Hewlett-Packard loses $190M lawsuit against IRS – New Mexico Business Weekly

New Mexico Business Weekly by Joe Renaud, Web Editor

Date: Wednesday, May 16, 2012, 10:33am MDT

According to a Reuters report, Judge Joseph Goeke of United States Tax Court in Washington, D.C. ruled against the technology giant, which filed the lawsuit in 2009.

The tax refunds sought by HP were tied to a Duch tax shelter, which was part of a strategy involving trading derivatives with the aim of generating capital losses and foreign tax credits, which could then be used to try to lower U.S. tax bills, the report said.

Reuters reports that the IRS contended that many foreign tax credit generators are designed to create artificial financial benefits that are not valid for IRS deductions.

Hewlett-Packard operates a technical support and customer service center in Rio Rancho, and is the city’s second-largest private employer.

http://www.bizjournals.com/albuquerque/news/2012/05/16/hewlett-packard-loses-190m-lawsuit.html?s=print

Just like the last VICTIM OF WELLS FARGO I wrote about, Wells Fargo claimed that Norman and Oriane Rousseau had missed a mortgage payment.  But the payment HAD been made in person at a Wells Fargo branch by Cashier’s Check, and Mrs. Rousseau has the receipt for the transaction.

The Rousseaus file a dispute with Wells Fargo over the supposed missing payment.  Wells Fargo “investigates” and comes back saying that the Rousseaus had stopped payment on the check.  They stopped payment on a Cashier’s Check?  Seriously?

I don’t want to spend too much time on this ridiculous point, so here’s how Rousseau’s lawyer explains this technical yet wholly insipid issue, and then we’ll move on…

The teller’s receipt establishes that the cashier’s check was in the custody and control of Wachovia on April 1, 2009, and the research by the Cashiering Department should have concluded that Wachovia screwed up by not applying the cash-equivalent funds to the Rousseau’s account. After delivery and acceptance to the branch office, it was Wachovia’s responsibility to safeguard the instrument; Wachovia itself effectively stopped payment on the cashier’s check.

Okay, so let’s get back to the meat of the story…

Concerned that they could not resolve the payment dispute but told they should apply for a loan modification, the Rousseaus hired a law firm and submitted a loan modification application.  After that it was standard operating procedure at Wells Fargo… we lost this, and we lost that, resend this, and resend that… for almost a year.

Good Lord, Wells Fargo, could you please do something differently just once?  This article is almost becoming a form letter.

Wells Fargo then of course told the Rousseau family not to make their payments, that they were being considered for a loan modification and that making their payments would immediately disqualify them.

So, they saved their payments just in case Wells decided to deny them a modification.  Saved every single one just in case the bank decided to act like… well, Wells Fargo Bank.

Then Wells sent them a Notice of Default, but when they called to say they wanted to reinstate their loan, Wells said what they always say… IGNORE IT… don’t worry about it, everything’s fine, it’s just an automated sort of thing… why, you’re being considered for a loan modification.

Then Wells filed a Notice of Sale on October 28, 2010.  Their home would be sold on November 22, 2010.  And still Wells said… IGNORE IT… it’s just another automated sort of thing… your loan modification is still pending… and please re-submit some documents.

It was November 10, 2010… just 12 days before their home was to be sold… when the Wells Fargo representative told the Rousseau’s that their loan modification had been denied.  The reason: Insufficient income.

Yeah, but you know the funny thing about that is that their income hadn’t changed a nickel since they applied for the loan modification.  So, what’s the deal?  Did it take Wells Fargo a year to figure out the Rousseau’s income was insufficient?  Is that the story I’m supposed to be buying into?

You’re a liar, Wells Fargo.  Either you knew you weren’t going to approve their loan modification, or you’re the most incompetent financial institution in the history of the world.  And you don’t just do this sometimes, you do this all the time… and especially to people in their 60s or older.  Why is that do you suppose? 

In case you’re wondering what I’ve been up to, I’m actually collecting Wells Fargo stories at this point.  I figure it’ll be a hoot to put them all together into a book.  What do you think?  Should I autograph a copy for you when it’s done?

That same day the Rousseaus found a lawyer and discovered they had a RIGHT TO REINSTATE their loan.  (Nice of Wells not to tell them that, by the way.)  They contacted Wells and requested a reinstatement quote… TWO DAYS LATER Wells finally gave them the phone number for RCS, the trustee.

But, RSC said that reinstatement would take two weeks and trustee sale was going off as planned in 8 days.  Wells got them their reinstatement quote too… it was dated November 15, but received via email on November 17, 2010.

And it expired in two days and had to be received in Texas by November 19, 2010.

The Rousseaus had more than enough in savings to reinstate their loan, they told Wells Fargo that… but now they couldn’t get the money from their IRA in time for the 2-day deadline and Wells refused to postpone the sale.

So, the Rousseau’s home sold at the trustee sale on November 22, 2010.

Next the Rousseaus go through a series of lawyers.  Finally, they get a good one and in July of 2011, the court grants an injunction contingent on them making a monthly payment of $1800.

But, by December of 2011, Wells finally wore the Rousseaus down and they just couldn’t make December’s payment.  They used up all their money fighting Wells Fargo, and Norm had been unemployed since the foreclosure.  He was taking odd jobs as a handy man to make ends meet.

Wells Fargo immediately goes to court… gets the injunction dissolved… then proceeds with the Unlawful Detainer… the lockout is set for May 15th, 2012… at 6:00 AM.

THAT’S TOMORROW MORNING… AT 6:00 AM.

Over this past weekend, Norm Rousseau talked with their attorney who is working pro bono by the way.  Basically, his lawyer tells him…

“Look… let’s face the facts here.  We’ll proceed with the lawsuit.  We’ll fight like hell to get you back in the home, but you have to be ready with some sort of plan so you’re not left homeless and on the streets.”

Norm found someone who has a 27-foot motorhome he can use, but after he gets it home on Saturday… it stops running… it won’t start.  But, Norm Rousseau is a man in his 50s with mad skills.  He goes to work around the clock taking apart the engine, doing everything he can to get it running so that on Tuesday morning he will have somewhere to house his family.  He’s up all night Saturday night, but still can’t get it running.  It’s too big to tow with a car.

