty. Posted by jan Lightfootlane on 03/28/2009 @ 12:12PM PST * Report close Please report any offensive or inappropriate content. Reason (optional) * Send a Compliment * Reply 104. reply to thread started by by jan Check Spelling * Email me when there are new posts to this thread * Comment Policy Cancel Reply 105. Troy Algood Considering the cost to have a roof over your head compared to wages, it’s a wonder we don’t have more homeless people. There are many issues contributing to the number of homeless we have. I have little hope that our government will do much of anything for the greater good of the American people. They fail at everything they do. Posted by Troy Algood on 03/28/2009 @ 12:51PM PST * Report close Please report any offensive or inappropriate content. Reason (optional) * Send a Compliment * Reply 106. Andrew Chow I am not sure we want to get into a discussion of government in this particular blog, but I recommend Obama’s book, The Audacity of Hope. It talked about the corruption of government at every level, but also the work of good people in government and in all levels of society. I think it is a little premature to give up hope when we have not yet tried. Imagine what the power that brought about change, that elected Barack Obama, can do in four years, if the last two months have been a preview. The road ahead may be long, the work may be difficult, but I have faith in a system of government that is fundamentally sound, led by a president who promised to be honest and to do what is right for the people, not the lobbists or simply to get re-elected. Posted by Andrew Chow on 03/28/2009 @ 04:58PM PST * Report close Please report any offensive or inappropriate content. Reason (optional) * Send a Compliment 107. Reply to thread 108. reply to thread started by by Troy Check Spelling * Email me when there are new posts to this thread * Comment Policy Cancel Reply 109. jan Lightfootlane I understand your lack of hope. I personally hope this president has more action the Kennedy, without getting killed in office. I think if a hand full of us tells the president what is WRONG and how to fix it. It could be fixed. But I agree with you on the point – every thing goes up, when the minimum wage goes up. That is why we have to ask business to hold profits at the rate they were before the increase. Example Milk in 1954 25 cents a quart,=1/2 of hour minimum wage. 2009 $1.89 a quart= 1/3 a hour of minimum wage. Its been 55 years and we have progressed roughly only 17%. I for one thinks the advocates of poverty and homelessness are moving way to slo-o-o-w-ly. We need the voices of the poor, the underpaid to write www.WhiteHouse.gov and demand Meaningful changes. Raise the poverty level and the minimum wages to cost of living-with a year mortiterm on business raising their prices. Posted by jan Lightfootlane on 03/28/2009 @ 01:40PM PST * Report close Please report any offensive or inappropriate content. Reason (optional) * Send a Compliment * Reply 110. reply to thread started by by jan Check Spelling * Email me when there are new posts to this thread * Comment Policy Cancel Reply 111. Laura Schleifer Well, the situation in L.A. with the teenagers has less to do with gangs or drugs than it has to do with fears of their burgeoning sexuality and the havoc it could create. The main reason I was cited by shelter personnel for the exclusion of kids aged 12 and over was that teen boys might impregnate teen girls, or else that it would be inappropriate to have teens from one family living with younger children from another family in such close quarters that the families don’t have their own private living spaces. The real issue at the root of it is the lack of space and privacy. However, I don’t think having shelters that only accept families with teens is the solution, since most of these families that have teens also have younger children as well, which means going right back to the situation we have now–separating children from their families right when they need them the most. Posted by Laura Schleifer on 03/28/2009 @ 01:48PM PST * Report close Please report any offensive or inappropriate content. Reason (optional) * Send a Compliment * Reply 112. Andrew Chow I am not familiar with the issues of teenagers in shelters so I have nothing much to contribute except what President Obama already said that it is heart breaking. In addition to the embarassment of puberty and all the changes for a teenager, they have to endure the stigma of homelessness as well. There was an article about a family living in hotels after being evicted, and the teenagers were in tears talking about their experience going to school, the reactions of their friends. There is really no good solutions to homelessness for families, and we need to address the problem outside of the shelters, which are really temporary housing for desperate and chronic people with much more difficult personal issues. Families and teenagers are better served, in my humble opinion, by services that are geared towards placing them with foster families or mentoring families with the goal of independence. These programs may (or may not) carry a cost that is higher per person but the duration of each family participating in the program will be shorter than those in the shelter programs, and begin paying back into the system sooner once achieving independece. As the program gains experience and economy in scale, I think the cost will be consistent with the other methods. Posted by Andrew Chow on 03/28/2009 @ 05:06PM PST * Report close Please report any offensive or inappropriate content. Reason (optional) * Send a Compliment 113. Reply to thread 114. reply to thread started by by Laura Check Spelling * Email me when there are new posts to this thread * Comment Policy Cancel Reply 115. Doris Vician When oh when will our government learn that the red tape and bureaucrats making big salaries are not solving the grassroots problems!! Probably not until enough grassroots people start making plenty of noise. Unless you have been involved in a disaster or worked in an area after one you have no idea what people are forced to endure during and for years after tragedy strikes. Worked with a disaster medical assistance team and was deployed after Hurricane Andrew and later the Northridge earthquake. It was a real eye opener and something reading about just does not convey the impact of living it. Posted by Doris Vician on 03/28/2009 @ 02:22PM PST * Report close Please report any offensive or inappropriate content. Reason (optional) * Send a Compliment * Reply 116. reply to thread started by by Doris Check Spelling * Email me when there are new posts to this thread * Comment Policy Cancel Reply 117. jan Lightfootlane Talk about hope. I have not read our fearless leaders book. I must get it from the library, like many of the poor, not enough cash to afford the luxury of books. I am both an adviocate, who is in poverty. It is people like myself who are in the front rows who instinctively know the answers. If our leader who IS accomplishing more then any other president in the first 100 days in office listens to National homeless, and poverty groups, he will not be on the right track to end poverty. He will merely place bands aids on part of the problem. This is the president who can be remembered for ending all of poverty. We need to add our voices to the mix. We need the poor to say what will end poverty. Why is it respectable for workers to pay 70% of all workers less then a livable wage? Workers and non workers, the disabled, and welfare mother unite. Toss off the imposed shame and our wrongfully being blamed. We do not ask to be under paid. Email the white house with your stories and your suggestions weekly. Haven’t you said more than once ” If I were paid an adequate wage my bills would be paid” That IS one solution to ending poverty. Yes Obama got into office saying he will aid the poor, then starts with the undocumented poor the bottom of the middle class. I noticed the task force. We need people hitting www.whitehouse.gov then scrolling down to the choices on the right side double click on Middle class tasks force. Tell The VP that roughly 1/4 of the middleclass are the under paid. They do not make livable wages. But until Mr Obama admits these facts, he will not make much head way. I whole heartedly agree with the fact that it We the People, in this case we the counted and uncounted poor who must get President Obama onto the correct track. We need people to take action and once a week mail or email the president asking him to raise the poverty and minimum wage level. While keeping costs holding at 2009 levels. Tell him $9.40 an hour will not cut it. For everyone to be able to pay their bills its closer to $19.40 an hour they need. Let us end 44 years of oppression-NOW not in another lifetime. The federal poverty level was created in 1965. By Mollie Orshansky at the Social Security Administration. It was created wrong. It was intended as a “First Step” By Mollie. Instead of taking all of lives basic needs into account she took the price of food alone. In order to feel human we must be able to pay our bills, and buy a meal with friend now and then. When you raise an inadequate number by the amount of inflation- you still have an inadequate poverty level. Common sense tells us poor in 2009 employers no longer pay for everyone’s health insurances. Rents no longer are $2-$3 hundred a month. Some of the so called middle class will know exactly what I am saying. They hardly can afford a cup of coffee with their friends. You are one of the uncounted poor when you cannot afford all your bills and food. We need your Voices. Tell Obama to raise minimum wages to $19.40 an hours and call for a price freeze. Lets end all poverty by 2118. We will save money in the long run. By uplifting the pay-not just giving clothes, canned food you do not want, but give them adequate pay. Then we can afford to pay our own rents, utilities, and eat. Let me close by asking this question “Why do 70% of the population deserve less then a Full Wage which covers all the bills?” Posted by jan Lightfootlane on 03/29/2009 @ 08:09AM PST * Report close Please report any offensive or inappropriate content. Reason (optional) * Send a Compliment * Reply 118. Joan Mershon Raising the minimum wage is not the answer….ok it may be the answer to your specific situation, but it doesn’t work on a large scale. Look at the states that have minimum wages above the Federal level – are people there any better able to pay rent, utilities, food, etc? No. Also how have the small businesses fared with higher min wage laws? Small businesses are important since about 70% of all jobs in this country are created by small businesses. If Mr. Small Business has to pay higher wages it limits how many people he can afford to employ – leading to higher unemployment. So how is the job market in those states with higher minimum wages doing? The extra cost to do business will also be reflected in the prices the customers are charged….which means the price you & I pay. That means our cost of living goes up…do we demand the government raise it again? It will only continue to spiral. I do not know what the answer is…I just know this idea is not working now. Before we try an experiment of this magnitude on the whole country – let’s first test it a couple of states and see if it actually works first. Posted by Joan Mershon on 03/29/2009 @ 09:57AM PST * Report close Please report any offensive or inappropriate content. Reason (optional) * Send a Compliment 119. Reply to thread 120. reply to thread started by by jan Check Spelling * Email me when there are new posts to this thread * Comment Policy Cancel Reply 121. Ralph Dreifus Homelessness may be heartbreaking but no one is doing anything about it. Large cities have flop huses smal citieied\s have tents in the woods. The ranks of the disenfranxchised grows daily and so is the prison population becaue prison offers three meals a hot bath and free medical care. Over 10% of the population does not get that now and for that reason the US congres is working to disarm America because they at least realize at some point the guns will be used on them and for good reason. They are all bought and paid for and collectively they have no common sense ethics or integrity Posted by Ralph Dreifus on 03/29/2009 @ 11:27AM PST * Report close Please report any offensive or inappropriate content. Reason (optional) * Send a Compliment * Reply 122. reply to thread started by by Ralph Check Spelling * Email me when there are new posts to this thread * Comment Policy Cancel Reply Add a Comment Comment Check Spelling * Email me when there are new posts to this thread * Comment Policy Comments on Change.org are meant for further exploration and evaluation of the ideas covered in the posts. To that end, we welcome constructive comments. However, we reserve the right to delete comments that are offensive, abusive, or off-topic; that contain ad hominem attacks; or that are designed to subvert or hijack comment threads rather than contribute to them. Repeat offenders may be permanently removed from the site at our discretion. Author Subscribe to RSS Feed Shannon Moriarty Shannon Moriarty Boston, MA Shannon has worked in homeless shelters and service organizations in San Francisco, the Triangle region of North Carolina, and currently in the greater Boston area. She is a graduate student studying housing and urban policy at Tufts University. Related Blog Posts * Michelle Obama Serves Soup, Nation Misses the Point Posted by Shannon Moriarty Mar 06 @ 10:00AM PST * Homeless with Homework Posted by Shannon Moriarty Mar 03 @ 05:52PM PST * Can Obama End Veteran Homelessness? Posted by Shannon Moriarty Mar 02 @ 08:20AM PST End Homelessness Featured Actions * Go to GiveVaccines.org – Play the free vocab. game & raise fun Go to GiveVaccines.org – Play the free vocab. game & raise fun Started by Andrea Mckeeby 230 People (19 comments) Take Action » * America’s Food Banks Are Facing A Shortage – Please Donate And Volunteer! America’s Food Banks Are Facing A Shortage – Please Donate And Volunteer! Started by Kris LS 339 People (27 comments) Take Action »

