Highlights Of Obama's Wall Street Reform Bill, What's In It?

Wall Street Reform: What's In The Bill?


After more than a year of work and two weeks of negotiations, lawmakers early Friday finished melding different versions of Wall Street reform.

The final bill won't be ready for a few days, but here's CNNMoney.com's breakdown of key provisions that aim to protect consumers, prevent firms from getting too big to fail and crack down on risky bets that leave taxpayers on the hook.

Creating a consumer agency:

Establishes an independent Consumer Financial Protection Bureau housed inside the Federal Reserve. Fees paid by banks fund the agency, which would set rules to curb unfair practices in consumer loans and credit cards. It would not have power over auto dealers.

Credit scores:

All consumers have been able to get one free credit report a year from the credit rating agencies. But the bill would also allow a consumer to get an actual credit score along with a report.

Interchange fees:

Lawmakers want the Fed to crack down on debit card swipe fees, which retailers pay to banks to cover the operational cost of transferring money. The Fed could cap the fees and make them more reasonable and proportional.
0:00 /2:30Behind the derivatives reform debate

Banning 'Liar loans':

Lenders would have to document a borrower's income before originating a mortgage and verify a borrower's ability to repay the loan.

Mortgage help for unemployed:

Unemployed homeowners with good credit would be eligible for low-interest loans to help them avoid foreclosures. The bill would spend $1 billion on such relief, using funds that had been directed for Troubled Asset Relief Fund bailing out the financial system.

Fixed-equity annuities:

Prohibits tougher federal rules on life insurance products, in which customers pay a lump sum upfront in exchange for monthly income over time, pegged to an index. The Securities and Exchange Commission had been gearing up to step in and start requiring more disclosure for these products, often sold to seniors, that are currently regulated by state insurance commissioners. Lawmakers decided to stop the SEC from tougher federal regulation.
Too big to fail

New oversight power:

Creates a new 10-member oversight council consisting of financial regulators to look out for major problems at financial firms and throughout the financial system. The Treasury Secretary gains a key role in enforcing tougher regulations on larger firms and watching for systemic risk. The council also has veto power over new rules proposed by new consumer regulator.

Unwinding powers:

Gives the FDIC new powers to take down giant financial firms in the same way it takes down banks. Banks would be taxed to reimburse the federal government for the cost of resolving these firms after a failure occurs.
Wall Street reform bill ready for final votes

Breaking up Banks:

Gives regulators strengthened powers to break up financial companies that have grown too big, but only if the firms threaten to destabilize the financial system.

Checking on the Fed:

Allows Congress to order the Government Accountability Office to review Fed activities, excluding monetary policy. Audits would be allowed two years after the Fed makes emergency loans and gives financial help to ailing financial firms.

Forcing 'skin in the game':

Firms that sell mortgage-backed securities must keep at least 5% of the credit risk, unless the underlying loans meet new standards that reduce risk.

Financial system fee:

Banks and financial firms would be taxed to pay for the $19 billion cost of implementing the Wall Street reform bill.
Risky bets

Regulating derivatives:

Attempts to shine a light on complex financial products called derivatives that many blame for bringing down American International Group (AIG, Fortune 500) and Lehman Brothers. Would force most derivatives to be bought and sold on clearinghouses and exchanges. Some derivatives, including those traded by agriculture companies and airlines to mitigate risk, would still be unregulated.

Spinning off swaps desks:

Big banks that want to engage in nontraditional bets, such as on mortgage products or certain commodities, would have to spin off their swaps divisions.

Reining in risky bets:

Limits giant Wall Street banks from making trades on their own accounts, although with a long lead time and opportunities for delays up to seven years. While the original proposal would have banned banks from owning hedge funds, the bill would allow banks to sink up to 3% of capital into hedge funds or private equity funds.

Improving credit ratings:

Agencies that rate securities must disclose their methodologies. The Securities and Exchange Commission would have to study a way to find an independent way to match credit rating agencies with financial firms seeking ratings. After two years, they'd have to implement such a process, or appoint a panel to independently match ratings agencies with firms that need securities rated.

Curbing executive pay:

The bill would also impose new rules for how all publicly-traded companies, not just banks and other financial firms, pay top executives. Shareholders will be given a nonbinding advisory vote on how top executives are paid while in office. Shareholders also get a nonbinding advisory vote on executives' outsized severance payments, or so-called "golden parachutes."

The new rules would also beef up oversight of pay practices within the financial industry, which some critics have suggested helped fuel the crisis by encouraging workers to place risky bets. The bill, for example, would require industry regulators to draft their own set of rules aimed at eliminating risky pay practice among banks and other financial firms.


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Sources: CNN, Google Maps

Obama Touts Wall Street Reform Bill Consumer Protections-Weekly Address

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Sources: Whitehouse.gov, Youtube, Google Maps

GOP vs Obama On Wall Street Reform, "I Dare You!"

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Obama Dares GOP To Fight Wall Street Reform Bill


For weeks, the White House strategy on Financial Regulatory Reform remained an open question: Would President Barack Obama water down his bill just to get something passed — the way he did on health care?

A Palinesque “Hell no!” was the answer coming from the White House on Wednesday as the president, his senior aides and his allies on Capitol Hill issued an ultimatum to Republicans fighting Democrats’ plans to overhaul financial oversight.

“For the president, you have to be willing to accept a strong bill,” said White House press secretary Robert Gibbs, after Obama emerged from a contentious meeting with GOP congressional leaders.

“If the effort to get this close is simply to take steps to weaken that legislation, that’s not what the president is interested in.”

Democrats are so emboldened that Senate Majority Leader Harry Reid (D-Nev.) is prepared to bring the Banking Committee bill to the floor with no major concessions to Republicans and essentially dare them to vote against the measure, senior leadership aides said.

At a time when Wall Street is as reviled as government, Democrats are willing to gamble that at least one Republican — and maybe as many as a half-dozen — will break ranks. At the same time, Senate Republican leader Mitch McConnell is betting he can hold his caucus together to deny Democrats even a single vote.

“It’s been two and a half years since this crisis started, more than a year since we first laid out a comprehensive set of reforms,” Treasury Secretary Timothy Geithner said during a rare appearance at the White House daily briefing alongside Gibbs.

“I think we know what we need to know. ... It’s just time to decide and time to move,” he added.

The hard-line, limited-compromise approach reflects a belief among Democrats, buoyed by recent polls, that they enjoy huge advantages on regulatory reform that eluded them on health care.

Unless the GOP can succeed in painting the reform effort as a path to new bailouts — and Senate Republicans are trying to do just that — the politics of the issue seem to be almost entirely on the Democrats’ side.

But before they take on the minority, Senate Democrats are trying to smooth over internal conflicts. For weeks, White House officials have been quietly working with Senate leaders, including Majority Whip Dick Durbin (D-Ill.), on the list of amendments liberals plan to introduce when the measure comes to the floor.

