Zombeck.com

By now almost everyone has heard about Bank of America's new five dollar charge for using a debit card. It should come as no surprise that the banks would spin it as the fault of the Durbin rule that regulates excessive charges, but make no mistake those charges were always there - we just couldn't see them before.

As Kevin Drum from Mother Jones points out, "So yes: the new fees are annoying. But that's a feature, not a bug, because now they're right up front in black and white, which means that consumers will see them and can be properly outraged (or not) by them."

Citibank has also joined the party by charging $20 for checking if your balance falls below $15,000.

An amount obviously calculated as unattainable by most families, allowing the bank to maximize the amount junk fees they can collect.

While most people in this country are struggling with unemployment, foreclosure, and the choice of paying a bill or putting food on the table Wall Street continues to harvest what is left of the rotting fruit. The other 99 percent of us have become the peasant class.

The peasants, in the meantime, have taken to the streets to show their displeasure with, among a litany of other causes, the pillaging of the middle and lower classes in what has been described as economic terrorism.

According to an AP article the movement is not only growing, it's not going away anytime soon.

"The Occupy Wall Street demonstration started out last month with fewer than a dozen college students spending days and nights in Zuccotti Park. It has grown significantly, both in New York City and elsewhere as people across the country, from Boston to Los Angeles, display their solidarity in similar protests."

Of course, the response, as always, is to throw money at the annoyance.
Take JPMorgan Chase's recent donation of an unprecedented $4.6 million to the NYPD.

It's not only the largest donation in history to the foundation; it actually makes up about 4 percent of the total donations the foundation has collected in its entire 40 years.

Chase Bank's $4.6 million is certainly more than any donation to the police or fire department during the Wall Street cleanup after 9/11 or during the recent hurricane and it's come ironically close in time to when 700 protester were arrested in Brooklyn on their way to Chase Manhattan Plaza. At the very least they've identified which debris needs to be cleaned up.

Incidentally, Chase has also recently invested $400 million in Twitter - the protester's preferred means of communication.

But why throw money at the annoyance when you can more easily throw contempt and arrogance around?

The reaction by Wall Street' aristocracy to the protest is not surprising - at least not historically.

Disdain, contempt, ridicule, and the basic "let them eat cake" attitude towards the protests and outrage seems to be pretty typical and historically accurate. Gawker reported this quote from our aristocracy:

"These guys are so pathetic and it was awesome watching them get dragged around and whooped by cops. Hey dumb non tax paying hippies.. You are costing people who actually have jobs more money by making 400 extra police occupy lower manhattan (sic) for two weeks ... Can't wait to see you Guys tomorrow - I'll be the guy handing out hippie muffins for free with laxatives baked in so after you shit yourselves uncontrollably we will spray you with champagne like we won a championship game. Only if you haven't been arrested for being a duche(sic) before that"

All this while sipping "Good Riddence" champagne, snapping pictures, and pointing at laughing at the protesters from their balconies.

Read the whole piece, it really is inspiring.

What seems to be lost on the partiers however, is that historically this attitude ended with a few aristocratic beheadings.

As one protester, Alexander Holmes, told HuffPo after being arrested, that if anyone thought "15 hours of no food, no water and a jail experience that is not enjoyable would deter us," they were "completely mistaken."

The contempt, hubris and disdain for the average working stiff has become all too common among the rich and powerful. The overall consensus seems to be that the rest of us are going to have to accept that this is the way it is and we should just shut up and take it.

I recently wrote about my experiences cashing a foreign bank check after the death of my godmother in France.

In the piece I speculated that Eastern bank was delaying my funds in order to "play the float"-- where a bank holds your money, watches the ever fluctuating exchange rate, dumps it into your account at the lowest possible time and pockets the difference.

As I suspected, when I finally receive my money I lost a considerable amount of it to them. The exchange rate, after holding my check for five weeks, was considerably lower than any exchange rate posted during the dates they had my check.

I filed complaints with Attorney General's office, the Fed, the FDIC, the OCC, and the Division.

I questioned why a bank (in the 21st century) would need to hold a check for 6-8 weeks - particularly a check written directly from a bank as large as Credit Lyonnais in France (the second largest bank in the French system and the 16th largest in the world). I also questioned what exchange rate I could expect.

Rather than address my concerns, Eastern Bank's response to the FDIC was instead to complain about me. In a three page letter, on behalf of the CEO Richard Holbrook, Vice President Joseph Riley, whom I never dealt with, essentially whines about my attitude and how difficult I was with all my pesky questions. You'd think that I had violated some customer agreement by having the audacity to ask what they were doing with my money.

Not once in the three pages do they address why it took them so long or why no one I spoke to could give me the exchange rate I could expect. To date I have no legitimate response as to how they came to the ridiculously low and apparently arbitrary exchange rate.
Mr. Riley writes in his letter to the FDIC:

During the timeframe defined as from Eastern bank's receipt of the check until July 25th, Mr. Zombeck was also calling Eastern bank's Customer Service Center inquiring into the status of his check collection. Specifically, he called on June 27th and 28th and July 11, 13th and 25th. All of those interactions involve the same line of questioning that is summarized above and to which he received the same answers.

The answer Mr. Riley refers to however, over and over again was: "We don't have an answer."
Mr. Riley and Mr. Holbrook apparently see this as perfectly acceptable response. Basically their way of saying to a customer, "Screw you. You'll take what we give you. What we do with your money is none of your business."

The reaction and hubris are consistent with the rest of the larger banks and the contempt is palpable.

I read an article on Yahoo news shortly after the incident while I was shopping for a new bank:

Dissatisfied customers will be able to switch banks more easily by signing just one form under an initiative announced by the federal government. [C]ustomers would sign one form that authorizes their new financial institution to do all the work for them. The new institution would transfer all automatic transactions and inform associated creditors and debtors about the new account details.

"This initiative will give consumers the power to easily switch to another bank, building society or credit union if their existing institution isn't providing good value and service," Mr. Swan said in a statement.

Unfortunately it's about a new service that Australia's Treasury is providing. That's right; a country essentially started by criminals looks out for its consumers while this country helps its criminals screw consumers.

I may be little more than annoyance to Eastern Bank - not even worth a phone call or an explanation. The protests across the country are, it would appear, also an annoyance. Some have made the point that the protests have no direction, no defined goal, and no clear list of demands. I would submit that there is too much at stake to take aim at one issue. The frustration and helplessness that comes from being told time and time again that this is the way it is and we should just accept has come to a boiling point.

I moved my money out of Eastern Bank to a credit union. And so far it's been a painless and, for the most part, pleasurable experience. The bank's manger answers my calls, they reimburse me for foreign ATM fees, and I don't' have a bunch of weird inexplicable charges randomly appearing on my statement.

I suggest you do the same and stop being harvested one $20 charge at a time. Start there and then lend your support to the people camping out on your behalf demanding change. Any change. I'm with #occupywallstreet here. Any change would be better than the status quo.

http://www.huffingtonpost.com/richard-zombeck/post_2507_b_992989.html

John O'Brien, Registry of Deeds for Southern Essex County in Massachusetts is asking that Tom Miller, Iowa Attorney General, step down. Miller is the lead AG in the controversial settlement with the big banks on mortgage servicing fraud.

In his most recent obscene act Miller kicked Attorney General Eric Schneiderman off of the 50-state task force probing foreclosure abuses and negotiating a possible settlement agreement with the mortgage firms.

Schneiderman, a Democrat who's in his first term as New York's top law enforcer, has been among a group of state legal officers who has opposed a speedy resolution. He's leading his own investigation into mortgage improprieties, subpoenaing documents from the nation's largest financial institutions and reviewing court records for possible illegal home repossessions.

When Schneiderman launched the investigation in April. He said he was "stunned" to find the multi-state probe so lacking that no documents or witness depositions had been obtained.

"We have no leverage," Schneiderman said in an interview with the Democrat and Chronicle.

Schneidernan getting kicked off the committee should come as no surprise to anyone following the foreclosure negotiations and is sickeningly similar to Pam Bondi, Florida's Attorney General firing Theresa Edwards and June Clarkson, who were heading up investigations on a series of mortgage related crimes for over a year.

While Bondi insists that the firings were a result of poor job performance, Miller points more towards attitude and that Schneiderman is somehow not a team player.

"New York has actively worked to undermine the very same multistate group that it had spent the previous nine months working very closely with," Miller said. "While we certainly respect the right of any state to choose to no longer participate in a multistate and to pursue another path, working to actively undermine a multistate while still a member of the Executive Committee simply doesn't make sense, is unprecedented and is unacceptable. Accordingly, today I informed New York that it is no longer a member of the Executive Committee."

"This is like Pam Bondi firing the two assistant AGs in Florida," O'Brien said. "Miller claims that Schneiderman was undermining the negotiations. Why wouldn't he since the negotiations are far from being in the best interest of homeowners and the general public? This settlement clearly favors the banks and I'm one hundred percent behind Eric Schneiderman. This is an outrage and they are beginning the process of selling the American people down the drain I say Miller should step down and all AGs should be appalled at what has happened."

Schneiderman's removal will likely make it easier for state and federal officials to reach an accord with the five banks. However, the potential amount of money they'll be able to extract will likely decrease.
American Banker posted the 27 term sheet of the negotiations presented to the banks with major servicing operations by the AGs and Federal Banking Regulators.

The deal completely handcuffs state attorneys general whose constituents are suffering serious economic damage as a result of the foreclosure fiasco and fraud by the banks and servicers.
When the investigation into robo-signing and fraud, Tom Miller had a brief moment of righteous advocacy until he received $261,445 in campaign contributions from out-of-state law firms and donors from the finance, insurance, and real estate sector shortly after he announced he was seeking criminal charges and retribution from the banks for mortgage fraud -- that's 88 times what he has received in the past decade.

Yves Smith over at Naked Capitalism had this to say in an extensive piece on the matter that's well worth the read:

Josh Rosner, in an analysis for clients (no online source), argues that if a private sector attorney negotiated a deal like this, he'd be at risk of being sued for malpractice:

This "term sheet" may well tie the hands of states from bringing actions against prior improper servicing and back-end/foreclosure practices AS WELL AS improper front-end or assignment practices....If a private-sector lawyer, representing any harmed party, settled for damages without an investigation of actual damages they would likely be exposing themselves to malpractice, why would that not be the case here?

In other words, this is simply another example of how the too big to fail banks are chipping away at the rule of law. The banks have over time have fought successfully to reduce the influence of state laws and regulations on their business while increasingly bending the Federal regulatory apparatus to their will. But the state AGs are still enough of a force to be reckoned with that the Federal bank regulators are now applying considerable to pressure them into abandoning initiatives that could help homeowners in their states. Hopefully at least a few of these AGs will wake up and have the self-preservation instincts to realize that this settlement is not in their or their constituents' best interests.

The state attorneys general are under a lot of pressure to let the banks walk free with this deal. Homeowners on the other hand will suffer the consequences for years to come.

"I urge anyone in this country who owns property, or thinks they own property, to contact their states Attorney General and let them know that we are opposed to this agreement," O'Brien said. "Demand that they do actual investigations and audits like we did in Essex County when we uncovered thousands of fraudulent documents in our registry."

You can find the appropriate numbers here.

http://www.huffingtonpost.com/richard-zombeck/john-obrien-ma-registry-o_b_935417.html

There are some rumblings that the Department of Justice is putting the pressure on state attorneys general to sign onto the controversial $20 billion mortgage settlement deal this week that could release banks from legal claims in state investigations and law suits.

Monday, Massachusetts Attorney General Martha Coakley joined a handful of dissenters in announcing that she will oppose the inclusion of the issues surrounding MERS in any deal.

MERS (Mortgage Electronic Registration System) as pointed out by Abigail Field in a recent post on Reality Check:

... was set up thoughtlessly, without regard to its basic legality, and designed with only two objectives: lowering the mortgage industry's costs and maximizing its convenience. As a result, MERS has none of the advantages of the centuries-old system it was intend to replace, and largely has. MERS is not accurate, not transparent, and not accountable to the public. To let MERS continue simply allows it to continue wreaking havoc on property records and the legal morass it's created to continue tangling foreclosure and bankruptcy cases nationwide.

Homeowner advocates and activists have long argued that mortgages transferred via the MERS system but not recorded with local registries of deeds are invalid and that land titles on thousands of homes are "clouded". Homeowners with clouded titles could find it impossible to sell or refinance their properties without going to court to clean up problems.

Register John O'Brien, of the Southern Essex County Registry of Deeds has been pushing Coakley to investigate these issues and asked that she not agree to settle with the big banks.

