Author Archives: David Dayen
Student Loan Servicer Corruption Rewarded, Covered For in New Round of Obama Executive Actions
It is student loan week in the Democratic Party. Elizabeth Warren’s bill to refinance prior loans to the current 3.86% rate (including private loans owned by the likes of Sallie Mae), gets a vote on Wednesday. Yesterday, the President endorsed that bill, and threw in his own executive memorandum to, as the White House puts it, “make student loans more affordable.” Today, Obama will show up on Tumblr to further make the sale.
Read more...Ashoka Mody and Michael Walton: Story of a Fraying Capitalism in India
French economist Thomas Piketty has written a scholarly tome with the humdrum title, Capital in the 21st Century. The book has become an overnight sensation because Piketty documents an inherent tendency for ever-increasing inequality of income and wealth in capitalist economic systems. It is not an accident, he says, that many will be left behind even as others become richer. The book taps into a collective anxiety, coming as it does amidst the lingering after-effects of the global crisis and slowing global growth.
India’s capitalist dynamic — as in other emerging economies — is different from that in the richer countries that Piketty focuses on. Yet, the lessons Piketty offers should ring a cautionary bell. Indeed, even more so than in the rich countries, India could find itself in a low growth, high inequality and high insecurity trap. These are the real fears that bubble under the theatrics and ugliness of the ongoing political debate.
Read more...David Dayen: How Chase Bank Denying Services to a Condom Shop Is Really About Deregulating Payday Lending
Under the odd conventions of journalism, if someone else writes about a topic, especially if it resembles a “scoop,” nobody else can write about it. So if you go down the road for a week or so chasing a story and then you see it in your friendly neighborhood copy of The Huffington Post, you can basically stop chasing. Thanks for taking food out of my mouth, HuffPo!
But in this case, the complicated story in question warrants more attention, because it’s a really good lesson in how “lobbying” incorporates more than just paying rich people in suits to sweet-talk politicians and regulators. This is the darker side of lobbying, with the venerated “small business owners” everyone loves to deify caught in the crossfire.
Read more...Whistleblower Reveals Favoritism Toward the Rich, Robo-Signing at the IRS
The great David Cay Johnston has obtained a letter written by a veteran IRS lawyer to 10 members of the Senate Finance Committee, alleging not only a gaggle workplace conduct violations but favoritism toward well-connected tax filers and even document fraud.
Read more...Links 3/19/14
Just 83,000 Homeowners Get First-Lien Principal Reductions from National Mortgage Settlement, 90 Percent Less Than Promised
Yesterday, the National Mortgage Settlement monitor, Joseph Smith, released his final crediting reports, confirming that all five banks (Wells Fargo, Bank of America, Citi, JPMorgan Chase and Ally, now known after bankruptcy as Residential Capital, or ResCap) have now satisfied the consumer relief portion of the foreclosure fraud settlement. The banks were required to spend $20 billion in “credited” relief (some actions received less than a dollar-for-dollar credit). Smith exults that the gross relief provided totaled over $50 billion, and that “more than 600,000 families received some form of relief.”
What the mainstream media reports on this don’t tell you is that the $50 billion number is wildly inflated: for example, it includes $12 billion in deficiency waivers in non-recourse states, which the IRS confirmed have no value whatsoever. But I didn’t know just how inflated these numbers were, and how empty the promises, until I went through them.
Read more...New Study Shows Dangers of Trade Agreements that Help Corporations Sue Governments
As the Obama administration negotiates new trade agreements with European and Pacific nations, a battle has emerged over the agreements’ egregious rules that grant giant corporations unreasonable powers to subvert democracy. These rules, dubbed “investor rights” by the corporations, allow firms to sue governments over actions—including public interest regulations—that reduce the value of their investments.
Oxfam, the Institute for Policy Studies, and four other non-profits are releasing a new study that explains why these rules are so dangerous to democracy and the environment. We are among the co-authors of this study, titled “Debunking Eight Falsehoods by Pacific Rim Mining/OceanaGold in El Salvador.” The report offers a powerful case study of everything that is wrong with this corporate assault on democracy.
