Big Picture

What’s Going On? (2012)

by Stephen Price

Seattle’s foreclosure problem is dire. The number of Seattle families preparing to see their homes sold at auction each month is usually more than 250, a number that’s remained steady for the past year with no sign of abating. Within the next 30 days, for example, 305 families will watch their homes go on the auction block. Not all of these families will lose their homes, however, as some will receive postponements, while others might short sell before the auction. The sad reality though is that more than 250 Seattle families each month are dealing with the stress of losing their homes.

This stress is compounded by two factors. Those who default on their mortgages are most often battling one of four family tragedies:  someone died, became unemployed, became very ill, or divorced. SAFE members Evonne and Jose Martinez, for example, had to sell nearly everything they owned to pay for their 26-year-old son’s two brain surgeries. As they both work they have enough money to pay their mortgage, but during their son’s illness they fell behind on their payments. So on top of dealing with the stress of their son’s near death, they began receiving foreclosure notices. Late last year, Chase sold their home at auction.

The second stress factor is that all the banks seem to be following the same playbook: they universally lose the homeowner’s paperwork, complain that the paperwork is out of date, frequently change customer service reps in mid-stream forcing the homeowner to start from the beginning, and refuse during mediations to operate in good faith — all of which would drive the emotionally most grounded among us to distraction. Within the last month, a Bank of America customer service worker submitted an affidavit confirming that BofA made their reps tell homeowners that paperwork was lost when it wasn’t. BofA rewarded the reps that did the most foreclosures with gift cards from Target.

Beyond this, the big banks have been charged with fraud, money laundering, rate fixing, knowingly selling mortgages to families that couldn’t pay them, and targeting minorities, especially women of color, with sub-prime loans. Many of these charges have resulted in cash settlements, but not one bank CEO or board director has spent a day in jail.

We have in our midst Routh Crabtree Olsen (RCO), the law firm representing the banks that boasts having the greatest geographical reach of any US law firm in the default services industry, and Northwest Trustee Services (NTS), the largest non-judicial foreclosure company in the Western US. The owners of RCO and NTS also own title companies, property management companies to deal with vacant houses, auctioneer firms, and newspapers to run their foreclosure notices. They have created a vertically integrated foreclosure mill that makes its money off the backs of the financially dispossessed. According to WA State law, however, NTS is supposed to act as a neutral party to both the banks and the homeowners, but the catch is that RCO’s lawyers own NTS! How can the homeowner expect the trustee to act with impartiality when the trustee is owned by the bank’s lawyers?

A frustration we have at SAFE is getting the media to cover this story in a comprehensive, compelling way. If 250 Seattle families lost their homes to fire each month, every paper in the world would cover this on their front page, but when 250 families lose their homes to the banks, the press barely makes a peep.

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Stephen Happy Hammering

Wealth Inequality

by Stephen Price

The three richest people in the world possess more wealth than the poorest 42 nations combined. In the US, wealth inequality has skyrocketed, especially in recent years. Consider the Koch brothers Charles and David, owners of the second largest privately held company in the US (next to Cargill), whose financing of right-wing groups like the Tea Party is well known. While they are not the richest men in the US – Bill Gates, Warren Buffet, and Oracle co-founder Larry Ellison wouldn’t let them shine their shoes – together they have a net worth, according to Forbes, of $68 billion.

Meanwhile, Evonne and Jose Martinez, SAFE members, have worked all of their lives. When Evonne became ill, she lost her job as a social worker, and Jose had to take time off as a letter carrier to care for her. When their 26-year-old son needed two brain surgeries, they sold what they had to pay for his treatment. In the course of this tragedy, they understandably fell behind on their mortgage. Their bank, however, was less understanding. JP Morgan Chase sold their home at auction and is seeking their eviction – even though Evonne and Jose are now back at work and can pay their mortgage!

Then there’s Larry Ellison. In 2012, he increased his net worth by $7 billion. Assuming a 40-hour week with two weeks unpaid vacation, he made $3,500,000 per hour, i.e., $972.22 per second.

