Bank CEOs Gain as Millions Lose Dreams, Retirement to Foreclosure

Wednesday, April 25, 2012 by The Newark Star-Ledgerby John Cavanagh and Scott Klinger


Inside and outside of Wells Fargo’s annual meeting in San Francisco yesterday, thousands of angry protesters decried the bank’s leading role in the loss of millions of American homes to foreclosure.

If you want to know why the protesters are so angry, consider this double standard. For most Americans, retirement security lies in the value of their homes. Millions of these people have been losing that security as the nation’s largest banks have foreclosed on them. Yet the CEOs of these banks are reaping giant pay packages and padding their own retirement security with profits squeezed from ordinary people.

For many American families, a paid-off home is part of the dream of a secure retirement. The roof over their heads has long comprised the largest element of most families’ net worth. The housing crisis brought to us by the country’s biggest bankers has stolen the dreams of the nearly 4 million families who have lost their homes to foreclosure since the housing crisis began in 2007.

Of those who continue to live in their homes, more than a quarter have lost so much equity that they now owe more on their mortgage than their residence is worth. Even those who have never missed a payment on these underwater mortgages have found it all but impossible to refinance their loans to take advantage of record low rates that would cut hundreds of dollars from their monthly payments.

As American families struggle with their shrinking equity, Wells Fargo is enjoying record profits. Its earnings clocked in at more than $4 billion during the first quarter of 2012.

Wells Fargo and Bank of America are the country’s two largest mortgage servicers. Over the past three years, the number of homes foreclosed upon by the two giant banks has steadily grown. At the end of 2011, they reported to federal banking regulators that they held $22.5 billion and $19 billion worth of foreclosed houses, respectively.

While foreclosures have devastated the financial security of millions of American families, the CEOs of Wells Fargo and Bank of America have seen their retirement packages balloon.

The pension assets of Wells Fargo CEO John Stumpf stand at $16 million, according to the company’s proxy statement. The vast majority of these assets came from a special plan available only to the company’s top executives. As high as Stumpf’s retirement assets have soared, they’re exceeded by those of another Wells Fargo executive. Mark Oman oversees the company’s consumer lending division, where most of its ill-fated subprime loans were made and where many customers have lost their homes to foreclosure. His retirement assets top $17 million.

Bank of America CEO Brian Moynihan’s pension assets now total $6.8 million. His nest egg came mainly from a special "supplemental" pension plan.

It’s long past time that banking regulators stopped these dream-stealers from laughing their way to their gold-plated retirements. Protesters are insisting that the corporate funds diverted to prop up the lavish lifestyles of those responsible for upending the lives of the millions of American families who have lost their homes be redirected toward principal relief for homeowners devastated by these banks’ actions.

The Wells Fargo action was just the start. Don’t be surprised when thousands more protesters show up when Bank of America shareholders gather on May 9 in Charlotte, N.C.

What Rightwingers Mean When They Talk About Freedom

One Nation, Two Universes 
By SAUL LANDAU

Listen to right wing talk radio – and tens of millions do – and you’ll hear about an alternative universe where bitter aliens describe a different reality than the one experienced by most -- thank god -- Americans.

My friend scowls. “How can you listen to that crap?”

“Limbaugh’s bombastic boasts are less painful than wearing scrapers between your thighs,” I explain, not daring to admit to the dolorous feelings in my ears and brain,  “and how else does one learn about what the new Republican Party and some Tea Partiers -- not all -- propose in their political agendas. Fanatic right talk radio has become the oral parchment of this alternate world view.”

For example, the words “freedom” and “liberty” don’t relate to the UN Covenants on Human Rights. Jimmy Carter signed those Covenant in 1979 but didn’t demand the Senate’s “advice and consent” that would make it a Treaty. Reagan and Bush I viewed economic, social, and cultural rights as goals and not the meat of the Covenants. Clinton never denied the obligation toward these rights but avoided fighting the right wing in Congress over them. So thanks to continuous opposition from the right, food, shelter, clothing, and medical care never gained the status of enforceable rights, even though they originated in Franklin Roosevelt’s January 6, 1941 speech to the 77th Congress.

FDR referred to “the basic things expected by our people of their political and economic systems.” His goals: “Equality of opportunity for youth and for others. Jobs for those who can work. Security for those who need it. The ending of special privilege for the few.”

His four freedoms: “freedom of speech and expression –everywhere … freedom of every person to worship God in his own way-- everywhere … freedom from want, [meaning] economic understandings which will secure to every nation a healthy peacetime life for its inhabitants -- everywhere … freedom from fear, [meaning] a world-wide reduction of armaments to such a point and in such a thorough fashion that no nation will be in a position to commit an act of physical aggression against any neighbor --anywhere in the world.”