His mind must have been wandering late on Saturday night.  What must a man, a father, a provider be thinking when he knows that everything in life has somehow gone terribly wrong and there’s nothing left to do?  He must have been imagining the sheriff pulling up to evict his family on Tuesday morning… just two days away, as the motorhome’s engine lay in pieces in his driveway.

I can only imagine what must have been going through his mind as he worked tirelessly, without sleep, on that engine and electrical system… as the clock ticked away the hours, I’m sure going faster and faster as time was running out.  Damn, it’s already 11:00 PM… then it’s 3:00 AM… and then 5:00 AM… and then before he knew it… a most unwelcome sun was shining… 9:00 AM…

I can almost hear him thinking: “Damn it, what am I going to do?  How could this have happened?”  I can hear him swearing under his breath as he fights with the old parts trying to get them to work together again… I can see him staring at the engine as the will to go on was leaving his soul…

Norman and Oriane Rousseau had bought their home in Ventura, California in 2000, putting nearly 30 percent down, which was their life savings.  In 2006, every time they went into the World Savings branch they’d get pitched on refinancing into one of World’s infamous Option ARM loans… that are now illegal, I believe.  After a couple of years of being pitched, they finally bought into World Saving’s lies.

They had told World Saving’s loan officer, ERIC COOPER, that they were only interested in obtaining a conventional 30-year, fixed-rate loan.  They wanted consistent payments over the life of the loan.

But COOPER assured them that they could significantly reduce their monthly payments… by more than $600 per month, with a lower interest refinanced loan. COOPER said that the new Pick-A-Payment loan product was better suited to their situation.

He described the Payment Option ARM as the new industry standard.  He pointed out that the lower interest rate and payment flexibility were valuable advantages that were not available with other loan products.  And he said that even more importantly, unlike the previous WORLD loans, the interest rate was tied to an index with historically low rates that were continuing to decrease.

According to COOPER, industry experts projected the interest rates to continue to fall, and so their monthly payments would be EVEN LOWER than their initial payments.

Even under the worst case scenario, COOPER assured them, the historical data for the index indicated that changes in the interest rate would only be slight, and if an increase should occur it would have a negligible effect on their monthly payments… no more than a few dollars.

And besides, COOPER explained, the loan would only be around for a couple years, as they should expect to refinance within the next two years to take advantage of even more favorable interest rates and as the steadily rising housing values would surely increase the amount of their equity in the property.

Then COOPER went for the close…

On the condition that the Rousseaus apply for the new loan that very day, he would agree to waive their pre-payment penalty, stating that there would be virtually no costs to refinance beyond a $35.00 application fee.

Yeah, COOPER, you’re a real peach.

COOPER also convinced the Rousseaus that it was in their best financial interests to consolidate approximately $25,000 in unsecured debt in the refinance transaction, citing the benefits of the lower interest rate and the convenience of having only one payment.

The Rousseaus provided COOPER with accurate and truthful information regarding their income and assets, and COOPER was such a nice guy that he offered to complete the Quick Qualifying Loan Application on their behalf.

Gee, thanks COOPER.

It was right around November 1, 2007, that WACHOVIA arranged for a notary to complete the closing at the Rousseau’s home.  The notary discouraged their review of the documents and directed them straight to the signature lines, but the Rousseaus noticed that a pre-payment penalty in excess of $4000.00 was included in the closing costs… the fee that COOPER had promised to waive if they applied that same day.  They called COOPER and he apologized for the oversight, but tried to get them to sign anyway, because it would only add a couple of bucks to their payment.

They said… no… they’d reschedule the appointment and wait for the four grand to be taken off their bill, thank you very much.

Two weeks later, the notary returned and they signed the paperwork for their new $368,000 state of the art loan.

Now, the Rousseaus didn’t know it at the time, but COOPER was a lying sack of garbage that had misrepresented just about everything having to do with their new loan.

The 7.2% interest rate of the new loan was actually higher than their old loan and higher than the 6.8% quoted by COOPER.  The “significant reduction in monthly payments” was an illusion accomplished by comparing the fully amortized payment of the 2006 loan with the negative amortizing minimum payment due under the new loan.

The new loan, at annual change dates, added deferred interest to principal and the loan amortized, with payment increases capped at 7.5% for ten years.  Then, the new loan recast when negative amortization reached 125%.

The Rousseaus were never told about the new loan’s fully amortizing payment of $2,497.94 per month, in fact their payment amount was intentionally misrepresented by COOPER.  And the new monthly payment could never decrease because it represented the minimum payment possible… the negatively amortizing option that meant payments would increase at each change date.

But that wasn’t enough for our boy COOPER.  The Rousseaus were charged $2,640.00 in origination fees for the “low cost” refinance, which made a tidy profit for World/Wachovia/Wells/Whatever bank.

And best of all, an undisclosed Yield Spread Premium (“YSP”) of $4,195 was charged for placing them in a loan with an interest rate .50% higher than they qualified for, and that YSP increased their monthly payments by $123.32, or $44,395.20 over the life of the loan.

The truth is that the Rousseaus were a heck of a long way from being considered well qualified for their new loan. Their fully amortized payment represented a total debt-to-income ratio of 27.91%, but that percentage was based on income figures that were grossly overstated by guess who? That’s right… COOPER.

The Rousseaus told COOPER their total gross annual income was, $76,000, but somehow it got listed as $136,800 on the application.  You know… the application that good old COOPER was nice enough to fill out for the Rousseaus.

So, it was Sunday… yesterday… around 10:00 AM… and Norm couldn’t get the motorhome running.  He must have realized that he couldn’t handle the shame of seeing his wife and stepson evicted with nowhere to go… living on the street.  I don’t know how anyone could face that reality.  I don’t think I could. 

How could it be that just 12 years before they had put their life savings down on their first and likely last home?  They had done everything right, but nothing was right anymore, and I’m sure to Norm Rousseau, nothing would ever be right again. 

Their church had offered to help them, maybe find them somewhere to stay temporarily, and that would be fine for his wife and her son… but not for him.  I’m sure he wept as he looked at the engine parts laying there, realizing that it was over.