The goal, according to several people close to the situation, is to green-light those amendments that force Republicans to take tough votes, while minimizing votes that divide the Democrats’ left and right wings.

In the meantime, McConnell has settled into his accustomed role as spoiler, trying to persuade the 41 members of the Republican conference to stick together in opposition to Banking Committee Chairman Chris Dodd’s bill as it is currently written.

McConnell circulated a letter Wednesday that he hoped every Republican would sign, sending the message — as they did during the health care debate — that Republicans are united in opposition. Sen. Scott Brown (R-Mass.), a potential swing vote, said he signed the letter, which asked Democrats to reopen negotiations.

“It appears the bipartisan talks have broken down,” McConnell said, after meeting for less than an hour with Obama, House Speaker Nancy Pelosi (D-Calif.) and Senate Majority Leader Harry Reid (D-Nev.).

“The strings were kind of pulled by the Democratic leaders,” said McConnell, who added that Democrats “are trying to jam us” for political gain.

A seething Reid, squinting in the bright sunlight of the West Wing driveway, called McConnell’s claim that Democrats had abandoned talks a “figment of his imagination” and vowed to pass the overhaul quickly.

The standoff defined the parameters for what has turned into a sharply partisan debate as Obama pushes the Senate to deliver another major legislative achievement before Memorial Day. Democrats believe they can make Republicans fold, and Republicans expect to hold firm or risk losing any leverage they have left to change the bill.

“If we can get 41 votes, they’ll have to deal with us,” said Alabama Sen. Richard Shelby, the ranking Republican on the Banking Committee.

Three Republicans who have been targeted as potential swing votes — Brown, New Hampshire Sen. Judd Gregg and Maine Sen. Susan Collins — suggested they have no plans, at this point, to provide Democrats the crucial 60th vote.

“Why would we do that when we are not in the room?” Gregg asked.

Shelby and Dodd resumed their negotiations Wednesday night, but both faced increasing pressure from their respective parties to go only so far in compromising.

Earlier in the day, Dodd threatened to end the talks with Republicans if they continued to lead what he called a misinformation campaign based on Wall Street talking points.

“My patience is running out,” Dodd said. “I’ve extended the hand. I’ve written provisions in this bill to accommodate various interests. But I’m not going to continue doing this if all I’m getting the other side is a suggestion somehow that this is a partisan effort.”

Dodd lashed out on the Senate floor as Obama led the tense meeting at the White House with congressional leaders.

Some Democratic senators say the template should be the legislative strategy that led to passage earlier this year of a $15 billion jobs bill. Reid infuriated Republicans by scuttling a bi-partisan compromise, betting that most wouldn’t have voted for it anyway. He pushed forward a narrowly tailored bill that at least a few Republicans decided they couldn’t vote against.





“We have to, on one hand, keep opening ourselves and keep offering our hands to Republicans,” said Sen. Sheldon Whitehouse (D-R.I.).

“But as a prudential matter we also have to be prepared, once again, to have that hand knocked away and to be able to go to a well-crafted Democratic bill — which will frankly be a stronger and better bill than if it is watered down with Republican amendments — and then let the chips fall where they may. I think that has to remain a backup strategy.”

With the public relations damage wrought by GOP talk of “death panels” fresh in Democratic memory, Team Obama launched a coordinated counteroffensive to rebut McConnell’s claim that the bank-financed “risk” fund included in the bill would pave the way for bottomless bank bailouts.

Geithner dismissed the idea that such a fund would lead to a bailout, saying, “Any risks the government takes are going to be borne by large financial institutions.”

Later, an administration official said Geithner has expressed willingness to negotiate with Republicans about the mechanics — but not the basic structure — of such a fund.

While Geithner and White House officials tried to project confidence that a strong, undiluted bill could be passed in weeks, they also cautioned that the toughest and most arcane work remained ahead of them.

Before leaving Wednesday’s briefing, Geithner delivered what he described as an “exhortation,” an unusual request for the press to guard the administration — and the American people — against GOP, lobbyists and banking interests.

“The stuff ahead of us now is derivatives, it’s ‘too big to fail,’ it’s complicated stuff — OK?” he said. “Make sure that you bring the same level of exposure and the spotlight on the choices ahead, because we — I think we all have an interest in resisting the efforts that are going to be made — and they’re going to come still, to weaken, to exempt, to carve people out of those basic protections.”


Sources: C-Span, MSNBC, Whitehouse.gov, Politico, Youtube

Obama's Banking Reform Agenda Hits A Bi-Partisan Wall

Bi-partisanship Banking Reform Stalls



The chances of a bi-partisan compromise on financial reform took another significant hit Tuesday as top Senate Republicans accused the White House of derailing a deal on derivatives trading and bashed the Democratic legislation as perpetuating Wall Street bailouts.

The Republican attacks drew a quick rebuke from the White House and pushed an issue long viewed as ripe for bipartisan agreement deeper into partisan territory. The sharp turn in the tone of the debate suggests Democrats might have to struggle to peel off more than a handful of Republican votes, if that.

After meeting with his members, Senate Minority Leader Mitch McConnell (R-Ky.) said he had “naively” assumed the bill would move forward on a bipartisan basis, and he predicted the overhaul legislation written by Banking Committee Chairman Chris Dodd (D-Conn.) would face “overwhelming Republican opposition.”

“I would say all signs we get from the White House is they’re not interested in talking, they’re not interested in making a deal with us,” McConnell told reporters. “They want to jam through a totally partisan bill. And if they do that, and it looks like the Dodd bill, it will guarantee perpetual taxpayer bailouts of Wall Street banks.”

Republicans are gravitating toward a strategy that defies the conventional wisdom held by Democrats — that the GOP, from a political standpoint, cannot throw up uniform opposition to Wall Street reform as it did with health care reform. A senior Senate Republican aide said the conference believes it has “a strong case to make as to why the bill is bad.”

“People expect us to say no to really bad ideas,” said Sen. John Cornyn, chairman of the National Republican Senatorial Committee. “The Dodd bill ... has a lot of problems.”

In a hastily assembled conference call with reporters Tuesday afternoon, Deputy Treasury Secretary Neal Wolin disputed McConnell point by point, saying charges that the bill would perpetuate Wall Street bailouts “aren’t consistent with the plain language of the bill.”

At the same time, White House deputy communications director Jen Psaki accused Republicans of taking cues from party strategists — naming GOP pollster Frank Luntz, who advised Republicans to attack President Barack Obama’s financial reform plans by calling them “bailouts.”

She said McConnell “reads Luntz’s line and follows Wall Street’s orders.”

“No matter what the bill actually does, they’re going to call it a bailout because that’s what the polls tell them to do,” Psaki wrote on the White House website. “The Senate bill explicitly mandates that a large financial firm that faces failure will be allowed to fail, and it explicitly prohibits the use of any funds to ‘bail out’ a failing firm.”

