San Bernardino is at the vortex of the mortgage scandal crisis, a crisis caused by Wall Street greed and a crisis that Wall Street greed is keeping from being fixed. There are something like 150,000 homes in San Bernardino with mortgages worth less than what buyers paid for them (i.e., underwater). More than half of all homeowners countywide are underwater. If banksters were busy fighting to stay out of prison-- or, better, yet, to reduce their sentences or to be moved to federal prisons closer to home so their families could visit them more easily-- they wouldn't be threatening expensive legal action now against local governments trying to fix the problem. And when you see the kind of slime on the side of the banksters-- like wholly-owned Wall Street subsidiary Rahm Emanuel-- you get a pretty good idea that there's a clear path to solving the problem. It's called eminent domain and it's how San Bernardino and other municipalities could finally get Wall Street's mess behind them. Under the plan, cities would seize underwater mortgages through their power of eminent domain at a discounted price, and then reduce the principal owed on the homes, refinance them to lower homeowners' monthly payments and sell them back to the owners.
While Chicago's City Council met to consider using eminent domain to solve that city's foreclosure crisis, Emanuel was mouthing the words of the Wall Street titans who financed his entire political career and made him a multimillionaire. "The idea of using eminent domain is not one I support ... because I don't think it's the right way to address the problem," Emanuel said. "I don't think it is the power of the city to deal with the housing issue. We have a national issue. I think we have to address the issue. I just don't think that is the right instrument."
Ben Hallman reported on the battle between San Bernardino and Wall Street's mortgage industry criminals. Wall Street is hysterical and threatening dire consequences. "We believe using eminent domain would reduce access to credit for borrowers and would, at a minimum, result in lengthy and costly litigation," said Timothy Cameron, a managing director of the Securities Industry and Financial Markets Association.
Under the plan, Mortgage Resolution Partners would front money to local governments to purchase the loans at market value in exchange for a fixed fee of $4,500 each. Homeowners could then refinance at the lower value, potentially saving hundreds of thousands of dollars each month in mortgage payments-- while also injecting a shot of adrenaline into moribund local economies.
More than a dozen local governments, including those in Suffolk County, N.Y., in Berkeley, Calif., and in Chicago are considering the proposal. But government officials, including Chicago Mayor Rahm Emanuel and Edward DeMarco at the Federal Housing Finance Agency, have expressed skepticism of using eminent domain in this way, as has the mortgage and finance industry, which has not-so-subtly threatened an expensive legal fight should any governmental entity go forward with such a plan.
...Left unsaid by the mortgage industry is who, exactly, would mount a legal challenge, but it is likely that SIFMA, which represents hundreds of banks and asset managers, would lead the charge. Over the past few months the industry group has released a series of statements warning of dire consequences should San Bernardino-- or any of the dozen or so other local government groups considering an eminent domain measure -- pursue such a remedy.
SIFMA has described the proposal as unconstitutional, and claimed that using eminent domain in this fashion would harm everyday investors and pensioners and would undermine the U.S. mortgage market. Using eminent domain in such a fashion would actually "exacerbate the problem" of depressed property values, Cameron warned, because borrowers in any area that embraces eminent domain may find new mortgages and refinancings more costly and more difficult to obtain.
But homeowners who showed up at the meeting said they are skeptical of the mortgage finance industry's motives. "We've seen a bailout of the banking industry, but no bailout for homeowners," said Arie Giddens, a San Bernardino resident whose home is worth less than half the $300,000 she paid for it in 2005, according to an estimate by Zillow, a real estate website.
Giddens said she missed a few payments when she lost her job last year, and is now in a trial loan modification through her loan servicer, Citigroup. She has not been offered principal reduction by the bank, she said.
Giddens' loan is owned by a private investor, and thus would potentially qualify for a principal reduction under the Mortgage Resolution Partners plan-- but she lives in the city of San Bernardino, which is separate from the county now considering homeowner relief proposals. "I think it's time we got some help out here," she said
For Spain?s ruling politicians he is a criminal; for his supporters he is Robin Hood, stealing from supermarkets and redistributing the food to the poor.
Juan Manuel Sánchez Gordillo, the mayor of Marinaleda, a southern town with a population of 2,600, has been catapulted to cult hero status in Spain after setting out this week on an anti-austerity march across Andalucia-- occupying banks and stealing food, and enraging the government of Mariano Rajoy.
Earlier this month Mr Sánchez Gordillo stood outside a supermarket with cheering supporters as trade unionists piled food into shopping trolleys and left without paying, later donating the items to food banks for the poor. The raid resulted in seven arrests.
The 59-year-old is also a member of the regional parliament, and enjoys immunity from prosecution. He says he will forgo this right on the march, which began this week with about 500 supporters.
?We are fighting a war for the poor ... going to jail is not important for me, it would be an honour,? Mr Sánchez Gordillo told the Financial Times.
?We are going to occupy all of the banks and supermarkets we are able to in Andalucia. The robbers who have caused this crisis must pay the consequences for what they have done.?
Mr Sánchez Gordillo, who wears a large beard and often sports a keffiyeh-style scarf, said he was attacking banks for repossessing the homes of people unable to pay their mortgages, and supermarkets for damaging local farmers.
?The euro is a fraud that enriches some and impoverishes the rest ... There are families going hungry, and small farmers who are ruined. We are asking for a change of the political model.?
His actions have infuriated Spain?s ruling Popular party, which has called for him to be stripped of his seat for the United Left party in Andalucia?s parliament.
?One can?t be Robin Hood and at the same time earning a salary as the sheriff of Nottingham,? said Alfonso Alonso, parliamentary spokesman for the ruling PP in Spain?s parliament.
?This man is looking for publicity at the cost of everyone else, and above all at the cost of the image of Spain,? he said.
During its first seven months in power, Mr Rajoy?s government has implemented swinging austerity measures that have damaged his popularity and triggered waves of demonstrations by public workers.
Andalucia, Spain?s largest region by population, has 30 per cent unemployment-- the highest of any region within the European Union. It has become a focal point for the government?s drive to rein in regional spending, and earlier this month Madrid clashed with the southern region over new budget cuts.
?This could close 19 hospitals, all of the Andalucian health service, or get rid of 60,000 public workers, one in four of the local governments workforce,? José Antonio Griñán, the region?s leader, said earlier this month.
On Friday, the marchers, who plan to sleep in the open or in parks, occupied a branch of Banco Santander in the town of Mancha Real in the province of Jaén before leaving later in the day.
Diego Canamero, head of the Andalucian Workers Union, was in the branch on Friday. He said critics of the protests were politicians protecting their own interests.
?These are symbolic actions against an unsustainable economic situation,? he said. ?The bankers rob us, and take our money to tax havens, and the political parties are corrupt. We live in a culture of robbery.?
Mr Canamero said the marchers were under tight police surveillance, but they would try and ?redistribute food for the most needy? if they could. Only staple items such as sugar, olive oil, milk and rice were being taken.