Campaign News

Neel Kashkari, a former financier who managed the U.S. Treasury’s $700 billion rescue of banks in the 2008 crisis, was named the next president of the Federal Reserve Bank of Minneapolis.

Kashkari’s resume includes stops at Goldman Sachs Group Inc. and Pacific Investment Management Co., and a failed run for governor of California last year. At the Treasury, he was Secretary Henry Paulson’s key aide in overseeing the Troubled Asset Relief Program, or TARP. Kashkari will take over from Narayana Kocherlakota on January 1, 2016, according to a statement Tuesday from the Minneapolis Fed.

“He has a little bit of all the pieces you’d want in a Fed president,” said Stephen Stanley, chief economist at Amherst Pierpont Securities LLC in Stamford, Connecticut.

As head of one of 12 regional Fed banks, Kashkari will join the Federal Open Market Committee, the central bank’s policy making panel. The Fed is weighing ending a seven-year era of near-zero interest rates, with investors betting it will move next month. Kashkari is not scheduled to vote on policy decisions until 2017. Kocherlakota, as is customary for outgoing FOMC members, will not attend the December meeting.

QE ‘Morphine’

Kocherlakota is one of the Fed’s most dovish policy makers who has argued it should keep rates on hold into next year. Kashkari has offered observations on monetary policy via his twitter feed, without spelling out whether he would favor raising rates or delaying liftoff in the current climate. In an April 2013 comment he likened the Bank of Japan’s asset purchase program to “morphine. makes u feel better but doesn’t cure.”

“I don’t think we know that much” about Kashkari’s views on monetary policy, said Angel Ubide, a senior fellow at the Peterson Institute for International Economics in Washington. “My experience with people who get appointed is whatever they thought before and what they do later doesn’t necessarily correlate.”

Kashkari, 42, earned bachelor’s and master’s degrees in mechanical engineering at the University of Illinois at Urbana-Champaign, and an MBA from the University of Pennsylvania’s Wharton School. He began his career as an aerospace engineer at TRW Inc. in Redondo Beach, California.

Goldman Sachs

Kashkari’s appointment places another ex-Goldman Sachs banker at the helm of a regional Fed bank. Robert Steven Kaplan at the Dallas Fed and New York’s William C. Dudley are Goldman alums. Philadelphia Fed chief Patrick Harker previously served as a trustee at Goldman Sachs Trust and as a member of the board of managers of Goldman Sachs Hedge Fund Partners Registered Fund.

“We’re disappointed that yet another former Goldman Sachs insider has been elevated to a regional president position,” said Jordan Haedtler at the Center for Popular Democracy in Washington.

Such appointments need “more transparency and public input,” said Haedtler, who’s deputy campaign manager at Fed Up, a national coalition that’s calling for changes at the central bank and wants to keep rates low to boost employment.

Kashkari worked at Goldman in the early 2000s before accepting a post at the Treasury in 2006. He joined Pimco, then led by bond fund manager Bill Gross, in 2009 to help oversee an expansion into equities, an attempt to reduce the firm’s heavy dependence on the fixed-income market. When he left in 2013, the company’s equity unit had attracted $10 billion in assets, or less than 1 percent of the firm’s total assets at the time.

Bank Bailout

TARP, approved by Congress in October 2008, remains one of the more controversial measures taken during the financial crisis. It authorized the government to purchase up to $700 billion in troubled assets from financial institutions, in an effort to bolster global credit markets. The government ultimately used $475 billion, including $250 billion to stabilize banks, $82 billion to bail out auto makers and $70 billion to save insurer American International Group Inc., according to the Treasury’s website.

“Mr. Kashkari is an influential leader whose combined experience in the public and private sectors makes him the ideal candidate to head the Minneapolis Fed,” said MayKao Hang, incoming chair of the Minneapolis Fed’s board of directors and co-chair of the search committee.

Kashkari, a Republican, was defeated by incumbent California Governor Jerry Brown in November 2014, getting 43 percent of the vote to Brown’s 57 percent.

