11 Ways Big Banks Make Life Harder for Working Families

A new report from the Center for Popular Democracy examines the ways that large financial institutions are helping dismantle the middle class and making life more difficult for working families. The top 10 banks alone bring in some $100 billion in annual profits, and a significant amount of that revenue is generated from sometimes unethical and questionable tactics that working families have a hard time fighting back against.

Here are 11 ways the big banks are making life harder for working families:

1. While 27% of Americans have no or little access to financial services, the big banks are closing local branches, making the problem worse.

2. Banks are pressuring their workers to push customers to purchase services that use predatory banking practices instead of sound financial principles. Quotas drive the process rather than the needs of customers.

3. The large financial institutions are cutting wages, benefits and hours for workers, making it harder for them to serve customers and increasing work-related stress.

4. Core banking activities for the average worker, such as helping people open and manage accounts or plan for retirement or obtain a credit card, are considered low value services by the banks, and they are actively trying to avoid those services in favor of higher profit activities such as mortgages.

5. Workers who can’t fill their quotas for pushing mismatched or predatory products and services are threatened with termination or had their paychecks docked for the amount they fell short of their quotas.

6. Since 2011, 17 lawsuits have been settled by the financial services industry for alleged illegal and unethical business practices. The banks have paid out nearly $46 billion.

7. At least three banks are accused of charging people of color higher interest rates or fees than white borrowers.

8. The big five banks are accused of steering people of color into dangerous subprime mortgages.

9. Two banks have, in the past, maximized their profits off of overdraft fees by posting charges in order of the largest dollar amount first, increasing the likelihood that not only are customers more likely to overdraft their accounts, but more likely to do so multiple times.

10. Three financial institutions were charged with forcing homeowners to buy overpriced property insurance.

11. Nearly one-fifth of employees at the biggest banks reported that more and more jobs had been moved from full-time to part-time.

Read the full report.

Reposted from AFL-CIO NOW

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Jobs Could Be Lost: Punching In A Little Later

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Put a Stop to This: Bad Credit? No Job for You!

Today’s jobless workers face new discriminatory barriers to finding work in a broken economy. Some employers won’t consider out-of-work applicants for job openings. And more and more employers run credit checks, leaving long-term jobless workers, who have likely fallen far behind in their bills and seen their credit scores tank, on the streets.

Today Sen. Elizabeth Warren (D-Mass.) introduced a bill to stop employers from requiring prospective employees to disclose their credit history or disqualifying applicants based on a poor credit rating. Says Warren:

Families have not fully recovered from the 2008 financial crisis, and too many Americans are still searching for jobs. This is about basic fairness—let people compete on the merits, not on whether they already have enough money to pay all their bills.

Even as the economy is slowly turning around, the recession and financial crisis continue to take a toll on working families. Many of whom are hardworking, bill-paying people who have seen the credit ratings damaged when they or a family member lost a job or a small business and saw the value of their homes plummet. Savings evaporate and payments get missed. Says Warren:

Most people recognize that bad credit means they will have trouble borrowing money or they will pay more to borrow. But many don’t realize that a damaged credit rating also can block access to a job.

While at one time it was common belief that a credit history could provide insight into a perspective employee’s character, Warren says that recent research has shown that an individual’s credit rating has little or no correlation with his ability to succeed at work. A bad credit rating is far more often the result of unexpected personal crisis or economic downturn than a reflection of someone’s abilities.

She also says, “This is one more way the game is rigged against the middle class.”

A rich person who loses a job or gets divorced or faces a family illness is unlikely to suffer from a drop in his or her credit rating. But for millions of hardworking families, hard personal blow translates into a hard financial blow that will show up for years in a credit report.

People shouldn’t be denied the chance to compete for jobs because of credit reports that bear no relationship to job performance and that, according to recent reports, are often riddled with inaccuracies. Click here to become a citizen co-sponsor of The Equal Employment for All Act.

