Friday, November 5, 2010

For the thousands of ‘Christinas’

By Roberta Riley

I thought of Christina when I read the latest studies showing that an increasing number of older Americans, especially single women and women of color, are slipping into poverty. Christina died a couple years ago with $15 in her bank account.

My parents first met her in the kitchen of their church, where together they made sandwiches for the homeless. When the residents of Tent City asked to set up camp in the church parking lot after the earthquake of February 2001, an angry mob packed the public meeting. They shouted and screamed, for well over an hour, that the homeless would bring crime, drugs and filth to the neighborhood. Then this tiny, birdlike woman stepped up to the microphone, and told her story.

She was born in Serbia. The ravages of World War II destroyed her home, killing her husband and displacing her and their baby girl to a series of refugee camps. America welcomed mother and child when they emigrated in the 1950s. Soon she found work as a server at Manhattan's Waldorf Astoria hotel. "I love this country,” she said, "but the way we are acting tonight makes me feel ashamed. If this earthquake had destroyed your home, would you want the church to help?"

By the time she finished, you could hear a pin drop.

"It was the most amazing transformation I've ever witnessed," recalls Pastor Rich Lang. She completely changed the tone of the evening, nobody said another word against the homeless, and Tent City was allowed in.

Compassion triumphed over fear because Christina stood up for the less fortunate. She refused to let her own poverty impoverish her spirit. Her kind face, chin length gray hair, and Slavic accent seem to rise from the pages as I pore through Fixing Social Security: Adequate Benefits, Adequate Finances, by the National Academy of Social Insurance.

She was one of thousands of women in the “most vulnerable” category, whose years of paid work were interrupted because she also cared for others. Her altruism was penalized with minimal Social Security benefits. Yet Fixing Social Security and other studies demonstrate that we have plenty of good options to increase Social Security revenues, securely finance current benefits, and pay for benefit improvements for those most in need.

A related study, by Wider Opportunities for Women (WOW), establishes just how critical it is that we update the way we measure poverty in this country, which sets the baseline for Social Security benefits. The antiquated formula, which is based on the cost of food, little else, assumes one person living alone in 2008 could get by on $10,400. But at that level, Christina suffered. She couldn’t afford her medications and pay rent and utilities. The cupboards of her tiny apartment were bare by the third week of the month.

The new, updated measure developed by WOW takes health and other necessary expenses into account. It finds that an older American who lives alone and enjoys good health actually needs about $16,300 to make ends meet if she owns a home mortgage-free. A renter like Christina needs about $20,250, and a homeowner still paying off a mortgage needs approximately $24,000.

We could pay for the benefit increases WOW calls for simply by requiring higher income workers to pay Social Security taxes on ALL of their wages. There is no good reason to exempt income above $106,800 from the payroll tax. It is just another tax break for the wealthy.

As this article goes to press, we do not know the outcome of this month’s election, but the latest posturing and misinformation by enemies of Social Security signals that Republicans will soon claim we must raid the Social Security Trust Fund and impose “entitlement reform” to reduce the federal deficit.

Paul Krugman, the Nobel Laureate economist, debunks such myths, penciling out the numbers to show that we can secure the existing program for generations to come by simply undoing President Bush's tax cuts for the rich. Fixing Social Security and WOW further demonstrate that we can, and should, not only secure Social Security, but improve it.

But in politics it’s never enough to have truth on one’s side. It will take an army, thousands of people just like Christina, braving the fear and vitriol and standing up for the less fortunate, to transform the debate.

(Roberta Riley is a PSARA member.)

The Legislative Conference: Preparing our ranks for a grueling session

By Will Parry

The activist core of the Puget Sound Alliance for Retired Americans is preparing to confront an excruciatingly tough 2011 legislative session shaped by the continuing economic crisis, by the resulting continued decline in state revenues, and by the outcome of revenue-related initiatives on the 2010 ballot.

PSARA members will prepare for the session at the Fourth Annual Legislative Conference from 1 p.m. to 3:30 p.m. Friday, November 19, at the Greenwood Senior Center, 525 N. 85th Street in Seattle.

Senator Ed Murray, Senate Majority Caucus Chair, will open the program with an overview of the session. Jeff Johnson of the Washington State Labor Council, Treasure Mackley of the Service Employees International Union State Council, and Danielle Friedman of the Statewide Poverty Action Network, will brief participants on some of the key issues.