The back-and-forth appeared to further alienate Republicans and Democrats, who have been struggling for months to reach a compromise on regulatory reform, as tensions over the backroom negotiations spilled into the open. It comes ahead of a White House meeting Wednesday between Obama, McConnell, House Speaker Nancy Pelosi, Senate Majority Leader Harry Reid and House Minority Leader John Boehner.

Dodd and Alabama Sen. Richard Shelby, the ranking Republican on the Banking Committee, said they continue to negotiate a compromise on the overall regulatory bill. However, Shelby joined McConnell at a press conference after the Republicans’ weekly policy luncheon and criticized the process.

“We can get a good bill, if they will meet us halfway. And they haven’t yet,” Shelby said. “I hope they will. We continue to be open. But we’re not open to a bad bill, because that would be continuing what we’re doing.”

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McConnell’s criticism of the bill came shortly after Georgia Sen. Saxby Chambliss, ranking Republican on the Agriculture Committee, accused senior administration officials of attempting to thwart a compromise on one of the last major elements of regulatory reform — a proposal to regulate risky derivatives trades, which falls under the jurisdiction of the Agriculture and Banking committees.

In contrast to the partisan bill produced by the Banking Committee, there was some expectation that Chambliss and Agriculture Committee Chairwoman Blanche Lincoln (D-Ark.) would reach a bipartisan deal on their portion of the bill to tighten restrictions on derivatives.

But that outcome looked remote after Chambliss issued a statement charging Treasury Secretary Timothy Geithner and Gary Gensler, chairman of the Commodity Futures Trading Commission, with forcing “politics in the pathway of meaningful financial regulatory reform.”

“They seem to be intent on making this a partisan issue without Republican input, which in no way benefits the American people who have endured economic distress as a result of the recent financial crisis,” Chambliss said.

Senate Republicans said Chambliss and Lincoln were nearing a deal, but when Chambliss declined to commit Republican support for the overall bill without seeing final language, the administration pulled back support for any emerging compromise.

A White House official told POLITICO that the administration had expressed concerns to Lincoln in the past “72 hours” about the direction of the derivatives language.

Lincoln aides said she broke with Chambliss over “mandatory exchange trading” — which would place derivatives trades on central market exchanges, making information about the derivatives available in a central location. Currently, derivatives are usually executed as private deals between two parties.

Lincoln supported the mandatory exchange trading. Chambliss didn’t. Once it was clear that a deal with Chambliss was not possible, Lincoln decided to craft a proposal that could win as much support as possible within her own Caucus, aides to the Arkansas Democrat said.

Lincoln pushed ahead with her plan Tuesday, briefing Agriculture Committee Democrats on an approach that was more restrictive than many had expected.

Lincoln’s plan is likely to burnish her standing with progressive groups inside the Democratic Party ahead of her May 18 Senate primary, where she is facing a challenger from the left, Lt. Gov. Bill Halter. Lincoln drew fire from liberals in her party for opposing the public health insurance option in the recent health care reform bill.

And the shift drew immediate praise from a leading progressive voice in the Senate on derivatives, Sen. Maria Cantwell (D-Wash.). “Out of the House and the Senate bills that have been on the table before, it sounds like Blanche Lincoln is going to put the strongest reforms on the table,” she said.

Lincoln would require “mandatory exchange trading” for most derivatives contracts, though there would be an exemption from such requirements for non-financial institutions.



Lincoln’s position is similar to the provision approved by the House Financial Services Committee and is “at least as stringent” as that called for by the Senate Banking Committee, her aides said. Under Lincoln’s proposal, manufacturers, agriculture companies and commodities producers would not be covered by a new requirement to “clear” the trades, or have them settled by a third party.

Chambliss said he continues to talk with Lincoln but the White House “has got to send a message that it wants to see a bipartisan bill, and they haven’t done that.”

“The pushback is kind of brand new,” Chambliss said. “For them to come up and push back on the bipartisan concepts that we’re thinking in terms of [derivatives] is somewhat surprising, because we thought we were working well.”

Wolin rejected Republican assertions that the administration had turned away from bipartisanship.

“We have worked for more than a year with Democrats and Republicans, and we will continue to work with Republicans and Democrats,” Wolin said.

But, he added, Obama and top administration officials have made clear they won’t accept compromises that weaken the Senate bill. “It is important and urgent that we get legislation — but that we get good, strong legislation,” Wolin said.


Sources: Bloomberg News, BOFA, CNN, Politico, Youtube, Google Maps

Obama's Mortgage Relief Program Provides Little Hope For Homeowners...Foreclosures

(NY Times) Billions To Fight Foreclosure, But Few New Loans



They milled about the hallways of the cavernous State Supreme Court building in Jamaica, Queens — 42 homeowners whispering, studying old bills, waiting for a court officer to call their names and wave them, one by one, through a door.

There, in a dusty, high-ceilinged room with a steam radiator that never stopped wheezing, they took a seat across a table from a lawyer for a mortgage company. Then their work began: trying to persuade a stranger not to foreclose on their home.

The Obama administration’s plan to rescue Americans from foreclosure plays out day after day in rooms like this. On this day, as on most, nothing happened. One lawyer, visibly bored, put in a brief, token appearance. A few others seemed barely familiar with their cases. Another asked for more records, hinting that maybe next month the lender might talk about a settlement.

Ismail Ali, a silver-haired immigrant from Guyana, hoped to save his home in Ozone Park. “If it takes you another three months to evaluate me, and I keep paying, will I get a new mortgage?” he asked, almost pleading.

The lawyer shrugged, not unsympathetically. “I can’t answer that for you,” he said.

Ten months ago President Obama announced a $75 billion program to keep as many as four million Americans in their homes by persuading banks to renegotiate their mortgages. Lenders have accepted more than one million applications and cut three-month trial deals with 759,000 homeowners. But they have converted just 31,000 of those to the permanent new mortgages that are the plan’s goal.

In New York City, where 20,000 homeowners faced foreclosure this year, a recent study by the Center for NYC Neighborhoods found that lenders have offered new or trial mortgages to just 3 percent of the homeowners who have sought help.

Big mortgage companies — servicers, in the parlance of the industry — stand at the heart of this program. Many of the servicers that have agreed to participate are subsidiaries of the nation’s largest banks — Wells Fargo, Bank of America and JPMorgan Chase.

They say their performance is improving. “We ourselves stated that we fell short of our customer service goals,” said Mary Coffin, executive vice president for loan servicing at Wells Fargo. “Now we are doing three modifications for every foreclosure.”

But a drove of critics, including homeowners, nonprofit loan counselors, legal services lawyers and court officials, say these companies are also at the heart of the problem. Servicers, they say, pile delay upon delay, and too often steer homeowners into new mortgages with onerous terms. Some companies have insisted that homeowners waive their right to sue before getting a new mortgage, even though the Obama plan prohibits such demands.

