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AP’s Today in History for March 17th
St. Patrick dies; President George W. Bush gives Saddam Hussein 48 hour ultimatum; Franklin D. Roosevelt gets married; Baseball players including Mark McGwire and Sammy Sosa testify to congress about steroid use.
Breakfast Tune The Tarriers: “Bile Them Cabbage Down”
Something to think about, Breakfast News & Blogs below
follow url KAMALA HARRIS CELEBRATES HER ROLE IN THE MORTGAGE CRISIS SETTLEMENT. THE REALITY IS QUITE DIFFERENT.
David Dayen, The Intercept
PRETTY MUCH EVERY major Democratic official involved in responding to the foreclosure crisis during the Obama years did an unforgivably terrible job. That’s how we wound up with 10 million families losing their homes, an unprecedented disaster that touched every corner of America and triggered the populist backlash we’re living through today.
There isn’t a particular individual to single out and blame for the party’s failure, and that’s not what this story is doing. Kamala Harris’s role in the affair was no more or less tragic than anyone else’s. But now that she’s running for president, Harris is not only eliding responsibility for her part in the failure, but claiming it as an outright success. That claim doesn’t withstand a moment’s scrutiny.
“We went after the five biggest banks in the United States. We won $20 billion together,” Harris said in her initial campaign address in Oakland, California. She has highlighted the settlement for years as an example of her record of taking on powerful interests.
When Harris departed in September 2011, the deal being discussed by the task force with five banks was for around $20 billion; the final deal, which she returned to in February 2012, totaled $25 billion. The Obama White House, which wanted to take action against banks in an election year, put extreme pressure on the dissident attorneys general and got them to roll over for a relative pittance. And even this headline number wildly overstates the penalty for the banks and the benefit for homeowners.
The national mortgage settlement only included $5 billion in actual hard dollars: $3.5 billion to the states, and another $1.5 billion in “sorry you illegally lost your home” checks for foreclosure victims. The checks totaled $1,480 each, barely a month’s rent in California. As for the state relief, Harris and her fellow negotiators never mandated that the money go toward helping homeowners. So, like many others, California Gov. Jerry Brown purloined most of the state’s $410 million share to fill holes in the budget. Years later, private litigants sued the state for robbing the settlement fund and won, but the state has yet to return the money, years after it could have done much good.
When Harris talks about how she “won $20 billion” for the state, she isn’t referring to those hard-dollar provisions. She means the consumer relief portion of the settlement, which were credits given to banks for assisting struggling homeowners with their mortgages. The credits were lower than the raw dollar figure, but Harris always highlights the higher number. In addition, banks could modify loans they serviced on behalf of investors, who took the actual hit. This means that banks paid much of their fine with other people’s money.
Of the $20 billion Harris touts, nearly half of it, $9.5 billion, came in the form of short sales, in which homeowners sell their properties for below the mortgage balance without having to make up the difference. That can be helpful to someone’s credit score, but it results in losing the home, the exact opposite intention of the settlement. And because California is a “non-recourse” state, lenders are prevented from seeking mortgage balances from borrowers after a home sale anyway.
In 2013, Harris’s predecessor, Sen. Barbara Boxer, got a ruling from the Internal Revenue Service that short sale forgiveness in California represented no material value to borrowers. In other words, this supposed “gift” for homeowners from Harris’s settlement totaled $0.00.
Another $4.7 billion of relief in California involved forgiveness of second mortgages like home equity lines of credit, which were deeply delinquent and “essentially dead,” according to mortgage experts. That forgiveness did not prevent lenders from pursuing foreclosure on the same families over their primary mortgages. And banks were getting credit toward their total for something they’d have had to do anyway: writing off debt that would never be collected.
So over 70 percent of Harris’s $20 billion settlement either removed people from their homes or canceled unrecoverable debt. A little less than 33,000 California families actually got principal reductions on their primary mortgages, the most sustainable type of relief.
Sadly, California made out better than the rest of the country. Nationwide, while the settlement’s architects promised 1 million principal reductions, only 83,000 received them. Set against the millions of foreclosures in this period, to call it a drop in the bucket is generous. And praising Harris for making the best of a shameful deal is faint praise indeed.
For the banks, the settlement was cause for celebration. Despite being caught red-handed in a litany of abuses, they paid off their penalty by either using other people’s money or performing routine functions. The actual impact made barely a dent in their profits. And they got a broad release from prosecution, putting their intense legal exposure behind them.