Conference participants will then adopt a focused legislative agenda and organize meetings with their legislators.

“It is beyond urgent this year that we prepare for the session,” said PSARA President Robby Stern. “We appeal to every member to join us at this all-important conference.”

(For more information on the Legislative Conference, see the special insert in this issue.}

State programs have endured budget cuts of $3.5 billion in 2009 and another $755 million this year. These cuts already go beyond budgetary “fat.,” cutting into the muscle and bone of state services.

Tens of thousands of men, women and children have been dropped from the Basic Health Program. Nursing home care and mental health services have suffered major reductions. Education funding was cut $1.5 billion, leaving 3,000 teachers and other school employees facing layoffs.

The state must make a particularly cruel cut of $41 million from WorkFirst, its “welfare-to-work” program, where caseloads have risen 30% in two years. Starting in February, about 5,500 families will be cut from the program, losing monthly stipends ranging from $453 to $762, depending on family size.

In the face of these grim realities, Governor Chris Gregoire has told every state agency to prepare for further cuts of 4% to 7%. A recent release from her office used the terms “cut” and “reductions” 19 times, but was silent on ways to increase revenue.

In view of these circumstances, PSARA will be an active participant in a campaign to closely scrutinize the many tax breaks granted by the legislature over the years. Every state expenditure is carefully reviewed with each budget, but the many tax preferences and exceptions, draining millions in urgently needed revenue, remain on the books unexamined year after year. Many such tax breaks are simply giveaways wrested from the legislature by special interest lobbying.

Membership meeting, Holiday Party, Dec. 16

PSARA will hold its annual election of officers and Executive Board members at the Membership Meeting and Holiday Party on Thursday, December 16. Members who wish to run should contact Election Committee members Will Parry or Maureen Bo at (206) 448-9646.

The terms of President Robby Stern and Executive Vice President Maureen Bo have another year to run. Community Vice President Bette Reed and Treasurer Edie Koch, whose terms are ending, have indicated they are candidates for re-election.

The Executive Board meets on the third Thursday of each month. Members are elected to two-year terms. Half the board members’ terms expire in even-numbered years, half in odd-numbered years. All board members whose terms are expiring have indicated they are candidates to remain on the board.

In addition to regular attendance at monthly membership meetings, Executive Board members are asked to work on committees, contact elected officials, testify at hearings, or participate in demonstrations, rallies, phone banks and conferences.

For Max Roffman

The late Max Roffman, the deeply respected builder of the Puget Sound Council of Senior Citizens, had a five-word slogan he drove home at every opportunity:
“Every member get a member!”

We lost Max years ago, but his organizing spirit is alive and with us today as together we work toward our goal of 250 new members in the year 2010.

Max had another slogan, this one only four words, that also applies today.
“Get into the action!”

We know that hundreds of our members, in one way or another, did “get into the action” during the challenging 2010 election campaign. In every struggle that comes its way, the Puget Sound Alliance for Retired Americans has an impact all out of proportion to its size because we do indeed “get into the action.”

In November, let’s honor a dedicated founder and champion builder of our movement by translating Max’s slogan into reality:

“Every member get a member!”

When you ask that friend or neighbor to join – retiree, boomer or any other generation – you are building the organization that “gets into the action.”

And somewhere Max Roffman will nod his head and smile quietly.

Extreme privatizer named Social Security trustee

The threat to Social Security and Medicare just turned still more sinister.
Charles Blahous, point man for George W. Bush in his abortive campaign to privatize Social Security, has been named one of two Public Trustees for the Social Security and Medicare Trust Funds.

Blahous, formerly on the staff of Wyoming Senator Alan Simpson, was the choice of Senate Minority Leader Mitch McConnell. Blahous is now associated with the far-right Hudson Institute.

The Democrats named Robert Reischauer as trustee. He is a conservative with ties to billionaire Pete Peterson, including membership on the Peterson-funded Committee for a Responsible Budget. If Blahous is clearly an extreme privatizer, Reischauer is at best a lukewarm supporter.

The appointments will weaken Social Security and Medicare from within at a moment when the deficit commission is poised to send its wrecking proposal to Congress.

Paid sick days for a healthy Tacoma

The Coalition for a Healthy Tacoma is campaigning for paid sick days for the 41,000 of the city’s workers who currently lack that basic protection.