For Roosevelt “a moral order” or freedom meant “the supremacy of human rights everywhere.”

For right wing Republicans freedom first and foremost means no taxation of billionaires and no regulation of their largest corporations and banks. Freedom for women means choosing abortion, murder of the unborn that deserve universal love. Once born they get what’s coming to them. (Adultery, coveting – well, forget those commandments).

God intended some to have wealth; others, without wealthy parents or luck, get screwed. That’s God’s will. “God intended you to be successful in business,” preached the late Rev. Jerry Falwell in his Lynchburg Virginia church.” Falwell indicated he had a special communication system with God and Jesus – or maybe even a business partnership. (Filmed interview by author with Falwell in “Quest for Power” 1982)

Recall Ray Stevens’ lyrics.

“Would Jesus be political if he came back to earth
Have his second home in Palm Springs, but try to hide his worth
Take money from those poor folks when He comes back again
And admit He's talked to all those preachers who said they'd been-a talking to Him”
(“Would Jesus Wear a Rolex on his Television Show?”)

Polluting corporations and fraud-infested banks count on religious pretenders to distract voters from their class interests. Two of three white men – mostly poor and middle class -- vote Republican because they support more muscularly God’s intentions: people should carry guns; government should not interfere with their veterans’ benefits or food stamps.

God hated welfare cheats (look what he did to Adam and Eve when those loafers cheated). And He didn’t approve of homosexuals -- or “race-mixing.”

This fogging of “issues” has indeed obscured clarity. Tens of millions of voters cast ballots for their class enemies. According to Vermont Independent Senator Bernie Sanders, “the middle class is collapsing. Median family income has gone down. Poverty is going way up. And the gap between the very, very rich and everybody else is growing wider.”

Beneficiaries of government programs vote for Republicans who pledge to remove those very programs that provide the thin cushion protecting those who lose jobs and homes. President Obama plans to reduce deficits by cutting back a bit on Social Security and Medicare. Republicans would privatize social security and leave pensions to the Free Market. “That makes no sense,” said Sanders. “The Social Security trust fund today has a $2.6 trillion surplus. It can pay out every benefit owed to every eligible American for the next 27 years.” (Talk in Berkeley California February 26)

The far right demands government stop punishing (taxi and regulate) the selected few and rewarding (unemployment insurance and food stamps) the lazy (mostly non-white unemployed). They accuse liberal lawmakers of transferring good people’s money to welfare cheats to buy booze and drugs. 

What’s mine is mine! Selfishness is good, or God wouldn’t have inserted that trait into his finest (richest) specimens. If not for liberal government the wealthy would be wealthier – as God intended. But don’t worry: these ideas have only captured the majority in the House of Representatives and 17 governorships!

Beware the Invisible Hand of Privatization

Monday, March 7, 2011 by CommonDreams.org
by Willie Pelote, Sr.
In California, the state government currently spends more than $34 billion a year paying private contractors to do jobs that civil servants can perform for half the cost. Another $900 million of taxpayer funds is wasted annually propping up the state’s failed enterprise zone program. Common sense dictates that any proposal to balance the state budget begin here.

Instead, what is being implemented in state capitals across the country are plans to eradicate traditional retirement and health care benefits for civil servants and, in some cases, to return civil servants to 19th century working conditions by eliminating their First Amendment right to assemble, organize, and bargain collectively as free citizens.

These developments are part and parcel of an ongoing strategy to steal our taxpayer dollars by redirecting them from public services and democratic institutions and into the pockets of private companies and individuals through wasteful subsidy programs and corrupt private contracting practices in government.

Case in point, the Little Hoover Commission recently recommended that retirement benefits for new and current public employees be essentially eliminated and replaced with 401(k)-style plans in order to save taxpayers money.

What the Little Hoover Commission left out of their report and avoided saying in testimony before the state legislature was that no one with a 401(k) has ever been able to afford to retire with one.

They also failed to mention that 401(k) plans are about three times more expensive to maintain than traditional, defined benefit retirement plans due to the fees that Wall Street investors charge to manage a 401(k).

It’s akin to the way technology consultants have repeatedly taken advantage of Sacramento’s lack of computer know-how by promising quick fixes for low prices on projects that routinely turn out to be more complicated and expensive.

Clearly, the move to eliminate traditional retirement benefits for civil servants is simply another attempt by Wall Street and their business associates to redirect our hard-earned tax dollars into their pockets.