Once again I am asking Attorney General Martha Coakley and the other state Attorney's General to follow the lead of New York Attorney General Eric Schneiderman and stop any settlement talks with the banks. The results of this report are only for my registry, but I can assure you that this type of criminal fraud is rampant across the nation. This leaves me to question why anyone would consider settling with these banks until we know the full extent of the damage that they have caused to the homeowners chain of title across this country and the amount of money they have bilked the taxpayers for their failure to pay recording fees.

New York Attorney General Eric Schneiderman launched his own investigation in April. He said he was "stunned" to find the multi-state probe so lacking that no documents or witness depositions had been obtained.
"We have no leverage," Schneiderman said in an interview with the Democrat and Chronicle.

Elizabeth Warren, a senior adviser to President Barack Obama agrees. She recently told a congressional panel that government agencies may not have fully investigated claims that borrowers' homes were illegally seized by banks.

"I think there's a real question about whether there's been adequate investigation," said Warren, also the temporary custodian of the Bureau of Consumer Financial Protection at the time - a new federal agency created to protect borrowers from abusive lenders.

In addition to O'Brien's communications with Coakley, Massachusetts residents have also been active in voicing their concerns. In a letter, signed by 24 Massachusetts homeowners, Senka Huskic, a Peabody MA resident and a blogger at Home Preservation Network wrote on behalf of Massachusetts homeowners:

The results of Wall Street's fraud are numerous foreclosures, topped with the ignorance that works well for those who committed the biggest financial crime in the history of the world. Nothing will change until those responsible for this scam are prosecuted! We must do that, and we should not rest until the truth is out and the correct people are held responsible. We have had enough of being robbed blind, of paying inflated mortgages, of rescuing criminals with our tax money! We have to stand up for our kids, and Register O'Brien is there to stand up for us and with us!

Monday, we finally decided to stop being a statistic, to stop being just a number in the books of the rich and powerful. Monday, we stood up and realized that the future of our lives lies in our hands and no one else's. Our search for American Dream is becoming an all-out battle for our basic needs. The big dream is dispersing before our eyes and we're left to face the biggest financial disaster ever.

We would like to use this opportunity to ask you to join Register O'Brien, New York Attorney General Eric Schneiderman, and many others who stood up to the "too big to fail," realizing that only the American people are too big to fail. We would like to ask you to immediately cease negotiations with the perpetrators of the mortgage fraud securitization who are not able to prove that they own the houses on which they are foreclosing upon. The only way for a homeowner to prove that is to sue the bank. We all know that this means if you don't have money, very soon you won't have your house either.

You, as the state's chief legal prosecutor, must stand up for us and demand answers, demand justice. The very word NEGOTIATION describes communication between at least two sides with the intent to achieve an agreement among everyone involved. So how can we expect that the side which created, implemented, and is still proceeding with the biggest financial crime in the history of this country could have anyone's best interest in mind, other than their own?

Fortunately for us, here in Massachusetts, Martha Coakley has no problem going after banks and mortgage servicers.

Coakley slammed MERS in a Boston Herald interview on Tuesday.

"From predatory loans to 'robo-signing' to servicing fraud, the banks continue to go merrily on their way while consumers, the real estate industry and the commonwealth of Massachusetts are being cheated," Coakley said.

"The inability to get a handle on the instability in the real estate market continues to affect Massachusetts and the entire national economy," she said.

Massachusetts, once again is leading the charge and forging ahead into uncharted waters. From the Supreme Judicial Court having handed down an important decision in the Ibanez case to O'Brien relentlessly advocating for homeowners, the securitization industry's argument that the pooling and servicing agreement was sufficient grounds to transfer of the mortgages to the trust has suffered some significant blows in Massachusetts.

Taking into consideration that the Massachusetts Supreme Court is widely considered one of the best courts in the country, these are not insignificant acts.

Coakley promised to exclude the MERS issue from any deal until she fully investigates the problem's scope.
"Massachusetts will not sign on to any global agreement with the banks if it includes a comprehensive liability release regarding securitization and the MERS conduct," she wrote in a letter Monday to all 21 Massachusetts county registers of deeds.

O'Brien, who spearheaded the drive against the paperwork flaws, was pleased with the announcement.

"I think this sends a message loud and clear to MERS and their shareholder banks that Massachusetts will hold them accountable," O'Brien said.

In the wake of the scandal in Florida (one of the hardest hit areas in the country), whose Attorney General, Pam Bondi, fired two investigators for actually doing their job and going after foreclosure mills, it gives me hope to live in a state where public officials take their job of protecting and defending the public seriously.

http://www.huffingtonpost.com/richard-zombeck/post_2212_b_910015.html

This post can laso be read at Huffington Post

We live under the unfortunate false assumption that the money we make and put in the bank is ours. That we can access it at any time and that we have a right to it. After all this is America. Once upon a time, in America, the money you put in the bank (your money) could yield 5 to 6 percent interest. It was a form of shared compensation from the bank for using your money to invest or loan to other people and businesses.

Today, we are subjected to a never ending onslaught of fees, fines, and arbitrary charges that pop up when we least expect it. Some banks are seriously considering a tellers fee. If you walk into a bank and talk to a teller, you're charged a fee.

It's become almost comical to watch as the financial industry systematically ravages everyday people in this country and then watch as our elected officials oppose an organization that would protect their constituents from being fleeced.

Forty-four Republican Senators wrote a letter saying that they will block anyone from serving as Director of the newly formed Consumer Financial Protection Bureau -- an agency that we, the consumer, need now more than ever.

Elizabeth Warren, recently addressed that issue in a recent HuffPost piece:

I hope that when those Senators next go home, they ask their constituents how they feel about fine print, about signing contracts with terms that are incomprehensible, and about learning the true costs of a financial transaction only later when fees are piled on or interest rates are reset. I hope they will ask the people in their districts if they are opposed to an agency that is working to make prices clear or if they think budgets should be cut for an agency that is trying to make sure that trillion-dollar banks follow the law.

For some reason we've all accepted these crimes as normal. That it's normal to pay a bank for the privilege of using your money to gamble with and in some cases lose. That it's normal to be charged ridiculous fees for things we were never told about; that arbitrary policies can pop-up at any time, and that banks can hold our money hostage.

In a recent post on Credit Slips, Adam Levitin, Professor of Law at Georgetown University, wrote about an arbitrary charge that he received when transferring money to his American bank account from Israel.

I recently received a reimbursement payment from an Israeli university for some travel expenses for a talk. The reimbursement was for $553 and was done via wire transfer. To my surprise, my account was only credited with $525. $28 was taken out as a fee. I inquired with my bank about this, and they said that they didn't charge the fee -- it must have been an intermediary bank. But the wire transfer receipt didn't indicate any intermediary. In fact, I was surprised to hear that there was an intermediary -- the transfer was from one of Israel's largest banks to the largest bank in the United States.

I'm rather puzzled by this fee. I didn't agree to it, as far as I know (although who knows what is buried in my bank account agreement). There was no indication of how it was calculated, etc., or to whom it was paid, only an indication that $28 was taken out of the transfer.

I recently received the check from one of the largest banks in France as part of a life insurance policy from my recently deceased godmother -- a bank check in euros. I deposited the check in my account nearly a month ago and have yet to have access to any of those funds. According to my bank, Eastern Bank of Massachusetts, the process of cashing a check from a foreign bank can take 6-8 weeks. A detail they didn't tell me about until a few days later.

The bank in France however, claims that the funds were debited and made available on July 5 (a week after my deposit) but Eastern Bank claims it could take until the end July or longer. Meanwhile my money is floating around and being used to invest, speculate, and gain interest for someone else -- in short, make someone else more money.

Eastern Bank is a regional New England bank with assets upwards of $6.7 billion. My wife and I chose it in order to avoid having to deal with behemoths like Bank of America and Wells Fargo. We figured, naïvely, that a bank of this size was small enough to care about customers, yet big enough to meet our business and personal needs.

Like with any bank however, as we see in countless stories of abuses by banks, the customer doesn't matter and neither does their money, at least not once it becomes the bank's money. I spent several hours over the course of a few days on the phone with customer service or in branch offices with absolutely no results and no explanation as to where my money is.

Neither Teresa Sarno nor Estela Budo, Eastern Bank Assistant VP and Assistant Manager respectively, could tell me where my check was or what process was used to retrieve the funds. Nor could they tell me when I could expect the funds. The only thing that they could tell me however, was that I would get the exchange rate that is posted on the day my funds were deposited to my account -- which, as of today is significantly less than what it was the day I deposited it. The actual numbers are irrelevant, but let's say that the amount I've lost so far (and the euro is dropping) is somewhere between a night on the town and an entire month's pay, depending on what rung of the socioeconomic ladder you find yourself. I'm going to guess that Eastern Bank's customers aren't pulling in multimillion dollar Wall Street salaries, so the misuse and disregard for other people's money in this case is borne by the people who can least afford it and have the most to lose. In all, it would have been cheaper for me to fly to France and cash the check myself.

What's particularly concerning in all of this is that neither an Assistant Manager nor a Vice President of a significantly large bank can tell me where my money is, who has it, what bank or country it's in, or why it's taking so long to make it to my account. So really, the exchange rate is completely arbitrary and doesn't quite follow the rules of reality.

If I were to use my debit card to buy a signed picture or a T-shirt of the Dalai Lama from a mountaintop gift shop in Tibet, the transaction would show up instantaneously, charges would be applied in the blink of an eye, and if I was for any reason overdrawn, I'd get hit with a fee far exceeding the price of a T-shirt.

A check, by definition, is a legal contract between two parties, given to a bank in good faith to act as an intermediary to retrieve those funds. It is not handed over to them to gamble with or "play the float" -- where a bank holds your money, watches the ever fluctuating exchange rate, dumps it into your account at the lowest possible time and pockets the difference.

I called the Attorney General's office, the Fed, the FDIC, the OCC, and the Division Banking to try to get answers about this. Not one of those agencies could provide an adequate response as to who handles these complaints and according to some who didn't want to be on the record, the matter is unregulated.

We've been conditioned to think that a shoulder shrug and a simple "I don't know what to tell you" or "I'm sorry you feel that way" from the VP of a bank is an acceptable answer to what happened to our money and that the intricate workings of the financial markets are too complex for us to understand, when the simple fact is that we have little control over our own money and we're essentially just handing it over for them to play with until it's no longer profitable. At which point they toss us whatever is left over.

Incidentally Bank of America and PNC, both of whom Eastern Bank apparently uses for foreign transactions, told me that as an account holder my money would be available to me the next day. Out of curiosity, I also called a handful of credit unions in the area, all of whom quoted me a time frame of 5 to 10 days.

I reached out to a few of the highly competent attorneys on our network at Home Preservation Network to ask about this very topic. Here's one of the emails I got back from Florida attorney Matt Weidner:

What if Americans finally just got totally fed up, and every time they were abused they marched into court and filed suit? Talk about a revolution. Talk about death by ten million cuts. Improper fee... lawsuit. Improper hold.... lawsuit. Lying on marketing material... lawsuit. Manipulate stock returns.... lawsuit.

Our American court system is supposed to be a forum for redressing abuses right? Our entire country is grounded on the notion that there is a higher law and that the higher law is owned by the people, right?

Screw the elections. We're all ignoring the third branch of government. In reality, the only one in which we have immediate, guaranteed, and very inexpensive access. I'm tired of hearing people complain without standing up and doing something -- either symbolic or practical.
The law is not just for lawyers. Our courts are not just for attorneys. Our courts are FOR THE PEOPLE.

You really want to get their attention? Make these multi-national corporations face lawsuits for their bad conduct in every single county court in this country. Screw them and their $600/hour attorneys. Screw them and their call centers in India. File a small claims case and drag their asses into a dirty, cramped small claims court.

I'm thinking that an action like that, by the tens of thousands of people experiencing what I'm experiencing, might send a message. It's clear that not everyone in America is cashing checks from foreign countries, but there are enough doing so that "playing the float" is more than likely a profit center worth tens of millions of dollars to the banks. There are more ways to rob people that holding on to foreign currency and certainly more ways to hold money hostage.

Once upon a time in America, people used to stand up for themselves and have the self-respect and dignity to take their business elsewhere when they knew they were getting screwed. At least there was a cop on the beat you could call when you were robbed and we protected our citizens. Today we hand the crooks the keys and help them load up the truck.

This si one of the few speeches I can refer to time and time again. Moyers paints a clear picture of how the mighty (America) has fallen and what little we really have to look forward to.

Bill Moyers speech at Boston University on October 29, 2010, as a part of the Howard Zinn Lecture Series.