The coalition reports that 78 percent of Tacoma’s restaurant workers, 55 percent of its retail workers, and even 29 percent of its health care workers have no paid sick days. That means they either go to work sick, or stay home and lose pay – or even face discipline for absenteeism.

It’s a public health issue as well. Sneezing, coughing workers spread disease. Paid sick days protect the entire community.

The plan would provide one hour paid sick time for every 30 hours worked. Workers in small companies could accrue up to 40 hours of paid sick time; those in larger companies, up to 72 hours.

Where Do We Go From Here

By Robby Stern

When you read this column, the 2010 election will be over and we will learn whether Washington voters and voters across the country have decided to move us forward or take us backwards. As I write this column in the last week of Oct., PSARA members are casting their votes (I KNOW PSARA members vote!) and many of us are anxiously awaiting the results.

Whatever the outcome of the election, PSARA is preparing for the next stage of our fight to achieve a society where people are encouraged to care about each other and work together to make the lives of all of our broader community better. PSARA has our short term focus, which includes developing our goals for the 2011 Legislative session. At the federal level, we are organizing to stop any cuts to Social Security and Medicare and supporting efforts to improve those essential programs. We are also supporting efforts to achieve Comprehensive Immigration Reform and all genuine efforts to create jobs and help the victims of this Wall Street generated economic crisis.

In the 2010 election, we have witnessed the pernicious impact of corporate greed as multi national corporations spent historically unprecedented amounts of money to gain advantage at the expense of the vast majority of the American people. We have also experienced a reactionary resurgence that longs for mythical days of yore when white, mostly men, ruled and government was a hand maiden to oppression of the vulnerable.

At the same time, on Oct. 2, in Washington D.C. (with a satellite action in Seattle) tens of thousands of people, reflecting the real diversity, of our country, came together under the theme “One Nation Working Together”. There is a real battle taking place for the “soul” of America and PSARA intends to be part of the side that works to create what Dr. Martin Luther King described as “The Beloved Community”.

I recently completed Going Down Jericho Road, The Memphis Strike, Martin Luther King’s Last Campaign, by U.W. Professor Michael K. Honey. Michael Honey has given us a gift with this book. The book left me with a much better understanding of the forces at play in the strike by Memphis sanitation workers. It sparked emotions of hope, of deep sadness, and also a sense of what we need to be building for the long haul in order to achieve the vision of “The Beloved Community”.

In Memphis, led by truly heroic African American sanitation workers, a community-wide coalition was forged including the labor movement, led by AFSCME, the union representing the sanitation workers and the Memphis Central Labor Council. Playing a key role in the coalition were the African American Churches and African American civic organizations, most notably the NAACP. This coalition faced off against an unbelievably racist Mayor, Henry Loeb, a predominantly racist and gutless City Council, a white media and a white community that was poisoned with racism and ignorance. The sanitation workers, their union and the African American community stood strong in the face of terrible violence, culminating in the assassination of Dr. King (Honey refers to it as a crucifixion), vilification and betrayal reaching as far as the FBI and the White House. The sanitation workers, the union, and the community won the battle at a huge cost to themselves and to the nation…but they WON!

The lessons from Memphis as well as other successful struggles for social and economic justice are clear. Every activity, every struggle in which PSARA engages we will keep in mind the need to build a broader movement for progressive change. We will work hard to be constructive members of the coalitions to which we commit. By working together with other sectors of the community, we are building the capacity to create a movement for progressive change.

The forces arrayed against us are strong, they have unlimited money, they control the media, and they will try to make us believe that our efforts are hopeless. But if we are determined, brave and smart; if we are genuinely loyal to those with whom we coalesce; if we are prepared to make sacrifices, then we will follow the example of the great victory of the sanitation workers and their allies in Memphis and we will prevail.

Drug company corruption

The Swiss drug giant Novartis is the latest company in that sleazy industry to buy its way out of multiple corrupt practices charges.

Novartis paid $422.5 million to settle criminal and civil investigations into the marketing of six of its drugs. It had been accused by federal prosecutors of paying illegal kickbacks to health professionals. It denied wrongdoing – a common drug company practice in these situations – but paid the walloping fine to avoid prosecution.

