Seattle Scales Back Tax in Face of Amazon’s Revolt, but Tensions Linger
Seattle Scales Back Tax in Face of Amazon’s Revolt, but Tensions Linger
Ms. Kniech was one of more than 50 local lawmakers in the United States who sent an open letter to Seattle leaders and...
Ms. Kniech was one of more than 50 local lawmakers in the United States who sent an open letter to Seattle leaders and residents on Monday supporting the tax and criticizing Amazon’s resistance to it. “By threatening Seattle over this tax, Amazon is sending a message to all of our cities: we play by our own rules,” the letter said.
Read the full article here.
Texas Gives The Green Light To Racial Profiling
Texas Gives The Green Light To Racial Profiling
Today, a judge in San Antonio will be hearing opening arguments on a lawsuit against Senate Bill 4, a law passed in...
Today, a judge in San Antonio will be hearing opening arguments on a lawsuit against Senate Bill 4, a law passed in Texas last month that is the single biggest attack on immigrants this country has seen in decades. SB 4 commands police to search the papers of anyone who looks like an immigrant and levels hefty fines and even jail time for law enforcement officers who resist. Under SB 4, even campus police will have the power to do random searches, transforming college campuses, traditionally a site of sanctuary, into a source of terror.
Read the full article here.
THE $15 QUESTION: Higher minimum helps workers and business
Chicago Tribune - June 5, 2014, by Connie Razza - The Great Recession is over! So say the corporations and the...
Chicago Tribune - June 5, 2014, by Connie Razza - The Great Recession is over! So say the corporations and the wealthiest among us. For the rest of us, the so-called recovery doesn’t feel like much of one at all.
Corporate profits and stock prices have rebounded, but wages have not. Middle-class and low-income workers are still struggling to keep up with the cost of living. Corporate recovery has been fueled by the proliferation of jobs paying low wages.
How can we fix this? Raise the minimum wage.
That’s why Aldermen Proco “Joe” Moreno, Roderick Sawyer and John Arena have introduced an ordinance to raise the minimum wage for Chicago workers to $15 an hour, following a March advisory referendum in a small number of precincts that showed about 86 percent of Chicago voters support such a proposal.
If adopted, the $15 wage would initially apply only to workers at businesses with $50 million or more in annual receipts, and their subsidiaries and franchisees, while workers at smaller businesses would see the wage phased in over a multi-year period.
A new study by the Center for Popular Democracy, where I serve as director of strategic research, shows that the ordinance will increase income for 40 percent of all Chicago workers.
But what about job loss? Big business will say the higher wage will hurt the economy and force layoffs.
Not so.
Our study shows that an additional $1.1 billion would be passed to workers as take-home pay. Almost all of that money will travel through the local economy, generating an additional $616 million in new economic activity and creating 5,350 new jobs.
And there is precedent for these findings elsewhere: The payroll company Paychex and research firm IHS did a survey that found that Washington, the state with the highest minimum wage, also has the highest annual job growth.
Raising the wage isn’t just the right thing to do; it’s the smart thing to do. And although it may seem counterintuitive, the higher wage will help businesses grow. How?
Because too much inequality threatens economic growth and stability by limiting consumers’ ability to buy goods and participate in the marketplace. In other words, who will buy a new car if no one can afford to pay rent?
Unfortunately, the so-called recovery we’re in has been fueled largely by low-wage jobs replacing previously existing higher-wage jobs, further fueling inequality. In 2012, the Brookings Institute named Chicago the eighth most unequal city in the country.
Latinos and African-Americans make up disproportionate portions of the low-wage workforce, exacerbating racial and geographic disparities in the economy. Our study shows that a higher minimum wage will address these disparities by helping low-wage workers to participate more fully in the city’s economy as consumers, and help facilitate economic recovery in the neighborhoods where these workers live.
The current Illinois minimum wage is $8.25 an hour, a dollar higher than the federal minimum wage. Neither of these wage levels has kept pace with inflation or the cost of living, and both fall well below in purchasing power compared to the minimum wage in previous decades.
While the state and the federal government continue to ponder action, Chicago can’t afford to wait. The city is well positioned to take action, and join other cities, such as Seattle, San Francisco, and Washington, that are showing national leadership for urban America while Congress continues to stall.