Needless to say, no bank executive went to jail for these crimes. In exchange for agreeing to the settlement, Schneiderman got to co-chair an overhyped federal-state task force that would allegedly serve as the real vehicle for criminal accountability. (Harris also wanted the gig, but Schneiderman out-maneuvered her for the position.) The task force wound up being a repository for existing cases, issuing no criminal subpoenas and merely securing more weak settlements.
Harris initiated a “mortgage strike force” to prosecute individuals, but it only brought a handful of cases, and the ones her campaign touts as triumphs were against penny-ante “foreclosure rescue” scams, not the bankers who maneuvered homeowners into foreclosure in the first place. Harris passed up the opportunity to charge OneWest Bank, then chaired by current Treasury Secretary Steven Mnuchin, with what her own investigators called “widespread misconduct” in state foreclosure cases.
Overall, the national mortgage settlement was a blight on this country, a tragic missed opportunity to rebalance the unfair burden thrown on homeowners for a financial crisis they did not cause. The architects of the settlement should be embarrassed by the very mention of it. If this is what we hold up as justice, then we have none.
Surely Harris must have better things in her record to talk about. She authored the California Homeowners Bill of Rights, which gave borrowers more protections against foreclosure, although attorneys have questioned its spotty enforcement (one major mortgage company had never even heard of the Homeowners Bill of Rights, years after its passage). And she did hire an aggressive settlement monitor, Katie Porter, who got personally involved in cases and delivered better outcomes for homeowners; Porter is now a first-term member of Congress.
But Harris is specifically praising herself for the national mortgage settlement, and that’s just appalling. Letting the biggest banks in America get away with the largest consumer fraud in American history is nothing to celebrate. It’s more deserving of an apology, for abandoning vulnerable Americans in their hour of need and damaging the noble cause of equal justice under law.
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Something to think about over coffee prozac
This is the list of what Laura Marston has sacrificed to keep herself alive: Her car, her furniture, her apartment, her retirement fund, her dog.
At 36 years old, she has already sold all of her possessions twice to afford the insulin her body needs every day.
Insulin is not like other drugs. It’s a natural hormone that controls our blood sugar levels – too high causes vision loss, confusion, nausea, and eventually, organ failure; too low leads to heart irregularities, mood swings, seizures, loss of consciousness.
For most of us, our bodies produce insulin naturally. But for Type 1 (T1) diabetics like Ms Marston, insulin comes in clear glass vials, handed over the pharmacy counter each month – if they can afford it.
One vial of the insulin Ms Marston uses now costs $275 (£210) without health insurance.
In 1923, the discoverers of insulin sold its patent for $1, hoping the low price would keep the essential treatment available to everyone who needed it.
Now, retail prices in the US are around the $300 range for all insulins from the three major brands that control the market.
Even accounting for inflation, that’s a price increase of over 1,000%.
Stories of Americans rationing insulin – and dying for it – have been making national headlines.
The most famous case, perhaps, was 26-year-old Alec Smith, who died in 2017 less than a month after he aged out of his mother’s health insurance plan. Despite working full-time making more than minimum wage, he could not afford to buy new insurance or pay the $1,000 a month for insulin without it.
Ms Marston knows the feeling – like most of the diabetics I spoke to, she has experienced frightening lapses in coverage through no fault of her own.
A few years ago, when the small law firm Ms Marston worked for abruptly closed, she found herself without an income and suddenly uninsured.
“I was spending $2,880 a month just to keep myself alive – that was more than I was making even working 50 hours a week,” says Ms Marston.
She was forced to leave her home in Richmond, Virginia, to find a new job in Washington DC to ensure she could pay for insulin.
“I sold everything, including my car, and had to give up my dog – he was eight and I had to give him away – and move to DC.”
There are any number of reasons why someone might still be uninsured in America – if they don’t qualify for employer-sponsored insurance or lose their job like Ms Marston had, for example, or if they cannot afford to pay for a plan on their own.
Ms Marston was diagnosed with T1 diabetes when she was 14. She laughs when recalling how the price of insulin in 1996 – $25 for one vial – was a shock to her.
Two decades later, Ms Marston still uses the same formula of insulin – Eli Lilly’s Humalog. Even the packaging is the same.
“Nothing about it has changed, except the price has gone up from $21 a vial to $275 a vial.”
It’s the same story for Sanofi’s Apidra and Novo Nordisk’s Novolog.