Norm Rousseau called me a couple of months ago.  He wasn’t asking me to help him, in fact, he never even told me about what he was going through with Wells Fargo.  No, Norm was concerned about someone else who was losing a home.  A really good person who’s done so much for so many others, was how he described her.  It wasn’t right what the banks were doing he said.  He was hoping that I could do something to help someone he knew, because she was someone who had helped others… but he didn’t say a word about himself.

Norman Rousseau gave up over that engine that sits in pieces in his driveway today, the sun shining down making the metal parts hot to the touch.  Maybe it was the frustration of having nowhere to turn for justice, maybe it was the shame he felt that somehow he had let his family down… even though that was not the case at all.

Sometime mid-morning on Sunday Norm Rousseau ended his own life.  He went into his garage and shot himself.  At one point he could have reinstated his loan, that’s what he had planned to do, but Wells Fargo had made that impossible… they stripped him of everything he had.

And now, his wife and stepson are to be evicted at 6:00 AM tomorrow morning.  They have nowhere to go, they have no money, they are still in shock over the loss of Norm.

And I don’t know what to do really.  I’m going to call the sheriff’s office in Ventura… see if I can persuade them to drag their feet for a week before locking them out.  Their lawyer is trying to file something with the courts, but maybe you can think of something too.

Maybe you can forward this article to people in the media.  Tell them what’s going on… maybe someone will care enough to do something.  It’s 11:21 AM and I’ve been up all night again, I can’t really keep this up much longer… but somehow I felt like telling Norm’s story was the very least I could do.

Since Wells Fargo had already done the very least they could do.

Rest in peace, Norm Rousseau.

Mandelman out.

http://mandelman.ml-implode.com/2012/05/husbands-suicide-yesterday-wells-fargo-to-evict-wife-tomorrow-anyway/

A new report from MSNBC, however, provided an inside account of how Wells Fargo’s robo-signing department works. Unqualified employees with salaries ranging from $30,000 to $50,000 are given titles like “vice president of loan documentation” so they can sign foreclosure documents. Actual supervisors institute quotas on employees, forcing them to sign a certain number of foreclosure files each day — sometimes telling them they can’t eat breakfast or take lunch until they’re done. Documents required for homeowners to avoid foreclosure were ignored, left sitting on an unattended fax machine.

The result: the nation’s largest mortgage servicer often improperly foreclosed on homeowners who weren’t past due or owed little interest while pushing the files out the door as fast as possible, as an insider told MSNBC:

Some families apparently were denied loan modifications after only cursory interviews, she said. Other borrowers applying for help sent comprehensive personal financial documents to a fax machine that she discovered had been unattended for weeks. Others landed in foreclosure after owing interest payments of as little as $1.18 a day, according to documents she said she reviewed. [...]

“There was one file where they weren’t even past due and they were in foreclosure status,” the loan processor said. “They’re pushing these files and pushing these files….”

The MSNBC report comes just a month after a similar report from the inspector general of the Department of Housing and Urban Development, which found many of the same occurrences at Wells Fargo. In that report, Wells Fargo allegedly put an employee who had previously sold pizza in charge of loan documentation. Worse yet, the report found that executives at the banks knew about the practices and refused to stop them.

Higher-ups at Wells Fargo, however, are still denying that these abuses take place. “No one here is asked to sign anything they don’t understand. Period. End of story,” Michael DeVito, executive vice president of Wells Fargo’s Home Mortgage Default Servicing, told MSNBC. “There’s no production quota and if a team member says, ‘I don’t understand this I’m not going to sign it,’ that’s fine.”

Another Wells Fargo employee had a different account. “It’s exactly like an assembly line,” a loan processor told MSNBC. “You sign it, you push it off to a notary, they stamp it, you put it in a box and it goes somewhere else.” The next step, unfortunately, is that someone loses their home.

http://www.alternet.org/module/printversion/newsandviews/907008

America is loaded. We are not a struggling nation ready to go under. We are not facing an enormous debt crisis despite what the politicians and pundits proclaim. We are not the next Greece.

Rather, we have an enormous concentration-of-wealth problem — one that must be solved for the good of our commonwealth. We are a very rich nation but it doesn’t seem that way because our wealth is so concentrated in the hands of a few. This is America’s disaster.

But wait. Doesn’t the wealth belong to the super-rich? Didn’t they earn it fair and square? Isn’t that the way it’s always been?

Not by a long shot. The amount of wealth that flows to the super-rich is determined by our public policies. It’s all about how we choose to share our nation’s productivity.

Productivity and the Wealth of Nations

Our country is rich because we are enormously productive as measured by output per hour worked. The greater our collective output per hour, the more our economy produces and the wealthier we are…or should be. It’s not a perfect measure since it doesn’t adequately take into account our environment, our health or our overall well-being. But it is a good gauge of our collective level of effort, skill, knowledge, level of organization, and productive capacity. As the top line on the productivity chart below shows, we’ve been able to produce more and more per hour year after year since WWII. It’s a remarkable achievement.

From 1947 until the mid-1970s, the fruits of our bountiful productivity were shared reasonably fairly with working people. As productivity rose so did workers’ real wages (See the bottom line in the chart below. It represents the average weekly wage of non-supervisory workers who make up about 80 percent of the entire workforce.) This wasn’t socialism. There were still plenty of rich people who earned a significant slice of the productivity harvest. But much of that wealth was plowed back into the economy through taxation rates that between 1947 and 1980 hovered between 70 to 91 percent on incomes over $3 million (in today’s dollars).  Much of that money was used to build our physical and knowledge infrastructures, and to fight the Cold War. Unions were supported by public policy and workers’ real wages rose steadily after accounting for inflation. Wall Street was tightly controlled and the middle-class grew like never before.

Then something happened.