I was honored when you asked me to join in celebrating Howard Zinn’s life and legacy. I was also surprised. I am a journalist, not a historian. The difference between a journalist and an historian is that the historian knows the difference. George Bernard Shaw once complained that journalists are seemingly unable to discriminate between a bicycle accident and the collapse of civilization. In fact, some epic history can start out as a minor incident. A young man named Paris ran off with a beautiful woman who was married to someone else, and the civilization of Troy began to unwind. A middle-aged black seamstress, riding in a Montgomery bus, had tired feet, and an ugly social order began to collapse. A night guard at an office complex in Washington D.C. found masking tape on a doorjamb, and the presidency of Richard Nixon began to unwind. What journalist, writing on deadline, could have imagined the walloping kick that Rosa Park’s tired feet would give to Jim Crow? What pundit could have fantasized that a third-rate burglary on a dark night could change the course of politics? The historian’s work is to help us disentangle the wreck of the Schwinn from cataclysm. Howard famously helped us see how big change can start with small acts.

We honor his memory. We honor him, for Howard championed grassroots social change and famously chronicled its story as played out over the course of our nation’s history. More, those stirring sagas have inspired and continue to inspire countless people to go out and make a difference. The last time we met, I told him that the stories in A People’s History of the United States remind me of the fellow who turned the corner just as a big fight broke out down the block. Rushing up to an onlooker he shouted, “Is this a private fight, or can anyone get in it?” For Howard, democracy was one big public fight and everyone should plunge into it. That’s the only way, he said, for everyday folks to get justice – by fighting for it.

I have in my desk at home a copy of the commencement address Howard gave at Spelman College in 2005. He was chairman of the history department there when he was fired in 1963 over his involvement in civil rights. He had not been back for 43 years, and he seemed delighted to return for commencement. He spoke poignantly of his friendship with one of his former students, Alice Walker, the daughter of tenant farmers in Georgia who made her way to Spelman and went on to become the famous writer. Howard delighted in quoting one of her first published poems that had touched his own life:

It is true
I’ve always loved
the daring ones
like the black young man
who tried to crash
all barriers
at once,
wanted to swim
at a white beach (in Alabama)
Nude.

That was Howard Zinn; he loved the daring ones, and was daring himself.

One month before his death he finished his last book, The Bomb. Once again he was wrestling with his experience as a B-17 bombardier during World War II, especially his last mission in 1945 on a raid to take out German garrisons in the French town of Royan. For the first time the Eighth Air Force used napalm, which burst into liquid fire on the ground, killing hundreds of civilians. He wrote, “I remember distinctly seeing the bombs explode in the town, flaring like matches struck in the fog. I was completely unaware of the human chaos below.” Twenty years later he returned to Royan to study the effects of the raid and concluded there had been no military necessity for the bombing; everyone knew the war was almost over (it ended three weeks later) and this attack did nothing to affect the outcome. His grief over having been a cog in a deadly machine no doubt confirmed his belief in small acts of rebellion, which mean, as Howard writes in the final words of the book, “acting on what we feel and think, here, now, for human flesh and sense, against the abstractions of duty and obedience.”

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His friend and long-time colleague writes in the foreword that “Shifting historical focus from the wealthy and powerful to the ordinary person was perhaps his greatest act of rebellion and incitement.” It seems he never forget the experience of growing up in a working class neighborhood in New York. In that spirit, let’s begin with some everyday people.

***

When she heard the news, Connie Brasel cried like a baby.

For years she had worked at minimum-wage jobs, until 17 years ago, when she was hired by the Whirlpool refrigerator factory in Evansville, Indiana. She was making $ 18.44 an hour when Whirlpool announced earlier this year that it was closing the operation and moving it to Mexico. She wept. I’m sure many of the other eleven hundred workers who lost their jobs wept too; they had seen their ticket to the middle class snatched from their hands. The company defended its decision by claiming high costs, underused capacity, and the need to stay competitive. Those excuses didn’t console Connie Brasel. “I was becoming part of something bigger than me,” she told Steven Greenhouse of the New York Times. “Whirlpool was the best thing that ever happened to me.”

She was not only sad, she was mad. “They didn’t get world-class quality because they had the best managers. They got world-class quality because of the United States and because of their workers.”

Among those workers were Natalie Ford, her husband and her son; all three lost their jobs. “It’s devastating,” she told the Times. Her father had worked at Whirlpool before them. Now, “There aren’t any jobs here. How is this community going to survive?”

And what about the country? Between 2001 and 2008, about 40,000 US manufacturing plants closed. Six million factory jobs have disappeared over the past dozen years, representing one in three manufacturing jobs. Natalie Ford said to the Times what many of us are wondering: “I don’t know how without any good-paying jobs here in the United States people are going to pay for their health care, put their children through school.”

Now, if Connie Brasel and Natalie Ford lived in South Carolina, they might have been lucky enough to get a job with the new BMW plant that recently opened there and advertised that the company would hire one thousand workers. Among the applicants? According to the Washington Post; “a former manager of a major distribution center for Target; a consultant who oversaw construction projects in four western states; a supervisor at a plastics recycling firm. Some held college degrees and resumes in other fields where they made more money.” They will be paid $15 an hour – about half of what BMW workers earn in Germany

In polite circles, among our political and financial classes, this is known as “the free market at work.” No, it’s “wage repression,” and it’s been happening in our country since around 1980. I must invoke some statistics here, knowing that statistics can glaze the eyes; but if indeed it’s the mark of a truly educated person to be deeply moved by statistics, as I once read, surely this truly educated audience will be moved by the recent analysis of tax data by the economists Thomas Piketty and Emmanuel Saez. They found that from 1950 through 1980, the share of all income in America going to everyone but the rich increased from 64 percent to 65 percent. Because the nation’s economy was growing handsomely, the average income for 9 out of l0 Americans was growing, too – from $17,719 to $30,941. That’s a 75 percent increase in income in constant 2008 dollars.

But then it stopped. Since 1980 the economy has also continued to grow handsomely, but only a fraction at the top have benefitted. The line flattens for the bottom 90% of Americans. Average income went from that $30,941 in 1980 to $31,244 in 2008. Think about that: the average income of Americans increased just $303 dollars in 28 years.

That’s wage repression.

Another story in the Times caught my eye a few weeks after the one about Connie Brasel and Natalie Ford. The headline read: “Industries Find Surging Profits in Deeper Cuts.” Nelson Schwartz reported that despite falling motorcycle sales, Harley-Davidson profits are soaring – with a second quarter profit of $71 million, more than triple what it earned the previous year. Yet Harley-Davidson has announced plans to cut fourteen hundred to sixteen hundred more jobs by the end of next year; this on top of the 2000 job cut last year.

The story note: “This seeming contradiction – falling sales and rising profits – is one reason the mood on Wall Street is so much more buoyant than in households, where pessimism runs deep and unemployment shows few signs of easing.”

There you see the two Americas. A buoyant Wall Street; a doleful Main Street. The Connie Brasels and Natalie Fords – left to sink or swim on their own. There were no bailouts for them.

Meanwhile, Matt Krantz reports in USA TODAY that “Cash is gushing into company’s coffers as they report what’s shaping up to be a third-consecutive quarter of sharp earning increases. But instead of spending on the typical things, such as expanding and hiring people, companies are mostly pocketing the money or stuffing it under their mattresses.” And what are their plans for this money? Again, the Washington Post:

“…. Sitting on these unprecedented levels of cash, U.S. companies are buying back their own stock in droves. So far this year, firms have announced they will purchase $273 billion of their own shares, more than five times as much compared with this time last year… But the rise in buybacks signals that many companies are still hesitant to spend their cash on the job-generating activities that could produce economic growth.”

That’s how financial capitalism works today: Conserving cash rather than bolstering hiring and production; investing in their own shares to prop up their share prices and make their stock more attractive to Wall Street. To hell with everyone else.

Hear the chief economist at Bank of America Merrill Lynch, Ethan Harris, who told the Times: “There’s no question that there is an income shift going on in the economy. Companies are squeezing their labor costs to build profits.”

Or the chief economist for Credit Suisse in New York, Neal Soss: As companies have wrung more savings out of their work forces, causing wages and salaries barely to budge from recession lows, “profits have staged a vigorous recovery, jumping 40 percent between late 2008 and the first quarter of 2010.”

Just this morning the New York Times reports that the private equity business is roaring back: “While it remains difficult to get a mortgage to buy a home or to get a loan to fund a small business, yield-starved investors are creating a robust market for corporate bonds and loans.”

If this were a functioning democracy, our financial institutions would be helping everyday Americans and businesses get the mortgages and loans – the capital – they need to keep going; they’re not, even as the financiers are reaping robust awards.

Yes, Virginia, there is a Santa Claus. But he’s run off with all the toys.

Late in August I clipped another story from the Wall Street Journal. Above an op-ed piece by Robert Frank the headline asked: “Do the Rich Need the Rest of America?” The author didn’t seem ambivalent about the answer. He wrote that as stocks have boomed, “the wealthy bounced back. And while the Main Street economy” [where the Connie Brasels and Natalie Fords and most Americans live] “was wracked by high unemployment and the real-estate crash, the wealthy – whose financial fates were more tied to capital markets than jobs and houses – picked themselves up, brushed themselves off, and started buying luxury goods again.”

Citing the work of Michael Lind, at the Economic Growth Program of the New American Foundation, the article went on to describe how the super-rich earn their fortunes with overseas labor, selling to overseas consumers and managing financial transactions that have little to do with the rest of America, “while relying entirely or almost entirely on immigrant servants at one of several homes around the country.”

Right at that point I remembered another story that I had filed away three years ago, also from the Wall Street Journal. The reporter Ianthe Jeanne Dugan described how the private equity firm Blackstone Group swooped down on a travel reservation company in Colorado, bought it, laid off 841 employees, and recouped its entire investment in just seven months, one of the quickest returns on capital ever for such a deal. Blackstone made a killing while those workers were left to sift through the debris. They sold their homes, took part-time jobs making sandwiches and coffee, and lost their health insurance.

That fall, Blackstone’s chief executive, Stephen Schwarzman, reportedly worth over $5 billion, rented a luxurious resort in Jamaica to celebrate the marriage of his son. According to the Guardian News, the Montego Bay facility alone cost $50,000, plus thousands more to sleep 130 guests. There were drinks on the beach, dancers and a steel band, marshmallows around the fire, and then, the following day, an opulent wedding banquet with champagne and a jazz band and fireworks display that alone cost $12,500. Earlier in the year Schwarzman had rented out the Park Avenue Armory in New York (near his 35-room apartment) to celebrate his 60th birthday at a cost of $3 million. So? It’s his money, isn’t it? Yes, but consider this: The stratospheric income of private-equity partners is taxed at only 15 percent – less than the rate paid, say, by a middle class family. When Congress considered raising the rate on their Midas-like compensation, the financial titans flooded Washington with armed mercenaries – armed, that is, with hard, cold cash – and brought the “debate” to an end faster than it had taken Schwartzman to fire 841 workers. The financial class had won another round in the exploitation of working people who, if they are lucky enough to have jobs, are paying a higher tax rate than the super-rich.

So the answer to the question: “Do the Rich Need the Rest of America?” is as stark as it is ominous: Many don’t. As they form their own financial culture increasingly separated from the fate of everyone else, it is “hardly surprising,” Frank and Lind concluded, “ that so many of them should be so hostile to paying taxes to support the infrastructure and the social programs that help the majority of the American people.”

You would think the rich might care, if not from empathy, then from reading history. Ultimately gross inequality can be fatal to civilization. In his book Collapse: How Societies Choose to Fail or Succeed, the Pulitzer Prize-winning anthropologist Jared Diamond writes about how governing elites throughout history isolate and delude themselves until it is too late. He reminds us that the change people inflict on their environment is one of the main factors in the decline of earlier societies. For example: the Mayan natives on the Yucatan peninsula who suffered as their forest disappeared, their soil eroded, and their water supply deteriorated. Chronic warfare further exhausted dwindling resources. Although Mayan kings could see their forests vanishing and their hills eroding, they were able to insulate themselves from the rest of society. By extracting wealth from commoners, they could remain well-fed while everyone else was slowly starving. Realizing too late that they could not reverse their deteriorating environment, they became casualties of their own privilege. Any society contains a built-in blueprint for failure, Diamond warns, if elites insulate themselves from the consequences of their decisions, separated from the common life of the country.

Yet the isolation continues – and is celebrated. When Howard came down to New York last December for what would be my last interview with him, I showed him this document published in the spring of 2005 by the Wall Street giant Citigroup, setting forth an “Equity Strategy” under the title (I’m not making this up) “Revisiting Plutonomy: The Rich Getting Richer.”