As if bringing on the Great Recession through a national housing crisis and financial meltdown wasn’t enough, these same vultures now want Main Street to pay for cleaning up their economic mess.

In light of the billions of taxpayer dollars given to bail out the financial institutions responsible for our current economic crisis, the public is right to be concerned over how our tax dollars are being spent.

That’s why we need to eliminate the more than $34 billion worth of private contracting in state government along with wasteful tax subsidy programs that routinely funnel billions every year to private companies with no oversight.

With regard to Wisconsin Governor Scott Walker’s bid to end people's First Amendment right to assemble, organize, and bargain collectively as free citizens, New York Times columnist Paul Krugman has astutely pointed out that this move masks a darker, more lucrative purpose.

Krugman writes that Walker’s budget bill is designed not only to eliminate collective bargaining rights for civil servants, but to facilitate the sale of taxpayer-owned heating, cooling, and electricity plants to private companies “with or without solicitation of bids, for any amount that the department determines to be in the best interest of the state.”

In fact, “no approval or certification of the public service commission is necessary” for the sale of taxpayer-owned plants or for the contracting out of the operation of these state institutions.

Here again, we find the market’s so-called invisible hand preparing to pilfer our hard earned tax dollars out of our collective pocket.

Instead of eliminating traditional retirement and health care benefits for grandma and other dedicated civil servants, we need to institute a surcharge on financial service transactions like stock trades to make sure that Wall Street cleans up this mess that the rest of us in California, the United States, and the rest of the world are suffering through.

State Budget Cuts

Starting at the Top

Dean Baker | Monday 07 February 2011

The corporate elite media are on yet another jihad. They are determined to cut the pay and benefits of public-sector workers who can still enjoy a middle-class lifestyle.

The idea that a schoolteacher or highway worker can retire with a pension of $2,000-$3,000 a month is directly at odds with their view of government. They believe that government exists to redistribute income from everyone else to those who already are rich and powerful. To these people, the money that is going to pay the wages and pensions of ordinary workers is money that could be in the pockets of the rich.

The economic crisis caused by the collapse of the housing bubble has created a great opportunity. State and local tax revenues plummeted as employment fell. Lower property values also meant lower property taxes. This meant that governments across the country suddenly faced severe budget shortfalls. This provided the opportunity to attack the pay and pension packages of public-sector workers.

It is difficult not to admire the brilliance of this attack. The country's wealthy elite, with the Wall Street high rollers at the forefront, wrecked the economy through a combination of incompetence, greed and outright fraud.

As tens of millions of workers are still struggling with unemployment, underemployment and underwater mortgages, this gang now turns around and starts demanding that middle-income workers take pay cuts and give up part of their pensions. This is like a child setting fire to his parents' house and then complaining because dinner isn't ready on time. But this is the way America now works, with the spoiled children on Wall Street calling the shots.

While there can be no doubt that many states face a serious budget squeeze as a result of the economic crisis, that doesn't mean that we have to join their attack on teachers, firefighters, and other public workers. Instead, we can go right to the top.

Most public-sector workers get paid no more than their private-sector counterparts, but there are, nonetheless, a small number of very well-paid public employees. The Boston Globe recent reported on the 6,400 state employees in Massachusetts who earn more than $100,000 a year. Topping the list was a professor at the University of Massachusetts Medical School who earned almost $800,000 in 2009.

According to the Chronicle of Higher Education, there were 11 presidents of public universities who earned more than $700,000 in the 2008-2009 academic year. The top earner on this list was the president of Ohio States University who pulled down more than $1.5 million. That's a lot of pension years for custodians or schoolteachers who are supposed to take big cuts to help state budgets.

There are many very high earners in the public sector if we look in the right places. Before we make a schoolteacher sacrifice part of the $25,000 pension that she worked for, maybe the president of Ohio State University should have his pay cut to less than $1 million.

We already know the counterargument: these people will go somewhere else if they didn't get their huge salaries. For the most part, this is probably not true, but in the cases where it is, there will be little loss to the state. After all, there are plenty of extremely bright, hardworking people who still consider $200,000 a good salary. Besides, aren't the budget cutters demanding that government will have to change; what better way to start than getting rid of some overpaid prima donnas?

This is not the only place to look for budget savings at the top. One reason that state pension funds have less money than they should is that they often overpay the people who manage their funds. This is not always an accident.

Wall Street honcho and former Obama adviser Steve Rattner agreed to pay $10 million to settle charges that he had made payoffs to public officials to get control of a portion of New York State's pension fund assets. It is likely that public officials outside of New York have also been willing to sell off control of pension fund assets.