It wasn’t an act of God, or the blind forces of technological change, or the mysterious movements of markets. Nor did the super-rich become enormously smarter than before. Instead, flesh-and-blood policy makers decided that deregulation and tax cuts should become the order of the day starting in the mid-1970s. The idea was that if we cut taxes on the super-rich and deregulated the economy (and especially Wall Street), investment would dramatically increase and all boats would rise. But as we can see from the chart below, the average worker’s wage in real terms stalled and even declined after the mid-’70s. The fruits of productivity no longer were shared equitably. The enormous gap between the two lines (trillions of dollars per year) went almost entirely to the super-rich. The wealth of the wealthy skyrocketed, not by accident, but by policy design. "Greed is good" replaced the middle-class American dream.

What Is Wealth and Who Has It?

Wealth or net worth is the total value of what you own (your assets) minus the total value of your debts (your liabilities.) Our collective net worth is really huge. We’re talking big, big numbers. As of the end of 2011, U.S. households had $30 trillion in private assets and $13.6 trillion in liabilities for a total net worth of $16.4 trillion (PDF). How much is that? It comes to an average of $141,000 per household – free and clear of any debts.

But averages are extremely misleading, because wealth is so highly concentrated at the top. Here are some eye-popping numbers.

1. The number of households with a million dollars or more of net worth grew by 202 percent between 1983 and 2007.

2. The number of households with a net worth of $5 million or more grew by 494 percent.

3. The number of $10 million or more households grew by a whopping 598 percent!

4. There are now more than 464,000 households worth $10 million or more. (PDF)

5. But the bottom 40 percent of American households has a net worth of nearly zero (.2 percent).

6. If you take out the value of our homes, the bottom 40 percent has a negative net worth of minus 1 percent – meaning they owe more than their assets are worth.

7. Meanwhile the top one percent holds 34.6 percent of our total net worth and 42.7 percent of all financial assets (excluding homes).

8. That means that the top one percent has a positive net worth valued at approximately $5,700,000,000,000 (that’s $5.7 trillion).

Why We Need a Financial Transaction Tax

Most Americans live on earned income which is taxed instantly through substantial payroll taxes. You can’t collect a paycheck without paying taxes. The super-rich, however, receive most of their income through financial investments that are taxed at lower capital gains rates and which can be offset through a myriad of deductions and loopholes. In effect, the super-rich live by one tax code and the rest of us use another. This is why the wealthiest Americans pay lower effective tax rates than their servants. It’s also why our government appears to be starved for income. If we want a vibrant economy and good investments in our public infrastructures, the wealthy must pay a great deal more, just like they did during the early post-WWII period.

For starters we need a financial transaction tax which is a small sales tax on each and every financial trade – from stocks and bonds to futures and other derivatives. Since the super-rich hold so many financial assets, this kind of tax would directly target their excessive trading and enormous holdings. Not only would this sales tax produce upwards of $150 billion a year in federal revenue, but also, it may help eliminate much of the financial gambling that took down the economy in 2007. Considerate it a tax on financial toxic waste.

A Wealth Tax to Improve our Commonwealth

Finland, France, Iceland, Luxembourg, Norway, Spain, Sweden and Switzerland have small net wealth taxes, and England has had a financial transaction tax for three centuries. We should join them. A 1 to 3 percent wealth tax with a million-dollar deduction would only hit the top 1 percent and would provide the nation with from $50 to $150 billion per year in income. Spare change for the super-rich.

The beauty of a wealth tax is that there are no loopholes. Your assets (which include both foreign and domestic) and your liabilities are easily calculated. It’s easier to spot the cheaters. It’s easier to press for information from other countries that may be tempted to launder money for our super-rich. There’s nowhere to run unless the super-rich want to give up their citizenship.

Even Ronald McKinnon, a conservative economist writing in the Wall Street Journal (“The Conservative Case for a Wealth Tax”) is advocating a wealth tax on the super-rich:

In order to have a fairer tax system, we should implement a new federal wealth tax in addition to the federal income tax. Unlike the current income tax, the wealth tax would not rely on how income is defined. Rather, it would require that households list all their domestic and foreign assets on, say, Dec. 31 in the relevant tax year. With a large exemption of $3 million that effectively excludes more than 95% of the population, a moderate flat tax—say 3%, on wealth so defined—could then be imposed.

Combined with the financial transaction tax, we would have more than $200 to $300 billion per year which could rebuild our crumbing infrastructure, provide higher education for our children, eliminate much of the student loan burden, and hire millions of laid-off teachers. Unemployment would fall dramatically and deficit hysteria would vanish into its own hot air.

We can cry about the distribution of income all we want. We can moan and groan about the top 1 percent and how they have captured political power. We can proclaim our membership in the 99 percent for all to hear. But none of that matters much unless we build a mass movement that reclaims our fair share of the fruits of productivity.

The 1 percent didn’t get there just because they were great entrepreneurs or because they were smarter than the rest of us. They got there because they pressed for tax cuts for the super-rich and the deregulation of Wall Street. Those twin policies poured the money into their coffers and stalled our middle-class dead in its tracks. Those policies also crashed the economy and destroyed the jobs of millions of Americans.

A financial transaction tax combined with a wealth tax will bring us closer to the time when the middle-class again was growing year by year. It would put Americans back to work and place our foot right back on Wall Street’s neck – where it needs to be for the good of us all.

But you know it won’t come easy. The super-rich feel entitled to all they can grab. Which means we’ll have to organize like never before and fight like hell. Let’s hope the 99 percent are ready, able and willing.

Les Leopold is the executive director of the Labor Institute and Public Health Institute in New York, and author of The Looting of America: How Wall Street’s Game of Fantasy Finance Destroyed Our Jobs, Pensions, and Prosperity—and What We Can Do About It (Chelsea Green, 2009).

© 2012 Independent Media Institute. All rights reserved.
View this story online at: http://www.alternet.org/story/155025/

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Moyers & Company 108: Encore: On Winner Take All Politics from BillMoyers.com on Vimeo.

• Encore Broadcast: On Winner-Take-All Politics | Moyers & Company | BillMoyers.com

  • why did they do it?

  • Jacob and I genuinely believe that it’s an optimistic story compared with the story that we’re typically told about what’s been happening to the American economy. Because what we’re typically told is there’s nothing you can do about this, that it’s just an economic reality, there’s no point in blaming any political party.