More families than ever are relying on low-wage jobs to make ends meet. Let’s give them a fighting chance. Let’s make the economy work for all of us, not just the wealthy and the corporations.
Connie M. Razza is the director of strategic research at the Center for Popular Democracy, which gets funding from private philanthropy, community groups and labor organizations.
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After the Las Vegas Shooting, Taking on Myths About Gun Control
After the Las Vegas Shooting, Taking on Myths About Gun Control
Nearly 60 people were killed and more than 500 injured in the worst mass shooting in modern US history on Sunday night...
Nearly 60 people were killed and more than 500 injured in the worst mass shooting in modern US history on Sunday night, early Monday morning in Las Vegas at a concert. As details are still emerging about the suspected shooter, we’ll take on the issue of gun control and the myths of the gun industry with Dennis Henigan. Then, we’ll turn to the situation in Puerto Rico. Samy Olivares of the Center for Popular Democracy will give us a report on the on-going slow-motion disaster unfolding in the aftermath of Hurricane Maria and how mainland Americans can help. Finally, author George Monbiot joins us from London to discuss his new book Out of the Wreckage: A New Politics for an Age of Crisis. Hosted by Sonali Kolhatkar.
Listen to the story here.
Former Yellen Adviser Proposes Sweeping Reform of Fed System
Former Yellen Adviser Proposes Sweeping Reform of Fed System
A former aide to Federal Reserve Chair Janet Yellen has broken ranks with his former employer and issued a blueprint...
A former aide to Federal Reserve Chair Janet Yellen has broken ranks with his former employer and issued a blueprint for a sweeping reform of the U.S. central bank, including regular government audits and shorter term limits for policy makers.
Dartmouth College professor Andrew Levin targeted four areas of change for the Federal Reserve system: make the Fed a fully public institution; ensure the process of picking regional Fed presidents is transparent; set seven-year term limits for regional presidents and Board governors; and make the entire Fed subject to external review.
The proposals were taken up by the union-backed activist group Fed Up, which promoted them Monday in a conference call with journalists, and come during an election year where the central bank has been a campaign topic.
“There is one key principle in this document which is the Fed needs to become a public institution,” Levin said. “Pragmatic, reasonable Fed reform should be able to be passed by the Congress, by both parties. That is my hope.”
The Dartmouth professor worked two decades at the Fed, and was a special adviser from 2010 to 2012 to former chairman Ben S. Bernanke, and Yellen when she was vice chair, according to his biography page at the university.
Legislative Plans
Republicans in the U.S. Senate and the House of Representatives last year proposed legislation that included reforms of the central bank, though none has become law. Fed spokeswoman Michelle Smith declined to comment.
As recently as February, Yellen said that while the Fed might be structured differently if it were created today, she believed it still worked well and wasn’t “broken.”
“Of course the structure could be something different and it’s up to Congress to decide that -- I certainly respect that,” she said at a Senate hearing. “I simply mean to say I don’t think it’s broken the way it is.”
The Fed system, which sets interest rates for the U.S. economy, is made up of a Board of Governors in Washington and 12 regional Fed banks. It was created by an act of Congress, yet private banks hold stock in the regional Fed institutions as a result of the way the capital structure was set up when the Fed was born more than a century ago.
“The Federal Reserve is the only central bank that I know of that isn’t a fully public central bank,” Levin said in an interview.
Levin said the 12 regional banks should become fully public entities, meaning they have to somehow eliminate or repurchase the stock they have issued to private member banks. He also proposed banning anyone affiliated with financial institutions overseen by the Fed from serving as a regional Fed director.
Three Classes
Each regional Fed has a nine-member board of directors which includes three Class A directors who represent private member banks, three Class B directors picked by the private banks to represent the public -- typically local business people -- and three Class C directors chosen to represent the public by the Fed board in Washington.
The presence of financial interests on Fed boards has been a long-standing source of criticism. Currently, for example, James Gorman, chairman and chief executive of Morgan Stanley, sits on the New York Fed Board as a Class A director.
Prior the passage of the Dodd-Frank financial reform act in 2010, Class A directors also helped pick the 12 regional Fed bank presidents, subject to the approval of the board in Washington. That potential conflict of interest, with bankers appointing their own supervisors, was limited by Dodd-Frank, which restricted the selection process to Class B and Class C directors.