Unfortunately in 2012, Larry and Flor Benes, also SAFE members, did not fare so well. After serving ten years on active military duty plus a three-year stint in the Reserves and the National Guard, Larry developed PTSD and a total service-connected disability rating of 70 percent. Nonetheless, he then worked as a stevedore for 20 years, but was eventually laid off because of his disabilities. To survive, Flor works two jobs. In 2012, Larry himself had no income. Bank of America is foreclosing on their home.

We are not claiming that all billionaires are moral reprobates. Our point, rather, is that there’s something terribly wrong with an economic system that allows, and even honors, such a skewed distribution of wealth.

1.) How do the rich and their academic sycophants justify such extreme inequality? Four arguments:the US is the greatest country on the planet, because each of us has the freedom and opportunity to become a billionaire (formerly, millionaire, but those days are now considered quaint);

2.) the opportunity to amass enormous wealth motivates us to grow our economy;

3.) wealth and poverty have always existed. Inequality is a natural phenomenon, a law of nature; and

4.) the rich are the job producers; without them, there would be no jobs.

Some thoughts:

1.) How well is this freedom-to-become-a-billionaire model working? In Qtr. 1, 2013, the US had 442 billionaires, one out of every 701,000 US residents. Do we call this a well functioning model? Is your car well functioning if it only starts one out of every 701,000 attempts to turn it on? Should we have a Lemon Law for economic systems?

2.) The motivation argument. Clearly, if you “earned” $3.5 million per hour, you too would love going to work, but what about the rest of us whose jobs are dehumanizing, repetitive, and, at times, injurious? How motivated are we to go to work (assuming we can find a job)? When 60% of our population, 186,000,000 people, own only 4.2% of our nation’s wealth, is our economy maximizing its human potential, its human resources? When 186,000,000 people work not to increase their own wealth, but the wealth of the richest 442 people, how eager are we to go to work each day?

3.) Inequality is natural. The problem with the natural-law argument is the fallacy of deriving an ethical conclusion from an existing state of affairs. Because slavery exists (astonishingly, it’s still with us), does that make it right? Because only a man and a woman can procreate, does that mean gays and lesbians should not marry? Because there is economic, social, educational inequality, this does not make it right; it makes it something we need to correct.

4.) The rich are the job producers. What this means is the rich have the capital to invest in people and machines, which in turn produces jobs. The problem, however, is that the rich are getting richer, but they are not producing jobs. We hear a lot about the unemployment rate (7.5%), but more revealing is the underemployment rate (17.5%), which includes (a) those who are looking for work but cannot find a job, and (b) those who want a full-time job but must settle for part-time work. It does not include those who have given up looking for work. When 17.5% of the work force is suffering, the system isn’t working.

The rich are the job-producers argument, however, has a second and more serious flaw. True, the rich now have the capital to create jobs. But if we remove the distinction between rich and poor, it doesn’t follow jobs will disappear. If wealth is divided more-or-less equally, why couldn’t the people collectively create jobs?

A first step to a more just and healthy society, one that prizes the growth and development of all its members, is a redistribution of wealth. Why should some – like the Koch brothers, who inherited their father’s oil business – start life with an insurmountable advantage over those who are born into poverty, despair, and deprivation? Why should someone, like Stephen A. Cohen, the hedge fund manager under investigation for insider trading, have the wherewithal to buy a Picasso for $155 million to put into his recently purchased $60 million mansion in the Hamptons, while others live without shelter, let alone art?

A second, and decisive, step to a more wholesome society involves the collective and democratic control of the redistributed wealth. Consider housing. Nearly all of us, if we wish to live in a home, must arrange a mortgage loan with a bank, the terms of which are set entirely by the bank for the profit of the bank. We, as buyers of the loan, have no input.

SAFE logoTo correct this, should we nationalize the banks? Yes, but in itself nationalization only shifts bank ownership from private hands to government bureaucrats. It does not address the question of who controls the banks and who decides their social purpose. What is needed instead is a revolutionary change in the way our society is structured, away from a class-stratified society where the few decide for the rest of us how our resources are allocated and distributed towards a classless society where the people decide democratically how our social wealth is utilized, one in which the unsustainable accumulation of profit for the few is proscribed and the amelioration of all is cherished.

Is this utopian? Perhaps. But what we have now is unjust and immoral. SAFE brings people together to fight the banks and to fight for Evonne, Jose, Larry, Flor, and all those suffering under the yoke of capitalism, struggling for a better life.

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