  • But the real action is inside the top one percent. If you go to the top tenth of one percent or the top hundredth of one percent, you know, you would need a much bigger graph to show what’s happening to incomes for that for that more select group. Because they’ve gone up much faster than have incomes for just your average top one percent kind of person.

  • PAUL PIERSON: In some ways, the fundamental myth that we’re trying to break out of is the idea that there’s something natural out there called "the American economy" that is prior to government, prior to politics. And that government, if it’s involved at all, is only involved sort of at the end of the day, maybe tidying things up around the edges, or redistributing money from some people to another.

  • the richest one-in-a-thousand households are truly living in an unparalleled age

  • BILL MOYERS: Well, as you speak, I can hear all of those free-marketers out they say, "Come on, Piers– come on Hacker it is the global economy. It’s that cheap labor overseas. It’s those high technology skills that you say are required, these deep forces that actually are beyond our control, and are making inevitable this division between the top and everyone else." Right? That’s what they’re saying as they listen to you right now.

  • When you start to look within the top one percent, and look at what government has done to help those people out, through taxes, through changes in the market, financial deregulation and the like, and through protecting them from efforts to try to push back.

  • Because they could.

  • And what we’ve seen in the last 30 years is a gradual erosion of the firewalls that protect our democracy from the inequalities that are occurring in the market. Money has come into politics much more.

  • So the whole idea of noblesse oblige and such and that the rich were supposed to have special responsibilities, that’s all gone, right? They have a God-given right to the lowest conceivable taxes.

     

    When you put anti-regulators in charge of the agencies who believe that regulation is bad and completely unnecessary and they destroy it, creates a self-fulfilling prophecy that produces massive fraud at the most elite levels.

  • I want to see money out of government. I’m a very big proponent of campaign finance reform, of limiting the role of lobbyists, and limiting the role of corporate personhood

  • But how do you explain the fact that we’ve seen over this period where the rich have gotten richer the tax rates on the richest of the rich come dramatically down.

  • BILL MOYERS: How can this happen? How could Washington turn its back on the broad middle class to favor a relatively few at the top in a democracy?

     

    JACOB HACKER:  What has really changed is the organization of American politics, particularly the organizations that represent the deepest pocketed members of American society. What we’ve seen as an organizational revolution over the last 30 years that has meant that business, and Wall Street, and ideological conservative organizations that are pushing for free market policies have all become much more influential.

  • JACOB HACKER: When citizens are organized and when they press their claims forcefully, when there are reformist leaders within government and outside it who work on their behalf, then we do see reform. This is the story of the American democratic experiment of wave after wave of reform leading to a much broader franchise, to a much broader understanding of the American idea.

     

    In the mid-20th century we saw a period in which income gains were broadly distributed, in which middle class Americans had voice through labor unions, through civic organizations and through, ultimately, their government. We’ve seen an erosion of that world, but just because it’s lost ground doesn’t mean it can’t be saved. And so in writing this book we were hoping to sort of tell Americans that what was valuable in the past could be a part of our future.

  • BILL MOYERS: But if both political parties are indebted to the winners where do the losers find an army to join?

  • How Washington Made the Rich Richer—and Turned Its Back on the Middle Class

  • You know, if you look to our northern neighbor, Canada, it had nothing like the same degree of banking crisis the United States did.

  • when you look at other affluent democracies that have also been exposed to these same kinds of pressures, who are actually more open — smaller economies are often more open to the global economy than the United States is — you don’t see anything like the run-up in inequality, especially this very concentrated high-end inequality, in most of these other countries that you see in the United States. Which to us, really, was a very strong clue that we need to understand why the American response to globalization, to technological change has been different than the response of most other wealthy democracies.

  • my family with two Master’s degrees is struggling

  • BILL BLACK:  What we have is recurrent, intensifying financial crises driven by elite fraud and now it’s done with almost absolute impunity.

  • And at the same time, when those risks have become apparent, there has been a studious effort on the part of political leaders to try to protect against government stepping in and regulating or changing the rules.

  • Within a few weeks after the legislation was passed, we all get a letter that says Congress and the President have given you this tax cut.

    • mine was around $300
  • these were all tax breaks that were worth a vast amount to the richest of Americans and worth very little to middle class Americans.

  • what is wrong with the priorities of our society that we cannot figure out how to translate our great wealth, our ingenuity, the hard work of our citizens, into a better standard of living that is shared broadly across the population?

  • BILL MOYERS You write, we have a government that’s been promoting inequality, and at the same time, as you just said, failing to counteract it. This has been going on, you write, 30 years or more. And here’s the key sentence: Step by step, and debate by debate, our public officials have rewritten the rules of the economy in ways that favor the few at the expense of the many.

  • “We wanted to know how our economy stopped working to provide prosperity and security for the broad middle class.”

  • JACOB HACKER: There was a poll done in 2010 that asked Americans whether the federal government had helped a great deal the following groups: large financial institutions and banks, 53 percent of Americans said they’d been helped a great deal.

     

    What about large corporations? 44 percent of Americans said they’d been helped a great deal. Then they asked, well, has the federal government helped the middle class a great deal? And do you want to guess what percent of Americans said that they’d been helped a great deal– the middle class had been helped a great deal? Two percent.

     

    BILL MOYERS: Two percent?

  • money matters much more in our politics, and where groups representing business and the wealthy are much more powerful than in the past.

  • BILL MOYERS: Protecting them?

     

    JACOB HACKER: Well, I think this is something that really needs to be understood. You know, these large shifts in our economy had been propelled in part by what government has done, say deregulating the market, the financial markets, to allow wealthy people to gamble with their own and other peoples’ money, and ways to put all of us at risk, but allow them to make huge fortunes.

  • JACOB HACKER:  We think the story that’s told about how the global economy has shifted clearly matters. But that it doesn’t get to the sort of really powerful role that government played in adapting to this new environment and in changing the well-being of people in the middle and at the top.

  • it was really designed to front-load the relatively modest benefits for the middle class, and to back-load the benefits for the wealthy.

  • Income inequality that statistics on income inequality now suggest that inequality is higher in the U.S. than it is in Egypt.

  • So, that top one percent saw its real incomes increase by over 250 percent between 1979 and 2006

  • 1979 to 2007, so all the increased household income over that period, around 40 percent of those gains went to the top one percent. And if you look at the bottom 90 percent they had less than that combined.