Now, most people know what plutocracy is: the rule of the rich, political power controlled by the wealthy. Plutocracy is not an American word and wasn’t meant to become an American phenomenon – some of our founders deplored what they called “the veneration of wealth.” But plutocracy is here, and a pumped up Citigroup even boasted of coining a variation on the word— “plutonomy”, which describes an economic system where the privileged few make sure the rich get richer and that government helps them do it. Five years ago Citigroup decided the time had come to “bang the drum on plutonomy.”

And bang they did. Here are some excerpts from the document “Revisiting Plutonomy;”

“Asset booms, a rising profit share and favorable treatment by
market-friendly governments have allowed the rich to prosper… [and] take an increasing share of income and wealth over the last 20 years.”

“…the top 10%, particularly the top 1% of the United States –
the plutonomists in our parlance – have benefitted disproportionately from the recent productivity surged in the US… [and] from globalization and the productivity boom, at the relative expense of labor.”

“… [and they] are likely to get even wealthier in the coming years. Because the dynamics of plutonomy are still intact.”

I’ll repeat that: “The dynamics of plutonomy are still intact.” That was the case before the Great Collapse of 2008, and it’s the case today, two years after the catastrophe. But the plutonomists are doing just fine. Even better in some cases, thanks to our bailout of the big banks.

As for the rest of the country: Listen to this summary in The Economist – no Marxist journal – of a study by Pew Research:

More than half of all workers today have experienced a spell of
unemployment, taken a cut in pay or hours or been forced
to go part-time. The typical unemployed worker has been
jobless for nearly six months. Collapsing share and house
prices have destroyed a fifth of the wealth of the average
household. Nearly six in ten Americans have cancelled or
cut back on holidays. About a fifth say their mortgages are
underwater. One in four of those between 18 and 29 have
moved back in with their parents. Fewer than half of all adults
expect their children to have a higher standard of living than
theirs, and more than a quarter say it will be lower. For many
Americans the great recession has been the sharpest trauma since
The Second World War, wiping out jobs, wealth and hope itself.

Let that sink in: For millions of garden-variety Americans, the audacity of hope has been replaced by a paucity of hope.

Time for a confession. The legendary correspondent Edward R. Murrow told his generation of journalists that bias is okay as long as you don’t try to hide it. Here is mine: Plutocracy and democracy don’t mix. Plutocracy too long tolerated leaves democracy on the auction block, subject to the highest bidder.

Socrates said to understand a thing, you must first name it. The name for what’s happening to our political system is corruption – a deep, systemic corruption. I urge you to seek out the recent edition of Harper’s Magazine. The former editor Roger D. Hodge brilliantly dissects how democracy has gone on sale in America. Ideally, he writes, our ballots purport to be expressions of political will, which we hope and pray will be translated into legislative and executive action by our pretended representatives. But voting is the beginning of civil virtue, not its end, and the focus of real power is elsewhere. Voters still “matter” of course, but only as raw material to be shaped by the actual form of political influence – money.

The article is excerpted from Hodge’s new book, The Mendacity of Hope. In it he describes how America’s founding generation especially feared the kind of corruption that occurs when the private ends of a narrow faction succeed in capturing the engines of government. James Madison and many of his contemporaries knew this kind of corruption could consume the republic. Looking at history a tragic lens, they thought the life cycle of republics – their degeneration into anarchy, monarchy, or oligarchy – was inescapable. And they attempted to erect safeguards against it, hoping to prevent private and narrow personal interests from overriding those of the general public.

They failed. Hardly a century passed after the ringing propositions of 1776 than America was engulfed in the gross materialism and political corruption of the First Gilded Age, when Big Money bought the government right out from under the voters. In their magisterial work on The Growth of the American Republic, the historians Morrison, Commager, and Leuchtenberg describe how in that era “privilege controlled politics,” and “the purchase of votes, the corruption of election officials, the bribing of legislatures, the lobbying of special bills, and the flagrant disregard of laws” threatened the very foundations of the country.”

I doubt you’ll be surprised to learn that this “degenerate and unlovely age” – as one historian described it – served to inspire Karl Rove, the man said to be George W. Bush’s brain and now a mover and shaker of the money tree for the corporate-conservative complex (more on that later.) The extraordinary coupling of private and political power toward the close of the 19th century – the First Gilded Age – captured Rove’s interest, especially the role of Mark Hanna, the Ohio operative who became the first modern political fund-raiser. (David von Drehle wrote (“Washington Post, July 24, 1999) that “as a tenacious student of political history, Rove had dug so deeply into the McKinley era that he had become “the swami of McKinley mania.” Rove denied it to the writer Ron Susskind, who then went on to talk to old colleagues of Rove “dating back 25 years, one of whom said: “Some kids want to grow up to be president, Karl wanted to grow up to be Mark Hanna. We’d talk about it all the time. We’d say, ‘Jesus,Karl, what kind of kid wants to grow up to be Mark Hanna?”

“There are two things that are important in politics,” Hanna said. “The first is money and I can’t remember what the second one is.” He had become rich as a business man in Ohio, “the characteristic American capitalist of the Gilded Age” (Columbia Encyclopedia). He was famously depicted by one cartoonist as “Dollar Mark,” the prototype of plutocracy. Hanna tapped the banks, the insurance companies, the railroads and the other industrial trusts of the late 1800s for all the money it took to make William McKinley governor of Ohio and then President of the United States. McKinley was the perfect conduit for Hanna’s connivance and their largesse – one of those politicians with a talent for emitting banalities as though they were recently discovered truth. Hanna raised “an unprecedented amount of money (the biggest check came from the oil baron John Rockefeller) and ran a sophisticated, hardball campaign that got McKinley to the White House, “where he governed negligently in the interests of big business,” wrote Jacob Weisberg in “Slate” (November 2, 2005) His opponent in the l896 election was the Democrat-Populist candidate, William Jennings Bryan, whose base consisted of aroused populists – the remnant of the People’s Party – who were outraged at the rapacity and shenanigans of the monopolies, trusts, and corporations that were running roughshod over ordinary Americans. Because Bryan threatened those big economic interests he was able to raise only one-tenth the money that Mark Hanna raised for McKinley, and he lost: Money in politics is an old story.

Karl Rove would have learned from his study of Hanna the principles of plutonomy. For Hanna believed “the state of Ohio existed for property. It had no other function…Great wealth was to be gained through monopoly, through using the State for private ends; it was axiomatic therefore that businessmen should run the government and run it for personal profit.”

He and McKinley therefore saw to it that first Ohio and then Washington were “ruled by business…by bankers, railroads, and public utility corporations.” The United States Senate was infamous as “a millionaire’s club.” City halls, state houses and even courtrooms were bought and sold like baubles. Instead of enforcing the rules of fair play, government served as valet to the plutocrats. The young journalist Henry George had written that “an immense wedge” was being forced through American society by “the maldistribution of wealth, status, and opportunity.” Now inequality exploded into what the historian Clinton Rossiter described as “the great train robbery of American intellectual history.” Conservatives of the day – pro-corporate apologists – hijacked the vocabulary of Jeffersonian liberalism and turned words like “progress,” “opportunity,” and “individualism” into tools for making the plunder of America sound like divine right. Laissez faire ideologues and neo-cons of the day – lovers of empire even then – hijacked Charles Darwin’s theory of evolution and so distorted it that politicians, judges, and publicists gleefully embraced the notion that progress emerges from the elimination of the weak and the “survival of the fittest.” As one of the plutocrats crowed: “We are rich. We own America. We got it, God knows how, but we intend to keep it.”

And they have never given up. The Gilded Age returned with a vengeance in our time. It slipped in quietly at first, back in the early 1980s, when Ronald Reagan began a “massive decades-long transfer of national wealth to the rich.” As Roger Hodge makes clear, under Bill Clinton the transfer was even more dramatic, as the top 10 percent captured an ever-growing share of national income. The trend continued under George W. Bush – those huge tax cuts for the rich, remember, which are now about to be extended because both parties have been bought off by the wealthy – and by 2007 the wealthiest 10% of Americans were taking in 50% of the national income. Today, a fraction of people at the top today earn more than the bottom 120 million Americans.

You will hear it said, “Come on, this is the way the world works.” No, it’s the way the world is made to work. This vast inequality is not the result of Adam Smith’s invisible hand; it did not just happen; it was no accident. As Hodge drives home, it is the result of a long series of policy decisions “about industry and trade, taxation and military spending, by flesh-and-blood humans sitting in concrete-and-steel buildings.” And those policy decisions were paid for by the less than one percent who participate in our capitalist democracy political contributions. Over the past 30 years, with the complicity of Republicans and Democrats alike, the plutocrats, or plutonomists (choose your own poison) have used their vastly increased wealth to assure that government does their bidding. Remember that grateful Citigroup reference to “market-friendly governments” on the side of plutonomy? We had a story down in Texas for that sort of thing; the dealer in a poker game says to the dealer, Now play the cards fairly, Reuben; I know what I dealt you.” (To see just how our system was rigged by the financial, political, and university elites, run, don’t walk, to the theatre nearest you showing Charles Ferguson’s new film, “Inside Job.” Take a handkerchief because you’ll weep for the republic.)

Looking back, it all seems so clear that we wonder how we could have ignored the warning signs at the time. One of the few journalists who did see it coming – Thomas Edsall of the Washington Post – reported that “business refined its ability to act as a class, submerging competitive instincts in favour of joint, cooperative action in the legislative arena.” Big business political action committees flooded the political arena with a deluge of dollars. They funded think tanks that churned out study after study with results skewed to their ideology and interests. And their political allies in the conservative movement cleverly built alliances with the religious right – Jerry Falwell’s Moral Majority and Pat Robertson’s Christian Coalition – who zealously waged a cultural holy war that camouflaged the economic assault on working people and the middle class.

Senator Daniel Patrick Moynihan also tried to warn us. He said President Reagan’s real strategy was to force the government to cut domestic social programs by fostering federal deficits of historic dimensions. Senator Moynihan was gone before the financial catastrophe on George W. Bush’s watch that could paradoxically yet fulfill Reagan’s dream. The plutocrats who soaked up all the money now say the deficits require putting Social Security and other public services on the chopping block. You might think that Mr. Bush today would regret having invaded Iraq on false pretences at a cost of more than a trillion dollars and counting, but no, just last week he said that his biggest regret was his failure to privatize Social Security. With over l00 Republicans of the House having signed a pledge to do just that when the new Congress convenes, Mr. Bush’s vision may yet be realized.

Daniel Altman also saw what was coming. In his book Neoconomy he described a place without taxes or a social safety net, where rich and poor live in different financial worlds. “It’s coming to America,” he wrote. Most likely he would not have been surprised recently when firefighters in rural Tennessee would let a home burn to the ground because the homeowner hadn't paid a $75 fee.
That’s what is coming to America.

***

Here we are now, on the verge of the biggest commercial transaction in the history of American elections. Once again the plutocracy is buying off the system. Nearly $4 billion is being spent on the congressional races that will be decided next week, including multi millions coming from independent tax-exempt organizations that can collect unlimited amounts without revealing the sources. The organization Public Citizen reports that just 10 groups are responsible for the bulk of the spending by independent groups: “A tiny number of organizations, relying on a tiny number of corporate and fat cat contributors, are spending most of the money on the vicious attack ads dominating the airwaves” – those are the words of Public Citizen’s president, Robert Wiessman. The Federal Election Commission says that two years ago 97% of groups paying for election ads disclosed the names of their donors. This year it’s only 32%.

Socrates again: To remember a thing, you must first name it. We’re talking about slush funds. Donors are laundering their cash through front groups with high-falutin’ names like American Crossroads. That’s one of the two slush funds controlled by Karl Rove in his ambition to revive the era of the robber barons. Promise me you won’t laugh when I tell you that although Rove and the powerful Washington lobbyist who is his accomplice described the first organization as “grassroots”, 97% of its initial contributions came from four billionaires. Yes: The grass grows mighty high when the roots are fertilized with gold.

Rove, other conservative groups and the Chamber of Commerce have in fact created a “shadow party” determined to be the real power in Washington just like Rome’s Opus Dei in Dan Brown’s “The DaVinci Code.” In this shadow party the plutocrats reign. We have reached what the new chairman of Common Cause and former Labor Secretary Robert Reich calls “the perfect storm that threatens American democracy: an unprecedented concentration of income and wealth at the top; a record amount of secret money, flooding our democracy; and a public becoming increasingly angry and cynical about a government that’s raising its taxes, reducing its services, and unable to get it back to work. We’re losing our democracy to a different system. It’s called plutocracy.”