Administration officials have vowed to shame servicers into action. And New York State lawmakers, like their counterparts in a few other states and cities, have tried to slow the headlong hurtle toward foreclosure by requiring lenders to negotiate with troubled borrowers in court.

Leonard N. Florio, a court-appointed referee, oversees such sessions in that dusty room in Queens. He is a chatty man and punctilious about not taking sides. But as he watched Mr. Ali, the Ozone Park homeowner, load his piles of bills and receipts back into his shopping bags, he could not help noting a pattern.

“I have yet to see an attorney for a servicer cut a deal,” he said. “Update this, update that. I mean, what’s the holdup?”

Loan servicers argue that homeowners are as often to blame: Many cannot show proof of income, and fail to make payments even on modified mortgages. And millions are in bigger trouble than the public realizes, burdened with monthly payments so exorbitant that even a reduced mortgage payment will not save their home.

The servicing companies make money either way. The Obama program pays them $1,000 for each loan modified, and another $1,000 per year for three more years if the borrower avoids foreclosure. On the other hand, the companies make large sums charging late and legal fees on overdue mortgage payments, and sometimes it is cheaper to foreclose than to cut the mortgage payment.

These same companies turned billions of dollars in profits during the fat years of the bubble. Four years ago, lenders strung banners from storefronts in Jamaica and Cypress Hills and Bedford-Stuyvesant, promising “You will not be turned down!” A no-documents-needed mortgage was easily obtained, often accompanied by the flimsiest of appraisals.

Now the lenders toss up daunting hurdles. Homeowners say they send and resend thick piles of documentation, only to be told that their papers have been misplaced, or that their pay stubs are out of date. Housing counselors dial a dozen times just to get a servicer on the phone.

“It’s a constant Catch-22: They never give you their name,” said Gerald Carter, a counselor with the Parodneck Foundation in New York City, which receives city and state money to advise homeowners. “You call back and say, ‘No, I was talking to Bob last time,’ but Bob wouldn’t give his last name — not even an employee ID number. So you start over.”

Last month, the Legal Aid Society of New York sued the federal government and a mortgage servicer, Aurora Loan Services, on behalf of four Queens homeowners. Aurora, which has a $116 billion loan portfolio, was a subsidiary of Lehman Brothers before that firm went bankrupt; it offered loans with interest rates just a bit lower than subprime rates, which are typically a few percentage points higher than rates on conventional mortgages.

The lawsuit charges that Aurora, and by implication many other servicers, systematically denied homeowners access to the federal rescue program. And, the lawsuit asserts, the Obama plan provides far too few safeguards for homeowners.

“The servicers ignore their obligations, and are throwing unaffordable agreements at people and setting them up for another default,” said Oda Friedheim, a staff lawyer with the Legal Aid Society.

Asked to respond, an Aurora spokeswoman e-mailed a statement saying the company tries to prevent foreclosure for its customers.

Tom Vellucci, 54, is one of the four plaintiffs in the lawsuit, and a soldier in this army of the potentially dispossessed. Once a maintenance man for an insurance company, with a modest home in Floral Park, Queens, he lost his health and then his job. When a tenant stopped paying rent, he fell behind on his mortgage. A so-called rescue firm offered to negotiate better terms and wheedled Mr. Vellucci and his wife, Maria, out of $8,000 in fees.

When the inevitable foreclosure notice arrived in March, the Velluccis called Aurora Loan Services and asked for a break. The company, he said, responded by piling on legal fees and giving them a four-month trial agreement that did not reduce their monthly payment.

The Velluccis say they drained their savings making payments. Then the couple asked Aurora if they could revise their mortgage terms under the Obama rescue plan. They say the company refused, saying their mortgage was not eligible because it was owned by investors.

Aurora makes a similar statement about investor-owned mortgages on its Web site. These claims are not true. The Obama program requires companies to make an effort to modify such mortgages.

Sitting on a bench in the Queens courthouse, where he has become a regular, Mr. Vellucci ran his fingers through thick black hair and shook his head. “We kept trying to pay on faith, all faith, so we could prove we were honest people,” he said. “Now all we look like is stupid.”

Phyllis Caldwell, chief of the Treasury Department’s Home Ownership Preservation Office, is not inclined toward tough talk about servicers, perhaps because the Obama plan, which she oversees, lacks enforcement teeth. Asked about Aurora’s refusal to consider modifying investor-owned mortgages, she suggested a reporter call the program’s compliance unit.

“If it is reported in The New York Times and someone chooses to audit it, that’s important,” she said.

She sees a brighter day coming. “We are holding the servicers accountable to report to us,” she said. “They are being much more transparent.”

For now, however, the Velluccis and thousands like them dangle perilously close to calamity.

Born in Italy, Mr. Vellucci and his wife migrated here as teenagers. They raised children, bought a house, lived their dream in Technicolor. Then his kidney gave out and their economic slide began. After court on this day, he would go for dialysis. The couple hope the lawsuit might give them one more shot at the Obama plan.

“I don’t sleep at night, I don’t sleep at all,” he said, rising slowly. “I tell Maria, ‘If we lose the house, I want to stop my dialysis.’ I want to die, honestly.”








Are Obama's & NACA Mortgage Relief Programs Scams?



Despite Millions of struggling American Homeowners seeking Gov't assistance to remain in their residences via Loan Modifications/ Loan Restructures from Pres. Obama's Making Homes Affordable (HAMP) or NACA's "Save the Dream" Tour, only about 4% (31,000 homeowners) applicants were approved.

This is absolutely unreal and totally unacceptable!

Something is most definitely wrong with this picture!

So Pres. Obama and NACA's programs are basically ineffective?

I've included NACA in this blog post because NACA employees use Pres. Obama's HAMP program Debt Ratio formula when assisting homeowners during "Save the Dream" tours.

4%?? Only 31,000 people??

According to several news reports (listed below) Banks are blaming the low number of approved Loan Modification/ Loan Restructure applications on lost paperwork.

What kind of lame excuse is that?

Where are the billions of dollars Pres. Obama and Congress allocated for Foreclosure Prevention earlier this year?

Better yet why won't NACA CEO Bruce Marks open his books to show real numbers of long term, proven success rates from his program to Congressional members?

Why is it ACORN CEO Bertha Lewis was the ONLY Federally Funded Housing program official required to open her organization's books to Congress?

Could it possibly be that Obama's HAMP program was perhaps intentionally set up to only approve a very small number of Loan Modifications in order to help banks stay profitable?

Doesn't this sound like something Tim Geithner might do?

No offense but for some reason I don't trust Tim Geithner. (Sorry Tim)

Could it be that participating Banks and NACA's CEO Bruce Marks are being paid by H.U.D. and Congress for each Submitted Application versus each APPROVED Loan Modification/ Loan Restructure application? (Permanent Loan Mods)

OMG! Isn't that considered a Scam??