Read more...Philip Pilkington: Thinking Makes It So – The IMF Bailout of the UK in 1976 and the Rise of Monetarism
Monetarism began it’s rise to world prominence in the ever-conservative Bundesbank in 1974. But it would be the government of Margaret Thatcher in the UK, elected in 1979, that would truly launch monetarism in central banking. After Thatcher’s monetarist experiment undertaken between 1979 and 1984 every economics student would be taught to recite the various monetary aggregates by heart for at least a decade or two.
This is what accounts for the monetarist bent we see in the economists of the last generation. Basically any economist trained between roughly 1980 and 1995 would be heavily exposed to monetarist dogma. And only those that read alternative accounts of money creation — namely, the theory of endogenous money — would be fully immunised. This explains, for example, why certain economists that champion Keynesian policies — like Paul Krugman — actually speak in monetarist tones.
Read more...Links 3/18/14
Lawsuit Against California’s Robbing Homeowners of National Mortgage Settlement Funds Has Very Good Chance of Success
Late on Friday, a coalition of African-American, Latino and Asian-American groups sued California Governor Jerry Brown, demanding that he return $350 million stolen from the state’s share of the National Mortgage Settlement to plug a budget hole.
California is far from the only state to divert money given as a penalty for homeowner abuse into the General Fund; in fact, less than half of the $2.5 billion given to states in the settlement actually went to housing (and that’s a generous rendering which counts things like North Dakota spending to increase housing stock in oil country for police officers, when that has nothing to do with compensation for abuse). In fact, consumer groups in Arizona already tried to sue to force $50 million that went to their state’s General Fund back into the hands of homeowners. But a Maricopa County judge ruled that the language of the consent order was sufficiently broad to allow the diversion of funds.
Does that mean that this California lawsuit is nothing more than a show of vanity, destined to fail? Absolutely not. In fact, by a strict reading of the case law and the documents in the case, the plaintiffs should win in a walk.
Read more...Russia Eyes Crimea’s Oil and Gas Reserves
Dave here. In case you were thinking that the Great Game was obsolete or something. Needless to say the referendum passed, this was written slightly before the release of the results. By Nick Cunningham, a Washington DC-based writer on energy and environmental issues. You can follow him on twitter at @nickcunningham1. Cross-posted at Oil Price. […]
Read more...Why the Justice Department Inspector General Report on Mortgage Fraud Matters
Hello, folks! As Yves is off explaining the world to Washington, I’m manning the controls for a couple days.
This allows me to ensure that NC has that whole Justice Department IG report on mortgage fraud covered. I know that Yves heaved the written equivalent of a sigh at the news, and she wasn’t wrong. Nothing tangible is likely to happen for the borrowers victimized by the abusive practices that DoJ willfully neglected to prosecute. And there’s surely a seat being kept warm at Covington & Burling for Eric Holder’s post-government career; this won’t hurt him a bit.
But because I don’t feel the coverage so far has plumbed the depths of this corruption, and because it’s still happening, it’s not worth going silent just yet. It’s probably spitting into the wind, yes, but I’ve got the time and the spit, so I want to note a few things.
Read more...Banker Farce: Spanish Bank CEO Launches Moral Crusade Against Political Corruption
“We have to fight corruption in order to build a new model of more sustainable and fairer growth.”
These laudable words came from the least likely of mouths – that of Francisco González, CEO of Spanish banking giant Banco Bilbao Vizcaya Argentaria (BBVA). González was speaking at the bank’s annual shareholder meeting, held last week in Bilbao.
BBVA is Spain’s second biggest bank with operations in more than 30 countries including the U.S., China, Argentina, Columbia and Mexico. It has about 107,000 employees, 47 million customers worldwide, a million shareholders and now, it seems, a moralizing CEO.
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