  • And we’re, we are deep believers in the ability of American democracy to reform itself, of the strength of our democratic institutions. But they’re in very serious disrepair right now. And we’ve seen in recent political fights a sort of paralysis and a broad loss of faith in government. And that sort of secession of the wealthy from our economic life that we’ve already started to see could be matched by a secession of them from our political life and a sort of loss of that broad democracy that was characteristic of mid-20th century. That’s the greatest fear that we have.

  • understand that inequality of income and wealth is part of a capitalist society, but it can’t overwhelm our democracy.

  • PAUL PIERSON: If you listen to many public officials over the over the last 20 or 30 years as they’ve started to recognize that inequality has grown, typically what they’ll say is, this is a result just of economic change. It’s a result of globalization changes in technology that have advantaged the educated at those with high skills at the expense of the uneducated.

  • those top 400 tax payers, they’ve seen their tax rates decline so much that it’s worth about $46 million for every one-

Posted from Diigo. The rest of my favorite links are here.

My Shame and Pride in Signing up for the Most Stigmatized Benefit By Christopher D. Cook, Salon Posted on February 8, 2012,

Printed on February 9, 2012 http://www.alternet.org/story/154041/i%27m_on_food_stamps%3A_my_shame_and_pride_in_signing_up_for_the_most_stigmatized_benefit

“Mister Cook! Chris Cook? Mr. Cook! Window three!”

I walk through the pasty government-issue fluorescent light and bureaucratic cinderblock waiting room, ushered into the inner sanctum of welfare benefits review. I feel oddly privileged, striding past rows of glum, tired, bored and frustrated faces; how have I been picked out so quickly, after just 15 minutes of sitting?

Getting inside doesn’t mean you’ll get approved, but, like waiting in a doctor’s lobby, sheer movement into a different room gives one hope. Progress.

My benefits counselor, a tall, stocky, healthfully heavyset Indian man, speaks like a machine gun. ”Fifty-five,” he says brusquely as he waves his arm at a numbered booth in a long row of numbered booths. I’m still non-caffeinated so it takes me a moment to realize what “55″ means, then I take my seat across from him. It looks (and feels) like I’m in prison.

The caseworker, whom I’ll call Chakim, is vigorous and businesslike. ”ID? Social Security card?”

I quickly hand him everything: my driver’s license, threadbare Social Security card with my awkward childhood signature, and my passport complete with its January 2011 stamp from India (I hope he notices).

He asks me, rat-a-tat-tat: “Unemployed? How much per month? Self-employed? Pay by cash or personal check?”

“I am self-employed,” I tell him, “payment is very inconsistent. Maybe $750 or $800 a month.”

“You have pay stubs? Pay in cash or personal check?”

I show him a few scattered check receipts from a folder. Four hundred and fifty dollars here, $100 there, another for $200, another for $500. This is the writer’s life today.

“And how much is your rent? Other bills?”

I tally them up: $770 for rent, $40 for cellphone, $25 for utilities. That’s over $800 right there.

Chakim looks at me quizzically. ”So how are you surviving? Your rent is higher than your income?”

Savings, I tell him. It’s true: For the past few years, as a semi-accomplished, mid-career journalist and writer, I’ve been scuffling in the always difficult, but now beastly hard choppy waters of freelancing, supplementing my obscenely low (often under $15,000) income with some money my grandmother left me years ago. Combined, in the city of San Francisco, I live on something around $20,000. Every year, even as I work my butt off scrambling for assignments and clients, that little nest egg shrivels frightfully smaller. Now it’s almost gone, and though I’ve had some good little runs here and there with work, I’m hurtling precipitously toward poverty.

I’m hardly alone in my marginally privileged plight: As Huffington Post reported in June 2010, food critic Ed Murrieta went from restaurant-hopping with an expense account to living off a $200-a-month food stamp allotment. According to the USDA, 46.3 million Americans depend on food stamps to survive — a historic high, due to recession and population growth.

The soaring food stamp rolls, though quite predictable in the midst of a deep recession, have inspired wealthy Republican candidates for president (is there any other kind?) to brand Barack Obama “the food stamp president,” even though, according to USA Today, the rolls rose more sharply under President George W. Bush.

Roughly one in six Americans (one in five children) does not have reliable access to food. According to USA Today, citing census data, nearly half the country is poor or low-income. Even as unemployment eases modestly in some places, the vast underbelly of America is, economically and nutritionally, underfed.

I call myself frayed white collar — part of the privileged poor. I have a college degree, a career and an array of middle-class, working-class and more economically privileged friends; together we are a fairly good representation of the 97 percent, or maybe the 95 percent. And most of us are hard-pressed; even my teacher friends, making about $60,000 a year, are perpetually flat-lined economically, eking across each month’s finish line thanks to credit cards.

Back in the benefits office, Chakim clicks away at his mouse with big, thick fingers, rifles through his accordion folder, thrusting papers in front of me: “Sign.” I look up at him questioningly. ”Sign,” he says again. ”I’m trying to help you. Just sign.” So I do.

“Getting unemployment now? Been on food stamps before?”

“No, no unemployment. This is my first time on food stamps,” I tell him. ”Except for when I was a kid.”

Behind Chakim, against the opposite wall, a prank coffee mug, sliced in half, reads: “You asked for half a cup of coffee.” Here in America’s embattled public benefits land, that sure feels like a metaphor to me. Still, just to warm things up, I tell Chakim I like his coffee mug.

Within minutes, Chakim pulls out a Department of Human Services form titled “Food stamps intake follow-up,” jotting down my name and case number, and, benevolently, checks off the box where it says I will be certified for food stamps for 12 months. I’ll be “required to complete Form QR 7, Quarterly Eligibility Report, once every three (3) months.”

I feel a rush of saliva in my mouth, as if I’m about to taste food. I’m not remotely going hungry, my pantry and fridge are at least modestly attended by basic solid good foods (bags of greens and turnips and broccoli from farmers’ market, organic chicken in the freezer).