Presidents of the 12 regional Fed banks are appointed by a portion of their respective boards of directors, subject to the approval of the Fed Board in Washington. Reserve bank boards typically consist of nine members, including three bankers. The banking members are excluded under Dodd-Frank from participating in the selection of presidents.

Source: Bloomberg Business

Republican Senators recently failed in their efforts to repeal and replace the nation’s current health care plan, but AIDS activists say the battle is not over. So they joined hundreds of health care workers, advocates and other people with preexisting conditions as they occupied the offices of all Republican U.S. senators to send them the message to “Kill the Bill,” “Kill Repeal” and “Protect Our Care.”

The massive manifestation of civil disobedience was held Wednesday afternoon, July 19, following a town hall meeting about health care held at St. Mark’s Episcopal Church in Washington, DC. As images and videos of the actions were shared on social media, it was reported that arrests were being made. On July 10, about 80 people were arrested while protesting the Senate health care bill in DC.

Watch the video and read the full article here.

The number of Americans applying for new unemployment benefits last week dropped to its lowest point in more than 40 years, signaling that the labor market may be stronger than many economists had predicted. But the positive labor numbers do not mean that wage stagnation for those workers who do have a job is likely to end anytime soon. 

Initial jobless claims fell last week to a seasonally adjusted 255,000, which is the lowest level since November 1973, the Labor Department reported on Thursday.

Summer is a volatile time for reliable unemployment numbers because it is generally the season that some large car assembly plants close for annual retooling. Because such stoppages don't affect all companies, it's more difficult for the Labor Department to accurately adjust its numbers.

Even with that caveat, Thursday's report points to a growing downward trend of unemployment that indicates a strengthening labor market.

The four-week moving average, which is less subject to weekly fluctuations and a better measure of labor market trends, fell 4,000 to 278,500 last week. The average level of claims has been near that mark since early April.

The numbers are being released as the movement for raising the minimum wage gains ground nationally. With the federal minimum wage at $7.25 an hour, American cities including Seattle, San Francisco, and Los Angeles in the past year have moved to raise their minimum wages to $15 an hour.

On Wednesday, the District of Columbia authorized a petition drive that could put the $15-an-hour minimum wage on the ballot in November 2016 elections. At the same time, a New York panel recommended that fast-food workers at chain restaurants statewide have their wages raised to $15, a move widely expected to be approved by the state's acting labor commissioner.

But that doesn't mean you should immediately march into your bosses' office and demand a raise. 

While job growth has picked up and unemployment is continuing its seven-year downward trend, it has not been matched by corresponding wage increases, indicating that the labor market is still predominantly skewed to employers and not workers. Wages have only risen about 2 percent during the past 12 months.

"As an economist watching the economy, we're somewhat surprised that wages pressures have been so muted to this point," IHS Economics senior director Jim Diffley told Reuters. "We do expect an acceleration and in fact think it necessary to continue the recovery."

According to the Economic Policy Institute in Washington, the majority of Americans have faced wage stagnation for the past 35 years, and it is a major factor the rise of family income stagnation and income inequality. Furthermore, the failure of wages to grow highlights gender and racial wage gaps.

United States Secretary of Labor Thomas Perez said that shifting wages out of its stagnation is still a major part of the “unfinished business” of the nation’s economic recovery from the Great Recession.

“The rising tide of this economic wind at our back has to lift more boats,” he told The New York Times.

Optimistic signs of labor market growth have been tempered with a note of caution from the Federal Reserve, which is monitoring labor market conditions, including wage stagnation, to determine whether to raise short-term interest rates. 

”While labor market conditions have improved substantially, they are ... not yet consistent with maximum employment,” Fed Chairwoman Janet Yellen told members of Congress last week.

Labor groups are calling on the Fed to hold off on rate hikes and focus on pursuing full employment in order to boost both job and wage growth.

“Raising interest rates too soon will slow an already sluggish economy, stall progress on unemployment, and perpetuate wage stagnation for the vast majority of American workers. This harm will be disproportionately felt by women and people of color, who are concentrated in the most vulnerable strata of the workforce,” said a report released by the Center for Popular Democracy and a coalition of labor groups.

