Author Archives: David Dayen

About David Dayen

David is a contributing writer to Salon.com. He has been writing about politics since 2004. He spent three years writing for the FireDogLake News Desk; he’s also written for The New Republic, The American Prospect, The Guardian (UK), The Huffington Post, The Washington Monthly, Alternet, Democracy Journal and Pacific Standard, as well as multiple well-trafficked progressive blogs and websites. His has been a guest on MSNBC, CNN, Aljazeera, Russia Today, NPR, Pacifica Radio and Air America Radio. He has contributed to two anthology books, one about the Wisconsin labor uprising and another on the fight against the Stop Online Piracy Act in Congress. Prior to writing about politics he worked for two decades as a television producer and editor. You can follow him on Twitter at @ddayen.

Links 8/23/13

A Very Profitable Part Of Banking Goes Totally To Heck

Refinancing mortgages is a phenomenally profitable and nearly risk-free business for banks, and one of the few growth sectors that were actually spawned by the Fed’s herculean efforts to force down long-term interest rates through waves of quantitative easing. Banks went on a hiring binge to shuffle all this paper around and extract fees along the way before they’d dump most of these mortgages into the lap of government-owned and bailed-out Fannie Mae and Freddie Mac. And then they’d run.

CFPB Examiners Find Mortgage Servicing Business Remains a Sewer

Not that we needed additional evidence, but the Consumer Financial Protection Bureau has found more fraud and theft inside the nation’s mortgage servicing operations. CFPB has examiners in both bank and non-bank servicers; this is the first time non-bank servicers have faced such scrutiny. And their new report on Supervisory Highlights for the summer shows that extremely little has changed, despite a gauntlet of settlements that were supposed to end this conduct (OK, not really).

House Republican GSE Bill Would Codify MERS, Pre-Empt Private Property Rights

The top Republican on the House Financial Services Committee has tucked a provision into his mortgage finance reform bill that would create a privately held “National Mortgage Data Repository.” The repository would basically look like MERS, the bank-owned electronic database tracking mortgage transfer. The difference is that, while MERS’ activities have drawn legal challenges across the country, the National Mortgage Data Repository would have the force of statute to carry out the exact same behavior. According to the bill text, any document arising from this repository would be seen as presumptively legal, pre-empting state and federal laws on demonstrating the right to foreclose.

David Dayen: A Revealing Episode in DC Groupthink

So this week I got an education in the mentality of “official” Washington.

Last week I was asked by a DC-based publication to give a comment on Corker-Warner, the flavor-of-the-month proposal to abolish Fannie and Freddie and reform mortgage finance. I basically take the same position as Yves on this issue: all of these GSE 2.0 plans assume a private label MBS market the way the proverbial economist on a desert island assumes a can opener.

Yanis Varoufakis: Greek Success Story: The latest Orwellian Turn of the Greek Crisis

Greece’s Prime Minister recently flew to China, to woo Chinese investors. In his bid to be persuasive, he adopted a radical narrative: Greece is a Success Story. A country that almost perished in 2012 is now on the mend; on the road to stabilisation and growth; a wonderful opportunity, currently, for investors to pick up ultra cheap investments and to benefit from the forthcoming growth. How much of this is true, however?

Martin Khor: No Solution Yet As Climate Threshold Crossed

A key threshold measuring the march of global warming was crossed recently, when the concentration of carbon dioxide in the atmosphere topped 400 parts per million.

On 10 May scientists announced that 400.03ppm had been measured at a climate-observing station in Hawaii that is often used as a benchmark. The global average is expected to cross the 400ppm mark in the next year.

This means that there in for every one million molecules in the Earth’s atmosphere, there are 400 molecules of carbon dioxide.

David Dayen: FSOC Annual Report Shows Continued Interest in Austerity Bargain Over Reducing Financial System

With Jack Lew now installed at Treasury, I decided to take a look at the annual report of the Financial Stability Oversight Council (FSOC), the Dodd-Frank creation that’s supposed to monitor systemic risk. We already know the leanings of the not-so-new regime at Treasury: they think Dodd-Frank worked to secure a more stable financial system, an opinion reiterated Tuesday at a Senate Banking Committee hearing.