This is a cool listen

http://www.youtube.com/watch?v=JBETqjlDMNc&feature=player_embedded

The Big Takeover

URL: http://www.rollingstone.com/politics/story/26793903/the_big_takeover

 

Rollingstone.com

 

 

The Big Takeover

The global economic crisis isn’t about money – it’s about power. How Wall Street insiders are using the bailout to stage a revolution

MATT TAIBBI

 

Posted Mar 19, 2009 12:49 PM

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It’s over — we’re officially, royally fucked. no empire can survive being rendered a permanent laughingstock, which is what happened as of a few weeks ago, when the buffoons who have been running things in this country finally went one step too far. It happened when Treasury Secretary Timothy Geithner was forced to admit that he was once again going to have to stuff billions of taxpayer dollars into a dying insurance giant called AIG, itself a profound symbol of our national decline — a corporation that got rich insuring the concrete and steel of American industry in the country’s heyday, only to destroy itself chasing phantom fortunes at the Wall Street card tables, like a dissolute nobleman gambling away the family estate in the waning days of the British Empire.

 

The latest bailout came as AIG admitted to having just posted the largest quarterly loss in American corporate history — some $61.7 billion. In the final three months of last year, the company lost more than $27 million every hour. That’s $465,000 a minute, a yearly income for a median American household every six seconds, roughly $7,750 a second. And all this happened at the end of eight straight years that America devoted to frantically chasing the shadow of a terrorist threat to no avail, eight years spent stopping every citizen at every airport to search every purse, bag, crotch and briefcase for juice boxes and explosive tubes of toothpaste. Yet in the end, our government had no mechanism for searching the balance sheets of companies that held life-or-death power over our society and was unable to spot holes in the national economy the size of Libya (whose entire GDP last year was smaller than AIG’s 2008 losses).

 

So it’s time to admit it: We’re fools, protagonists in a kind of gruesome comedy about the marriage of greed and stupidity. And the worst part about it is that we’re still in denial — we still think this is some kind of unfortunate accident, not something that was created by the group of psychopaths on Wall Street whom we allowed to gang-rape the American Dream. When Geithner announced the new $30 billion bailout, the party line was that poor AIG was just a victim of a lot of shitty luck — bad year for business, you know, what with the financial crisis and all. Edward Liddy, the company’s CEO, actually compared it to catching a cold: “The marketplace is a pretty crummy place to be right now,” he said. “When the world catches pneumonia, we get it too.” In a pathetic attempt at name-dropping, he even whined that AIG was being “consumed by the same issues that are driving house prices down and 401K statements down and Warren Buffet’s investment portfolio down.”

 

 

 

 

 

Liddy made AIG sound like an orphan begging in a soup line, hungry and sick from being left out in someone else’s financial weather. He conveniently forgot to mention that AIG had spent more than a decade systematically scheming to evade U.S. and international regulators, or that one of the causes of its “pneumonia” was making colossal, world-sinking $500 billion bets with money it didn’t have, in a toxic and completely unregulated derivatives market.

 

Nor did anyone mention that when AIG finally got up from its seat at the Wall Street casino, broke and busted in the afterdawn light, it owed money all over town — and that a huge chunk of your taxpayer dollars in this particular bailout scam will be going to pay off the other high rollers at its table. Or that this was a casino unique among all casinos, one where middle-class taxpayers cover the bets of billionaires.

 

People are pissed off about this financial crisis, and about this bailout, but they’re not pissed off enough. The reality is that the worldwide economic meltdown and the bailout that followed were together a kind of revolution, a coup d’état. They cemented and formalized a political trend that has been snowballing for decades: the gradual takeover of the government by a small class of connected insiders, who used money to control elections, buy influence and systematically weaken financial regulations.

 

The crisis was the coup de grâce: Given virtually free rein over the economy, these same insiders first wrecked the financial world, then cunningly granted themselves nearly unlimited emergency powers to clean up their own mess. And so the gambling-addict leaders of companies like AIG end up not penniless and in jail, but with an Alien-style death grip on the Treasury and the Federal Reserve — “our partners in the government,” as Liddy put it with a shockingly casual matter-of-factness after the most recent bailout.

 

The mistake most people make in looking at the financial crisis is thinking of it in terms of money, a habit that might lead you to look at the unfolding mess as a huge bonus-killing downer for the Wall Street class. But if you look at it in purely Machiavellian terms, what you see is a colossal power grab that threatens to turn the federal government into a kind of giant Enron — a huge, impenetrable black box filled with self-dealing insiders whose scheme is the securing of individual profits at the expense of an ocean of unwitting involuntary shareholders, previously known as taxpayers.

 

I. PATIENT ZERO

 

The best way to understand the financial crisis is to understand the meltdown at AIG. AIG is what happens when short, bald managers of otherwise boring financial bureaucracies start seeing Brad Pitt in the mirror. This is a company that built a giant fortune across more than a century by betting on safety-conscious policyholders — people who wear seat belts and build houses on high ground — and then blew it all in a year or two by turning their entire balance sheet over to a guy who acted like making huge bets with other people’s money would make his dick bigger.

 

That guy — the Patient Zero of the global economic meltdown — was one Joseph Cassano, the head of a tiny, 400-person unit within the company called AIG Financial Products, or AIGFP. Cassano, a pudgy, balding Brooklyn College grad with beady eyes and way too much forehead, cut his teeth in the Eighties working for Mike Milken, the granddaddy of modern Wall Street debt alchemists. Milken, who pioneered the creative use of junk bonds, relied on messianic genius and a whole array of insider schemes to evade detection while wreaking financial disaster. Cassano, by contrast, was just a greedy little turd with a knack for selective accounting who ran his scam right out in the open, thanks to Washington’s deregulation of the Wall Street casino. “It’s all about the regulatory environment,” says a government source involved with the AIG bailout. “These guys look for holes in the system, for ways they can do trades without government interference. Whatever is unregulated, all the action is going to pile into that.”

 

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The mess Cassano created had its roots in an investment boom fueled in part by a relatively new type of financial instrument called a collateralized-debt obligation. A CDO is like a box full of diced-up assets. They can be anything: mortgages, corporate loans, aircraft loans, credit-card loans, even other CDOs. So as X mortgage holder pays his bill, and Y corporate debtor pays his bill, and Z credit-card debtor pays his bill, money flows into the box.