When assisting Homeowners do NACA employees ensure all required, up to date paperwork is included with each Loan Modification/ Loan Restructure application?

So in essence it really doesn't matter to NACA or Pres. Obama's HAMP Program Administrators if Loan Mod applicants are approved for Long Term results or not, because Banks and NACA will be paid regardless.

Seems as if NACA's CEO Bruce Marks may have secret ties to Wall Street despite his claims of being a radical "Bank Terrorist".

Thus I'll ask this question again:

Why is it Congress jumped so quickly to deny funds for ACORN's Housing program unless CEO Bertha Lewis could prove her program was successful (by opening her books) but NACA's Bruce Marks can still receive Federal & State Funds without doing so?

Something is definitely wrong with this picture don't you think?

Again I'm speaking of Long Term or Permanent results, NOT 90-day trial periods.

Also due to the Recession millions of Homeowners are now living in "Underwater Homes", which means Property Tax values on those homes have dropped significantly.

When banks are processing Loan Modification applications, do they take that factor into consideration?

If so the Escrow on those loans should be reduced as well correct?

However in regions like Charlotte-Mecklenburg City & County officials have chosen to INCREASE Property Tax values on thousands of Underwater Homes.

Of course most of the residents living in those Underwater Homes are Middle Class & Low Income Minority Citizens.

What's the purpose of approving Homeowners for a Loan Modification/ Loan Restructure without including the decreased Tax Value on residential properties?

Considering the current Economic Recession our country is experiencing, why are City and County Officials Nationwide choosing NOT to lower Property Tax Values on homes, especially homes located in Middle and Low Income Communities as a best practice for their struggling Constituents?

Hmmm. This is certainly something to think about and inquiring minds want to know.

I propose that Congress should call Tim Geithner and Bruce Marks to Capitol Hill for inquiries about the operations of these two weak Foreclosure Prevention programs.

Immediately afterward Congress needs to than launch thorough investigations into Pres. Obama's HAMP and NACA's so-called "Mortgage Relief" programs.

Investigate as in requesting Pres. Obama's HAMP program officials & NACA CEO Bruce Marks to provide clear evidence and proof each program (since inception) has successfully helped at least close to 1 Million (combined) Homeowners versus just a paltry 31,000.

Don't you agree?

After all both programs are being funded with Taxpayer money just like ACORN was.

Only 4% (31,000 people) approved for Long Term results Indeed!




More tax dollars for the self-proclaimed Bank Terrorist

Despite receiving taxpayer money, NACA doesn’t provide public reports on either its loan-brokerage business or its campaign to modify mortgages. Jim Campen, an economics professor emeritus at the University of Massachusetts, Boston, says he tried in the 1990s to analyze the performance of loans arranged by NACA, but Mr. Marks refused to provide data.

Mr. Marks says he feared the data would be used by another nonprofit to discredit his group. NACA does provide information to lenders that work with it, he says, but sees no duty to disclose it to the public.

“He’s been very effective in shaking money out of the banks,” says Mr. Campen, but “he’s not one to open up his records to public scrutiny.” Wall Street Journal
Article dated * May 20, 2009




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Sources: NY Times, Wall Street Journal, Michelle Malkin, NACA, Youtube, Google Maps

Pres. Obama Praises Passge Of Diluted, Partisan Financial Reform Bill

The President explains that while he continues to focus on jobs, it is also profoundly important to address the problems that created this economic mess in the first place. He commends the House of Representatives for passing reforms to our financial system, including a new Consumer Financial Protection Agency, and blasts Republican Leaders and financial industry lobbyists for their joint pep rally to defeat it.





Home prices up, more borrowers Underwater. CNBC's Diana Olick reports that while home prices show a slight gain, about 25 percent of homeowners owe more on their mortgages than they are worth.

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House kills Bankruptcy Mortgage Relief in Wall Street bill


The House has rejected an effort to expand a Wall Street regulation bill with mortgage relief that would let debt-ridden homeowners reduce their payments in bankruptcy court. The vote was 241-188 to reject.

The provision would have revived a previous bill that passed the House but later failed in the Senate.

Democrats hoped that by inserting the provision in the regulatory legislation they would have had another opportunity to make it law. Aiding homeowners through bankruptcy had been a key feature of President Barack Obama's foreclosure fighting proposal, but the president did not push for it.

Banks and credit unions have lobbied against the bankruptcy measure. They say it would force a flood of bankruptcy filings and ultimately drive up mortgage rates.





US House Passes Broad Wall Street Regulatory Overhaul


The House passed the most ambitious restructuring of federal financial regulations since the New Deal on Friday, aiming to head off any replay of last year's Wall Street failures that plunged the nation deep into recession.

The sprawling legislation would give the government new powers to break up companies that threaten the economy, create a new agency to oversee consumer banking transactions and shine a light into shadow financial markets that have escaped the oversight of regulators.

The vote was a party-line 223-202. No Republicans voted for the bill; 27 Democrats voted against it.

While a victory for the administration, the legislation dilutes some of President Barack Obama's recommendations, carving out exceptions to some of its toughest provision. The burden now shifts to the Senate, which is not expected to act on its version of a regulatory overhaul until early next year.

The president praised the House action Friday, and called on Congress to act swiftly to get the bill to the White House for his signature.

"The crisis from which we are still recovering was born not only of failure on Wall Street, but also in Washington," Obama said. "We have a responsibility to learn from it and to put in place reforms that will promote sound investment, encourage real competition and innovation and prevent such a crisis from ever happening again."

The legislation would govern the simplest payday loan and the most complicated high-finance trades. In its breadth, the measure seeks to impose restrictions on every house of finance, from two-teller neighborhood thrifts to huge interconnected conglomerates.

Democratic leaders had to fend off a last-minute attempt to kill a proposed consumer agency, a central element of the legislation and one the features pushed by the White House. The agency would take over consumer protection powers from current banking regulators, and big banks and the U.S. Chamber of Commerce vigorously opposed the idea.

Democrats said the broad legislation would help address problems that led to last year's calamitous financial crisis. Republicans argued that it overreached and would institutionalize bailouts for the financial industry.

"Let's put it to the American people: Do you prefer the Republican position of doing literally nothing to rein in these abuses or should we try to rein them in?" Rep. Barney Frank, who led the Democratic effort on the bill, asked moments before the final vote.

Republicans cast the regulatory bill as a burden to business and argued that it would continue to protect companies considered too big to fail. They offered an alternative that called for special bankruptcy proceedings to dismantle failing financial institutions. That alternative failed.

"This house has been on a spending spree, a bailout spree and a regulatory spree that I could never have imagined in any of my prior 18 years here in Congress," Republican Leader John Boehner of Ohio said.