In the last few years, at least five other major drug companies have pleaded guilty of health care fraud and have settled with huge payments. Pfizer paid $2.3 billion; Eli Lilly, $1.4 billion; Allergan,$600 million; AstraZeneca, $520 million; Bristol-Myers Squibb, $515 million, and Forest Laboratories, $313 million.
Novartis raised a few eyebrows when it announced its guilt and in the same release pledged to “continue its commitment too high standards of ethical business conduct and regulatory compliance.”

The criminal conduct at issue with Novartis and the other companies was aggressive (and illegal) “off‐label marketing, ”that is, persuading physicians to use drugs for purposes other than those approved by rigorous testing.

Monthly discussions at three senior centers

Groups will meet monthly to discuss topical issues at Seattle’s Greenwood, Ballard and Wallingford Senior Centers, on the initiative of the Puget Sound Alliance for Retired Americans.

The first such gathering, at 10:30 a.m. Thursday, November 4, at the Wallingford Senior Center, 4649 Sunnyside Ave. N., will discuss the significance of the 2010 election results. Discussions at the Ballard Senior Center are scheduled at 11 a.m. on the third Monday of each month, and those at the Greenwood Senior Center are scheduled at 1 p.m. on the second Thursday of each month.

“We’d like to encourage the participants to study and evaluate local issues – particularly those that impact the lives of seniors,” said Bette Reed, PSARA community vice president and chair of its Outreach Committee. “Residents of each of the three communities are encouraged to drop in and take part in these one-hour discussion groups.”

Defending Saturday mail delivery

If the Postal Service eliminates Saturday delivery - - a step under serious consideration – it will shoot itself in those sturdy and dependable feet that for generations have walked the mail door to door in fair weather and foul.
Cutting service from six to five days is a dumb idea, the Postal Workers Union says. Here are five reasons why:

1. Saturday delivery is the key strategic advantage the Postal Service has over United Parcel Service and Federal Express. Surrendering Saturday to the competition would reduce Postal Service revenues in an amount far exceeding any short-term savings.

2. Slower service will drive customers away. Letters mailed late Friday wouldn’t be picked up until Monday. Besides, the less frequent delivery is likely to accelerate the shift to electronic invoicing and bill paying, further draining Postal Service revenues.

3. Niche delivery firms are already salivating over the lucrative business opportunities offered by Saturday delivery. Once established, competitors will demand that Congress open the mail boxes to their deliveries, making it impossible to maintain the government monopoly – the foundation of dependable, affordable service.

4. The slick rationale for ending Saturday delivery could be used again to cut the delivery week still further from five days to four days. This would not only eliminate half the union jobs in the system. It would inevitably trigger a death spiral, with less service leading to less mail volume, justifying still deeper cuts in service, etc.

5. Eliminating Saturday delivery is not a budget necessity. The union insists that pensions and retiree health benefits are fully funded and that the system has reserves that can be drawn upon.

Tell Congress you want to have your mail delivered Monday, Tuesday, Wednesday, Thursday, Friday, and Saturday, too. Let the letter carriers continue to have Sundays and holidays free and clear.

One beautiful rainbow nation

By Rap Lewis

Marshaled by more than 400 sponsoring organizations, tens of thousands of labor, civil rights and social justice advocates massed at the Lincoln Memorial October 2 for a powerful demonstration with the theme of “One Nation Working Together.”

The mighty gathering presented a rainbow of Black, Brown and white faces, in stark contrast to the virtually all ‐ white crowd pulled together August 28 by Fox News, the Tea Party and TV demagogue Glenn Beck.

“You look like one beautiful nation,” a radiant AFL-CIO President Richard Trumka said, touching off a roaring ovation from a crowd that included thousands of Black, Latino and white union members in their brightly colored T-shirts, jackets and caps.

“We are together. This march is about power to the people,” said Ed Schultz, host of MSNBC’s “Ed Show.” “It is about the people standing up to the corporations. Are you ready to fight back?” Another roaring affirmative rose from the crowd, waving a sea of placards proclaiming “Hope not Hate,” “Healthcare not Warfare,” and “Jobs, not Tax Give-aways to the Rich.”

Speaking from the steps where Martin Luther King, Jr. delivered his “I Have a Dream” speech, Marian Wright Edelman, president of the Children’s Defense Fund, condemned those who dole out “massive tax giveaways to the rich when fifty percent of our children are living in poverty.”