 

The key idea behind a CDO is that there will always be at least some money in the box, regardless of how dicey the individual assets inside it are. No matter how you look at a single unemployed ex-con trying to pay the note on a six-bedroom house, he looks like a bad investment. But dump his loan in a box with a smorgasbord of auto loans, credit-card debt, corporate bonds and other crap, and you can be reasonably sure that somebody is going to pay up. Say $100 is supposed to come into the box every month. Even in an apocalypse, when $90 in payments might default, you’ll still get $10. What the inventors of the CDO did is divide up the box into groups of investors and put that $10 into its own level, or “tranche.” They then convinced ratings agencies like Moody’s and S&P to give that top tranche the highest AAA rating — meaning it has close to zero credit risk.

 

Suddenly, thanks to this financial seal of approval, banks had a way to turn their shittiest mortgages and other financial waste into investment-grade paper and sell them to institutional investors like pensions and insurance companies, which were forced by regulators to keep their portfolios as safe as possible. Because CDOs offered higher rates of return than truly safe products like Treasury bills, it was a win-win: Banks made a fortune selling CDOs, and big investors made much more holding them.

 

The problem was, none of this was based on reality. “The banks knew they were selling crap,” says a London-based trader from one of the bailed-out companies. To get AAA ratings, the CDOs relied not on their actual underlying assets but on crazy mathematical formulas that the banks cooked up to make the investments look safer than they really were. “They had some back room somewhere where a bunch of Indian guys who’d been doing nothing but math for God knows how many years would come up with some kind of model saying that this or that combination of debtors would only default once every 10,000 years,” says one young trader who sold CDOs for a major investment bank. “It was nuts.”

 

Now that even the crappiest mortgages could be sold to conservative investors, the CDOs spurred a massive explosion of irresponsible and predatory lending. In fact, there was such a crush to underwrite CDOs that it became hard to find enough subprime mortgages — read: enough unemployed meth dealers willing to buy million-dollar homes for no money down — to fill them all. As banks and investors of all kinds took on more and more in CDOs and similar instruments, they needed some way to hedge their massive bets — some kind of insurance policy, in case the housing bubble burst and all that debt went south at the same time. This was particularly true for investment banks, many of which got stuck holding or “warehousing” CDOs when they wrote more than they could sell. And that’s were Joe Cassano came in.

 

Known for his boldness and arrogance, Cassano took over as chief of AIGFP in 2001. He was the favorite of Maurice “Hank” Greenberg, the head of AIG, who admired the younger man’s hard-driving ways, even if neither he nor his successors fully understood exactly what it was that Cassano did. According to a source familiar with AIG’s internal operations, Cassano basically told senior management, “You know insurance, I know investments, so you do what you do, and I’ll do what I do — leave me alone.” Given a free hand within the company, Cassano set out from his offices in London to sell a lucrative form of “insurance” to all those investors holding lots of CDOs. His tool of choice was another new financial instrument known as a credit-default swap, or CDS.

 

The CDS was popularized by J.P. Morgan, in particular by a group of young, creative bankers who would later become known as the “Morgan Mafia,” as many of them would go on to assume influential positions in the finance world. In 1994, in between booze and games of tennis at a resort in Boca Raton, Florida, the Morgan gang plotted a way to help boost the bank’s returns. One of their goals was to find a way to lend more money, while working around regulations that required them to keep a set amount of cash in reserve to back those loans. What they came up with was an early version of the credit-default swap.

 

In its simplest form, a CDS is just a bet on an outcome. Say Bank A writes a million-dollar mortgage to the Pope for a town house in the West Village. Bank A wants to hedge its mortgage risk in case the Pope can’t make his monthly payments, so it buys CDS protection from Bank B, wherein it agrees to pay Bank B a premium of $1,000 a month for five years. In return, Bank B agrees to pay Bank A the full million-dollar value of the Pope’s mortgage if he defaults. In theory, Bank A is covered if the Pope goes on a meth binge and loses his job.

 

When Morgan presented their plans for credit swaps to regulators in the late Nineties, they argued that if they bought CDS protection for enough of the investments in their portfolio, they had effectively moved the risk off their books. Therefore, they argued, they should be allowed to lend more, without keeping more cash in reserve. A whole host of regulators — from the Federal Reserve to the Office of the Comptroller of the Currency — accepted the argument, and Morgan was allowed to put more money on the street.

 

What Cassano did was to transform the credit swaps that Morgan popularized into the world’s largest bet on the housing boom. In theory, at least, there’s nothing wrong with buying a CDS to insure your investments. Investors paid a premium to AIGFP, and in return the company promised to pick up the tab if the mortgage-backed CDOs went bust. But as Cassano went on a selling spree, the deals he made differed from traditional insurance in several significant ways. First, the party selling CDS protection didn’t have to post any money upfront. When a $100 corporate bond is sold, for example, someone has to show 100 actual dollars. But when you sell a $100 CDS guarantee, you don’t have to show a dime. So Cassano could sell investment banks billions in guarantees without having any single asset to back it up.

 

Secondly, Cassano was selling so-called “naked” CDS deals. In a “naked” CDS, neither party actually holds the underlying loan. In other words, Bank B not only sells CDS protection to Bank A for its mortgage on the Pope — it turns around and sells protection to Bank C for the very same mortgage. This could go on ad nauseam: You could have Banks D through Z also betting on Bank A’s mortgage. Unlike traditional insurance, Cassano was offering investors an opportunity to bet that someone else’s house would burn down, or take out a term life policy on the guy with AIDS down the street. It was no different from gambling, the Wall Street version of a bunch of frat brothers betting on Jay Feely to make a field goal. Cassano was taking book for every bank that bet short on the housing market, but he didn’t have the cash to pay off if the kick went wide.

 

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In a span of only seven years, Cassano sold some $500 billion worth of CDS protection, with at least $64 billion of that tied to the subprime mortgage market. AIG didn’t have even a fraction of that amount of cash on hand to cover its bets, but neither did it expect it would ever need any reserves. So long as defaults on the underlying securities remained a highly unlikely proposition, AIG was essentially collecting huge and steadily climbing premiums by selling insurance for the disaster it thought would never come.

 

Initially, at least, the revenues were enormous: AIGFP’s returns went from $737 million in 1999 to $3.2 billion in 2005. Over the past seven years, the subsidiary’s 400 employees were paid a total of $3.5 billion; Cassano himself pocketed at least $280 million in compensation. Everyone made their money — and then it all went to shit.

 

II. THE REGULATORS

 

Cassano’s outrageous gamble wouldn’t have been possible had he not had the good fortune to take over AIGFP just as Sen. Phil Gramm — a grinning, laissez-faire ideologue from Texas — had finished engineering the most dramatic deregulation of the financial industry since Emperor Hien Tsung invented paper money in 806 A.D. For years, Washington had kept a watchful eye on the nation’s banks. Ever since the Great Depression, commercial banks — those that kept money on deposit for individuals and businesses — had not been allowed to double as investment banks, which raise money by issuing and selling securities. The Glass-Steagall Act, passed during the Depression, also prevented banks of any kind from getting into the insurance business.

 

But in the late Nineties, a few years before Cassano took over AIGFP, all that changed. The Democrats, tired of getting slaughtered in the fundraising arena by Republicans, decided to throw off their old reliance on unions and interest groups and become more “business-friendly.” Wall Street responded by flooding Washington with money, buying allies in both parties. In the 10-year period beginning in 1998, financial companies spent $1.7 billion on federal campaign contributions and another $3.4 billion on lobbyists. They quickly got what they paid for. In 1999, Gramm co-sponsored a bill that repealed key aspects of the Glass-Steagall Act, smoothing the way for the creation of financial megafirms like Citigroup. The move did away with the built-in protections afforded by smaller banks. In the old days, a local banker knew the people whose loans were on his balance sheet: He wasn’t going to give a million-dollar mortgage to a homeless meth addict, since he would have to keep that loan on his books. But a giant merged bank might write that loan and then sell it off to some fool in China, and who cared?

 

The very next year, Gramm compounded the problem by writing a sweeping new law called the Commodity Futures Modernization Act that made it impossible to regulate credit swaps as either gambling or securities. Commercial banks — which, thanks to Gramm, were now competing directly with investment banks for customers — were driven to buy credit swaps to loosen capital in search of higher yields. “By ruling that credit-default swaps were not gaming and not a security, the way was cleared for the growth of the market,” said Eric Dinallo, head of the New York State Insurance Department.

 

The blanket exemption meant that Joe Cassano could now sell as many CDS contracts as he wanted, building up as huge a position as he wanted, without anyone in government saying a word. “You have to remember, investment banks aren’t in the business of making huge directional bets,” says the government source involved in the AIG bailout. When investment banks write CDS deals, they hedge them. But insurance companies don’t have to hedge. And that’s what AIG did. “They just bet massively long on the housing market,” says the source. “Billions and billions.”