Source: Christian Science Monitor

San Diego Free Press - March 13, 2012, by Alliance of Californians for Community Empowerment - When it comes to foreclosing on Californians, it looks like Wells Fargo may take the prize. According to a report released today, Wells Fargo is responsible for more homes in the foreclosure pipeline in California than any other single lender.

Wells Fargo is servicing the most loans, but they are providing less principal reduction to struggling borrowers than either Bank of America and Chase – who themselves should be doing more! The recent report from the Monitor of the multi-state Attorneys General settlement with the five big mortgage servicers showed that Wells Fargo trails behind Bank of America and Chase when it comes to the amount of principal reduction given as part of first lien loan modifications.

This is the very same Wells Fargo that just had its most profitable year ever in 2012, with earnings of $19 billion.

The report, California in Crisis: How Wells Fargo’s Foreclosure Pipeline Is Damaging Local Communities, by ACCE (Alliance of Californians for Community Empowerment), the Center for Popular Democracy and the Home Defenders League, shows the harm coming to homeowners, communities and the economy unless Wells Fargo reverses its course and averts some or all of the impending foreclosures.

Click here to download the report.

The report uses data from Foreclosure Radar to look at loans currently in the foreclosure pipeline in California – meaning loans that have a Notice of Default or Notice of Trustee Sale. Of the 65,466 loans in the foreclosure pipeline, close to 20% of them are serviced by Wells Fargo.

If Wells Fargo’s 11,616 distressed loans go through foreclosure, California will take a next $3.3 billion hit: Each home will lose approximately 22 percent of its value, for a total loss of approximately $1.07 billion; homes in the surrounding neighborhood will lose value as well, for an additional loss of about $2.2 billion; and government tax revenues will be cut by $20 million, as a result of the depreciation.

And not surprisingly, African American and Latino communities will be particularly hard-hit. The report includes maps for seven major cities showing minority density and dots for each of Wells Fargo’s distressed loans. In city after city, they are heavily clustered in neighborhoods with high African American and Latino populations.

“My community has been absolutely devastated by the foreclosure crisis, and I put a lot of the blame at the doorstep of Wells Fargo,” says ACCE Home Defenders League member Vivian Richardson. “Wells Fargo’s heartless and unfair foreclosure practices are sending far more homes into foreclosure than is necessary.”

San Francisco Supervisor David Campos released a statement of support: “Our communities and our entire State are still reeling from the housing crisis, and will be for years to come. As this report shows, the numbers of homes still facing foreclosure is enormous. Principal reduction is clearly a critical strategy for saving homes and stabilizing the economy. Wells Fargo and the other major banks should be doing more of it.”

The report recommends:

Wells Fargo should commit to a broad principal reduction program.

This means that every homeowner facing hardship should be offered a loan modification, when Wells has the legal authority to do so. The modification should be based on an affordable debt-to-income ratio, achieved through a waterfall that prioritizes principal reduction and interest rate reductions. Junior liens must also be modified.

Wells Fargo should report data on its principal reduction, short sales, and foreclosures by race, income, and zip code.

Wells Fargo must be more transparent about its mortgage practices. The bank has an egregious history of harming California’s African American and Latino communities through predatory and discriminatory lending. To show the public that it has reformed, Wells Fargo must make this data available. The people of California need to know that Well Fargo is no longer discriminating against people of color and is fairly and equitably providing relief to homeowners and to the hardest hit communities.

 Wells Fargo should immediately stop all foreclosures until the first two demands are met.

In the event that it takes a few months to set up a fully functioning principal reduction program, Wells Fargo needs to immediately stop all foreclosures. Wells Fargo has done enough harm. It’s time to stop. California deserves a break.

ACCE is waging a campaign to push Wells Fargo to be a leader in California, their home state, in saving homes – beginning with their performance to comply with the Attorneys General Settlement and with the Homeowner Bill of Rights, but not ending there.

Click here to sign on to a letter to Wells Fargo CEO John Stumpf to support to campaign demands.

 

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