It doesn't take many sleazy deals like this to add to real money. Suppose that corruption added an average of 0.5 percent to the management fees of public pension funds. If this is the case, then excessive Wall Street fees are costing public pension funds almost $15 billion a year.

States could prevent this sort of corruption by putting tight restrictions on management fees, requiring that they match the lowest cost in the industry. (Vanguard will manage index fund for around 0.15 percent of the value of the assets.) Perhaps, they should also require that all contacts between pension fund agents and bank representatives be videotaped and posted on the web so that everyone can know what sort of arrangements were made. Preventing Wall Street rip-offs could go a long way toward making up pension shortfalls, while bringing greater efficiency to the country's financial sector.

We should never forget that the bulk of states' budget problems are the result of the economic crisis brought on by Wall Street greed and incredibly bad economic policy. As much as possible, we should be trying to make the people at top pay for the damage they have caused. It makes no sense to beat up on schoolteachers, firefighters, and other public-sector employees, who have to work for a living.

A Labor Day Commitment to the Common Good

Saturday, September 4, 2010 by Creators.com
by Jim Hightower

America's corporate chieftains must love poor people, for they're doing all they can to create millions more of them.

They're knocking down wages, offshoring everything from manufacturing jobs to high tech, reducing full-time work to part-time, downsizing our workplaces, busting unions, cutting health care coverage and canceling pensions - while also lobbying in Washington to privatize Social Security, eliminate job safety protections, restrict unemployment benefits, kill job-creating programs and increase corporate control of our elections.rece

It's said that the poor and the rich will always be among us. But nowhere is it written that the middle-class will always be there. In fact, it is a very recent creation in our society (and an unavailable dream for most people in the world). America's great middle class literally arose with the rise of labor unions and populist political movements in the 1800s, finally culminating in democratic economic reforms implemented from the 1930s into the 1960s.

Social Security, wage AND hour laws, collective bargaining rights, unemployment compensation, the GI Bill, the interstate highway program, civil rights laws, Medicare, Head Start - and more - provided the national framework necessary to sustain a middle class for the American Majority.

This essential framework was not "given" to us by corporate executives and politicians - indeed, they sputtered, spewed and fought every piece of it tooth and nail. Rather, it came from union-led grassroots movements, organizing for structural change.

This Labor Day, we see corporate executives and their politicians relentlessly dismantling that framework, piece by piece - and we see the middle class disappearing and poverty rising with each dismantled piece. But as labor icon Joe Hill said just before he was executed by Utah authorities for his unionizing activities, "Don't mourn, organize." It's time for working families to organize again for the revitalization of the middle class.

Who'll take a stand these days for restoring America's founding ethic of the common good?

You won't get this leadership from Washington - and damned sure not from those in the corporate suites who're ruthlessly pushing an ethic of uncommon greed, saying to the middle class, "Adios, chumps."

Instead, look to places like Williamson, a town in upstate New York.
This is apple country, home to a sprawling Mott's apple processing plant. Generations of families have worked at this plant, and there had not been a labor dispute in over 50 years. But the Mott family is long gone - and so is the sense of shared purpose that had unified owners and workers.

In 2008, Mott's became a subsidiary of Dr. Pepper Snapple, a giant Texas conglomerate that also owns 7Up, Hawaiian Punch and dozens of other brands. DPS, as it's known, is doing very well, having banked a record profit of half-a-billion dollars last year. But its honchos apparently missed that basic kindergarten lesson about sharing. Indeed, the new owners introduced themselves to the area by eliminating the company's annual summer picnic, the children's Christmas party and other community-building touches.

Then, this March, DPS bosses abruptly demanded pay cuts averaging about $3,000 per worker, while also slashing pensions and hiking employee costs for health care. Why? Because they asserted that Mott's 300 workers were paid more than others in the area and should simply lower their standard of living accordingly. This from a corporation that paid its CEO $6.5 million last year! Adding insult to injury, the plant manager called workers "a commodity like soybeans" that can easily be replaced. Take the cuts - or else, demanded DPS.

The workers chose "else." As we celebrate Labor Day at the beach or at backyard barbeques, they are on a strike for middle-class survival that's now in its fourth month.

This is not just about them, but about what kind of country America will be. If DPS succeeds in knocking down these skilled, experienced, loyal workers, other profitable corporations will follow. The Mott workers are taking a courageous stand for the middle class and our country's commitment to economic justice. To stand with them, go to www.ufcw.org.