 

In the biggest joke of all, Cassano’s wheeling and dealing was regulated by the Office of Thrift Supervision, an agency that would prove to be defiantly uninterested in keeping watch over his operations. How a behemoth like AIG came to be regulated by the little-known and relatively small OTS is yet another triumph of the deregulatory instinct. Under another law passed in 1999, certain kinds of holding companies could choose the OTS as their regulator, provided they owned one or more thrifts (better known as savings-and-loans). Because the OTS was viewed as more compliant than the Fed or the Securities and Exchange Commission, companies rushed to reclassify themselves as thrifts. In 1999, AIG purchased a thrift in Delaware and managed to get approval for OTS regulation of its entire operation.

 

Making matters even more hilarious, AIGFP — a London-based subsidiary of an American insurance company — ought to have been regulated by one of Europe’s more stringent regulators, like Britain’s Financial Services Authority. But the OTS managed to convince the Europeans that it had the muscle to regulate these giant companies. By 2007, the EU had conferred legitimacy to OTS supervision of three mammoth firms — GE, AIG and Ameriprise.

 

That same year, as the subprime crisis was exploding, the Government Accountability Office criticized the OTS, noting a “disparity between the size of the agency and the diverse firms it oversees.” Among other things, the GAO report noted that the entire OTS had only one insurance specialist on staff — and this despite the fact that it was the primary regulator for the world’s largest insurer!

 

“There’s this notion that the regulators couldn’t do anything to stop AIG,” says a government official who was present during the bailout. “That’s bullshit. What you have to understand is that these regulators have ultimate power. They can send you a letter and say, ‘You don’t exist anymore,’ and that’s basically that. They don’t even really need due process. The OTS could have said, ‘We’re going to pull your charter; we’re going to pull your license; we’re going to sue you.’ And getting sued by your primary regulator is the kiss of death.”

 

When AIG finally blew up, the OTS regulator ostensibly in charge of overseeing the insurance giant — a guy named C.K. Lee — basically admitted that he had blown it. His mistake, Lee said, was that he believed all those credit swaps in Cassano’s portfolio were “fairly benign products.” Why? Because the company told him so. “The judgment the company was making was that there was no big credit risk,” he explained. (Lee now works as Midwest region director of the OTS; the agency declined to make him available for an interview.)

 

In early March, after the latest bailout of AIG, Treasury Secretary Timothy Geithner took what seemed to be a thinly veiled shot at the OTS, calling AIG a “huge, complex global insurance company attached to a very complicated investment bank/hedge fund that was allowed to build up without any adult supervision.” But even without that “adult supervision,” AIG might have been OK had it not been for a complete lack of internal controls. For six months before its meltdown, according to insiders, the company had been searching for a full-time chief financial officer and a chief risk-assessment officer, but never got around to hiring either. That meant that the 18th-largest company in the world had no one checking to make sure its balance sheet was safe and no one keeping track of how much cash and assets the firm had on hand. The situation was so bad that when outside consultants were called in a few weeks before the bailout, senior executives were unable to answer even the most basic questions about their company — like, for instance, how much exposure the firm had to the residential-mortgage market.

 

III. THE CRASH

 

Ironically, when reality finally caught up to Cassano, it wasn’t because the housing market crapped but because of AIG itself. Before 2005, the company’s debt was rated triple-A, meaning he didn’t need to post much cash to sell CDS protection: The solid creditworthiness of AIG’s name was guarantee enough. But the company’s crummy accounting practices eventually caused its credit rating to be downgraded, triggering clauses in the CDS contracts that forced Cassano to post substantially more collateral to back his deals.

 

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By the fall of 2007, it was evident that AIGFP’s portfolio had turned poisonous, but like every good Wall Street huckster, Cassano schemed to keep his insane, Earth-swallowing gamble hidden from public view. That August, balls bulging, he announced to investors on a conference call that “it is hard for us, without being flippant, to even see a scenario within any kind of realm of reason that would see us losing $1 in any of those transactions.” As he spoke, his CDS portfolio was racking up $352 million in losses. When the growing credit crunch prompted senior AIG executives to re-examine its liabilities, a company accountant named Joseph St. Denis became “gravely concerned” about the CDS deals and their potential for mass destruction. Cassano responded by personally forcing the poor sap out of the firm, telling him he was “deliberately excluded” from the financial review for fear that he might “pollute the process.”

 

The following February, when AIG posted $11.5 billion in annual losses, it announced the resignation of Cassano as head of AIGFP, saying an auditor had found a “material weakness” in the CDS portfolio. But amazingly, the company not only allowed Cassano to keep $34 million in bonuses, it kept him on as a consultant for $1 million a month. In fact, Cassano remained on the payroll and kept collecting his monthly million through the end of September 2008, even after taxpayers had been forced to hand AIG $85 billion to patch up his fuck-ups. When asked in October why the company still retained Cassano at his $1 million-a-month rate despite his role in the probable downfall of Western civilization, CEO Martin Sullivan told Congress with a straight face that AIG wanted to “retain the 20-year knowledge that Mr. Cassano had.” (Cassano, who is apparently hiding out in his lavish town house near Harrods in London, could not be reached for comment.)

 

What sank AIG in the end was another credit downgrade. Cassano had written so many CDS deals that when the company was facing another downgrade to its credit rating last September, from AA to A, it needed to post billions in collateral — not only more cash than it had on its balance sheet but more cash than it could raise even if it sold off every single one of its liquid assets. Even so, management dithered for days, not believing the company was in serious trouble. AIG was a dried-up prune, sapped of any real value, and its top executives didn’t even know it.

 

On the weekend of September 13th, AIG’s senior leaders were summoned to the offices of the New York Federal Reserve. Regulators from Dinallo’s insurance office were there, as was Geithner, then chief of the New York Fed. Treasury Secretary Hank Paulson, who spent most of the weekend preoccupied with the collapse of Lehman Brothers, came in and out. Also present, for reasons that would emerge later, was Lloyd Blankfein, CEO of Goldman Sachs. The only relevant government office that wasn’t represented was the regulator that should have been there all along: the OTS.

 

“We sat down with Paulson, Geithner and Dinallo,” says a person present at the negotiations. “I didn’t see the OTS even once.”

 

On September 14th, according to another person present, Treasury officials presented Blankfein and other bankers in attendance with an absurd proposal: “They basically asked them to spend a day and check to see if they could raise the money privately.” The laughably short time span to complete the mammoth task made the answer a foregone conclusion. At the end of the day, the bankers came back and told the government officials, gee, we checked, but we can’t raise that much. And the bailout was on.

 

A short time later, it came out that AIG was planning to pay some $90 million in deferred compensation to former executives, and to accelerate the payout of $277 million in bonuses to others — a move the company insisted was necessary to “retain key employees.” When Congress balked, AIG canceled the $90 million in payments.

 

Then, in January 2009, the company did it again. After all those years letting Cassano run wild, and after already getting caught paying out insane bonuses while on the public till, AIG decided to pay out another $450 million in bonuses. And to whom? To the 400 or so employees in Cassano’s old unit, AIGFP, which is due to go out of business shortly! Yes, that’s right, an average of $1.1 million in taxpayer-backed money apiece, to the very people who spent the past decade or so punching a hole in the fabric of the universe!

 

“We, uh, needed to keep these highly expert people in their seats,” AIG spokeswoman Christina Pretto says to me in early February.

 

“But didn’t these ‘highly expert people’ basically destroy your company?” I ask.

 

Pretto protests, says this isn’t fair. The employees at AIGFP have already taken pay cuts, she says. Not retaining them would dilute the value of the company even further, make it harder to wrap up the unit’s operations in an orderly fashion.

 

The bonuses are a nice comic touch highlighting one of the more outrageous tangents of the bailout age, namely the fact that, even with the planet in flames, some members of the Wall Street class can’t even get used to the tragedy of having to fly coach. “These people need their trips to Baja, their spa treatments, their hand jobs,” says an official involved in the AIG bailout, a serious look on his face, apparently not even half-kidding. “They don’t function well without them.”

 

IV. THE POWER GRAB

 

So that’s the first step in wall street’s power grab: making up things like credit-default swaps and collateralized-debt obligations, financial products so complex and inscrutable that ordinary American dumb people — to say nothing of federal regulators and even the CEOs of major corporations like AIG — are too intimidated to even try to understand them. That, combined with wise political investments, enabled the nation’s top bankers to effectively scrap any meaningful oversight of the financial industry. In 1997 and 1998, the years leading up to the passage of Phil Gramm’s fateful act that gutted Glass-Steagall, the banking, brokerage and insurance industries spent $350 million on political contributions and lobbying. Gramm alone — then the chairman of the Senate Banking Committee — collected $2.6 million in only five years. The law passed 90-8 in the Senate, with the support of 38 Democrats, including some names that might surprise you: Joe Biden, John Kerry, Tom Daschle, Dick Durbin, even John Edwards.

