One town's anti-bank statement
Even before protesters began "occupying" Wall Street last year, at least one American town decided to divest from a big, government-bailed out bank to protest the bank's slow pace assisting delinquent mortgage holders to get back on their feet financially. Tony Guida has the story.
"I was waking in the middle of the night thinking when we'd have to leave the house," said Maribel Toure of Hempstead, Long Island.
Like millions of Americans, the Toures are struggling to keep their home. The family income took a hit two years ago when Mamadou Toure lost his job as an architect. Maribel Toure's salary as an X-ray technician couldn't keep up with their mortgage payments.
"You know, when you are trying to save your house, I was trying to spend as many hours at work, to make extra money to make overtime," Maribel said.
The Toures appealed to J.P. Morgan Chase bank to get a mortgage modification. The bank said "No" . . . twice.
In Hempstead, a quarter of the homes are "underwater" - meaning the mortgages are higher than the houses are worth.
After hearing dozens of stories like the Toures', Hempstead Mayor Wayne Hall got angry.
"We always felt that our president had bailed out the banks with our money, so why aren't the banks bailing out our residents?" Hall said.
Last April he decided to pull the town's money - more than $12 million - out of J.P. Morgan Chase.
"These big corporations, they don't pay attention to the little guys, and so we had to help the little guys. We spoke for them," said Hall.
When the Toures first applied for mortgage relief two years ago, J.P. Morgan Chase was offering only 30 percent of its delinquent homeowners nationwide a chance to lower the cost of their loans.
The bank says that rate has doubled, to 60 percent, helping prevent 700,000 foreclosures.
"We're doing everything we can at our level to keep folks in their home," said Chase's Patrick McGovern.
But a recent Treasury Department report concluded that J.P. Morgan Chase still needs "substantial improvement" in assisting homeowners, and is the slowest bank at locking in deals for qualified borrowers.
"Are we working fast enough? I know we are putting every effort to do a better job on a daily basis," said Chase's McGovern.
Mayor Hall admits closing the town's account was largely symbolic. But after the village took action, the Toures finally got their mortgage modification. With the interest rate cut in half, the payment was reduced by a thousand dollars a month.
"Chase has improved its modification rate, and you can't ask for any more than that," said Hall.
One thing both sides agree on: Nobody wins when there's a foreclosure.
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Regarding "stagnating wages" - could you please reference the fundamental right everyone holds that entitles them to have their hourly wage increase in direct correlation to the cost of living so that they can easily pay all their bills? I can't find it. Last I checked, wages fall under the influence of supply and demand. If someone's standing behind you and willing to work for less than you are, you are going to come to work one day and find them at your desk.
This mess would have ended in 6 months.
"The Toures appealed to J.P. Morgan Chase bank to get a mortgage modification. The bank said "No" . . . twice"
Well that's the problem isn't it? The banks played the game and lost but THEY got bailed out. They should be realistic about it and knock 20 to 40% of the mortgages and just eat it. They got bailed out. Better to keep people in their homes. Instead, they took the greedy low road. When all the people just walk away from the homes, the banks just blow off the houses and write off the whole thing! Look around at all the neighborhood blight because of bank owned properties that the banks aren't keeping up.
These monster, too-big-to-fail financial institutions need to be knocked off their pedestals. Re-instate the Glass-Steagal Act and remove the Gramm-Leach-Bliley Act. It's their Kryptonite. It's the reason this hasn't happened since the Great Depression.
The removal of the Glass-Steagall Act in 1999 was the biggest mistake we have made since the Great Depression. Time to put it 100% back in place and get these financial institutions back under control. What is it? Back after the Depression our fore fathers said, hey, these monster banks are too big to control! They decided to split them up into real estate, investment, etc. That was the Glass-Steagal Act. It kept the peace and stability since 1933 till 1999. Once that was removed (at the behest of the banks) The banks merged back into these huge financial institutions we haven't seen since 1932. That set the stage.
When the fed reduced the prime to almost zero, it was it. GAME ON- It only took them a few years to drive the system into financial melt down. Way to go you greedy blood suckers. They are still in place to this day.
The Glass-Steagal Act needs to be put back in place. These too-big-to-fail banks need to be made smaller and segmented again as they were before.
It's the only thing we have to do but you NEVER hear ANYONE talking about it? Why?
A LOT MORE.
Maybe if enough town mayors take the same actions, the banks will finally figure it out.
$12 million may seem just like a drop in the bucket to these large banks, but multiply this by the number of towns who follow suit and see what kind of results you get.
what a stupid rightwing talking point. why aren't the banks making loans now? when did the government stop forcing the banks to make laons? was there a law written to force the banks, if so what happened to the law?
We could have required the banks, in return for making unlimited profits by borrowing from the FED at zero and buying government debt with a yield greater than zero, to auto-modify loans using a fair rule which didn't sc(w all of us do DID pay our mortgages.
For every 5 years you didn't miss a payment consecutively, you can have one year of extension, no payments due, interest only accrual.
We could have had Fannie or Freddie start buying the actual mortgages and converting them to 100 year notes, too. (Japan has had 100 year notes for a long time)
These things, and more, are not hard to invent. What's hard is getting our leaders to do ANYTHING with banks who line their pockets with huge contributions.
what they have now, are essentially free money machines. Even if someone didn't fall into foreclosure, the deed was wrapped up in the "securities-like product" that *did* default, so the insurance was paid. So if someone is still struggling with their current mortgage, theirs is a *DOUBLE* free money machine for the bank.
The banks could wipe every single mortgage clean, right off their books and make everyone free and clear homeowners, and not suffer the loss of a single honest penny. Keyword: HONEST. And for those who cringe at the thought of someone "getting their house for free", no, they shouldn't get it free. The value of the house should be added to their income for that year, and now they have to pay the taxes. They'd have to take out a small loan, but paying one year's taxes on $150k is a heck of a lot less than paying off a 30-year mortgage on $250k.
Don't be fooled by people who try to point out the foolishness of homebuyers who 'should have known better'. Horsefeathers! Banks weren't told to LIE in order to make mortgages available to as many people as they could, they were told "do your best" to get people into homes. So banks and realtors did their best at LYING, telling people "You can do this!", and if anyone tried to check the facts, the agents would say, "Okay, I'll just sell it to the next person in line." When you've got hundreds of people hungry for homes lined up in your email inbox, that's not an idle threat.
Re-enact Glass-Steagall as it was enacted originally. NO modifications, loopholes or riders.