Levin said the current system of picking Fed presidents, which is led by regional board directors, is too secretive. He recommended the reserve bank boards accept nominations from the public, publish a list of eligible nominees, and then engage in a “selection process that involves genuine public participation.”
The Dartmouth professor also said that the entire Fed system should be subject to “external reviews” and disclosure requirements “just like every other key public agency.”
“The Government Accountability Office should produce a regular annual review of all aspects of the Fed’s policies, procedures, management, and operations,” Levin wrote in his proposal. The Fed has strenuously objected to calls by Republican lawmakers that monetary policy decisions be subject to GAO audit. In the interview, Levin said the GAO should focus on the management and operations of the Fed system, “not so much on monetary policy.”
“Part of the financial crisis was due to mismanagement in the division of supervision at the Fed,” Levin said in an interview. GAO reviews would provide assurance to the public and Congress that the “Fed is a well-managed organization,” he said.
By Craig Torres
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For Many Americans, the Great Recession Never Ended. Is the Fed About to Make It Worse?
When the Federal Reserve considers raising interest rates on July 28—and then again every six weeks after—MyAsia Reid,...
When the Federal Reserve considers raising interest rates on July 28—and then again every six weeks after—MyAsia Reid, of Philadelphia, will be paying close attention. Despite holding a bachelor’s degree in computer science, completing a series of related internships, and presenting original research across the country, Reid could not find a job in her field and, instead, pieces together a nine-hour-per-week tutoring job and a 20-hour-per-week cosmetology gig. The 25-year-old knows that an interest-rate hike will hurt her chances of finding the kinds of jobs for which she has trained, and earning the wage increase she so desperately needs.
A Fed decision to raise interest rates, expected sometime this year, amounts to a vote of confidence in the economy—a declaration that we have achieved the robust recovery we need. “We are close to where we want to be, and we now think that the economy cannot only tolerate but needs higher interest rates,” the chairwoman of the Federal Reserve, Janet Yellen, told Congress during a July 15 policy briefing.
But for many millions of Americans, the recovery has yet to arrive, and for them, a rate hike will be disastrous. It will put the brakes on an economy still trudging toward stability; stall progress on unemployment, especially for African-Americans; and slow wage growth even more for the vast majority of American workers.
The general argument for raising interest rates is that it will prevent wage costs from pushing up inflation. However, there is no data suggesting price instability; nor is there any indication that wages have risen enough to spur such inflation. For the overwhelming majority of American workers, wages have stagnated or even dropped over the past 35 years, even as CEOs have seen their compensation grow 937 percent. During the same period, wage gaps between white workers and workers of color have increased, and black unemployment is at the level of white unemployment at the height of the Great Recession. Meanwhile, the labor-force participation rate is less than 63 percent, the lowest in nearly four decades, suggesting that many Americans have simply given up looking for work.
Yellen has herself often urged the Fed to look at the broadest possible employment picture. Yet, during her recent congressional testimony, shedownplayed the Fed’s ability to address racial disparities, saying that the central bank does not “have the tools to be able to address the structure of unemployment across groups” and that “there isn’t anything directly that the Federal Reserve can do” about it. She cited, rightly, a range of other factors, including disparate educational attainment and skill levels, that contribute to economic and social disparities between racial groups. But she also glossed over the importance of the economic environment in shaping workers’ unequal chances.
One defining metric in shaping workers’ chances is the unemployment rate. A high unemployment rate facilitates racial discrimination. When there are too many qualified job candidates for every job, employers can arbitrarily limit their labor pool based on unnecessary educational requirements, irrelevant credit or background checks, or straightforward bias. A tight labor market, by contrast, makes it much harder for employers to succumb to prejudices and overlook qualified workers simply because of bias. When the number of job seekers matches the number of job vacancies, African-Americans, Latinos, women, gays and lesbians, injured veterans, and formerly incarcerated workers finally get their due in the workforce.
The late 1990s, when unemployment was at about 4 percent, bear out this thesis. During that rosier era, black unemployment was 7.6 percent, and the ratio of black family income to white family income rose substantially.