 

 

The act helped create the too-big-to-fail financial behemoths like Citigroup, AIG and Bank of America — and in turn helped those companies slowly crush their smaller competitors, leaving the major Wall Street firms with even more money and power to lobby for further deregulatory measures. “We’re moving to an oligopolistic situation,” Kenneth Guenther, a top executive with the Independent Community Bankers of America, lamented after the Gramm measure was passed.

 

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The situation worsened in 2004, in an extraordinary move toward deregulation that never even got to a vote. At the time, the European Union was threatening to more strictly regulate the foreign operations of America’s big investment banks if the U.S. didn’t strengthen its own oversight. So the top five investment banks got together on April 28th of that year and — with the helpful assistance of then-Goldman Sachs chief and future Treasury Secretary Hank Paulson — made a pitch to George Bush’s SEC chief at the time, William Donaldson, himself a former investment banker. The banks generously volunteered to submit to new rules restricting them from engaging in excessively risky activity. In exchange, they asked to be released from any lending restrictions. The discussion about the new rules lasted just 55 minutes, and there was not a single representative of a major media outlet there to record the fateful decision.

 

Donaldson OK’d the proposal, and the new rules were enough to get the EU to drop its threat to regulate the five firms. The only catch was, neither Donaldson nor his successor, Christopher Cox, actually did any regulating of the banks. They named a commission of seven people to oversee the five companies, whose combined assets came to total more than $4 trillion. But in the last year and a half of Cox’s tenure, the group had no director and did not complete a single inspection. Great deal for the banks, which originally complained about being regulated by both Europe and the SEC, and ended up being regulated by no one.

 

Once the capital requirements were gone, those top five banks went hog-wild, jumping ass-first into the then-raging housing bubble. One of those was Bear Stearns, which used its freedom to drown itself in bad mortgage loans. In the short period between the 2004 change and Bear’s collapse, the firm’s debt-to-equity ratio soared from 12-1 to an insane 33-1. Another culprit was Goldman Sachs, which also had the good fortune, around then, to see its CEO, a bald-headed Frankensteinian goon named Hank Paulson (who received an estimated $200 million tax deferral by joining the government), ascend to Treasury secretary.

 

Freed from all capital restraints, sitting pretty with its man running the Treasury, Goldman jumped into the housing craze just like everyone else on Wall Street. Although it famously scored an $11 billion coup in 2007 when one of its trading units smartly shorted the housing market, the move didn’t tell the whole story. In truth, Goldman still had a huge exposure come that fateful summer of 2008 — to none other than Joe Cassano.

 

Goldman Sachs, it turns out, was Cassano’s biggest customer, with $20 billion of exposure in Cassano’s CDS book. Which might explain why Goldman chief Lloyd Blankfein was in the room with ex-Goldmanite Hank Paulson that weekend of September 13th, when the federal government was supposedly bailing out AIG.

 

When asked why Blankfein was there, one of the government officials who was in the meeting shrugs. “One might say that it’s because Goldman had so much exposure to AIGFP’s portfolio,” he says. “You’ll never prove that, but one might suppose.”

 

Market analyst Eric Salzman is more blunt. “If AIG went down,” he says, “there was a good chance Goldman would not be able to collect.” The AIG bailout, in effect, was Goldman bailing out Goldman.

 

Eventually, Paulson went a step further, elevating another ex-Goldmanite named Edward Liddy to run AIG — a company whose bailout money would be coming, in part, from the newly created TARP program, administered by another Goldman banker named Neel Kashkari.

 

V. REPO MEN

 

There are plenty of people who have noticed, in recent years, that when they lost their homes to foreclosure or were forced into bankruptcy because of crippling credit-card debt, no one in the government was there to rescue them. But when Goldman Sachs — a company whose average employee still made more than $350,000 last year, even in the midst of a depression — was suddenly faced with the possibility of losing money on the unregulated insurance deals it bought for its insane housing bets, the government was there in an instant to patch the hole. That’s the essence of the bailout: rich bankers bailing out rich bankers, using the taxpayers’ credit card.

 

The people who have spent their lives cloistered in this Wall Street community aren’t much for sharing information with the great unwashed. Because all of this shit is complicated, because most of us mortals don’t know what the hell LIBOR is or how a REIT works or how to use the word “zero coupon bond” in a sentence without sounding stupid — well, then, the people who do speak this idiotic language cannot under any circumstances be bothered to explain it to us and instead spend a lot of time rolling their eyes and asking us to trust them.

 

That roll of the eyes is a key part of the psychology of Paulsonism. The state is now being asked not just to call off its regulators or give tax breaks or funnel a few contracts to connected companies; it is intervening directly in the economy, for the sole purpose of preserving the influence of the megafirms. In essence, Paulson used the bailout to transform the government into a giant bureaucracy of entitled assholedom, one that would socialize “toxic” risks but keep both the profits and the management of the bailed-out firms in private hands. Moreover, this whole process would be done in secret, away from the prying eyes of NASCAR dads, broke-ass liberals who read translations of French novels, subprime mortgage holders and other such financial losers.

 

Some aspects of the bailout were secretive to the point of absurdity. In fact, if you look closely at just a few lines in the Federal Reserve’s weekly public disclosures, you can literally see the moment where a big chunk of your money disappeared for good. The H4 report (called “Factors Affecting Reserve Balances”) summarizes the activities of the Fed each week. You can find it online, and it’s pretty much the only thing the Fed ever tells the world about what it does. For the week ending February 18th, the number under the heading “Repurchase Agreements” on the table is zero. It’s a significant number.

 

Why? In the pre-crisis days, the Fed used to manage the money supply by periodically buying and selling securities on the open market through so-called Repurchase Agreements, or Repos. The Fed would typically dump $25 billion or so in cash onto the market every week, buying up Treasury bills, U.S. securities and even mortgage-backed securities from institutions like Goldman Sachs and J.P. Morgan, who would then “repurchase” them in a short period of time, usually one to seven days. This was the Fed’s primary mechanism for controlling interest rates: Buying up securities gives banks more money to lend, which makes interest rates go down. Selling the securities back to the banks reduces the money available for lending, which makes interest rates go up.

 

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If you look at the weekly H4 reports going back to the summer of 2007, you start to notice something alarming. At the start of the credit crunch, around August of that year, you see the Fed buying a few more Repos than usual — $33 billion or so. By November, as private-bank reserves were dwindling to alarmingly low levels, the Fed started injecting even more cash than usual into the economy: $48 billion. By late December, the number was up to $58 billion; by the following March, around the time of the Bear Stearns rescue, the Repo number had jumped to $77 billion. In the week of May 1st, 2008, the number was $115 billion — “out of control now,” according to one congressional aide. For the rest of 2008, the numbers remained similarly in the stratosphere, the Fed pumping as much as $125 billion of these short-term loans into the economy — until suddenly, at the start of this year, the number drops to nothing. Zero.

 

The reason the number has dropped to nothing is that the Fed had simply stopped using relatively transparent devices like repurchase agreements to pump its money into the hands of private companies. By early 2009, a whole series of new government operations had been invented to inject cash into the economy, most all of them completely secretive and with names you’ve never heard of. There is the Term Auction Facility, the Term Securities Lending Facility, the Primary Dealer Credit Facility, the Commercial Paper Funding Facility and a monster called the Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility (boasting the chat-room horror-show acronym ABCPMMMFLF). For good measure, there’s also something called a Money Market Investor Funding Facility, plus three facilities called Maiden Lane I, II and III to aid bailout recipients like Bear Stearns and AIG.

 

While the rest of America, and most of Congress, have been bugging out about the $700 billion bailout program called TARP, all of these newly created organisms in the Federal Reserve zoo have quietly been pumping not billions but trillions of dollars into the hands of private companies (at least $3 trillion so far in loans, with as much as $5.7 trillion more in guarantees of private investments). Although this technically isn’t taxpayer money, it still affects taxpayers directly, because the activities of the Fed impact the economy as a whole. And this new, secretive activity by the Fed completely eclipses the TARP program in terms of its influence on the economy.

 

No one knows who’s getting that money or exactly how much of it is disappearing through these new holes in the hull of America’s credit rating. Moreover, no one can really be sure if these new institutions are even temporary at all — or whether they are being set up as permanent, state-aided crutches to Wall Street, designed to systematically suck bad investments off the ledgers of irresponsible lenders.

 

“They’re supposed to be temporary,” says Paul-Martin Foss, an aide to Rep. Ron Paul. “But we keep getting notices every six months or so that they’re being renewed. They just sort of quietly announce it.”

 

None other than disgraced senator Ted Stevens was the poor sap who made the unpleasant discovery that if Congress didn’t like the Fed handing trillions of dollars to banks without any oversight, Congress could apparently go fuck itself — or so said the law. When Stevens asked the GAO about what authority Congress has to monitor the Fed, he got back a letter citing an obscure statute that nobody had ever heard of before: the Accounting and Auditing Act of 1950. The relevant section, 31 USC 714(b), dictated that congressional audits of the Federal Reserve may not include “deliberations, decisions and actions on monetary policy matters.” The exemption, as Foss notes, “basically includes everything.” According to the law, in other words, the Fed simply cannot be audited by Congress. Or by anyone else, for that matter.