That word again. But Reich is right. That fraction of one percent of Americans who now earn as much as the bottom 120 million Americans includes the top executives of giant corporations and those Wall Street hedge funds and private equity managers who constitute Citigroup’s “plutonomy” are buying our democracy and they’re doing it in secret.

That’s because early this year the five reactionary members of the Supreme Court ruled that corporations are “persons” with the right to speak during elections by funding ads like those now flooding the airwaves. It was the work of legal fabulists. Corporations are not people; they are legal fictions, creatures of the state, born not of the womb, not of flesh and blood. They’re not permitted to vote. They don’t bear arms (except for the nuclear bombs they can now drop on a congressional race without anyone knowing where it came from.) Yet thanks to five activist conservative judges they have the privilege of “personhood” to “speak” – and not in their own voice, mind you, but as ventriloquists, through hired puppets.

Does anyone really think that’s what the authors of the First Amendment had in mind? Horrified by such a profound perversion, the editor of the spunky Texas Observer, Bob Moser, got it right with his headline: “So long, Democracy, it’s been good to know you.”

You’ll recall that soon after the Court’s decision President Obama raised the matter during his State of the Union speech in January. He said the decision would unleash a torrent of corrupting corporate money into our political system. Sitting a few feet in front of the president, Associate Justice Samuel Alito defiantly mouthed the words: “Not true.”

Not true? Terry Forcht knew otherwise. He’s the wealthy nursing home executive in Kentucky whose establishments is being prosecuted by Attorney General Jack Conway for allegedly covering up sexual abuse. Conway is running for the Senate. Forcht has spent more than $l million to defeat him. Would you believe that Forcht is the banker for one of Karl Rove’s two slush funds, American Crossroads, which has spent nearly $30 million to defeat Democrats?

What’s that, Justice Alito? Not true?

Ask Alan Grayson. He’s a member of Congress. Here’s what he says: “We’re now in a situation where a lobbyist can walk into my office…and say, ‘I’ve got five million dollars to spend and I can spend it for you or against it.’”
Alito was either disingenuous, naïve, or deluded. He can’t be in this world without knowing he and his four fellow corporatists were giving big donors the one thing they most want in their campaign against working people: an unfair advantage.

My friend and colleague, the writer Michael Winship, told a story this week that illuminates the Court’s coup de grace against democracy. It seems the incorrigible George Bernard Shaw once propositioned a fellow dinner guest, asking if she would go to bed with him for a million pounds (today around $1,580,178 US dollars). She agreed. Shaw then asked if she would do the same for ten shillings. “What do you take me for?” she asked angrily. “A prostitute?” Shaw responded: “We’ve established the principle, Madam. Now we’re just haggling over the price.”

With this one decision, the Supreme Court established once and for all that Shaw’s is the only principle left in politics, as long as the price is right.

Come now and let’s visit Washington’s red light district, headquarters of the U.S. Chamber of Commerce, the front group for the plutocracy’s prostitution of politics. The Chamber boasts it represents more than three million businesses and approximately 300,000 members. But in reality it has almost nothing to do with the shops and stores along your local streets. The Chamber’s branding, as the economics journalist Zach Carter recently wrote, “allows them to disguise their political agenda as a coalition of local businesses while it does dirty work for corporate titans.” Carter reported that when the Supreme Court came down with its infamous ruling earlier this year, the Chamber responded by announcing a 40% boost in its political spending operations. After the money started flowing in, the Chamber boosted its budget again by 50%.

After digging into corporate foundation tax filings and other public records, the New York Times found that the Chamber of Commerce has “increasingly relied on a relatively small collection of big corporate donors” – the plutocracy’s senior ranks – “to finance much of its legislative and political agenda.” Furthermore, the chamber “makes no apologies for its policy of not identifying its donors.” Indeed, “It has vigorously opposed legislation in Congress that would require groups like it to identify their biggest contributors when they spend money on campaign ads.”

Now let’s connect some dots. While knocking down nearly all limits on corporate spending in campaigns, the Supreme Court did allow for disclosure, which would at least tell us who’s buying off the government. Senate Republican Leader Mitch McConnell even claimed that “sunshine” laws would make everything okay. But after the House of Representatives passed a bill that would require that the names of all such donors be publicly disclosed, McConnell lined up every Republican in the Senate to oppose it. Hardly had the public begun to sing “Let the Sunshine In” than McConnell & Company went tone deaf. And when the chief lobbyist for the Chamber of Commerce was asked by an interviewer, “Are you guys eventually going to disclose?” the answer was a brisk: “No.” Why? Because those corporations are afraid of a public backlash. Like bank robbers pulling a heist, they prefer to hide their “personhood” behind sock masks. Surely that tells us something about the nature of what they’re doing. In the words of one of the characters in Tom Stoppard’s play Night and Day:: “People do terrible things to each other, but it’s worse in places where everything is kept in the dark.”

That’s true in politics, too. Thus it turns out that many of the ads being paid for secretly by anonymous donors are “false, grossly misleading, or marred with distortions,” as Greg Sargent reports in his website “The Plum Line.” Go to Sargent’s site and you’ll see a partial list of ads that illustrate the scope of the intellectual and political fraud being perpetrated in front of our eyes. Money from secret sources is poisoning the public mind with toxic information in order to dupe voters into giving even more power to the powerful.

On another site –“thinkprogress.com” – you can find out how the multibillionaire Koch brothers – also big oil polluters and Tea Party supporters – are recruiting “captains of industry” to fund the right-wing infrastructure of front groups, political campaigns, think tanks and media outlets. Now, hold on to your seats, because this can blow away the faint-hearted: Among the right-wing luminaries who showed up among Koch’s ‘secretive network of Republican donors’ were two Supreme Court Justices: Antonin Scalia and Clarence Thomas. That’s right: 2 of the 5 votes to enable the final corporate takeover of government came from justices who were present as members of the plutocracy hatched their schemes for doing so.

Something else is going on here, too. The Koch brothers have contributed significantly to efforts to stop the Affordable Care Act – the health care reforms – from taking effect. Justice Clarence Thomas has obviously been doing some home schooling, because his wife Virginia claims those reforms are “unconstitutional,” and has founded an organization that is fighting to repeal them. Her own husband on the Supreme Court may one day be ruling on whether she’s right or not (“Play the cards fair, Reuben; I know what I dealt you.”) There’s more: The organization Virginia Thomas founded to kill those health care reforms – also a goal of the Koch brothers, remember – got its start with a gift of half a million dollars from an unnamed source, and is still being funded by donors who can’t be traced. You have to wonder if some of them are corporations that stand to benefit from favorable decisions by the Supreme Court. Now guess the name of the one Supreme Court justice who voted against the disclosure provision. I’m not telling, but Mrs. Thomas can tell you – if, that is, she’s willing to share the pillow talk.

This truly puzzles me. It’s what I can’t figure out about the conservative mindset. The Kochs I can understand: messianic Daddy Warbucks who can’t imagine what life is like for people who aren’t worth 21 billion dollars. But whatever happened to “compassionate conservatism?” The Affordable Care Act – whatever its flaws – extends health care coverage to over 40 million deprived Americans who would otherwise be uncovered. What is it about these people – the Thomases, the secret donors, the privileged plutocrats on their side – that they can’t embrace a little social justice where it counts – among everyday people struggling to get by in a dog-eat-dog world? Health care coverage could mean the difference between life and death for them. Mrs. Thomas is obviously doing okay; she no doubts takes at least a modest salary from that private slush fund working to undermine the health care reforms; her own husband is a government employee covered by a federal plan. Why wouldn’t she want people less fortunate than her to have a little security, too? She headquarters her organization at Jerry Falwell’s Liberty University, a reportedly Christian school aligned with the Moral Majority. How is it she’s only about “Live and Let Live?” Have they never heard there the Old Time Religion of “Live and help live?” Why would this cushioned, comfortable crowd, pious crowd, resort to such despicable tactics as using secret money to try to turn public policy against their less fortunate neighbors, and in the process compromise the already tattered integrity of the United States Supreme Court?

I don’t get it.

You be the judge (Because if you don’t, Justice Thomas will.)

Time to close the circle: Everyone knows millions of Americans are in trouble. As Robert Reich recently summed it the state of working people: They’ve lost their jobs, their homes, and their savings. Their grown children have moved back in with them. Their state and local taxes are rising. Teachers and firefighters are being laid off. The roads and bridges they count on are crumbling, pipelines are leaking, schools are dilapidated, and public libraries are being shut.

Why isn’t government working for them? Because it’s been bought off. It’s as simple as that. And until we get clean money we’re not going to get clean elections, and until we get clean elections, you can kiss goodbye government of, by, and for the people. Welcome to the plutocracy.

***

Obviously Howard Zinn would not have us leave it there. Defeat was never his counsel. Look at this headline above one of his essays published posthumously this fall by the Progressive magazine: DON’T DESPAIR ABOUT THE SUPREME COURT. The Court was lost long ago, he said – don’t go there looking for justice. “The Constitution gave no rights to working people; no right to work less than 12 hours a day, no right to a living wage, no right to safe working conditions. Workers had to organize, go on strike, defy the law, the courts, the police, create a great movement which won the eight-hour day, and caused such commotion that Congress was forced to pass a minimum wage law, and Social Security, and unemployment insurance….Those rights only come alive when citizens organize, protest, demonstrate, strike, boycott, rebel and violate the law in order to uphold justice.”

So what are we to do about Big Money in politics buying off democracy? I can almost hear him throwing that question back at us: “What are we to do? ORGANIZE! Yes, organize—and don’t count the costs.” Some people already are. They’re mobilizing. There’s a rumbling in the land. All across the spectrum people oppose the escalating power of money in politics. Fed-up Democrats. Disillusioned Republicans. Independents. Greens. Even Tea Partiers, once they wake up to realize they have been sucker-punched by their bankrollers who have no intention of sharing the wealth.

Veteran public interest groups like Common Cause and Public Citizen are aroused. There are the rising voices, from web-based initiatives such as “freespeechforpeople.org” to grassroots initiatives such as “Democracy Matters” on campuses across the country, including a chapter here at Boston University. “Moveon.org” is looking for a million people to fight back in a many-pronged strategy to counter the Supreme Court decision.

What’s promising in all this is that in taking on Big Money we’re talking about something more than a single issue. We’re talking about a broad-based coalition to restore American democracy – one that is trying to be smart about the nuts-and-bolts of building a coalition, remembering that it has a lot to do with human nature. Some will want to march. Some will want to petition. Some will want to engage through the web. Some will want to go door-to-door: many gifts, but the same spirit. A fighting spirit. As Howard Zinn would tell us: No fight, no fun, no results.

But here’s the key: If you’re fighting for a living wage, or peace, or immigration reform, or gender equality, or the environment, or a safe neighborhood, you are, of necessity, strongly opposed to a handful of moneyed-interests controlling how decisions get made and policy set. Because most Americans are attuned to principle of fair play, of not favoring Big Money at the expense of the little guy – at the expense of the country they love. The legendary community organizer Ernesto Cortes talks about the “power to preserve what we value.” That’s what we want for Americans – the power to preserve what we value, both for ourselves and on behalf of our democracy.

But let’s be clear: Even with most Americans on our side, the odds are long. We learned long ago that power and privilege never give up anything without a struggle. Money fights hard, and it fights dirty. Think Rove. The Chamber. The Kochs. We may lose. It all may be impossible. But it’s OK if it’s impossible. Hear the former farmworker and labor organizer Baldemar Velasquez on this. The members of his Farm Labor Organizing Committee are a long way from the world of K Street lobbyists. But they took on the Campbell Soup Company – and won. They took on North Carolina growers – and won, using transnational organizing tacts that helped win Velasquez a “genius” award from the MacArthur Foundation. And now they’re taking on no less than R. J. Reynolds Tobacco and one of its principle financial sponsors, JPMorgan-Chase. Some people question the wisdom of taking on such powerful interests, but here’s what Velasquez says: “It’s OK if it’s impossible; it’s OK! Now I’m going to speak to you as organizers. Listen carefully. The object is not to win. That’s not the objective. The object is to do the right and good thing. If you decide not to do anything, because it’s too hard or too impossible, then nothing will be done, and when you’re on your death bed, you’re gonna say, “I wish I had done something. But if you go and do the right thing NOW, and you do it long enough “good things will happen—something’s gonna happen.”

Shades of Howard Zinn!

Watch a video of the full speech and the question and answer session here.