Citing the Biblical story of Noah’s Ark, Edelman said, “We’re all in the same boat. Don’t let our children be put in small, leaky boats. “Noah’s Ark was built by amateurs,” she reminded the crowd. “The Titanic was built by professionals.”
Trumka captured the mood of the huge throng when he said, “There is nothing, and I mean nothing, we can’t do when we stand side by side, shoulder to shoulder.
“We will stand together,” Trumka said, his voice ringing out loud and clear over the sea of faces. “And we will win together. And we won’t let anyone – and I mean anyone – stand in our way.

‘I’ll defend Social Security’ – Senator Cantwell

Senator Maria Cantwell has declared that she “will do everything I can to strengthen and protect the Social Security program.”

The Washington Democrat made this commitment October 4 in a letter to Social Security Works Washington and to the Puget Sound Alliance for Retired Americans.
Without mentioning the deficit reduction commission by name, Cantwell said: “Changes to the Social Security program – how it is financed, how benefits are calculated, or decisions about retirement age – should be designed to preserve and strengthen the financial integrity of the program, and should not be a part of the deficit reduction decisions.”

Cantwell expressly hailed “the efforts of Social Security Works Washington and the Puget Sound Alliance for Retired Americans” for their efforts “to protect and strengthen Social Security for current and future generations.”

The Senator’s letter was in response to a request from Social Security Works Washington and PSARA that she join Senator Patty Murray, Representative Jim McDermott, and Eighth District Congressional candidate Suzan delBene in a firm pledge to reject any changes in Social Security that would emasculate the program in the name of tackling the federal budget deficit.

“Social Security is a promise to American workers and their dependents, and changing the rules in the middle of the game by eroding benefits or delaying the retirement age undermines that promise,” Senator Cantwell wrote.

Means testing: Here’s what’s wrong with it

By Nancy Amidei and Will Parry

“Means testing” Social Security is a slick, seductive idea being promoted by Social Security’s enemies, supposedly to address the federal budget deficit. But like proposals to raise the Social Security retirement age, means testing has nothing to do with the deficit, and everything to do with emasculating Social Security.

So how would means testing apply to Social Security? It’s simple: Continue to require everybody to contribute to the Trust Fund from their paychecks, but abandon the established practice of paying benefits based on those contributions. Instead, pay benefits based on “need.” That is, reduce or eliminate benefits for those with incomes above a certain level.

Note that means testing, whatever its form and whatever its rationale, betrays two basic principles of Social Security: First, that benefits be universally available; and second, that a benefit be an earned right. Everyone who works and pays into the system is entitled to a benefit. It’s always worked that way.
That’s why the Puget Sound Alliance for Retired Americans and its partners in the Social Security Works/Washington coalition have explicitly rejected means testing: “Principle No. 3: Social Security is an insurance policy, and as such should not be means tested.”

In a survey of nearly 1,500 people last year, hefty majorities said they had no problem with having to pay Social Security taxes. Why the popular support? It’s the program’s universality. People know that that they will receive a monthly Social Security check when they become eligible.

It’s a well understood principle in Washington, DC, that “programs for poor people tend to become poor programs.” Consider a means tested program like TANF (Temporary Assistance to Needy Families). Only poor people qualify. Eligibility is strict. And the benefits are temporary and meager.

Grotesquely inadequate as it is, TANF is always on the chopping block when government budgets get tight. The wealthy and the powerful do not spring to the defense of TANF. Why should they? They’re means-tested totally out of the program.

In summary, to means test Social Security is to place it on the proverbial slippery slope, its funding without powerful champions, inevitably degenerating into a program no longer recognizable as Social Security, sooner or later to become simply an under-funded twin to TANF. The enemies of Social Security want the program to wither away and die. That’s why they churn out slick arguments for means testing.

(Nancy Amidei is a member of PSARA.)

Jo Jacobson new staffer

Jo Jacobson, a retiree with more than 35 years in public education, has been hired by the Washington State Alliance for Retired Americans as their staff person for field mobilization.

Jacobson has taught every K‐12 grade and in community college. Her rich resume also includes work as a school counselor; a private therapeutic counseling service; and service as executive director of Pierce County Careers Connection.

“She is strongly committed to fight for issues that affect, not just retired Americans, but all Americans,” WASARA President Mike Warren said.