C.P. Chandrasekhar and Jayati Ghosh: The Great Jobs Disaster

Early this year, the International Labour Organisation (ILO) had noted that the global unemployment rate was close to 6 per cent, implying that 197 million people were unemployed, even ignoring the 39 million who had dropped out of the workforce, discouraged by persistent failure in job search.

But that aggregate figure concealed a picture that was far worse in the advanced economies where the crisis had originated and spread. There were at least 12 advanced economies where the unemployment rate was 8 per cent or more, and seven in which the rate was 10 per cent or more.

David Dayen: The Uprising of the Second Tier in a Time of Late Capitalism

The past several years have demonstrated the obvious point that inequality and depression will combine to produce flares of mass social unrest. You see this in Europe and the Middle East, where rising food prices had as much to do with the Arab Spring as decades of political repression. Things are no different here in America. Even though elites are fortunate enough to have a militarized local law enforcement apparatus in place to make sure the rabble doesn’t get too out of control, these flares, indications of broader awareness that in an economy rigged against them, the only recourse is to step outside the system and shout to the heavens. We’ve seen this before in US history; it was called the Gilded Age, and it led to the set of progressive reforms as well as a legacy of labor organizing that might, just might, be awakening from what seems like a decades-long slumber.

David Dayen: SEC Convenes Foot-Dragging Roundtable on Rating Agency Reform, While Securities Issuers Return to Familiar Rating-Shopping Tricks

A few months ago, I wrote a story for The American Prospect about the credit rating agencies, and their thus-far successful effort to ward off any change to their business model, despite their wretched performance during the crisis. This is true even though Dodd-Frank contained a measure, written by Al Franken, to alter the issuer-pays model that incentivizes higher ratings in the pursuit of future profits. The Franken-Wicker rule (the “Wicker” is Republican Senator Roger Wicker) would create a self-regulating organization to randomly assign securities to accredited rating agencies, with more securities over time going to the agencies that rated the most accurately.

Dan Kervick: Did the House of Representatives Just (Unintentionally) Eliminate the Debt Ceiling?

My fellow NEP blogger Joe Firestone wrote recently about House Resolution 807, the Full Faith and Credit Act, which was passed on May 9th by the US House of Representatives. The supposed purpose of the act is to prevent default on the public debt as a result of the debt ceiling… But if I am not mistaken, this act would provide the Secretary of the Treasury with the power to meet all US spending obligations, and effectively eliminate the debt ceiling as a serious political and operational consideration going forward.

David Dayen: Hedgies Bet on Fannie/Freddie Status Quo

The new CBO budget projections showing debt stabilization over the next decade and a reduction of the expected FY 2013 deficit to $642 billion hasn’t been deemed by Washington as a “scandal,” although falling deficits amid high unemployment and below-trend growth is actually, you know, a bit scandalous. But even more unremarked upon is one of the primary reasons for this near-term deficit drop, mentioned in passing by CBO on page 1:

CBO’s estimate of the deficit for this year is about $200 billion below the estimate that it produced in February 2013, mostly as a result of higher-than-expected
revenues and an increase in payments to the Treasury by Fannie Mae and Freddie Mac.

David Dayen: GAO Report on Independent Foreclosure Reviews Exposes OCC, Fed’s Plan to Deliberately Minimize Evidence of Borrower Harm

By David Dayen, a lapsed blogger, now a freelance writer based in Los Angeles, CA. Follow him on Twitter @ddayen

This morning the Government Accountability Office released their second report on the Independent Foreclosure Reviews.

David Dayen: OCC, Fed Stonewalling Congressional Oversight of Independent Foreclosure Reviews

A couple months ago, Elizabeth Warren and Elijah Cummings opened what they described as an investigation into the Independent Foreclosure Reviews. We all knew the IFRs deserved some form of response by Congress, and we knew that the OCC and the Fed wanted no part of any questioning of their latest gift to predatory banks and their fraudulent practices.

But we didn’t know how much they would try to stonewall this investigation right from the outset – at least not until today, when Warren and Cummings released some of their recent correspondence with the federal regulators.