 

VI. WINNERS AND LOSERS

 

Stevens isn’t the only person in Congress to be given the finger by the Fed. In January, when Rep. Alan Grayson of Florida asked Federal Reserve vice chairman Donald Kohn where all the money went — only $1.2 trillion had vanished by then — Kohn gave Grayson a classic eye roll, saying he would be “very hesitant” to name names because it might discourage banks from taking the money.

 

“Has that ever happened?” Grayson asked. “Have people ever said, ‘We will not take your $100 billion because people will find out about it?’”

 

“Well, we said we would not publish the names of the borrowers, so we have no test of that,” Kohn answered, visibly annoyed with Grayson’s meddling.

 

Grayson pressed on, demanding to know on what terms the Fed was lending the money. Presumably it was buying assets and making loans, but no one knew how it was pricing those assets — in other words, no one knew what kind of deal it was striking on behalf of taxpayers. So when Grayson asked if the purchased assets were “marked to market” — a methodology that assigns a concrete value to assets, based on the market rate on the day they are traded — Kohn answered, mysteriously, “The ones that have market values are marked to market.” The implication was that the Fed was purchasing derivatives like credit swaps or other instruments that were basically impossible to value objectively — paying real money for God knows what.

 

“Well, how much of them don’t have market values?” asked Grayson. “How much of them are worthless?”

 

“None are worthless,” Kohn snapped.

 

“Then why don’t you mark them to market?” Grayson demanded.

 

“Well,” Kohn sighed, “we are marking the ones to market that have market values.”

 

In essence, the Fed was telling Congress to lay off and let the experts handle things. “It’s like buying a car in a used-car lot without opening the hood, and saying, ‘I think it’s fine,’” says Dan Fuss, an analyst with the investment firm Loomis Sayles. “The salesman says, ‘Don’t worry about it. Trust me.’ It’ll probably get us out of the lot, but how much farther? None of us knows.”

 

When one considers the comparatively extensive system of congressional checks and balances that goes into the spending of every dollar in the budget via the normal appropriations process, what’s happening in the Fed amounts to something truly revolutionary — a kind of shadow government with a budget many times the size of the normal federal outlay, administered dictatorially by one man, Fed chairman Ben Bernanke. “We spend hours and hours and hours arguing over $10 million amendments on the floor of the Senate, but there has been no discussion about who has been receiving this $3 trillion,” says Sen. Bernie Sanders. “It is beyond comprehension.”

 

Count Sanders among those who don’t buy the argument that Wall Street firms shouldn’t have to face being outed as recipients of public funds, that making this information public might cause investors to panic and dump their holdings in these firms. “I guess if we made that public, they’d go on strike or something,” he muses.

 

And the Fed isn’t the only arm of the bailout that has closed ranks. The Treasury, too, has maintained incredible secrecy surrounding its implementation even of the TARP program, which was mandated by Congress. To this date, no one knows exactly what criteria the Treasury Department used to determine which banks received bailout funds and which didn’t — particularly the first $350 billion given out under Bush appointee Hank Paulson.

 

The situation with the first TARP payments grew so absurd that when the Congressional Oversight Panel, charged with monitoring the bailout money, sent a query to Paulson asking how he decided whom to give money to, Treasury responded — and this isn’t a joke — by directing the panel to a copy of the TARP application form on its website. Elizabeth Warren, the chair of the Congressional Oversight Panel, was struck nearly speechless by the response.

 

“Do you believe that?” she says incredulously. “That’s not what we had in mind.”

 

Another member of Congress, who asked not to be named, offers his own theory about the TARP process. “I think basically if you knew Hank Paulson, you got the money,” he says.

 

This cozy arrangement created yet another opportunity for big banks to devour market share at the expense of smaller regional lenders. While all the bigwigs at Citi and Goldman and Bank of America who had Paulson on speed-dial got bailed out right away — remember that TARP was originally passed because money had to be lent right now, that day, that minute, to stave off emergency — many small banks are still waiting for help. Five months into the TARP program, some not only haven’t received any funds, they haven’t even gotten a call back about their applications.

 

“There’s definitely a feeling among community bankers that no one up there cares much if they make it or not,” says Tanya Wheeless, president of the Arizona Bankers Association.

 

Which, of course, is exactly the opposite of what should be happening, since small, regional banks are far less guilty of the kinds of predatory lending that sank the economy. “They’re not giving out subprime loans or easy credit,” says Wheeless. “At the community level, it’s much more bread-and-butter banking.”

 

Nonetheless, the lion’s share of the bailout money has gone to the larger, so-called “systemically important” banks. “It’s like Treasury is picking winners and losers,” says one state banking official who asked not to be identified.

 

This itself is a hugely important political development. In essence, the bailout accelerated the decline of regional community lenders by boosting the political power of their giant national competitors.

 

Which, when you think about it, is insane: What had brought us to the brink of collapse in the first place was this relentless instinct for building ever-larger megacompanies, passing deregulatory measures to gradually feed all the little fish in the sea to an ever-shrinking pool of Bigger Fish. To fix this problem, the government should have slowly liquidated these monster, too-big-to-fail firms and broken them down to smaller, more manageable companies. Instead, federal regulators closed ranks and used an almost completely secret bailout process to double down on the same faulty, merger-happy thinking that got us here in the first place, creating a constellation of megafirms under government control that are even bigger, more unwieldy and more crammed to the gills with systemic risk.

 

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In essence, Paulson and his cronies turned the federal government into one gigantic, half-opaque holding company, one whose balance sheet includes the world’s most appallingly large and risky hedge fund, a controlling stake in a dying insurance giant, huge investments in a group of teetering megabanks, and shares here and there in various auto-finance companies, student loans, and other failing businesses. Like AIG, this new federal holding company is a firm that has no mechanism for auditing itself and is run by leaders who have very little grasp of the daily operations of its disparate subsidiary operations.

 

In other words, it’s AIG’s rip-roaringly shitty business model writ almost inconceivably massive — to echo Geithner, a huge, complex global company attached to a very complicated investment bank/hedge fund that’s been allowed to build up without adult supervision. How much of what kinds of crap is actually on our balance sheet, and what did we pay for it? When exactly will the rent come due, when will the money run out? Does anyone know what the hell is going on? And on the linear spectrum of capitalism to socialism, where exactly are we now? Is there a dictionary word that even describes what we are now? It would be funny, if it weren’t such a nightmare.

 

VII. YOU DON’T GET IT

 

The real question from here is whether the Obama administration is going to move to bring the financial system back to a place where sanity is restored and the general public can have a say in things or whether the new financial bureaucracy will remain obscure, secretive and hopelessly complex. It might not bode well that Geithner, Obama’s Treasury secretary, is one of the architects of the Paulson bailouts; as chief of the New York Fed, he helped orchestrate the Goldman-friendly AIG bailout and the secretive Maiden Lane facilities used to funnel funds to the dying company. Neither did it look good when Geithner — himself a protégé of notorious Goldman alum John Thain, the Merrill Lynch chief who paid out billions in bonuses after the state spent billions bailing out his firm — picked a former Goldman lobbyist named Mark Patterson to be his top aide.

 

In fact, most of Geithner’s early moves reek strongly of Paulsonism. He has continually talked about partnering with private investors to create a so-called “bad bank” that would systemically relieve private lenders of bad assets — the kind of massive, opaque, quasi-private bureaucratic nightmare that Paulson specialized in. Geithner even refloated a Paulson proposal to use TALF, one of the Fed’s new facilities, to essentially lend cheap money to hedge funds to invest in troubled banks while practically guaranteeing them enormous profits.

 

God knows exactly what this does for the taxpayer, but hedge-fund managers sure love the idea. “This is exactly what the financial system needs,” said Andrew Feldstein, CEO of Blue Mountain Capital and one of the Morgan Mafia. Strangely, there aren’t many people who don’t run hedge funds who have expressed anything like that kind of enthusiasm for Geithner’s ideas.

 

As complex as all the finances are, the politics aren’t hard to follow. By creating an urgent crisis that can only be solved by those fluent in a language too complex for ordinary people to understand, the Wall Street crowd has turned the vast majority of Americans into non-participants in their own political future. There is a reason it used to be a crime in the Confederate states to teach a slave to read: Literacy is power. In the age of the CDS and CDO, most of us are financial illiterates. By making an already too-complex economy even more complex, Wall Street has used the crisis to effect a historic, revolutionary change in our political system — transforming a democracy into a two-tiered state, one with plugged-in financial bureaucrats above and clueless customers below.

 

The most galling thing about this financial crisis is that so many Wall Street types think they actually deserve not only their huge bonuses and lavish lifestyles but the awesome political power their own mistakes have left them in possession of. When challenged, they talk about how hard they work, the 90-hour weeks, the stress, the failed marriages, the hemorrhoids and gallstones they all get before they hit 40.