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On Friday the Massachusetts Supreme Judicial Court upheld a controversial decision by Land Court Judge Keith C. Long, who ruled in the case of two Springfield, MA homeowners that the foreclosures were invalid because the mortgages were not officially recorded as being owned by the foreclosing banks, US Bancorp and Wells Fargo.

The reaction from Wall Street came shortly after the decision was announced. Within a couple of hours Wells Fargo shares were down nearly 4 percent at $30.92, while U.S. Bancorp was down 1.4 percent at $25.93, Bank of America stock was down 2.8 percent, JPMorgan fell 3.7 percent, and the KBW Bank Index, which includes all four lenders, was down 2.3 percent.

In short, the Supreme Court upheld the March 2009 decision of the lower court that a bank can’t foreclose on a home if it doesn’t own the mortgage. You can read the 16-page decision here.

This simple statement would seem like a no-brainer, but as a result of fast and loose securitized mortgage lending practices, the ownership of a mortgage could potentially be divided and transferred multiple times by the lenders. As I pointed out in a post back in November, in one week alone there were 808 mortgage transfers in just one county in Massachusetts.

The documentation for these transfers (i.e., the assignments at the Registry of Deeds) on the other hand often lags far behind - in many cases months, or even years after the foreclosure has taken place. This makes it difficult and sometimes impossible to determine who owned what and when.

Add to an already confusing chain of events, and consider that many notes were signed “in blank”, shuffled around from one lender to the next and put into trusts well past the legal limit allowed and you’ve got a mess of epic proportions.

In the past a bank representative or attorney for the bank would walk into court, point out that the deadbeat homeowners weren't paying their mortgage and the family would get kicked out. Many states adopted non-judicial foreclosure policies to alleviate unnecessary paperwork and court time. The premise being that a bank would never foreclose on a property on which the payments were being made and were certain that they owned. That worked fine and made sense when you knew who owned your loan and you owed the money to a local bank or credit union. The bank had your mortgage and your note and the Registry of Deeds has a solid record of it. If there was a transfer – something that might happen once or twice in the life of a loan, if at all, the banks would go down to the Registry of Deeds, file the assignment, pay the fee, and go on with their day. You, the borrower, would start sending your monthly checks to another bank.

Glenn Russell, one of the attorneys to have argued this case and who represented Mark and Tammy LaRace, one of the Springfield homeowners said, “In most cases banks foreclose without any detailed examination of the securitization process of the loan. After all, the homeowner hasn’t paid or has missed payments and the foreclosure goes through without anyone really questioning the legality or legitimacy of the foreclosure.”

Then the art of securitization came along and mortgages started being traded like baseball cards at recess, sliced up into pieces, and loaded into pools, trusts, and whatever new intricate financial instrument Wall Street dreamed up. Servicers started handling loans instead of your neighborhood bank and MERS (Mortgage Electronic Registration System) was invented to further allow banks to bypass millions of dollars in fees to County registries. Of course with all of these transactions flying around in the hands of people who quite possibly didn’t understand what they represented and as we’ve seen in the recent robo-signing fiasco didn’t know what they were signing, there was a lot of room for mistakes … a lot of mistakes.

Mortgage fraud investigator Steve Dibert of MFI-Miami said, “Seventy percent of the loans we investigate are flawed due to recordation, PSA violations, etc.”

As the Boston Globe reported:

During the housing boom, millions of mortgages were packaged into bonds and sold to investors, a process that resulted in lengthy and tangled paper trails that can obscure ownership. Many lenders believed they could complete foreclosure transactions and later produce formal proof they held a mortgage. Today's ruling makes it clear that the practice will not be allowed in Massachusetts.

The timeline of the case started, simply enough, back in 2007 when Wells Fargo and U.S. Bancorp began foreclosure proceedings against two separate delinquent borrowers. Neither borrower fought the proceedings; Massachusetts is a non-judicial state in which courts do not oversee foreclosures, so both banks seized the Springfield, MA properties without any trouble or pesky legal challenges.

In the fall of 2008 the banks tried to list the foreclosed properties in the Boston Globe. According to Mass law, like many states, foreclosure sales must be listed in a newspaper of general circulation in the county or town where the property is located, so the Globe asked the bank to get an okay from the Land Court. This is where Judge Long comes in – in March 2009.

Judge Keith C. Long had no problem with the properties being listed in the Globe, but to the shock of the attorneys he also wanted them to prove that they had legal standing to foreclose on the properties they had repossessed in the first place. He gave them until October (seven months) to get the proper paperwork together and come back and show how they had acquired the mortgage and prove that they had legal standing.

In October 2009 Judge Long examined the paperwork the banks came back with and determined that the mortgage "note" that proves who the owner is had not been properly transferred when the banks auctioned off houses.

Judge Long found that Option One Mortgage Corp., which early in the “chain of title” owned the mortgages, erred in assigning the mortgages without naming who they were transferred to, so- called blank assignments.

The Supreme Court agreed:

A plaintiff that cannot make this modest showing cannot justly proclaim that it was unfairly denied a declaration of clear title. See In re Schwartz, supra at 266 ("When HomEq [Servicing Corporation] was required to prove its authority to conduct the sale, and despite having been given ample opportunity to do so, what it produced instead was a jumble of documents and conclusory statements, some of which are not supported by the documents and indeed even contradicted by them").

Judge Long's decision hit on the sensitive issue of the "assignment of mortgages in blank." In their crazed furry to aggregate and sell and then resell mortgages, many mortgage documents were transferred without explicitly naming to whom the note or mortgage was being sold.

The banks have argued (and tried to with Long) that this practice is legal. The argument being that everyone’s doing it and it is standard practice in the industry. Long didn’t buy it. "These blank mortgage assignments were never recorded and they were not legally recordable," he wrote in his ruling.

Where it gets interesting, is rather than take a loss and accept the ruling from a smaller court – a decision that in retrospect must now seem like a good idea, in their contempt and utter lack of respect for the law, they decided to appeal to a higher authority. The Massachusetts Supreme Judicial Court, who upheld, unanimously, the lower court’s decision.

"We agree with the [land court] judge that the plaintiffs who were not the original mortgagees, failed to make the required showing that they were the holders of the mortgages at the time of foreclosure,'' the justices said in their opinion.

Under  Massachusetts law, in order to sell the borrowers home at a foreclosure auction, the foreclosing entity must actually be the “holder” of the right to foreclose contained in a borrowers’  mortgage at the time the auction takes place.

“Looking into the not so distant future, I predict Judge Long's ruling will be hailed as one of the great Judicial opinions of all time, with regards to its impact,” Attorney Glenn Russell said.

Essex County Register of Deeds John O’Brien, who in November requested Attorney General Martha Coakley to investigate whether major lenders had devised a scheme to avoid paying assignment fees when transferring mortgages from one entity to another, issued the following statement on Friday:

“The Massachusetts Supreme Court has ruled that these Major Banks must follow the same laws as everyone else and that assignments are not optional in Massachusetts. It's obviously they didn’t want the public to know what they were doing, coupled with their greed in trying to deliberately avoid the payment of the required recording fees, has placed them in the mess that they are in today.”   “This is a huge win for the taxpayers, this case will send shock waves throughout the MERS community as they now have been exposed, and they are going to have to get their checkbooks out and reimburse the taxpayers.” “These major banking conglomerates deliberate scheme to not file the proper paperwork together with the “robo-signers scandal” are the major reasons why our housing market is in the economic turmoil it is in today.”

Massachusetts Attorney General Martha Coakley issued her own statement making her feeling about the financial industry clear.

“We continue to suffer from the fallout of the lending crisis. There are thousands of people in our state who have lost their homes and many more still in danger of losing them. This decision affirms our belief that the onus should be on the banks and other holders of notes to follow proper procedures before initiating foreclosure on any Massachusetts homeowner.

In their careless and hasty stampede to securitize loans, the banks moved at their own peril. Whether by robo-signing or failing to properly transfer title, these financial institutions created this real estate chaos. They should bear the brunt and the cost of the remedy.”

As for the spin coming from the banks as they try to deflect this, Attorney Glenn Russell had this to say on his site:

As I represented one of the parties in the Land Court cases (the LaRace family), it is very interesting to listen to the so called "experts" opine on Judge Long's ruling, saying that "at best" this will delay foreclosures, but that is about it." These are uninformed and usually self-serving statements made by real estate professionals. Left unsaid is the fact that under G.L. c. 244 Section 14, in order to foreclose, the foreclosing entity must also prove that it is the holder of the borrowers mortgage note as well. The complexity of the securitization process can present difficult issues for lender to overcome.

Generally the parties involved in the securitization process of your mortgage did not follow the mandates under the prospectus supplement and pooling and servicing agreement  governing the securitized trust that the note and mortgage are in. Additionally problematic for foreclosing entities, is the situation whereby the lender has already sold a property to an innocent third party (that it didn't really own, according to Judge Long's decision)

Taking into consideration that the Massachusetts Supreme Court is widely considered the best court in the country, there's a good chance that other states will soon follow this decision.

Judge Long and the six jurists of the Massachusetts Supreme Court sent a very clear message on Friday: This is the law… And it matters.

Article cross posted at Huffington Post

About a week ago, John O’Brien, Register of Deeds in Essex County Massachusetts, sent a letter to Massachusetts Attorney General Martha Coakley asking that she look into whether MERS (Mortgage Electronic Registration Systems, Inc.) failed to pay legally required recording fees in Massachusetts when a MERS-mortgage is assigned to another entity, like a trust or a bank.

MERS is a privately held company that operates an electronic registry designed to track servicing rights and ownership of mortgage loans in the United States.

MERS has seen a lot of attention of late because of the number of robo-signing cases popping up at banks and mortgage servicers. MERS has no employees, it simply assigns and designates an estimated 20,000 unpaid VPs and officers around the country as certifying officers to sign off on mortgage transfers, foreclosures, and assignments, according to R.K. Arnold, President and CEO of Mortgage Electronic Registration Systems, Inc., in a recent testimony before Congress.

The recording fees Essex County has missed out on as a result of MERS purportedly bypassing normal recording channels was O’Brien’s primary concern.

In his November 18 letter to Attorney General Coakley, O’Brien wrote, “I am writing to ask that you investigate and provide me with an official opinion as to whether or not the Mortgage Electronic Registration Systems, Inc. (MERS) has failed to pay the proper recording fees required under Massachusetts statute when a lender assigns a mortgage to another entity.”

O’Brien’s action in sending that letter, picked up by a local paper, was just the tip of the iceberg.

“As the keeper of the land records in Essex County, I take my job very seriously,” O’Brien told “The Marblehead Reporter”, a North Shore newspaper. “Every day, hard-working people come into the Registry to record their documents, and they pay the proper fees. It troubles me greatly that these major lenders may have devised a scheme to avoid paying what the average citizen is legally required to pay. In many cases, MERS has assigned homeowners’ mortgages dozens of times to various MERS-related entities, thereby avoiding recording the proper assignments in the respective registries of deeds.”

According to Kevin Harvey, 1st Assistant Register, who was fielding phone calls from media outlets for the better part of the day before Thanksgiving, MERS may have wrongfully bypassed Massachusetts recording requirements, making it difficult, if not impossible for the borrower to know who is actually collecting on the mortgage.

Massachusetts law requires a fee of $75.00 each time a mortgage is assigned. “Individually it’s not a lot of money,” Harvey said. “But do that a million times and now we’re talking about real money.”

To put that into perspective, between November 12, 2010 and November 26, 2010, MERS was involved in 808 mortgages that were recorded in Southern Essex County. That’s $60,600.00 in potential lost revenue, just from one week, just for recordation fees, just in one county. Assuming even an average of 500 mortgages per week, this year alone, Southern Essex County has lost a potential $1.95 million in recording fees because of the MERS system of “avoiding” recording assignments.

In a response to O’Brien’s letter, MERS posted a press release on its site. “In fact, MERS greatly reduces the workload of county recorders, resulting in lower operating expenses for the county recorder’s office. Moreover, it would be the borrower, and not the lender, who ultimately pays the costs of recording assignments, either directly or indirectly,” the statement says.

So somehow stealing millions of dollars in potential revenue is justified by claiming it saves counties from having to pay someone – someone with a family and potentially a mortgage. But why stop there? Blaming the homeowner seems to be all the rage and the statement also makes the claim that the homeowner is somehow responsible for the lost revenue. In other words, if MERS were to transfer a mortgage from one mortgagee to another twenty times (not unheard of), in Massachusetts the homeowner would be on the hook for $1,500 in fees, according to MERS’ logic – a claim Harvey says is an “absolute falsehood”.