As the guardian of monetary policy, the Federal Reserve has a number of tools for encouraging a tight labor market, and one of those tools is to keep interest rates low. By keeping rates low, the Fed creates a hospitable environment for job growth by lowering the borrowing costs for consumer and business spending—including hiring new workers. By contrast, raising rates deliberately suppresses spending by consumers and businesses. In the process, it slows job growth, holds down wages, and unnecessarily maintains racial disparities.
With so many workers still struggling, there is no need to cut off this recovery prematurely. Inflation remains below the Fed’s already-low 2 percent target, unemployment and underemployment are too high, and wage growth and labor-force participation are too low. In fact, the Fed should be doing everything within its power to keep nudging the recovery forward for the workers still caught in the slipstream of the Great Recession.
The Federal Reserve should not raise interest rates this week, nor when it meets again six weeks after that. It should not raise rates at all in 2015. Doing so would cause tremendous harm to the aspirations and lives of tens of millions of working families, and would disproportionately hurt African-Americans.
MyAsia Reid knows the difference that a full-employment economy can make. She is ready to participate in the economic recovery. And she will be watching as the Fed decides whether to hold to a strategy of strengthening the recovery or pursue a new strategy that jeopardizes her chances and her community.
Source: The Nation
Exposing the Charter School Lie: Michelle Rhee, Louis C.K. and the Year Phony Education Reform Revealed its True Colors
Salon - January 1, 2015, by Jeff Bryant - Since it’s the time of the year when newspapers, websites and television talk...
Salon - January 1, 2015, by Jeff Bryant - Since it’s the time of the year when newspapers, websites and television talk shows scan their archives to pick the person, place or thing that sums up the year in entertainment, business, sports or every other venue, why not do that for education too?
In 2014 education news, lots of personalities came and went.
Michelle Rhee gave way to Campbell Brown as a torchbearer for “reform.” The comedian Louis C. K. had a turn at becoming an education wonk with his commentary on the Common Core standards. Numerous “Chiefs for Change” toppled from the ranks of chiefdom. Pennsylvania Gov. Tom Corbett went down in defeat due in part to his gutting of public schools, as Wisconsin Gov. Scott Walker remained resilient while spreading the cancerous voucher program from Milwaukee to the rest of the state.
New York Mayor Bill de Blasio rose to turn back the failed education reforms of ex-Mayor Michael Bloomberg, only to have his populist agenda blocked by New York Gov. Andrew Cuomo who insisted on imposing policies favored by Wall Street. Progressives formed Democrats for Public Education to counter the neoliberal, big money clout of Democrats for Education Reform. And Kentucky Sen. Rand Paul and former Florida Gov. Jeb Bush emerged as rival voices in the ongoing debate about the Common Core among potential Republican presidential candidates.
But hogging the camera throughout the year was another notable character: charter school scandals.
In 2014, charter schools, which had always been marketed for a legendary ability to deliver promising new innovations for education, became known primarily for their ability to concoct innovative new scams.
From Local Stories to National Scandal
Troubling news stories about the financial workings of charter schools had been leaking slowly into the media stream for some years.
A story that appeared at Forbes in late 2013 foretold a lot of what would emerge in 2014. That post “Charter School Gravy Train Runs Express to Fat City” brought to light for the first time in a mainstream source the financial rewards that were being mined from charter schools. As author Addison Wiggin explained, a mixture of tax incentives, government programs and Wall Street investors eager to make money were coming together to deliver a charter school bonanza – especially if the charter operation could “escape scrutiny” behind the veil of being privately held or if the charter operation could mix its business in “with other ventures that have nothing to do with education.”
As 2014 began, more stories about charter schools scandals continued to drip out from local press outlets – a chain of charter schools teaching creationism, a charter school closing abruptly for mysterious reasons, a charter high school operating as a for-profit “basketball factory,” recruiting players from around the world while delivering a sub-par education.
Here and there, stories emerged: a charter school trying to open up inside the walls of a gated community while a closed one continued to get more than $2 million in taxpayer funds. Stories about charter operators being found guilty of embezzling thousands of taxpayer dollars turned into other stories about operators stealing even more thousands of dollars, which turned into even more stories about operators stealing over a million dollars.