 

“But wait a minute,” you say to them. “No one ever asked you to stay up all night eight days a week trying to get filthy rich shorting what’s left of the American auto industry or selling $600 billion in toxic, irredeemable mortgages to ex-strippers on work release and Taco Bell clerks. Actually, come to think of it, why are we even giving taxpayer money to you people? Why are we not throwing your ass in jail instead?”

 

But before you even finish saying that, they’re rolling their eyes, because You Don’t Get It. These people were never about anything except turning money into money, in order to get more money; valueswise they’re on par with crack addicts, or obsessive sexual deviants who burgle homes to steal panties. Yet these are the people in whose hands our entire political future now rests.

 

Good luck with that, America. And enjoy tax season.

 

[From Issue 1075 — April 2, 2009]

Administration Seeks Increase in Oversight of Executive Pay

By STEPHEN LABATON

Published: March 21, 2009

WASHINGTON — The Obama administration will call for increased oversight of executive pay at all banks, Wall Street firms and possibly other companies as part of a sweeping plan to overhaul financial regulation, government officials said.

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The outlines of the plan are expected to be unveiled this week in preparation for President Obama’s first foreign summit meeting in early April.

Officials said the proposal would seek a broad new role for the Federal Reserve to oversee large companies, including major hedge funds, whose problems could pose risks to the entire financial system.

It will propose that many kinds of derivatives and other exotic financial instruments that contributed to the crisis be traded on exchanges or through clearinghouses so they are more transparent and can be more tightly regulated. And to protect consumers, it will call for federal standards for mortgage lenders beyond what the Federal Reserve adopted last year, as well as more aggressive enforcement of the mortgage rules.

The administration has been considering increased oversight of executive pay for some time, but the issue was heightened in recent days as public fury over bonuses spilled into the regulatory effort.

The officials said that the administration was still debating the details of its plan, including how broadly it should be applied and how far it could go beyond simple reporting requirements. Depending on the outcome of the discussions, the administration could seek to put the changes into effect through regulations rather than through legislation.

One proposal could impose greater requirements on company boards to tie executive compensation more closely to corporate performance and to take other steps to ensure that compensation was aligned with the financial interest of the company.

The new rules will cover all financial institutions, including those not now covered by any pay rules because they are not receiving federal bailout money. Officials say the rules could also be applied more broadly to publicly traded companies, which already report about some executive pay practices to the Securities and Exchange Commission.

During the presidential campaign, Mr. Obama repeatedly urged regulators to adopt new rules to give shareholders a greater voice in setting executive pay for all public companies. And last month, as part of the stimulus package, Congress barred top executives at large banks getting rescue money from receiving bonuses that exceeded one-third of their annual pay.

The regulatory plan is being put together ahead of the meeting of the Group of 20 industrialized and developing nations in London. The meeting, which begins April 2, is expected to be dominated by the global financial crisis and discussions about better oversight of large financial companies, whose problems could threaten to undermine international markets.

An important part of the plan still under debate is how to regulate the shadow banking system that Wall Street firms use to package and trade mortgage-backed securities, the so-called toxic assets held by many banks and blamed for the credit crisis.

Officials said the plan would also call for increasing the levels of capital that financial institutions need to hold to absorb possible losses. In a sign of the economic system’s fragility, officials said the administration would emphasize that those heightened standards should not be imposed now because they could discourage more lending. Rather, they would be put in place after the economy began to rebound.

“The argument some are making is that they don’t want to be stepping on the gas pedal and the brake at the same time,” said Morris Goldstein, a senior fellow at the Peterson Institute for International Economics and a former top official at the International Monetary Fund.

Administration officials are also debating how tightly to supervise hedge funds.

A broad consensus has emerged among regulators and administration officials that hedge funds must be registered and more closely monitored, probably by the Securities and Exchange Commission. But officials have not decided how much the funds will have to disclose about their investments and trading practices. The officials spoke on condition of anonymity because the regulatory plan was still being formulated and they did not want to upstage Mr. Obama or Treasury Secretary Timothy F. Geithner, who will describe the plan when he appears before Congress on Thursday.

A central aspect of the plan, which has already been announced by the administration, would give the government greater authority to take over and resolve problems at large troubled companies not now regulated by Washington, like insurance companies and hedge funds.

That proposal would, for instance, make it easier for the government to cancel bonus contracts like those given to executives at the American International Group, which have stoked a political furor. Under the proposal, the Treasury secretary would have the authority to seize and wind down a struggling institution after consulting with the president and upon the recommendation of two-thirds of the Federal Reserve board.

Long before he became Treasury secretary, Mr. Geithner sought broader authority for the government to resolve problems at financial institutions not under bank regulators’ supervision.

The government now has the power to take over only the banking unit that controls federally insured deposits of large troubled institutions, not the parent company — a limit that could pose problems if large financial conglomerates like Citigroup or Bank of America continued to spiral downward.

In unveiling the regulatory plan, Mr. Obama would signal to Europe that he intended to crack down on the risk-taking and other free-wheeling practices by the financial industry that resulted in the global economic meltdown.

France and Germany especially have suggested that the better response is not more government spending but tighter regulation.

The Obama administration has urged European nations to do more to restart their economies through financial stimulus. Mr. Obama is hoping that by showing a serious commitment to tighter regulation he can more easily persuade other countries to increase government spending and stimulate demand by consumers and businesses that would help pull the global economy out of a serious decline.

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But the administration’s efforts, especially on tighter regulation of hedge funds, are not expected to assuage some European countries. Moreover, the hedge fund industry has significant influence on Capitol Hill and has shown that it can defeat proposals it finds onerous.

While a growing number of hedge fund advisers have voluntarily agreed to register with the S.E.C., many of the most prominent ones are expected to oppose efforts to require them to provide what they consider proprietary information about their holdings and trading practices, even on a confidential basis.

From the outset of the Obama administration, officials and European leaders have disagreed over how much to limit pay. And Mr. Geithner has discouraged the administration from imposing across-the-board limits on compensation of all employees at troubled companies receiving federal assistance and more burdensome pay restrictions at healthy institutions that the administration is trying to encourage to take government money so they can increase lending.

Last week, Ben S. Bernanke, the Fed chairman, also called on regulators to supervise executive pay at banks more closely to avoid “compensation practices that can create mismatches between the rewards and risks borne by institutions or their managers.” Much of the plan would require the approval of Congress, where divisions are forming over how best to overhaul financial industry oversight.

Representative Barney Frank, the Massachusetts Democrat who heads the Financial Services Committee, said he believed giving the government new authority to take over troubled companies could be adopted by the House relatively quickly, particularly after the furor over the A.I.G. bonuses.

“This would give the government the same powers that you would get as if the company were in bankruptcy,” Mr. Frank said in an interview shortly after meeting with Mr. Geithner on the plan.

But Mr. Frank and other lawmakers said other elements of the plan could take more time, like expanding the authority of the Federal Reserve to become a systemic regulator.

In a hearing Thursday, Senator Christopher J. Dodd, a Connecticut Democrat who is chairman of the banking committee, expressed skepticism about that proposal. “Whether or not those vast powers will reside at the Fed remains an open question,” said Mr. Dodd, pointing out that the Federal Reserve had failed to apply tough oversight of the companies it now regulates.

Administration wants to buy up banks’ toxic assets

• Martin Crutsinger, AP Economics Writer
• Saturday March 21, 2009, 6:16 pm EDT

Sources say Geithner has plan to attack toxic assets with Fed and FDIC help

WASHINGTON (AP) — Struggling to contain the worst financial crisis in seven decades, the Obama administration wants to buy billions of dollars of toxic assets from banks to ease borrowing for consumers and businesses.

Some industry officials familiar with the details said Saturday they expected the approach would try to remove as much as $1 trillion from banks’ books. An announcement from Treasury Secretary Timothy Geithner could come as early as Monday.

If banks are not burdened by the soured loans, then they would be in better shape to resume more normal lending.

According to administration and industry officials, the plan would rely on the Federal Reserve and the Federal Deposit Insurance Corp. to supplement the government’s $700 billion bailout fund. The uproar over the millions of dollars in bonuses for employees at troubled insurance giant American International Group Inc. has dimmed prospects for getting more bailout money from Congress.

The officials, who spoke on condition of anonymity because the details have not been announced, said Geithner’s plan will have three major parts:

–a public-private partnership to back private investors’ purchases of bad assets. The $700 billion bailout fund would provide the backing. The government would match private investors dollar for dollar and share any profits equally.

–expanding a recent Fed program that provides loan for investors to buy securities backed by consumer debt. It’s an effort to make it easier for people to get auto, student and credit card loans. The Term Asset-Backed Securities Loan Facility (TALF) program is getting up to $100 billion from the bailout fund; that money then is being leveraged to support up to $1 trillion in Fed loans. Under Geithner’s plan for the toxic assets, part of that $1 trillion would now go to support purchases of banks’ troubled assets.