The bill is co-sponsored by Sens. Richard Blumenthal (D-Conn.), Sherrod Brown (D-Ohio), Patrick Leahy (D-Vt.), Edward Markey (D-Mass.), Jeanne Shaheen (D-N.H.) and Sheldon Whitehouse (D-R.I.).

Rep. Steve Cohen (D-Tenn.) introduced the bill in the House late last year.

Photo via U.S. Senator Elizabeth Warren on Facebook

Reposted from AFL-CIO NOW

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It’s Working Already: CFPB Gets $140 Million in Rebates for Capital One Customers

Today marked a big victory today for fairness, economic justice and the notion that rules are to be obeyed, even by big banks. In its first major enforcement action, the Consumer Financial Protection Board has given Capital One, a major credit card company, a $210 million fine for deceptive practices. Of that fine, $140 million is going to be rebated directly to customers.

That’s what holding financial institutions accountable looks like.

According to today’s enforcement action, Capital One was targeting and exploiting people with lower credit ratings, pushing them into credit card products through dishonest marketing or even enrolling them without their consent.

The financial industry isn’t going to do the right thing out of the goodness of its executives’ hearts. It takes rules, and enforcement of those rules, to keep it in check. Strong rules give corporations like Capital One the incentive to do better.

That’s exactly why the financial industry and its allies in Congress fought so hard to keep the CFPB from functioning—by passing bills to try and defund it and particularly by blocking the nomination of its director, Richard Cordray. Now Cordray, the former Attorney General of Ohio, is on the job, and the CFPB is already working on a number of issues, including making mortgages simpler and fairer and reining in payday lenders. (CNN did a great story on the CFPB’s staff this week.)

This is why we passed financial reform, over strong opposition from the banks it would affect. This is why the CFPB exists in the first place—and Cordray put other financial institutions on notice today.

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Schneiderman Heard You

Last week we emailed you to urge you to express your support for New York Attorney General Eric Schneiderman to hold banks accountable for foreclosure fraud and other abuses.

Over 5,000 of you sent emails, tweeted, and wrote on AG Schneiderman’s Facebook page encouraging him to investigate the banks, stand strong against pressure from financial institutions and Administration officials, and use his authority to hold lawbreakers accountable.

Today, it’s clear: Schneiderman heard you. And he isn’t wasting any time:

Attorney General Eric T. Schneiderman today filed a lawsuit against several of the nation’s largest banks charging that the creation and use of a private national mortgage electronic registry system known as MERS has resulted in a wide range of deceptive and fraudulent foreclosure filings in New York state and federal courts, harming homeowners and undermining the integrity of the judicial foreclosure process.

This lawsuit doesn’t target some small players. Schneiderman is already tangling with the big boys:

The lawsuit asserts that employees and agents of Bank of America, J.P. Morgan Chase, and Wells Fargo, acting as “MERS certifying officers,” have repeatedly submitted court documents containing false and misleading information that made it appear that the foreclosing party had the authority to bring a case when in fact it may not have. The lawsuit names JPMorgan Chase Bank, N.A., Bank of America, N.A., Wells Fargo Bank, N.A., as well as Virginia-based MERSCORP, Inc. and its subsidiary, Mortgage Electronic Registration Systems, Inc.

What’s more? This is in addition to Schneiderman’s role as co-chair of the “financial crimes unit” that President Obama announced at the State of the Union. As Dave Dayen points out, the latter role is dealing with “pre-bubble” conduct, activities that lead to the 2008 economic crisis. This lawsuit is dealing with the “post-bubble” world, where banks allegedly took actions to stick it to homeowners just the sky was falling.

Schneiderman, along with fellow Justice Democrats Kamala Harris, Martha Coakley, Beau Biden, and Catherine Cortez Masto, is showing what public service is all about. Thanks for listening to us, Eric – as long as you’re holding banks accountable and fighting for homeowners, our members stand with you.

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Workers Tell Their State Attorneys General: Banks Aren’t Above the Law

“Banks don’t need a slap on the wrist, they need a kick in the ass.”