While some charter schools schemed to steer huge percentages of their money away from instruction toward management salaries and property leases (to firms connected to the charter owners, of course), others worked the system to make sure fewer students with special needs were in their classrooms.
Then the steady drip-drip from local news sources turned into a fire hose in May when a blockbuster report released by Integrity in Education and the Center for Popular Democracy revealed, “Fraudulent charter operators in 15 states are responsible for losing, misusing, or wasting over $100 million in taxpayer money.”
The report, “Charter School Vulnerabilities to Waste, Fraud And Abuse,” combed through news stories, criminal records and other documents to find hundreds of cases of charter school operators embezzling funds, using tax dollars to illegally support other, non-educational businesses, taking public dollars for services they didn’t provide, inflating their enrollment numbers to boost revenues, and putting children in potential danger by forgoing safety regulations or withholding services.
The report made charter school scandals a nationwide story and received in-depth coverage at Salon, “Bill Moyers and Company,” the Washington Post and the Nation.
A Summer of Scams
Charter schools scandals continued to break throughout the summer.
In Ohio, report after report continued to reveal how popular charter school chains like White Hat Management had sky-high dropout rates while they poured public money into advertising campaigns and executive pay.
In Pennsylvania, a report found exorbitant costs associated with charter school operations and lavish CEO salaries and bonuses for charter school operators despite vastly underperforming the state’s traditional public schools. Another report revealed how Pennsylvania charters had gamed the system for special education funding, resulting in annual profits of $200 million to the schools.
In Michigan, a series by the Detroit Free Press found charter schools with “wasteful spending and double-dipping. Board members, school founders and employees steering lucrative deals to themselves or insiders. Schools allowed to operate for years despite poor academic records.”
In Florida, an investigation by the Orlando Sun Sentinel found, “Unchecked charter-school operators are exploiting South Florida’s public school system, collecting taxpayer dollars for schools that quickly shut down.”
Another Florida local news outlet investigating charter school operations found millions of taxpayer dollars misdirected from classrooms and students to management companies. The report pointed to charter school chain Charter Schools USA that uses tax-exempt bonds to build schools that it then rents to UCSA-affiliated schools. Then the CUSA schools are saddled with rent payments back to CUSA and its management company at rates considerably higher than those charged to other non-CUSA schools in the area.
Still more news stories came out about charter schools related to the largest bricks-and-mortar charter-school chain in the United States run by the secretive Turkish cleric Fethullah Gülen, who lives in exile from Turkey in rural Pennsylvania. The Chicago Sun-Times reported that Chicago-area Concept Schools, part of the Gulen charter chain, were subjects of an ongoing federal investigation. The enquiry is about nearly $1 million that has been paid to contractors all with ties to the Gülen network.
Articles from the Washington Post found District of Columbia charter school operators evading rules to pocket millions in taxpayer dollars and charter schools pumping public money into for-profit management companies.
A report in the Arizona Republic found board members and administrators from more than a dozen charter schools “profiting from their affiliations by doing business with schools they oversee.”
The rash of summer charter scandal stories resonated in news outlets across the country.
Then to cap off the summer of charter scandals, the Progressive reported an upsurge in FBI raids on charter schools all over the country. “From Pittsburgh to Baton Rouge, from Hartford to Cincinnati to Albuquerque, FBI agents have been busting into schools, carting off documents, and making arrests leading to high-profile indictments.”
Reporter Ruth Conniff found charter schools allegations range from “taking money that was meant for the classroom,” to spending taxpayer dollars on “luxuries such as fine-dining and retreats at exclusive resorts and spas,” to engaging in “bribes and kickbacks.”
Back to Schools for Scandal
As back-to-school season rolled out, charter schools scandals broke harder and heavier.
The Center for Popular Democracy, Integrity in Education and ACTION United published a continuation of their charter schools study with a new report that disclosed charter school officials in Pennsylvania had defrauded at least $30 million intended for schoolchildren since 1997.
Startling examples of charter school financial malfeasance revealed by the authors included an administrator who diverted $2.6 million in school funds to a church property he also operated. Another charter school chief was caught spending millions in school funds to bail out other nonprofits associated with the school. A pair of charter school operators stole more than $900,000 from the school by using fraudulent invoices, and a cyberschool entrepreneur diverted $8 million of school funds for houses, a Florida condominium and an airplane.