These fees, in many cases by the way, are used to fund the county offices and in most cases contribute to county and state revenue. Some counties use real property recording fees to fund their courts, police departments, legal aid offices, and schools – the apparent lower operating expenses.

With an additional $1.95 million in the Registry’s budget, Southern Essex County could easily afford to hire more employees to handle the extra work that MERS claims to have saved them. Hence, it could be argued that MERS has contributed to the job loss, economic downturn and deterioration of entire school systems in not only Massachusetts but the entire country as a result of lost recording fees to county Registries and Recorders of Deeds.

“If we had just a percentage of that money we could afford to re-hire the twelve people we lost as a result of budget cuts,” Harvey said.

If that weren’t enough, that’s not quite the whole iceberg.

There’s a lot wrong with MERS and plenty of arguments against it. If you’re interested in knowing more about MERS, I’ve provided some links at the end of this post to get you started, but the abridged version and what’s important for the purposes of this story is that somewhere in the mid-1980s securitization came along – a process of pooling piles of mortgages into a trust and selling it off in chunks on Wall Street.

In the mid-1990s, mortgage bankers (including the Mortgage Bankers Association, Fannie Mae, Freddie Mac, Bank of America, Nationwide, HSBC, American Land Title Association, and Wells Fargo, among others) decided that since they were flinging mortgages around like monkeys fling poop, they didn’t want to pay recording fees for assigning mortgages anymore, so they came up with MERS, a bogus company that would pretend to own all the mortgages in the country and bankers wouldn’t have to record assignments since all the mortgages were “owned” by the same company. Now, 66 million mortgages (nearly 60 percent of all mortgages in the country) are recorded in the name of MERS as opposed to a bank, trust, or company that actually has any interest in the debt being repaid.

Another gigantic potential issue is that roughly 90 percent of all residential mortgage loans originated over the last decade have been sold to either Fannie Mae, Freddie Mac, or to private securitization trusts, few of whom prepared, and none of whom actually recorded a complete unbroken chain of assignments of the mortgage together with the notes, so the mortgages (borrower IOU) have been separated from the note (proof of ownership, i.e. collateral).

This separation, known as bifurcation, means that the entity that purchased and allegedly holds the note does not have the legal rights contained in the mortgage.· The consequence of this bifurcation is that the debt has become unsecured. Unsecured debt is when a lender loans money without the security of an underlying asset – like a house.

Yves Smith of Naked Capitalism wrote:

“In 45 states, that position would seem to be a non-starter. In those states, the note (the borrower IOU) is the critical document; in these states, the mortgage is a mere “accessory” to the note and has no independent force. Indeed, in these states, you cannot be a mortgagee unless you are also the creditor. But in depositions, MERS has repeatedly acknowledged that it does not lend money and does not collect interest payments. But MERS effectively takes the position that you can separate the mortgage from the note and reunite them, a position that was rejected in an 1873 (no typo) Supreme Court decision, Carpenter v. Longan (Carpenter v. Longan, 83 U.S. 271, 21 L.Ed. 313 [1873])):

“The note and mortgage are inseparable; the former as essential, the latter as an incident. An assignment of the note carries the mortgage with it, while an assignment of the latter alone is a nullity. Case law in virtually every state follows Carpenter.”

This could potentially mean that 60 percent of homeowners in this country are currently paying on unsecured debt – which can be dealt with in bankruptcy.

Taking into consideration the number of loans currently under water (where the home is worth less than the money owed), that’s a gigantic iceberg.

If you’re interested in more information about MERS here are some places to start:

Mortgage Electronic Registration Systems, Inc.: A Survey of Cases Discussing MERS’ Authority to Act

Get D Shirtz

Cloud Titles

Where's The Note, Who's The Holder: ·Enforcement Of Promissory Note Secured By Real Estate - by Hon. Samuel L. Bufford & Hon. R. Glen Ayers

Christopher Lewis Peterson Professor of Law University of Utah - S.J. Quinney College of Law

MERS 101 at StopForeclosureFraud

Over the past few weeks many of us with skin in the game have watched as the media finally started covering the foreclosure fiasco. Some homeowner activists saw it as the beginning of a long string of investigative reporting. The rest of us knew that it was only a matter of time before the next fluffy squirrel ran through the media's backyard, in the form of another one of the Palins dancing or fishing, and they gave a tail-wagging chase forgetting all about the half eaten homeowner carcass that looked so good five minutes before.

Some of us have stayed conspicuously quiet while more popular and salaried "professionals" took the reins, covering and uncovering banks and servicers behaving badly. In some cases it's proved to be a painful exercise in self-restraint to not get out the soapbox and megaphone and shout, "We told you so," or at the very least littering the articles with self-affirming comments.

18 months ago, I had dinner with several staff members of the House Finance Committee. When I told them about all this they gave me the deer in headlights look. I remember approaching the mainstream media then who acted like I was nothing more than a Che Guevara wannabe. I had associates in the mid-west doing short sales and modifications who couldn't figure out why they were getting nowhere with their files for 9-12 months, they finally came to me out of desperation. Within 3 weeks, I had the servicer begging to give the homeowner a modification because I was able to prove they lacked legal standing to foreclose and could face a fraud lawsuit.

Steve Dibert - MFI-Miami

Mike Dillon has been working to bring attention to MERS, robo-signers, and the blatant fraud in the foreclosure mill process for nearly seven years.

"I still had to get used to being looked at like a guy standing out in a cornfield describing how the lights came down out of the sky and stole my cow. As devastating as this level of fraud has been, it was nice to finally get that confirmation that I really wasn't crazy," Dillon said in a recent interview, referring to the rash of articles and testimonies proving his claims.

Dillon was recently featured on WMUR in New Hampshire discussing the basic case of legal standing a bank needs in order to foreclose and how many of them simply don't have that legal standing.

In January I argued that HAMP (the administrations failed modification program) was nothing more than a way for banks and servicers to suck more money out of strapped homeowner under the guise of hope.

In truth, a disturbingly large percentage are denied permanent modifications and given no reason why they are denied. These people will most likely face foreclosure, ruined credit, and shame, despite their best efforts and their proven ability to afford and pay the new mortgage. Bank of America for example, in what I can only assume is their "friends and family plan", permanently modified 98 mortgages of the 156, 864 trial modifications they started.

Many of the trial modifications have been extended unreasonably beyond the requisite three month period. The banks attribute the delay to questionable claims of lost paperwork and a lack of effort on the part of homeowners. Some homeowners have been stuck in a modification limbo for five or six months only to be denied a permanent modification after making the required payments.

"Taibbi is among those who will be saying I told you so," Robin Young of "Here and Now" said while plugging her interview with Matt Taibbi on Tuesday's NPR "Morning Edition".

Taibbi, whose main focus for the past couple of years has been Wall Street, recently turned his attention to the mortgage and foreclosure mess in his recent Rolling Stone piece "Courts Helping Banks Screw Over Homeowners" he manages to lay out, in one spectacular article, what the rest of us have been writing about for the past several years and have been emailing reporters and government officials about relentlessly.

Their stated mission isn't to decide right and wrong, but to clear cases and blast human beings out of their homes with ultimate velocity. They certainly have no incentive to penetrate the profound criminal mysteries of the great American mortgage bubble of the 2000s, perhaps the most complex Ponzi scheme in human history -- an epic mountain range of corporate fraud in which Wall Street megabanks conspired first to collect huge numbers of subprime mortgages, then to unload them on unsuspecting third parties like pensions, trade unions and insurance companies (and, ultimately, you and me, as taxpayers) in the guise of AAA-rated investments. Selling lead as gold, shit as Chanel No. 5, was the essence of the booming international fraud scheme that created most all of these now-failing home mortgages.

The rocket docket wasn't created to investigate any of that. It exists to launder the crime and bury the evidence by speeding thousands of fraudulent and predatory loans to the ends of their life cycles, so that the houses attached to them can be sold again with clean paperwork. The judges, in fact, openly admit that their primary mission is not justice but speed. One Jacksonville judge, the Honorable A.C. Soud, even told a local newspaper that his goal is to resolve 25 cases per hour. Given the way the system is rigged, that means His Honor could well be throwing one ass on the street every 2.4 minutes.

Courts Helping Banks Screw Over Homeowners - Rolling Stone

The exposure in the mainstream will hopefully help shed some light on the situation and draw attention to the fact that this was more than just deadbeat homeowners. It's certainly more than a handful of crazy bloggers with skin in the game can accomplish.

That's not to say that the press has been completely remiss in covering the mortgage and foreclosure mess. Arthur Delaney and Shahien Nasiripour of HuffPost; Gretchen Morgenson, The New York Times; Felix Salmon, Reuters; Denise Richardson, givemebackmycredit.com and Sun Sentinel, and Bob Sullivan, MSNBC to name a few have all been vigilant and relentless in their coverage since the economic implode.

William Black, former Senior Regulator during the S&L debacle has also been writing several posts in HuffPost about the mortgage fraud and about Bank of America's possible insolvency.

This is something Steve Dibert of MFI-Miami wrote about back in July, in "Is Bank of America Hiding an Insolvency Problem From The Public?"

Black has also made a much needed argument for homeowners and has argued vehemently against the tired argument on the part of banks, servicers, and sanctimonious, self-righteous blog commenters who blame homeowners.

"It is even more absurd to believe that honest lenders, finding themselves the victims of an epidemic of mortgage fraud by these clever working class Americans, responded by (1) massively expanding the number of liar's loans they made, (2) spreading them to subprime borrowers with severe credit defects, (3) made defaults on the loans, and the loss upon default, far greater by layering risk and inflating appraisals, and (4) slashed their allowances for losses (ALLL) to trivial levels to ensure that the inevitable fraud losses would cause catastrophic losses."

Lenders Put the Lies in Liar's Loans, Part 2

While Black's measured and reserved snarkiness and sarcasm shows empathy to homeowners being targeted for having caused the meltdown, Taibbi takes it to a level only he can and nicely sums up the way we've all been feeling for years.

The way the banks tell it, it doesn't matter if they defrauded homeowners and investors and taxpayers alike to get these loans. All that matters is that a bunch of deadbeats aren't paying their fucking bills. "If you didn't pay your mortgage, you shouldn't be in your house -- period," is how Walter Todd, portfolio manager at Greenwood Capital Associates, puts it. "People are getting upset about something that's just procedural."

Jamie Dimon, the CEO of JP Morgan, is even more succinct in dismissing the struggling homeowners that he and the other megabanks scammed before tossing out into the street. "We're not evicting people who deserve to stay in their house," Dimon says.

There are two things wrong with this argument. (Well, more than two, actually, but let's just stick to the two big ones.)

The first reason is: It simply isn't true. Many people who are being foreclosed on have actually paid their bills and followed all the instructions laid down by their banks. In some cases, a homeowner contacts the bank to say that he's having trouble paying his bill, and the bank offers him loan modification. But the bank tells him that in order to qualify for modification, he must first be delinquent on his mortgage. "They actually tell people to stop paying their bills for three months," says Parker.

During his interview on "Here and Now" Taibbi drove that point home and was adamant in clarifying, "A lot of the [homeowners] I ran into in Florida actually were current on their payments," referring to the accusations that people deserved to be foreclosed on and that the paperwork - accurate or not was irrelevant.

It is however, bittersweet to see stories popping up two, sometimes three years later, confirming and corroborating what we've been saying all along. While it's nice to be right and certainly satisfying to have heavy hitters like Taibbi and Black finally agree with those of us in the bush leagues and confirm our theories and speculations, who wants to be right about this?

What's most disturbing in all of this is most of us came to our conclusions by asking one simple question ... "What could possibly go wrong?"

So, I got one of those e-mails this morning. You know the kind that looks like it’s from a friend of yours, but it’s some d-bag that got a hold of your friends e-mail or your address book or Facebook friends and sends you a bogus e-mail as if it’s coming from your friend and they’re in jail or in some country and they’re in trouble. Today I decided to respond. Kathy is a Facebook friend and according to this idiot is trapped in London.

Here’s the exchange:

From: Scammer

Hi Kathy,

Just writing to let you know my trip to London, England has been a mess. I was having a great time until last nite when I got mugged and lost all my cash and credit cards, It has been a scary experience, I was hit at the back of my neck with a club. Anyway...... I'm still alive and that's whats important. I'm financially strapped right now and need your help. i need you to loan me some $$, I'll refund it to you as soon as i arrive home.Write me back so i can tell you how to get it to me.

Love.