Consumer advocates cheered the survival of the consumer protection agency but said the overall legislation fell short, especially in the regulation of complex investment instruments known as derivatives.

The legislation aims to prevent manipulation and bring transparency to the $600 trillion global derivatives market. But an amendment by New York Democrat Scott Murphy, adopted 304-124 Thursday night, created an exception for nonfinancial companies that use derivatives as a hedge against price, currency and interest rate changes rather than as a speculative investment.

The amendment also provided an exception for businesses that are considered too small to be a risk to the financial system.

A Democratic effort to make more companies subject to derivatives regulations and to abusive-trading rules failed.

When the Obama administration first proposed a package of regulations, it called for regulations of derivatives without any exceptions. But a potent lobbying coalition that included Boeing Co., Caterpillar Inc., General Electric Co., Coca-Cola and other big companies persuaded lawmakers to dilute the restrictions.

"It does fall well short of what the administration promised and what everybody assumed we would get," said Barbara Roper, director of investor protection for the Consumer Federation of America. "It's a weakness in the bill and a win for Wall Street. Hedge funds and others that are not bona fide hedgers of commercial risk will slip through this language."

The bill would create a Financial Services Oversight Council made up of the Treasury secretary, the Federal Reserve chairman and heads of regulatory agencies to monitor the financial markets for potential threats to nation's system.

It would identify firms and activities that should be subject to heightened standards, including requirements that they place more money in reserve. Companies would have to plan for their own demise, detailing how they would be dismantled if they failed. The government could dismantle even healthy firms if they were considered a grave risk to the economy. Large firms with assets of more than $50 billion, and hedge funds with at least $10 billion in assets, would pay into a $150 billion resolution fund that would cover the costs of dismantling such a company.

It was that fund that Republicans argued amounted to yet another bailout pool.

The Federal Reserve, criticized for not spotting last year's crisis, would lose power in the legislation. The measure would limit the Fed's unilateral ability to inject large amounts of money into financial institutions. It also would take away the Federal Reserve's consumer regulation authority and would subject it to a broad audit by Congress' investigative arm.

The legislation also takes on Wall Street compensation. Company shareholders would get a nonbinding vote on the pay of top executives. Federal banking regulators would have to approve compensation practices, though not actual pay, at banks and bank holding companies.





Dems paint Wall St. vote as big win


Not a single Republican cast a “yes” vote for the Wall Street reform bill in the House Friday.

Democrats could hardly contain their glee.

“Seriously?” was the subject line of an asked the headline of an e-mail from Democratic National Committee communications director Brad Woodhouse after the House vote.

“Representative Mary Bono Mack has apparently learned nothing from the near-collapse of big banks and financial institutions that put our entire economy at risk,” read the e-mail sent to Mack’s California district and more than three dozen other target GOP incumbents by the Democratic Campaign Committee, slamming the incumbents for backing Wall Street over consumers.

With polls showing voters furious at Wall Street and their big fat bonus checks, Democrats smell an opportunity to turn their political fortunes around with the help of the financial reform legislation that’s moving through Congress.

The DCCC is raising money to produce “hard-hitting” spots against Republicans who sided with financial lobbyists “trying to kill reform,” according to a Nov. 10 fundraising e-mail. And the rhetoric during and after the debate this week made clear, Democrats – at least in the House – will try to turn their Republican opponents into Wall Street’s lapdogs and saddle them with the populist outrage still burning in the heartland.

The pitch may not be as easy as it sounds. Sure, opposing legislation that cracks down on greedy bankers, enhances consumer protection and puts an end to taxpayer bailouts sounds like political suicide. But Republican strategists disagree that this was a bad vote for their party.

“Opposing Barney Frank is not going to be a political liability” in swing districts, said GOP pollster Adam Geller, who worked for Christopher Christie’s successful 2009 New Jersey gubernatorial campaign. Voters see Frank – and House Speaker Nancy Pelosi, the other major face of the bill – “as kind of on the left extreme,” he said.

And a closer look at Friday’s votes shows the issue isn’t that black and white in every Democratic district.

Quite a few Democrats in tough reelection races bolted off the party line to oppose the bill, undermining the notion that Democrats have the undisputed political high ground on this one. The 27 Democrats who opposed the bill included highly vulnerable members such as Reps. Bobby Bright (D-Ala.), Eric Massa (D-N.Y.), Zach Space (D-Ohio) and Tom Perriello (D-Va.) – who took flak at home for voting “yes” on Democrats’ climate change bill. There were also a number of less-imperiled but still-worried Democrats that voted no.

And Democratic party brass also tacitly acknowledged that the politics on this aren’t so clear cut when they agreed to give Idaho freshman Walt Minnick a floor vote on his controversial amendment to gut the new consumer protection agency at the heart of the legislation. While the bulk of their rank-and-file opposed the measure, leadership wanted to give moderate Democrats the vote to help insulate themselves against industry-financed attacks next fall, leadership aides said, giving these lawmakers a chance to vote with the Chamber of Commerce – a strong opponent of the newly created consumer-protection agency that highlighted the vote politically.

After some tough whipping, Democratic leaders were able to defeat the amendment, 223-208, with 33 Democrats supporting it. But they were scared for a few hours that they might not be able to, said leadership aides.

Those votes suggests that voters in some of these tough Democratic districts the Republican arguments that the legislation amounts to a perpetual bailout, harmful government control of the economy and job-killing layers of bureaucracy might be more likely to resonate.

“As in the case of health care and energy policy, this bill was about empowering the government and not the individual. Government control and command was not what made America the largest and most successful economy in the world,” said Rep. Spencer Bachus (R-Ala.). “The array of new regulations and taxes on consumers, investors and businesses will destroy jobs and further undermine the fragile economy.”

Nonetheless, Democrats’ own polling gives them reasons for optimism. A recent survey done by Democratic polling firm Anzalone Liszt for Americans United for Change found that 70 percent of voters – Democrats, Republicans and independents alike – want to see major reform of the financial system.

Most Americans aren’t aware of the reform measures put forward by the Obama White House, but when voters heard descriptions of the proposals to beef up oversight of big banks, create a new consumer protection watchdog and crack down on corporate abuses, support shot up from 35 percent to 60 percent, the poll found. Independents were particularly supportive of the plan after hearing the description.

“This creates an opportunity for the President and members of Congress to address major financial concerns of voters and to be seen as standing up for working families,” said a memo from pollsters John Anzalone and Matt Hogan.

In an interview, Anzalone said the financial reform bill could be “the populist issue of the cycle, bringing strong accountability and oversight to Wall Street. There’s no good way to spin this one, except voting for it because it’s a good bill and people think it’s a good bill.”