But as Chakim readies my approval documents, I taste a happy relief, imagining myself with my shiny new electronic benefits card, stocking up each month without moving toward destitute quite so quickly.

As I mentioned to Chakim, perhaps to curry sympathy, I grew up on food stamps. In the 1980s, while Ronald Reagan was raising the frightful specter of “welfare queens driving Cadillacs,” my single mother and I relied on food stamps for years, even when she worked at a health food store in Boston. We muddled through with her poverty wages, food stamp booklets, and, sometimes, slightly bruised but totally edible produce the store couldn’t sell.

I don’t recall ever feeling ashamed about being poor. To me, those booklets of food coupons were like Monopoly play money, and they kept us going. But now I’m 44, single, nobody to feed other than myself, and as Chakim signs the final papers, my sense of victory quickly feels like defeat. How have I “sunk” to this unkind station where, if I don’t get help or significantly boost my income, I could soon be ass out on the unforgiving streets?

As I leave the cinderblock edifice, passing people huddled around the entrance smoking cigarette butts, a wave of shame and sadness comes over me.

How have I fallen back to where I was when I was a food stamp, Head Start kid (getting, yes, free lunches)? America is supposed to be the engine of progress, and each of us is assigned the “promise” and, effectively, the duty, of keeping up that steady march. Even though I never bought the American narrative of progress and opportunity, I somehow feel like a bumbling screw-up for not holding up my end of the bargain.

With my “Golden State Advantage” benefits card in hand, I move quickly from shame to guilt. Why? After all, I pay taxes, even if not very much on my poverty-level income (effectively about the same rate Mitt Romney pays on his thus far untold millions a year in investment income). Oh yes, of course, this is bootstraps America, land of free capitalistic opportunity.

Public assistance has always carried the puritanical stink of stigma and guilt. As Francis Fox Piven and Richard Cloward explained in their classic book ”Regulating the Poor,” guilt and shame have long been intentional features of public aid — along with various forms of coerced labor and invasive monitoring — dating back to England’s poor laws of the 16th century, through to today’s much demonized welfare capitalism in America, where Republicans goad and bait our nation’s first black chief executive as “the food stamp president.”

Along with personal guilt, there is my broader political concern: that by adding to the food stamp rolls, I’m diminishing Obama’s chances of reelection (not that I’m a fan, but the Republicans have embraced full-fledged barbarism, threatening to destroy what little is left of the safety net).

But as a low-income progressive writer (talk about redundancies!) I’m committed to a couple of things: getting myself fed, and getting out the word that being on food stamps — or expanding them as president — is about as far from a crime as one can get. Despite my personal response to being on the dole, the fact is, these benefits keep people alive. They keep people eating, and they keep others working, by essentially subsidizing the market for food retail.

Perhaps most important, food stamps are not the problem, nor are they the solution. They are a basic Band-Aid that barely keeps people afloat, while America’s corporations and the exceedingly rich make off like bandits, vacuuming their profits away from the public treasury. One might say that’s “another story,” but in fact rich people like Mitt Romney (and Newt Gingrich, for that matter) evading taxes while blaming the poor for living off virtually nothing — that’s the real story we should be talking about.

As I walk through my gray shame and guilt in the cold overcast morning, I treat myself to a panic cigarette on my way to Whole Foods, where my purchases amount to coffee and a carrot and an apple ($1.88, more than half the daily individual food stamp allotment) to augment my homemade tofu veggie stir-fry lunch. My electronic benefits transfer card won’t be activated until tomorrow. Then I’ll feel rich indeed.

Christopher D. Cook is the author of “Diet for a Dead Planet: How the Food Industry Is Killing Us” (New Press). © 2012 Salon All rights reserved. View this story online at: http://www.alternet.org/story/154041/ http://www.alternet.org/module/printversion/154041

“Our nation, so richly endowed with natural resources and with a capable and industrious population, should be able to devise ways and means of insuring to all our able-bodied men and women, a fair day’s pay for a fair day’s work.”  Franklin Delano Roosevelt, 1937

Millions of people in the US work and are still poor.  Here are eight points that show why the US needs to dedicate itself to making work pay.

One.  How many people work and are still poor? 

In 2011, the US Department of Labor reported at least 10 million people worked and were still below the unrealistic official US poverty line, an increase of 1.5 million more than the last time they checked.  The US poverty line is $18,530 for a mom and two kids.  Since 2007 the numbers of working poor have been increasing.  About 7 percent of all workers and 4 percent of all full-time workers earn wages that leave them below the poverty line.

Two.  What kinds of jobs do the working poor have?

One third of the working poor, over 3 million people, work in the service industry.  Workers in other occupations are also poor: 16 percent of those in farming; 11 percent in construction; and 11 percent in sales.

Three.  Which workers are most likely to be working and still poor?

Women workers are more likely to be poor than men.  African American and Hispanic workers are about twice as likely to be poor as whites.  College graduates have a 2 percent poverty rate while workers without a high school diploma have a poverty rate 10 times higher at 20 percent.

Four.  What about benefits for low wage workers?

Ten percent of US workers earn $8.50 an hour or less according to the US Department of Labor.  About 12 percent have health care and about 12 percent have retirement benefits.  Nearly one in four get paid sick leave and less than half get paid vacation leave.

Five.  What rights do the working poor have?

Most workers have a right to earn at least the federal minimum wage of $7.50 an hour.  Tipped employees are supposed to get at least $2.13 each hour from their employer and if the worker does not earn enough in tips to make the $7.50 minimum wage, the employer must make up the difference.  People who work more than 40 hours in a workweek are entitled to one and one-half of their regular pay for each hour of overtime.

Six.  What about wage theft from the working poor?

Many low wage workers have part of their earnings stolen by their employers.  Examples include not paying people the full minimum wage, not paying required overtime, stealing from tipped employees, or fraudulently classifying workers as independent contractors.   A survey of over 4000 low wage workers in Chicago, Los Angeles and New York conducted by university and non-profit researchers found: 26 percent of the workers were paid less than the minimum wage in the previous week, a majority were underpaid by more than $1 an hour; a significant number worked overtime the previous week and were not paid the legally required overtime; many were required to come early or stay late and work “off the clock” and were not paid for it; almost a third of the tipped workers were not paid the minimum wage and more than 1 in 10 tipped workers had some of their money stolen by their employer or supervisor.