The Puget Sound ARA joins WASARA in warmly welcoming Jo Jacobson to the Alliance.

Wal-Mart target of discrimination suit

By Rap Lewis

Nine years after it was filed, the largest employment discrimination suit in U.S. history, affecting more than one million women currently or formerly employed by Wal-Mart, is headed for the Supreme Court.

If the Supreme Court accepts the case, it will decide, not whether discrimination occurred, but whether the women can sue as a class, rather than being compelled to sue as individuals or in small groups. The company argues that employees charging discrimination should sue one at a time.

Brad Seligman, an attorney for the women, challenged Wal-Mart’s position.
“The ruling upholding the class in this case is well within the mainstream that courts at all levels have recognized for decades,” Seligman said.
“Only the size of the case is unusual, and that is a product of Wal-Mart’s size and the breadth of the discrimination we documented. There is no ‘too big to be liable’ exception in civil rights laws.”

In April, the federal Court of Appeals for the Ninth District in San Francisco ruled 6-5 that the suit could proceed as a class action. The company appealed. If the Supreme Court agrees with the appeals court majority, the case could provide judicial grounds for similar class actions in the future.

If the Supreme Court rejects Wal-Mart’s position, the case will revert for trial as a class action before U.S. District Judge Vaughn Walker.

If the pattern of discrimination is established in Judge Walker’s court, Wal-Mart could be confronted with $1 billion or more in damages, Steven Greenhouse reported in The New York Times. The women are seeking damages for every year since 1997.

The suit, Dukes v. Wal-Mart, gets its name from Betty Dukes, a spunky Wal-Mart greeter who experienced years of frustration on the job, culminating in an argument with managers that led to a humiliating demotion and a pay cut. In 2001, Dukes and six other women filed the class action suit that is now before the Supreme Court.
When the lawsuit was filed, Dukes was being paid $8.44 an hour, despite nine years of service. When she began being covered in the media, Wal-Mart raised her pay nearly 50% within a year.

Dukes’ lawsuit alleges that Wal-Mart has violated the 1964 Civil Rights Act, which made it illegal for employers to discriminate on the basis of race, creed or gender. It charges that the company systemically pays women less than their male counterparts and promotes men more rapidly than women.

Experts retained by the plaintiffs said they found such patterns of discrimination at all 46 Wal-Mart regions.

It was not the first time discrimination was an issue. As early as 1995, Wal-Mart itself hired a major law firm to explore its vulnerability to such a lawsuit. The law firm found wide gender disparities in pay and promotion at Wal-Mart and Sam’s Club stores and urged the company to take remedial measures.

The law firm’s findings were similar to those found years later by the plaintiffs’ main expert, Richard Drogin, an emeritus statistics professor at California State University, who examined payroll data from 1996 to 2002.

Drogin found that among hourly workers in 2001, women earned about $1,100 a year less than men. Among salaried workers, he found that women earned $14,500 less than men. He also found that in 2001, 65% of Wal-Mart’s workforce was female, compared with only 33% of its managers.

Poverty rising in state

New Census data indicate that poverty in Washington state has increased substantially during the recession, with an especially disturbing rise in poverty among children, and with catastrophic poverty rates in the African American, Native American and Latino communities.

The state’s overall poverty rate rose from 11.4% in 2007 to 12.3% in 2009. Among the state’s children, the poverty rate grew from 14.5% to 15.8%.
The Census also reported 2009 poverty rates of 24.8% among Latinos, 24.4% among Native Americans, and 24.3% among African Americans.

The median annual income in the state fell by nearly $1,000, and food stamp usage (now called the Supplemental Nutrition Assistance Program, or SNAP) rose by 51% between 2007 and 2009.

In the nation as a whole, 43.6 million people – one in every seven Americans – were in poverty in 2009, up from 39.8 million in 2007. It was the largest increase in nearly three decades. Everywhere, communities of color continue to be hit hardest.
Even with the mitigating effect of Social Security, poverty among older Americans is about 9%. The poverty rate among children in Washington State is now at 15.8%, 10% above the rate a year ago.

Who has the right to foreclose?

Let’s review: a collapsed housing market and sustained high unemployment have left millions of homeowners falling behind on mortgage payments. Until early September, home foreclosures and seizures continued at a record pace. But who, if anyone, has the right to seize these homes? Based on the discovery of apparently flawed foreclosure documents and likely criminal industry procedures, the answer is very unclear.