Republicans who oppose the bill “are going to pay a very heavy price,” DCCC Chairman Chris Van Hollen (D-Md.) warned Thursday on a conference call with reporters. He referred to a much-publicized meeting of banking lobbyists convened by House Minority Leader John Boehner earlier in the week to rally against the bill, saying “it was very clear whose side the Republicans were on, and they were on the side of protecting the special interests and allowing us to once again get ourselves in a mess where the taxpayers are left holding the bag for bad decisions on Wall Street.”

“This Republican recession based on [their] Wild West mentality cost this country millions of jobs and these guys should be ashamed of themselves,” fumed Rep. Ed Perlmutter (D-Colo.), taking a page from the Anzalone polling memo, which urged lawmakers to stress how financial reform will prevent future job losses.

“There is some risk” to voting against legislation framed as a reform of Wall Street, acknowledged Rep. Mike Castle of Delaware, a moderate Republican who is running for Joe Biden’s Senate seat. “Democrats have presented it as such – and I’m not sure it’s a fair presentation. I think it’s up to Republicans to be able to rebut it, maybe better than we have so far.”

Most Republicans dismiss the idea that their vote against the financial package would come back to haunt them.

“Anyone who expects a political advantage by supporting this bill is ignoring the public opposition to the Democrats’ agenda of big government and fewer jobs,” said National Republican Congressional Campaign spokesman Paul Lindsay.

“There’s a political opening on any bill, whether you vote yes or no, somebody can always spin it in a way that’s not advantageous to you,” said Rep. Scott Garrett (R-N.J.).

“Good policy at the end of the day makes good politics. And someone can just as easily argue that this is disastrous policy that would give us too big to fail banks, turning banks into utility companies that hurt the little guy,” said Rep. Paul Ryan (R-Wisc.).

“They’ll use it for ads, absolutely. Of course. You can twist your mind into pretzels on every one of these votes because they can twist, distort and demagogue just about any vote around here. If you let that guide you, then you’re running around in circles around here.”




Federal Judge: ACORN Funding Restored


A Federal Judge in New York ordered that ACORN’s federal funding be restored, rolling back a slew of Congressional actions that sought to stop taxpayer money from flowing to the community group on the heels of a fall full of embarrassments for it.

Nina Gershon, a district judge in New York, issued a preliminary injunction directing the US Department of Housing & Urban Development, the Office of Management & Budget, and the Treasury department to disregard a bill signed into law by President Obama that prohibited federal funding of the Association of Community Organizations for Reform Now.

“The question here is only whether the Constitution allows Congress to declare that a single, named organization is barred from all federal funding in the absence of a trial,” Gershon wrote in her opinion. “Because it does not, and because the plaintiffs have shown the likelihood of irreparable harm in the absence of an injunction, I grant the plaintiffs’ motion for a preliminary injunction.”

Gershon said that “none of the government’s justifications stand up to scrutiny” and that “no non-punitive rational” is obvious.

ACORN was the subject of bi-partisan disdain in September, after undercover videos were released that seemed to show the organization’s employees offering advice on how to break the law. Republicans and Democrats voted to stop federal funding of the group – a measure signed into law by the president on the back of an appropriations bill.

In November, the group sued the federal government, claiming that the provision, attached to the legislative branch appropriations bill, was a bill of attainder – unconstitutional legislation that unfairly punishes one group. As part of this lawsuit, ACORN sought a Restoration of Federal Funding.

With Friday’s injunction, ACORN stands to begin receiving funds once again, including between $40,000 and $60,000 for housing assistance, according to the decision from the district court in eastern New York.

“Today’s ruling is a victory for the Constitutional Rights for all Americans and for the citizens who work through ACORN to improve their communities and promote responsible lending and homeownership,” ACORN CEO Bertha Lewis said in an emailed statement.

It is also is the second in a string of victories for ACORN. An investigation by former Massachusetts Attorney General Scott Harshbarger largely absolved the organization from any wrongdoings or illegalities in a hidden-video scandal which allegedly showed the organization’s employees offering advice on how to dodge taxes while setting up a prostitution ring of underage illegal immigrants.

Republicans are already hammering away at the decision. Rep. Darrell Issa (R-Calif.), a longtime critic of ACORN and author of a report on the group’s problems, framed Gershon as an “activist judge” appointed by former President Bill Clinton.

“This left-wing activist Judge is setting a dangerous precedent that left-wing political organizations plagued by criminal accusations have a constitutional entitlement to taxpayer dollars,” Issa said in a news release. “The Obama administration should immediately move to appeal this injunction.”


Sources: Whitehouse.gov, Politico, Fox News, My Fox33.com, CNBC, ACORN, Youtube

Chris Dodd vs Barney Frank: Fights Erupt Over Real Financial Industry Reform

Fights erupt over Chris Dodd's Financial Reform Bill


Senate Banking Committee Chairman Chris Dodd said he wanted to produce a “bold” and “sweeping” Financial Reform Bill.

In other words, he’s got a bill that’s going to tick everyone off.

The 1,136-page draft measure the Connecticut Democrat unveiled last week would bulldoze the financial architecture built over the past 80 years, setting up clashes among Democratic chairmen, powerful regulators, small banks and their bigger competitors. He’s angered everyone from Coca-Cola to your corner credit union.

For those keeping score, here’s a list of the most significant fights erupting over Dodd’s bill:

Frank vs. Dodd

Dodd has immediately picked a fight with his House counterpart, Rep. Barney Frank (D-Mass.), by proposing to strip the Federal Deposit Insurance Corp. of its supervisory powers and give those powers to a new banking super-regulator.

“There is no chance of the FDIC being put in there,” Frank told POLITICO.

Frank isn’t the only one ganging up against Dodd on this one. Sheila Bair, chairwoman of the FDIC and incredibly popular on Capitol Hill, has argued loudly against such a move — including in a New York Times op-ed — saying it would threaten the country’s long-standing dual banking system. Community bankers also reject the idea, arguing that the largest institutions would consume the regulators’ time and attention, while smaller banks would be ignored.

“We’re going to be lobbying hard against it both here in Washington and via the grass roots,” said Steve Verdier, head of congressional affairs for the Independent Community Bankers of America. About 25 of the group’s state association executives will be on the Hill this week and will definitely raise the issue with their senators, he said.

The Fed vs. the World

If Federal Reserve leaders think everyone is out to get them on financial reform, they may be right. Virtually every major proposal seeks to scale back the Fed’s incredible powers — and there’s a huge push to audit the Fed for the first time.

Fed Chairman Ben Bernanke has warned that the central bank’s ability to directly oversee banks — especially the big complex bank holding companies — is key to the Fed having the know-how and information it needs to conduct monetary policy, especially in a crisis.

But the Fed doesn’t really have many people in its corner. The perceived missteps made by the Fed leading up to the crisis and the extraordinary measures it took during the crisis have made the central bank wildly unpopular on Capitol Hill with both parties. Dodd called the Fed’s regulatory record an “abysmal failure.” Even the big banks that support the Fed aren’t going to stick their necks out over the issue — and even if they did, lawmakers most likely wouldn’t listen.