–using the FDIC, which guarantees bank deposits, to purchase toxic assets. Officials said the agency would create special investment partnerships and then lend them money to buy up troubled assets.

Industry officials said the administration had not disclosed to them the exact amounts of money to be devoted to the effort.

“The key is going to be if the government buys these assets quickly,” said Mark Zandi, chief economist at Moody’s Economy.com. “The sooner they get these assets off banks’ balance sheets, the quicker the system will find its footing and get the economy moving again.”

Geithner’s announcement last month of the financial rescue overhaul was widely panned by investors. The Dow Jones industrial average plunged by 380 points in large part because investors were disappointed that Geithner did not have more details.

Some analysts worry the market may once again be underwhelmed, in part because not enough resources will be devoted to the problem.

“The market is looking for a `wow’ factor where they can see the administration is finally doing enough,” said Sung Won Sohn, an economics professor at the Smith School of Business at California State University.

The administration had said in February it needed more time to work out thorny problems that former Treasury Secretary Henry Paulson and the Bush administration had been unable to resolve.

Geithner’s new plan is meant to attack what is widely viewed as the major failure of the bailout program so far: the inability to rid banks of a mountain of soured loans and troubled mortgage-backed securities.

Some industry officials said that participation by the private sector may be harmed because potential investors will now be worried that the government will change the terms of the deal or impose new restrictions because of the current political backlash against Wall Street.

Hedge funds and other big investors are likely to be more leery of accepting the government’s enticements to purchase these assets, fearing tighter government restraints in such areas as executive compensation.

The effort to deal with toxic assets is the administration’s latest initiative to tackle the financial crisis.

Other programs cover mortgage foreclosures; lending to small businesses; unfreezing the markets that support credit card, student loan and auto debt; and testing of the 19 largest banks to ensure they have enough reserves to withstand an even more severe recession.

In addition to unveiling his plan for toxic assets, Geithner, who came under criticism for his handling of the AIG bonus issue, is expected to put forward next week the administration’s proposals to overhaul the government’s current financial regulatory structure.

President Barack Obama said this past week that this plan will include a proposal to give the administration expanded authority to take control of major troubled institutions that are deemed too big to fail because their collapse would pose a risk to the entire financial system.

Obama tells Leno he was stunned by AIG bonuses

By MARK S. SMITH, Associated Press Writer Mark S. Smith, Associated Press Writer – Thu Mar 19, 7:38 pm ET

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AP – President Barack Obama, left, appears on The Tonight Show with Jay Leno in Burbank, Calif. Thursday, …

BURBANK, Calif. – President Barack Obama has told Jay Leno he was stunned when he learned of the bonuses that bailed-out insurance giant AIG was paying its employees.

Obama told “The Tonight Show” host the payments raise moral end ethical problems — and the administration’s going to do everything it can to get them back.

But Obama added the bigger problem is the culture that allowed traders to claim them. He says that’s got to change if the economy is to recover.

According to NBC, Obama was the first sitting president ever to appear on “The Tonight Show.” He’d already appeared twice as a candidate. already appeared twice as a candidate.

In his opening monologue, Leno lots of people were surprised Obama would come on NBC — figuring he’d be tired of big companies on the brink of disaster with a bunch of overpaid executives.

Leno also joked about the dismal state of the economy, saying it’s so bad Obama flew to California on Southwest Airways — making nine stops.

June Reyno

Hello all,

called me early this morning and asked me to pass this along to everyone. As most of you may know, she was arrested and released on bail this past weekend when, after the sheriff’s lockout, she broke back into her house. And now, apparently she was arrested again yesterday.

She’s currently been staying with her next-door neighbor, and yesterday saw a moving van in front of her [former] house, men loading her possessions into it. This, after she’d arranged with the sheriff’s department to get her belongings out of the house this coming Friday.

According to June, she called the police and went over to confront the movers. The “realtor” who took over the property was there, and once the police arrived, he performed a citizen’s arrest on June for trespassing. She claims she wasn’t even standing on the actual property, and if so I’d imagine they’d have no valid grounds to have arrested her … and yet they did.

The police cuffed her and placed her in the back of the squad car, intending to take her back to jail again. But at some point, deprived of her blood-pressure med which was locked inside her house, she began having chest pains and numbness in her arms. So instead of jail, they took her to the hospital where she was treated and later released.

As of now, she’s back with her neighbor, apparently released on her own regoc in lieu of going back to jail. She already has her arraignment from her initial arrest pending.

I’m not clear as to whether she has an attorney at this point or not. She said she did, but also asked me for a referral to one. And so … this whole thing wreaks of the gestapo-type mentality that has permeated our banks and lenders, our legal system, and even our very government.

There’s no real justice left for the little person trying to defend their homes against some evil entity that has no legal claim on it to begin with. Believe me, I know. And while I elected to move my stuff out and leave before my own lockout date three weeks ago.

 I will always know the anger and bitterness that accompany having one’s house stolen out from under them. It will carry with me the rest of my life. I don’t blame June for fighting for what’s rightfully hers.

To make matters worse, June had filed for bankruptcy protection, and her “lender” apparently had convinced the BK court to deny her claim … alleging she was “gaming the system” to stay eviction. And this is exactly just how corrupt our system is.

I told her I’d sue the living hell out of the realtor … I’d ruin his career until he himself was out on the streets. I’ve known others who’ve gone to jail over things like this, I’ve known families to be ripped apart, relationships damaged beyond repair … all over a greedy and corrupt system that couldn’t care less if any of us lives or dies once they kick us out of our homes.

To add insult to injury, June’s things are all now God knows where … medications, income tax papers, furniture.

Assuming they even bothered to store it, they’ll probably bill her for moving and storage. And again … this is what our society has apparently become.

Steve Cisko 760-207-9793

99Libra@gmail.com

“Welcome home.” But what is a home?

In this life, there’s so much to understand, so much to learn. There are so many things that we measure ourselves by—whether it’s age, accomplishments, things that are done, or things undone. But that’s not the purpose of this life. Things happen. People move on, and new people come. It is like the analogy of a home. We all know about home: “Home sweet home,” “Welcome home.” But what is a home? Home is where wonderful things happen. And it is also a place where horrible things happen. If you are lucky, home is where you will take your last breath. This is where, hopefully, you have cultivated a happy environment where you thrive, where you’re not inundated with problems. It is truly a place of comfort—not only physical comfort but mental comfort and the comfort of knowing that you are at home. And the only way a place can become home is if you work on it. It is not which way the door faces. I have seen happiness, comfort, and joy in a hut built of mud, with a thatched roof and a little door that doesn’t lock, but the people who live there are comfortable. Why am I talking about home? This existence is your home. And it is incumbent upon you to make this home as comfortable, peaceful, beautiful as possible. Because in this home, the truest nurturing takes place. Good things happen, and bad things happen. You have to make sure that good things happen there, nurture them, and bring forward the true joy that this home can offer. This home you have—there will be nothing like it again. I know it is hard to believe that you will be allowed only 15 minutes or so on the most magnificent stage of life. The curtains will not drop shut, but you will be asked to leave, and somebody else will come. And there will be another and another and another. For most people, this is extremely hard to believe. I tell people who have lost someone close to them that it’s okay. They have not gone anywhere; they are still with you. They live in your memories. You can see them, feel them, think about them. They dance with you; they are with you. Maybe it’s not the same, but the companionship continues. Nurture that. Understand that. There is no shame or agony in that. It is the nature of things. Water is happy when it flows. It can play with life. It can harbor other life forms. When water is static, when fresh water is landlocked, it becomes saltier and saltier, and everything in it begins to die. All water wants is to flow, to go back again to being that clean, pure water. Understand it. Don’t fight it. Don’t ask, “Why?” because it will never be answered. This gift of life unfolds effortlessly. You don’t have to pull on a rope or push a button. This is the time that you have, the consciousness, the opportunity to know. The challenge is to understand the obvious. How? Listen to what the heart has to say. It is not a big philosophy or a big drum; it is a very short little statement: “Be in that existence.” Be. Be. Accept what you have been given. Could there be a miracle in just acceptance—that I simply accept my existence, and something great will happen? Yes. That’s the obvious. Accept this breath that you have been given. Look in your heart and see and feel the desire to be content, to be in joy, to make this home as beautiful as you can. You will have to work on this. Garbage must go out. Begin with resolving not to bring the garbage in, because otherwise, you will keep throwing garbage out and bringing it back in. This is what we all do. This home is so fragile. And yet, it is the very place that will protect you from the storms. It is so delicate and yet so strong that it is almost unbelievable. You may think that all you have to do is decorate it to make it look good. Decoration is okay, but first make sure it is a happy home. The day you find your home within is when you realize you can live without a lot of things. I want your home to be the best for you, and that you really feel at home there. You are here because the blessing of breath comes in and out of you. How magnificent is that? That is the core. And then to be able to feel, to be able to go inside. And let this home be beautiful.