From: Me

Date: Tuesday, November 2, 2010, 11:44 AM

Oh my - get back to me

From: Scammer

Glad to hear back from you. It has really been embarrassing for me. $1,170 will cover all my expenses, I promise to refund it to you as soon as

I arrive home. You can wire it to my name from a western union outlet around. Here are the details you need to get it to me;

Name – Kathy

Location - 97 waverley rd london se18 7tl

United Kingdom

I still have my passport so I can use it as identification. You'll be given a 10 digit

confirmation number as soon as the transfer goes through, email it to me as soon as you have wired the cash to me

From: Me

Sorry, but I don't quite understand what you're getting at. You say a western union around. Around where? I'm not in England. I just came from the bank and have the money. I plan to send a little more since I know you may need a couple thousand more to get home.

Don't worry I know you'll pay me back. I just hope you're ok.

From: Scammer

Hi Richard,

OK but that the only way you can send me the money or can you do it online at this website westernunion.com.

Immediately i arrive back home i will refund you back the cash.

I owe you a lot.

From: Me

Date: Tuesday, November 2, 2010, 1:37 PM

Yes, but I can’t get to that site from work – they seem to have blocked the site and paypal as well. I’m confused. What exactly happened? I still have several friends in London, where are you. I’ll have someone bring the money to you. It’s about $5,000, so let me know so I can get it to you quickly.

From: Scammer

Hi RICHARD,

whats really going on.....

From: Me

Date: Tuesday, November 2, 2010, 3:12 PM

I’ve talked to my friends in London. Please tell me where you are and I will have them meet you. They have $5,000 for you. All I need is an address. The guy’s name is Simon Bronston. He is about 5ft 5in and 160 pounds. He will be wearing a Yankees baseball hat. Tell me where he should meet you and he’ll hand you the money. He’s a little shy and frightened but willing to do this because you’re a friend.

From: Scammer

Richard i appreciate all what you have been doing, and i promise to refund the money back immediately i get back home.All you need is to  is go to the western union and this are the details..

Glad to hear back from you. It has really been embarrassing for me. $1,170 will cover all my expenses, I promise to refund it to you as soon as

I arrive home. You can wire it to my name from a western union outlet around. Here are the details you need to get it to me;

Name – Kathy

Location - 97 waverley rd london se18 7tl

United Kingdom

I still have my passport so I can use it as identification. You'll be given a 10 digit

confirmation number as soon as the transfer goes through, email it to me as soon as you have wired the cash to me

i  will be waiting to hear from yon soon..

From: Me

Date: Tuesday, November 2, 2010, 3:56 PM

Ah, you’re in luck. He will be at the Porter House Pub in London, on Gowalla at 7 PM tonight. He will have your $5000. I called Western Union and they cannot send more than $2000. So I would have to send it three times from different places and I work until 6PM, so this works out very well for both of us. Kathy, make sure you’re there tonight to meet him.

From: Scammer

Subject: RE: WESTERN UNION DETAILS!!!!

Omg! you can wire the money at any Western Union outlet near to you.You can send me the $2,000 now and then send the remaining later as i have got to settle my bills here.Please get back to me as soon as you can.

From: Me

What kind of bills? Tell me who you owe money to. I'll pay the hotel with a credit card. That's much easier. How lucky. We'll get this sorted out and have you home in no time.

I thought I lost him, so I sent this:

Date: Tuesday, November 2, 2010, 4:59 PM

I think this is getting complicated …. DO YOU WANT MY HELP or not? For someone who needs help you’re being difficult. Where in London are you. I’ll wire the money to a Western Union office close to you.

From: Scammer

Am sorry getting back you late.i still need your help.Here is the Western Union details below.

Here are the details you need to get it to me;

Name – Kathy

Location - 97 waverley rd london se18 7tl

United Kingdom

I still have my passport so I can use it as identification. You'll be given a 10 digit

confirmation number as soon as the transfer goes through, email it to me as soon as you have wired the cash to me.

From: Me

Date: Tuesday, November 2, 2010, 6:03 PM

Great. Send me your passport number and I’ll add it to the money transfer to avoid confusion.

From: Scammer

They don't require passport number at the Western Union outlet.please act fast on this before my flight takes off.

From: Me

Okay, done. I made sure they will only deliver it to you at the airport. I sent them your picture for them to be able to recognize you – good thing you have your passport. It’s amazing they didn’t steal that. You are very lucky.

Here is the correct address, remember you can only pick it up here. I had to pay an extra $50 for them to hold the full $5000 at this office, but that way you don’t have to worry about not making your flight.

T4 LANDSIDE DEPARTURES

ADJACENT TO ZONE E

HEATHROW AIRPORT

HOUNSLOW

GREATER LONDON

TW6 1QG

The number for the transfer is: 277450326

Good luck, have a good trip and call me when you get in.

From: Scammer

Hey, are you kidding me or something,the number is suppose to be 10 not 9 digit.please let me know if you really willing on helping me or you just trying to make a fool out of me.

From: Me

No I’m not making a fool out of you. Are you sure it’s only 9 digits? I’m sure I sent 10. I just typed it while they read it to me over the phone. I’m at a different computer and don’t have access to the email I sent. Can you send me the number so I can add the correct one please. I’m so sorry for this I thought I copied it correctly, but I must have heard the number incorrectly. I’ll try to call back and get the real number.

From: Scammer

Hey,i just got back from the WU outlet and they told me the confirmation number you gave to me was no record to be found i advise you send me the scanned receipt.that should be better.

From Me:

That was fast, did you go to the one at the airport I told you to go to? When is your flight?

I’m not sure what you mean by a “scanned” receipt. I have a receipt from the transaction, but it doesn’t say anything about it being scanned – That was the number they gave me over the phone.

This is a lot of money. What are you doing? Are you still mad because I broke up with you? The crap you pulled in Portugal was nasty you know. I mean I know you were drinking heavily at the time, but it was pretty mean. And now you need help and I’m helping you. $5000 is  a lot of money. And it takes a big chunk out of my account. You think this easy? Are you drinking again?

DAY 2

Yes, seriously there's a day two.

Last night I went to http://www.419eater.com/index.php and downloaded a blank Western Union form they provide for times like these. So the emails continue.

From Me

I don’t know if this is too late … I hope not (attached) wu.pdf

From Spammer:

HI,RICHARD
i was very disappointed when i went to the western union to pick up the money but the money was hold and was not  given the money the only way for you to help me is to call the western union to release the money..

From Me:

Oh My, I can only imagine what a problem that has caused. I’m not sure I understand. How can it be on hold? Was it too much? Do I need to send less? Please give me the number of the office to call where I can clear this up. I’m guessing I have to call the office you’re going to. Please let me know where that is and I’ll call them as soon as possible. Sorry for the troubles. When is your flight?

From Spammer:

HI RICHARD,
It was hold because it was too much and i will like you to reduced it to $2000 and send the remaining later.My flight we tack one hour to this time. please i want you to act fast for me not to miss the flight..

i will be waiting for your reply soon...

From Me:

I’m not sure how to do that. What number do I need to call. You didn’t give me the number. If you’re drinking again I will help you, but you need to get help. Don’t forget to send me the number. I can’t help without that. You have already cost me $5,000 and now it will be another $2,000 – how did you lose that money? Did you get mugged again?

Who do I call to get this to you?

From Spammer:

Am sorry but you have to go the western union and explained that your money has been hold that they should released the money and they should reduced the money to $2000....

please you are the only one i have hope on i did not get mugged.........

please let me know if you are heading to the western union. i appreciate all what you have been doing for me and i promise to pay back all the expenses immediately i arrive home..

From Me:

So you need an additional $2000? That $5000 went really fast. What hotel were you staying in? I will go tonight but I need the address. You have still not told me where I need to go. I need your help. I can't do this alone and every time I go out I have to find someone to watch the cats and call a taxi that can carry my wheel chair. You know I would do anything for you but you have to help me.

From Spammer:

HI
you don't need to stress yourself and am so sorry for what have put you through and  not saying i need another money all am saying is that the $5000 you send was said to be hold and i cannot collect it...you need to go to a western union office nearby and complain about the money that was hold so they could released the money and reduce it to $2000 and send to this detail..

Name -Kathy [last name removed]
Location - 97 waverley rd london se18 7tl
United Kingdom
I still have my passport so I can use it as identification. You'll be given a 10 digit
confirmation number as soon as the transfer goes through, email it to me as soon as you have wired the cash to me...

i will like to hear from you soon if you are heading to the western union office..

From Me:

Okay. I also thought I lost your cell phone number, but I found it. I will call you when I get in the taxi and you can give the driver directions to the WU office. I'm waiting for my sister to come watch the cats. Do you remember Trixie and Mr. Boots?

Day 3

It's getting a little silly at this point. I'm almost starting to feel sorry for the spammer, but then I tell myself that he's the one who started out scamming me. In addition, he also doesn't seem to care that I might be an old handicaped guy with limitted funds.... so, screw him.

From Me:

Darn you Cathy … I drove around for two hours looking for an office that was open. I tried calling you but you don’t answer your phone! Now what? I need to know what to do with this money. It’s almost $7000 now and I’m not sure what to do. I do hope you’re ok. 

From Spammer:

Am very sorry for what happened i was not with my phone.i will like you to go to the western union office and send $2000 then you send the remaining  money later i promise to pay all the money.i don't think am  ok because i have lost my flight now i have to hear from you before i know what to do next.please i promise to pay all the cash as soon as i arrived home.
waiting to hear from you soon... 

From Me:

How did you miss your flight? I sent you $5000… what happened to that? You need to be more responsible with your money. I think I understand what’s going on. I will see about leaving the house again to wire you $2000 and will also call the airline and get you a flight but I’m not sure I can do both I may only be able to pay for the flight.

From Spammer:

HI
when i went to western union to collect the money they told there no money,please i will be grateful if you send the $2000 and forget about the airline i will do that my self immediately you wired the cash to me and promise to pay the total money of $7000...
i will waiting to know if you are heading to the western union office....
i owe you a lot....these are the details you need  to send the money to...

Name -Kathy [last name removed]
Location - 97 waverley rd london se18 7tl
United Kingdom
I still have my passport so I can use it as identification. You'll be given a 10 digit
confirmation number as soon as the transfer goes through, email it to me as soon as you have wired the cash to me... 

Day 4

Holy crap! I can't believe this douche is still hanging on.

From Me:

I have not left yet … it’s hard for me to get out of the house. I’m sorry but you’ll have to be patient.

From Spammer:

ok i appreciate your effort..

From Me:

I wasn’t able to get out today. The Van/Taxi that can take wheel chairs was not available.

Luckily I am able to make phone calls, so I was able to call the airport get you another flight out of London.

I got you a new flight from Heathrow. It is Flight BA1504 on Sunday at 9:50 AM – I can pick you up at the airport and we can work on settling your bills when you get home. I am running out of money as I’ve already sent you $7000, so this ticket is the best I could do for now.

Day 5

This is pretty much where it ends and he gives up. Poor guy, he was so close ....

From Spammer:

Hi Richard.
you did send me a confirmation number.....

From Me:

You don’t need a confirmation number, just your passport – it’s much easier no?

You should also be able to pick up your money.

From Spammer:

HELLO
whats going on have not hear from you?

From Me:

I sent you the flight number .. you have to be on that plane – stop playing games Cathy. I’ve sent you $7000 an a plane ticket back home. I even offered to come pick you up. You must be back in bars and drinking. I don’t what you expect of me. I’ve done everything you ask. I’ve spent almost $8000 on this so far and while that’s not a lot, a cannot squander my family fortune on a wild goose chance.

You must be on that flight.

From Spammer:

thank a lot i appreciate your effort....

Then, on November 29th ... nearly 10 days later:

From Spammer:

hi Richard,
don't you want to help me anymore?

From Me:

Of course. But you don't answer your emails. I sent you several in the the last week.

From Spammer:

Am sorry is just that am freaked up....please i need to get back soon and that could be done if you can help me...these details you need to wired the money to me


I arrive home. You can wire it to my name from a western union outlet around. Here are the details you need to get it to me;
Name -Cathy [removed]
Location - 97 waverley rd london se18 7tl
United Kingdom
I still have my passport so I can use it as identification. You'll be given a 10 digit
confirmation number as soon as the transfer goes through, email it to me as soon as you have wired the cash to me $1,000 will cover all my expenses, I promise to refund it to you as soon as I arrive home
i will be waiting  to hear from you soonest....

From Me:

Your spelling seems to be suffering. If you are drinking again I can't help. I can only imagine where the $5000 went. I can't have you stepping on the cats again. Mr. Boots has never quite recovered. Keep me posted. I am having a hard time reading your emails. Please type bigger.