Legal analysts see one gigantic problem: How do you foreclose on a home when you can’t figure out who owns it? Since the mid-1990s, original mortgages have been sliced and diced so many ways as part of a “derivatives” investment package that legal ownership is often unrecognizable.

As if that weren’t enough, many of those who sign off on foreclosures are so-called “robo-signers” tied to a computerized program that is often identified in proceedings as the owner of record. Roughly 65 million homes are potentially affected. Employees at some lender banks have also admitted to signing off with absolutely no review.
As the public learned all this, it also got wind of The Interstate Recognition of Notarizations Act, which would have forced state courts to ignore many of the most commonly cited flaws, potentially streamlining and accelerating the already record pace.

The Act, first passed by the House in April of this year, sat quietly in the Senate Judiciary Committee until the day before Congress recessed for its midterm-election break. On September 27, with little attention or public debate, the bill was unexpectedly brought to the Senate floor and passed. A little over a week later, President Obama broke with his own party's leadership and announced that he’d veto the legislation.

Then, in mid-October, fifty-one Attorneys-General (including D.C.) simultaneously launched investigations into allegations that flawed documents were used in hundreds of thousands of foreclosures. Critics found it hard to imagine manufacturing $14 trillion worth of mortgage-backed securities and other games of mathematical chance in five years without cutting a lot of corners.

Within days, major lenders announced actions ranging from a temporary nation-wide moratorium on foreclosures to promises to hire “outside” reviewers or to review for potential defects even though lenders “had discovered no problems.” By month’s end, Bank of America had reinsituted foreclosures in 23 states, amending its declaration of “not one case” of error to read “a tiny number,” generally “misspellings and omissions.”

Sadly, the White House warned of the “unintended consequences to a broader moratorium.” Treasury Secretary Geithner cited “too many people taking on debt they couldn’t handle,” plus “Don’t hurt the recovery!” and “the Wisdom of Markets Forces” as reasons to oppose an extended moratorium while neglecting to show how to detect and quantify people who were “foolishly overextended.” He also failed to note that “the recovery” is 25-30% fueled by sales of foreclosed properties, or that the Free Market allowed banks to launch this “runaway train.”

Some prominent economists believe Geithner’s reluctance to back a moratorium is based on the fact that the government owns or is backing trillions of dollars in assets that no one wants, predicated on the same or similar suspicious loans that defaulted during the last Bush years, when the White House did nothing to stop the wave or force banks to restructure.

If foreclosed homes couldn’t be sold because of fraudulent paperwork or had to wait for more detailed inspections, imagine how difficult selling assets stuffed with faulty loans might be.

If it’s tough to find a title for a foreclosed home, think how tough it is to extract the related loan from a pyramid of securities sitting on top of it.
If a foreclosed property isn’t selling, it’s not recovering any money back to any asset waiting for it. What that can do to the value of toxic assets living at the Fed and the Treasury Department is simple: kill it.

Geithner’s stance is a reminder that business as usual has resumed. Candidate Obama advocated a foreclosure moratorium, as did his opponent. So did newly sworn-in President Obama. That was when things were still bad for the banks and the markets. Then profits, bonuses and stock prices got stronger. So did the power of the TooBigToFails.

The response from the Right is even worse. The GOP is mum, but its media surrogates (esp. The Wall Street Journal editorial page) have dismissed the lack of proper documents as a triviality. Paul Krugman put it best: In effect, they’re saying that if a bank says it owns your house, we should just take its word. To me, this evokes the days when noblemen felt free to take whatever they wanted, knowing that peasants had no standing in the courts. But then, I suspect that some people regard those as the good old days.

In 2000, then-Treasury Secretary--and now soon-to-be-departed White House economic guru Lawrence Summers--declared that the keys to avoiding financial crisis were “well-capitalized and supervised banks, effective corporate governance and bankruptcy codes, and credible means of contract enforcement.”

Back to Professor Krugman: The accounting scandals at Enron and WorldCom dispelled the myth of effective corporate governance. The idea that our banks were well capitalized and supervised sounds like a sick joke. And now the mortgage mess is making nonsense of claims that we have effective contract enforcement — in fact, the question is whether our economy is governed by any kind of rule of law.

Events

For updated information about events, go to www.psara.org/events.