Then, in November, the Center for Popular Democracy, with the Alliance for Quality Education, submitted yet another continuation of its analysis of charter school financial fraud, this time finding as much as $54 million in suspected charter school fraud in New York state.
Specific examples from the report included a New York City charter that issued credit cards to its executives allowing them to charge more than $75,000 in less than two years, a Long Island charter that paid vendors over half a million dollars without competitive bids, an Albany charter that lost between $207,000 to $2.3 million by purchasing a site for its elementary school rather than leasing it, a Rochester charter that awarded contracts to board members, relatives and other related parties rather than get competitive bids, and a Buffalo charter with a leasing arrangement that paid more than $5 million to a building company at a 20 percent interest rate.
A write-up of the report in the New York Daily News noted CPD “investigators uncovered probable financial mismanagement in 95 percent of the [charter] schools they examined.”
More recently, a widely circulated report from progressive news outlet ProPublica revealed how charter schools increasingly use arrangements known as “sweeps” contracts to send nearly all of a school’s public dollars – anywhere from 95 to 100 percent — into for-profit charter-management companies.
Reporter Marian Wang wrote, “The contracts are an example of how the charter schools sometimes cede control of public dollars to private companies that have no legal obligation to act in the best interests of the schools or taxpayers … it can be hard for regulators and even schools themselves to follow the money when nearly all of it goes into the accounts of a private company.”
The New Face of Charter Schools
In their defense, charter school advocates object to the negative portrayals of their operations by claiming the reports cherry-pick bad actors from the broad population of charters. But this year’s avalanche of malfeasance should dispel any argument about cherry-picking.
For sure there are examples of charter schools that are doing an excellent job of educating students. But rapid growth in the industry continues to come from charter operators who are not willing to run their operations like these successful charters because it doesn’t suit their “business model.”
Further, would a public school advocate defend public schools by countering, “But look at this good one over here”? They would be mocked and derided by charter school proponents.
Advocates for charter schools also defend the explosion in charter schools scandals by pointing to scandals in a public school and contending, “Look, they do it too.” Indeed, there are instances of financial and other types of scandals in public schools. That’s why they are heavily regulated. Yet charter school backers continue to fight regulations, contribute big money to political candidates who promise a hands-off approach to their schools, and use powerful lobbying firms to coerce legislators to continue unregulated charter governance.
Charter school defenders also argue that these widespread scandals will be remedied by the “market” – that the inevitable “bad” charters will get closed while only the “good” ones remain. It’s true that charter school closures are becoming more commonplace, but charter operators often resist closures – even calling on parents to rally to their cause and appeal to local authorities. Charter schools that close abruptly leave schoolchildren and families in the lurch and severely interrupt the students’ learning. Operators of closed charters often flee the scene to practice their malfeasance elsewhere, taking with them the supplies and materials they obtained at taxpayer expense. Meanwhile, enormous sums of precious public money are wasted – with no apparent education benefit – all for the sake of this “market churn.”
As a result of the flood of charter schools scandals, public attitudes about these schools are bound to change.
Surveys show the public generally doesn’t get what charter schools are and don’t understand whether they are private or public or whether they can charge fees or teach religion. Charter operators themselves have muddled their image by arguing successfully in numerous confrontations with legal authorities that “they are exempt from rules that govern traditional public schools, ranging from labor laws to constitutional protections for students.”
But a recent poll in Michigan, a state where rampant charter fraud has been well publicized, found that 73 percent of responders say they want a moratorium on the creation of new charter schools. In many communities, announcements about new charter operations opening up have been greeted with outspoken public protests as we’ve seen in in Nashville; York, Pennsylvania; and Camden, New Jersey.
Forecasts about what 2015 will bring to the education landscape frequently foresee more charter schools as charter-friendly lawmakers continue to act witlessly to proliferate these schools. But make no mistake, the charter school scandals of 2014 forever altered the narrative about what these institutions really bring to the populace.
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Democrats amass enough support for filibuster against Gorsuch nomination
Democrats amass enough support for filibuster against Gorsuch nomination
Democrats on April 3 amassed enough support to block a U.S. Senate confirmation vote on President Donald Trump’s...