Seven.  What is a living wage in the US?

Dr. Amy Glasmeier of Penn State University has created a Living Wage Calculator that estimates the hourly wage needed to pay the cost of living for low wage families in the US.  It breaks down the cost of living by state and locality across the nation.  In New Orleans, a mom with one child needs to earn $17.52 to make ends meet.  In New York, the mom with one child should earn $19.66 to make it.   If we now realistically calculate the number of people who work and do not earn a living wage, the numbers of working poor in the US skyrocket to several tens of millions.

Eight.  What about jobs for the unemployed and underemployed? 

The US Labor Department estimated recently that 13 million people were unemployed.  Another 8 million people were working part-time but wanted full-time work.  Even more millions who are not working are not counted in those numbers because they have been unemployed so long.

A study by Northeastern University found that in the poorest families, unemployment is nearly 31 percent. Underemployment is also much more of a problem in poor homes, with over 20 percent of those workers reporting they are working part-time but seeking full-time work.

Our nation can do so much more.  We say our country values work.  It is time to do something about it.

If the US truly values work, we need to support the millions of our sisters and brothers who are low wage workers.  Steps needed include: raising the minimum wage to a living wage; protecting workers from getting ripped off; making it easier for workers to organize together if they choose to; and creating jobs, public jobs if necessary, so that everyone who wants to work can do so.  Many are already working on these justice issues.

For those interested in learning more about this, see the websites of Interfaith Worker Justice, the National Employment Law Project, and the National Jobs for All Coalition.

Bill teaches law at Loyola University New Orleans and is Associate Legal Director of the Center for Constitutional Rights. Thanks to Rob Dordan and Kim Bobo for help with this.

© 2012 Independent Media Institute. All rights reserved. View this story online at: http://www.alternet.org/story/153856/

California Refuses to Accept Obama’s Banking Sellout

Thursday 10 November 2011

by: Robert Scheer, Truthdig | News Analysis

California Attorney General Kamala Harris says that she refuses to release banks from legal liability for the mortgage crisis. (Photo: Obama For America – California [3])

There is no three-strikes law for crooked bankers, not even a law for a fifth strike, as The New York Times reported in the case of Citigroup, cited last month in a $1 billion fraud case. Unlike the California third-striker I once wrote about whom a district attorney wanted banished forever to state prison for stealing a piece of pizza from the plate of a person dining outdoors, Citigroup executives get off with a fine and by offering a promise not to do it again, and again and again.

As the Times reported when Citigroup agreed to settle SEC charges last month: “Citigroup’s main brokerage subsidiary, its predecessors or its parent company agreed to not violate the very same antifraud statue in July 2010. And in May 2006. Also as far back as March 2005 and April 2000.”

Not that the bankers face prison time, since the Justice Department has refused to act in these cases, and the Securities and Exchange Commission is bringing only civil charges, which the banks find quite tolerable. This time, the fine against Citigroup was $285 million, which may sound like a lot except that the bank raked off as much as $700 million on this particular toxic securities deal. As the Bloomberg news service editorialized, “… there should be only one answer from Jed S. Rakoff, the federal judge in New York assigned to weigh the merits of the agreement: You’ve got to be kidding.”

Not to pick on Citigroup, the too-big-to-fail bank that Clinton administration Treasury Secretary Robert Rubin helped make legal before he was paid off with a $126 million job on Wall Street; that corporation was not the only serial offender. “Citigroup has a lot of company in this regard on Wall Street,” the Times noted, “nearly all of the biggest financial companies—Goldman Sachs, Morgan Stanley, J.P. Morgan Chase and Bank of America among them—have settled fraud cases by promising that they would never again violate an antifraud law, only to have the SEC conclude they did it again a few years later.”

So forget relying on the federal government to hold the Wall Street swindlers accountable. Indeed, the Obama administration has been involved in negotiating a deal with state attorneys general to settle their complaints with the banks for a pittance of compensation for the victims. In return, the states would promise not to institute further legal proceedings against the banks.

The fix was in for what a New York Times editorial on Tuesday headlined “Letting the Banks Off Easy” described as “paltry” mortgage relief, reducing by less than $20 billion the balances of 14.5 million underwater homeowners who are “drowning in some $700 billion of negative equity.” The deal has been stalled by the refusal of California Attorney General Kamala Harris to accept this sellout. Among its other disastrous concessions would be ending further investigation by the states into financial skullduggery connected with the housing meltdown.

In September, Harris, elected in a Democratic sweep of the state’s top offices in 2010, went against the dictates of the Democrat in the White House, stating that she refused to release the banks from legal liability for the mortgage crisis. That is the nub of the pending White House-brokered deal with the banks. As the Times summarized it: “The proposed settlement reportedly would prevent the states from pursuing claims against banks relating to fraud or abuse in the origination of the bubble. It would also prevent states from pursuing claims for foreclosure abuses, like improper denial of loan modifications.”

Traditionally the states provided the essential regulation of mortgage origination, ownership and sales as a transparent process duly recorded and subject to public examination at the county level. But in order to facilitate the gathering of those mortgages into the sort of collateralized debt obligations that the banks could then bet on and trade worldwide, homeownership became a murky matter. Many of the mortgages now in question, including the ones that Citigroup’s “synthetic” derivative was based on, are no longer owned by the banks that originated them. They are instead part of the Mortgage Electronic Registration Systems (MERS) database, owned by a consortium of banks and residing in computers in Reston, Va.

The MERS system is described by the Times as “a land registry system implicated in bubble-era violations of tax, trust and property law.” The Obama-supported settlement would make it very difficult if not impossible to investigate at long last the workings of MERS and other systemic sources of what is now a full-blown international economic crisis. As the Times editorial put it, “In effect, the legal waivers being contemplated would let the banks pay up to sweep wrongdoing under the rug.”

Thankfully, we have a few state attorneys general, most prominently California’s Harris, standing up for the American people, but it is outrageous that a president who avowedly committed to defending the public interest would now be subverting that effort rather than leading it.

Copyright 2011 Creators.com