The Obama administration — which envisions an enhanced, not diminished, Fed role — did step up to defend the Fed at the end of last week.

“No regulator had a perfect record leading up to the crisis. But in our view, the Federal Reserve is the agency best equipped for the task of supervising the largest, most complex firms,” Deputy Treasury Secretary Neil Wolin said in a speech Friday.

But some observers doubt the administration can do much to deter the anti-Fed push on the Hill.

Shelby vs. the White House

Any hope for bipartisanship goes through Sen. Richard Shelby, the wily Alabama Republican.

Where he goes, most of the Republican votes are likely to follow. And Shelby has been as vocal about what’s in the bill — the consumer financial protection agency — as what’s not in the bill: a serious overhaul of Fannie Mae and Freddie Mac.

President Barack Obama himself has put a lot of political capital on the line in pushing for the creation of the consumer financial protection agency, but Shelby calls the establishment of a separate agency an “obstacle” to his support. When asked by reporters about the White House’s strong support for the CFPA, Shelby observed that the administration doesn’t get a vote in the Senate.

Shelby, the top Republican on the banking panel, is balking at the idea of moving financial regulatory overhaul legislation without addressing the future of the companies, which were taken over by the government following the housing collapse last fall.

“And so the question is, what is it going to take; what are the fights going to be to try to bring enough Republicans along to get the bill done?” said Jaret Seiberg, an analyst with Washington Research Group.

Big banks vs. little banks

The two lobbies have been tussling over numerous aspects of financial reform, but Dodd’s bill sparked a brand-new fight.

Dodd wants the FDIC to collect its fees based on assets rather than deposits as it does under current law.

This would make business much cheaper for the smaller banks, which tend to have much lower assets but higher deposits. And it would make larger banks, which tend to have assets far in excess of deposits, pay more into the FDIC.

The two camps continue to fight over who pays into a “too big to fail” fund that would grant the federal government “resolution authority” to wind down large financial firms. Community banks want the big banks to prepay into this emergency fund. The big banks prefer the approach taken by Dodd’s bill: the FDIC collecting money from big firms after the crisis has passed. But the community banks won the day on the House side on this issue.

Apple Inc. & Coca-Cola vs. Democrats

Why would Apple and Coke — or, for that matter, Harley- Davidson and Ford Motor Co. — lobby so hard on derivatives legislation?

These companies live at the retail end of these complex financial tools, using them to hedge their futures on commodities like fuel, foreign currency rates and raw materials for their products. And they’re not happy about being lumped into the wide-ranging proposals to heavily regulate the derivatives market.

These big companies aren’t the speculators who caused the derivatives market meltdown, this group argues, and they’ll be seeking exemptions from Dodd’s tougher crackdown on the derivatives market. But some Senate Democrats have criticized the House bill for making the changes these companies asked for.



Sources: Politico

Financial Regulatory Reform Vote: Barney Frank Decides To Get Off His Butt!

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Sources: MSNBC, CNBC

"Too Big To Fail" Has Voters Steaming...Whitehouse's Progress Too Slow

Progress slowed on "Too Big to Fail" decision

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Arianna Huffington comments on people and political parties

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Sources: MSNBC, Google Maps

Debt Collection Reform: We Need It Now!

Calling the Debt Collectors on Abuse

People dread getting calls from bill collectors. And it's not always because they can't pay. It can be a degrading experience, especially with third-party collectors who are overly aggressive, even threatening.

A new report from the Government Accountability Office calls for major reform to the law that governs how companies collect old debt from consumers.

The reform can't come soon enough. Debt defaults are at the highest level in 18 years. About 6.6 percent of credit card holders were 30 days or more past due in the first quarter of 2009. In 2008, credit issuers had more than $23 billion in unsecured debt that was between 30 and 180 days delinquent.

There are many scrupulous debt collectors that compassionately work with borrowers to get them to repay what they owe. But there are also bottom-feeders in the industry that resort to any means necessary, harassing and intimidating consumers to pay up on accounts for which the collectors have paid pennies on the dollar.

It's the dreadful players in this industry and their often illegal practices that was the subject of the GAO report on the effectiveness of the Fair Debt Collection Practices Act, or FDCPA, which was enacted in 1977. The law, enforced by the Federal Trade Commission, dictates how third-party debt-collection companies can communicate with debtors. It prohibits the companies from using unfair, abusive or deceptive practices. The FDCPA does not apply to creditors collecting on their own accounts.

"With the economy in crisis and many people struggling to pay their bills, debt collectors have responded by becoming more aggressive," Sen. Carl Levin (D-Mich.), said in a prepared statement after the release of the GAO report. "Debt collection abuses are not getting the attention they should." The FTC reports that it receives more complaints about debt collectors than it does on any other specific industry. Among the most common complaints are excessive telephone calls, collectors misrepresenting the amount or legal status of a debt, and the addition of unauthorized fees and interest to accounts. People also complain that collectors try to get them to pay debts that have been discharged in bankruptcy -- an action that is against the law.

Last year, the FTC said it won the largest civil penalty ever -- $2.25 million -- in a case in which a company, among many other actions, physically threatened people and made unauthorized withdrawals from consumer bank accounts.

With a surge in companies trying to collect past-due debts, it's vital that federal and state laws adequately protect borrowers from dishonest debt collectors.

The FTC has already begun investigating what changes are needed. Although some sections of the FDCPA have been amended, it hasn't been substantially revised since its enactment 32 years ago.

On Dec. 4 in Washington, the agency is scheduled to hold the third in a series of roundtable discussions examining the treatment of consumers by debt collectors. The meeting is open to the public and can also be viewed live via a webcast. For more information about the roundtable, go to http://www.ftc.gov and search for "Debt Collection: Protecting Consumers." In February, the FTC issued its own report recommending that the regulations covering debt collection be improved. Chief among the concerns for both the FTC and the GAO is the way that debts are verified as old accounts are passed around.

When consumers become seriously delinquent, their original creditors may give up trying to collect. The creditors may then sell the debt as a way to make something on the accounts.

The accounts can then be resold so many times that it becomes hard to verify that the debt actually belongs to the person the collectors say it does, or that it was discharged in a bankruptcy case. Third-party debt collectors may not have access to or copies of billing statements, credit card agreements or applications, and other documents to verify a debt is owed.

The FTC and the GAO say Congress should modify the law to require collectors and debt buyers to disclose the original creditor; break down the debt by principal, total interest and fees; and inform consumers of certain rights they already have under the FDCPA.

What's in the law now?

If a consumer disputes a collection action in writing, the collector must prove what is owed. But here is where the law is seriously flawed. The statute isn't clear on what constitutes proof.

It's time to fix this gaping loophole, which should have been closed long ago.

Sources: Washington Post