Democrats on April 3 amassed enough support to block a U.S. Senate confirmation vote on President Donald Trump’s Supreme Court nominee, Neil Gorsuch, but Republicans vowed to change the Senate rules to ensure the conservative judge gets the lifetime job.
As the Judiciary Committee moved to send Gorsuch’s nomination to the full Senate, Sen. Christopher Coons became the 41st Democrat to announce support for a procedural hurdle — a filibuster — requiring a super-majority of 60 votes in the 100-seat Senate to allow a confirmation vote...
Read full article here.
If Amazon Wants New York, Make It Unionize
If Amazon Wants New York, Make It Unionize
The Center for Popular Democracy awarded Walgreens its “worst employer” prize because of its treatment of the retail...
The Center for Popular Democracy awarded Walgreens its “worst employer” prize because of its treatment of the retail chain’s employees.
Read the full article here.
Housing advocates accuse Wells Fargo of damaging communities through foreclosures
89.3KPCC - March 13, 2013 - Wells Fargo writes the most mortgages in California. According to a ...
89.3KPCC - March 13, 2013 - Wells Fargo writes the most mortgages in California. According to a new report released Tuesday from a consortium of grassroots activists and housing advocates, 11,616 of those loans are currently in foreclosure, out of roughly 65,000 homes in foreclosure in the state.
The report accuses Wells Fargo of damaging both California communities and the state’s overall economy. It was produced by the Alliance of Californians for Community Empowerment, the Center for Popular Democracy, and the Home Defenders League.
Ross Rhodes of the Alliance of Californians for Community Development said on a conference call Tuesday that Wells Fargo was singled out because the bank is "responsible for handling more delinquent loans than any other servicer."
He added that Wells Fargo is failing to live up to the terms of last year's mortgage settlement between the states and the country's biggest banks. Rhodes said that Wells is lagging behind both Bank of America and Chase in efforts to keep people in their homes.
In a statement, Wells Fargo said that its foreclosure rate in California is lower than its rate in the nation as a whole and that the report "appears to be an attempt to question Wells Fargo’s longstanding track record as a fair and responsible lender and servicer."
The bank emerged from the financial crisis relatively unscathed. But in recent years it has been called to task for past lending practices. It was was fined $175 million by the Justice Department in 2012 for steering minorities into costly subprime loans before the housing crisis.
The bank was also fined $148 million by the Securities and Exchange Commission for violations perpetrated by Wachovia Securities (Wells took control of Wachovia in 2008, at the height of crisis, when major U.S. banks were failing).
The report also argues that Wells Fargo’s foreclosures in the state are disproportionately affecting African American and Latino neighborhoods and could wind up costing the state $20 million in lost tax revenue.
The authors say that the solution is “principal reduction” — adjusting mortgages to reflect the reduced market value of homes in foreclosure.
Numerous economists support the idea of principal reduction, but the notion has been resisted at the federal level, most notably by Edward DeMarco, acting director of the Federal Housing Finance Agency, which has overseen mortgage giants Fannie Mae and Freddie Mac since they were taken into receivership during the financial crisis.
DeMarco has supported principal forbearance, a method that would not reduce the amount of mortgages held by Fannie and Freddie but rather restructure them so that homeowners could see more affordable payments.
The report's consortium of advocates doesn't favor forbearance, arguing that it can't address the core issue of borrowers drowing in debt.
But as tempting as principal reduction might be in theory, in practice is doesn't always lead to the homeowner staying in the home.
Economist Stuart Gabriel is Director of the Ziman Center for Real Estate at UCLA. He said that principal reduction isn't a "cure all."
"For borrowers that are deeply underwater, a modest amount of principal reduction is going to make no difference the ultimate outcome, which would be default and foreclosure," Gabriel said.
In its statement, Wells Fargo called its principal reduction efforts since 2009 "aggressive." But the advocacy groups said that Wells Fargo is one of the most difficult banks to work with, and that it engages in "dual tracking" — undertaking loan modifications at the same time it moves forward with the foreclosure process.
The report also recommends that Wells Fargo disclose more data about its foreclosures, and specifically about the impact that foreclosures are having on minority neighborhoods in California.
Gabriel said that more transparency about lending practices and the racial and geographical makeup of loan portfolios is always a good thing because additional information improves markets.
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