Payday loan offices have been sprouting up across the country for decades. In these hard times, more people than ever are using payday loans to keep bill collectors at bay. Quick money, at interest rates of around 500% or more, for people with bad credit has been praised by some as a lifeline for the poor, but condemned by others as a trap to keep families in debt. Recently some states have passed laws limiting interest rates, but there is one marketplace that knows no borders — the Internet.
ANP visited a conference where online payday-lending lobbyists urged congress to reject reform, and then traveled to a small town near the Virginia-North Carolina border to learn about the experiences of a man who googled “bad credit loans” and found himself in more trouble than he bargained for.
Mortgage madness. Millions of Americans still face foreclosure. But there’s no guarantee that the Mortgage Reform and Anti-predatory Lending act will make it through the senate. In fact, every proposal put forward thus far has hardly forced industry’s hand.
Writing in the Nation magazine, Kai Wright says that Obama’s plan doesn’t address the larger question: “can any solution work if it doesn’t strengthen the negotiating hand of overwhelmed borrowers? Like all previous initiatives, industry participation in the president’s plan is largely voluntary, if heavily subsidized.”
Just in case anyone had their doubts about whether progressive groups are serious about holding Blue Dogs, conservodems, and other center-right Democrats accountable for supporting Wall Street and conservative groups instead of supporting their own constituents, doubt no more. The following video is the first paid media campaign from a large progressive coalition designed to hold Democrats accountable on mortgage bankruptcy reform, otherwise known as “cramdown.”
It will run only on CNN, both in the daytime and during primetime. CNN was chosen because its appeals to news junkies and its viewers lean heavily Democratic (65%-26% according to a poll by Rasmussen Reports) and because MSNBC was not available in the area.
The ad will run over the next three weeks, starting today. By appearing over 250 times in one area, and over an extended period of time, local Democratic news junkies will see it often enough to remember it.
The ad placement cost $5,000, paid for by BlogPac. Such a low price was made possible by the new services offered by SaysMe TV.
Under the Treasury Department’s toxic asset proposal, the government puts in 85% of the investment in these assets through a loan given by the FDIC. The Treasury puts in another 7.5% of the money and the private investor contributes the final 7.5%
This is a guaranteed way of transferring money from the American taxpayer to the private investors. Let me show you how.
Let’s take two assets that the government and investors buy together, both at the purchase price of $100 million. Now, assume that one investment does great and goes up by 50% (to $150 million) and the other one does poorly and goes down by 50% (to $50 million).
Well, the combined assets would still be worth $200 million, so the investors and the government should be exactly where they started, right? Nope. Look at the financial magic in this plan that makes the money disappear from the taxpayer and appear in the private investor’s pocket.
In the investment that went down, since the private investor is part of the original 15% deposit, he actually gets wiped out when the loan cannot be paid back. That’s really bad for the investor and he has lost his whole $7.5 million. This is the risk that Geithner is talking about to the private investor.
Republicans hammered Barack Obama over his connection to ACORN during last year’s election, but now ACORN is taking a swing at some Democrats – with the help of liberal activists at MoveOn.org.
The role reversal arises out of the groups’ anger at moderate House Democrats who opposed a housing bill that has more generous bankruptcy rules for people facing foreclosure.
Next week this coalition will begin airing TV ads criticizing House Democrats who voted against the measure, which would for the first time give judges the authority to restructure home mortgages – a procedure known as a cramdown.
Hmmm… where did I hear about this before? Oh yeah:
An Ad To Run Against Dems Who Vote Against Cramdown
by: Chris Bowers
Without resolving the chicken-egg question of which came first, the housing crisis or the banking crisis, we can say that the pace of foreclosures is accelerating with the downward economic slide. Every thirteen seconds, an American loses his/her home. In 2008, more than 2.3 million families faced foreclosure. If the government doesn’t intervene in a muscular way, an estimated 6 million owners will lose their homes in the next three years. President Obama has proposed to attack the crisis with a $75 billion initiative, the Homeowner Affordability and Stability Plan. A commendable effort to directly address the problems faced by homeowners, the bill nevertheless has inherent limitations on who can benefit from it.
As a kind of home remedy, so to speak, The Nation and the Association of Community Organizations for Reform Now (ACORN) have issued a useful list of ten ways to prevent or fight foreclosure.
The House just voted to pass H.R. 1106, the Helping Families Save Their Homes Act of 2009. Over the past four days, the Fighting For Our Homes Campaign produced almost 17,500 petition signatures and countless phone calls urging members to support this legislation.
As we now take the fight to the Senate, we are unveiling this new video and sending it to Senate staff to remind them why the playing field must be leveled for homeowners. Dan’s story is one of greedy lenders abusing the trust of people who play by the rules and try to live the American Dream. Dan lost his house and he is the face of what we are trying to avoid. The Senate must quickly take up bankruptcy reform legislation and pass it.
At the insistence of the “centrist” democrats under the leadership of Ellen Tauscher, and with the cooperation of Blue Dogs, the Bankruptcy Cramdown has been made more favorable to the banks that started the entire thing, and the investors who trusted them.
The original bill made it easy for the homeowner to file Chapter 13 and write the mortgage down to its current market value. In doing so, it gave the homeowner a strong bargaining position. The amendments bog down the process in a thicket of bureaucratic nonsense, and water down that bargaining position to next to nothing. Jane described the changes here, so I won’t repeat them.
One group of amendments practically requires the homeowner to try to participate in the non-bankruptcy work-out plan of President Obama. This site contains information about this program. This plan thrills the financial industry because the Treasury bears part of the loss, and pays servicers to make the modification. It also contains a provision that conceivably might encourage investors in Residential Mortgage Backed Securities to allow the modifications.
So, lesson learned: do not cancel on The Daily Show. Or at least do not do whatever CNBC and/or Rick Santelli did, in the way they canceled on The Daily Show, because last night, Jon Stewart basically said, “I’ll see your canceling on me and RAISE you a thorough evisceration of the faux-populist bilge you’ve been pumping and a complete blasting of your network’s credibility.”
Stewart aped Santelli’s newsgrabbing shouty-faced blubber from the Chicago Mercantile Exchange, coyly admitting, “I have to say, I find cheap populism very arousing.” And then, for eight minutes, Stewart at his arch best (with the help of the crackerjack Daily Show research team) went on an absolute tear and burned CNBC right down to the doorframes. “If only I’d followed CNBC’s advice, I’d have a million dollars, provided I’d started with a hundred million dollars.” Brutal, but utterly hilarious.
House Democrats reached a compromise yesterday on the cramdown provision of John Conyers’ Helping Families Save Their Homes Act, and for a change, it was a decent compromise. Proponents of this legislation pretty much managed to keep the cramdown provision intact, meaning that bankruptcy judges will be able to modify mortgages for homeowners facing foreclosure on primary residences. Plus, there were negotiations with Senate Dems and not just New Democrats, who have been acting on behalf of their corporate interests and have made passing cramdown legislation ridiculously and unnecessarily difficult.
Chances are Conyers’ compromised legislation will pass the House tomorrow. And while, as Bowers noted, it was a good sign to see Senate staffers participating in yesterday’s negotiations, odds are HR1106′s counterpart in the Senate will still face a tough battle. That’s why it’s key to keep Brave New Foundation’s petition going that over 17,000 people have signed in the last four days! We have to keep the pressure up on Congress and get these judicial modifications passed.