Jim from Escanaba, Michigan, wasn’t mincing words when he wrote his message to Attorney General Bill Schuette. Jim was one of thousands of Working America members and union members who sent messages to their state attorneys general about the impending settlement with Big Banks on the issue of foreclosure fraud.

As Seth wrote yesterday, state Attorneys General will be deciding soon on a “50 state deal” that could let banks off the hook for their shady, deceptive, and possibly illegal foreclosure methods. Stories about tactics like “robo-signing” – where a bank employee signs thousands of documents and affidavits approving mortgage foreclosures without really looking at them – are widespread, but if the state AG’s take sign on to a proposed deal, none of these cases will be thoroughly investigated. Worse, the very people responsible could get legal immunity.

It would be one thing if the large financial institutions were truly doing their part to aid in the recovery of the economy they helped destroy. But what we’re seeing now, and throughout 2011, is that the wealthiest are having their own private recovery while the rest of the 99 Percent remain stuck in the mud. “Please stand up to these greedy banks and punish them as though it was one of us 99 Percenters,” wrote Doug from St. Clair Shores, Michigan, “Why did my house’s value decline by nearly 50 percent while their bonuses grew?”

As for homeowners, 7.5 million homes have entered the foreclosure process, and 11 million are at risk. The problems that started the mess in 2008 have not yet abated.

If your state Attorney General doesn’t call for an investigation, and instead takes the lazy, easy way out by taking a deal, the people responsible for our economy’s collapse will never be held accountable. There will be no reason for the robo-signers, fraudsters, and predatory lenders to change their ways. Stephanie from Greenwood Lake, New York, in her message to AG Eric Schniderman, says that she has seen these dirty tactics firsthand:

As a foreclosure prevention counselor at a local non-profit for the past 6 years, I know the devastating effects of the financial crisis; I see first-hand the irresponsible behavior of the big banks towards homeowners. There is clear evidence of misconduct, fraud and out-and-out crime perpetrated against the American people and no one is doing anything about it!

If any of us did our jobs the way the Big Banks did theirs, we’d not only get fired – we’d probably go to jail. “Ordinary Americans who commit a sliver of what high financiers did over the past half-decade would be lucky to see sunlight for the rest of existence,” wrote Jim from Gatlinburg, Tennessee to his AG Robert Cooper, Jr. Stephanie from Greenwood Lake, New York echoed those sentiments: “If I ever attempted to commit any of the acts the big banks perpetrated before, during and after the mortgage crisis, I would be in jail for a very long time.”

The central issue here is not revenge, but fairness. Many messages mentioned the fact that if you or I committed theft, or if a fellow American lost their home because of our negligence, we would be summarily punished. Unless we want history to repeat itself, we need a thorough investigation of these shady mortgage practices and put a stop to them.

We know that Bank of America, JPMorgan Chase, Wells Fargo, Citigroup, and Ally Financial aren’t above the law. The question is, do our state Attorneys General agree with us?

Photo by scad_lo on Flickr, via Creative Commons.

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Banks, Bubbles and Busts

The knowledge that the economy is broken crosses political lines, and the wide majority of people who don’t pay much attention to political news nonetheless understand that something is deeply wrong. Where there’s disagreement is how we got here. Is the problem somehow due, as mainstream pundits, corporate lobbyists and right-wing politicians will tell you, to deficits, public employes and regulations? Or is it the decline of the middle class and corporate misbehavior at work?

At one of today’s panels at the Take Back the American Dream conference, the answer is clear: the failure of the economy to work for anyone but the financial sector gave us our current crisis.

“Banks are front and center in the story,” said economist Dean Baker, “but there’s also an incredible failure of regulation. Regulators were out to lunch as the biggest asset bubble in the world grew.” The housing bubble that drove the economy (through construction jobs and rising home values) ended up driving the economy into the ground when it collapsed. “We’re up against trillions in lost demand.”

The crisis was due to rapid deregulation and to the failure of regulators to enforce existing laws. Big banks wound bankrupt, Baker said, because they had so much garbage debt on their books.

Robert Kuttner of the American Prospect noted that the collapse was made possible by what he called a decades-long “invisible depression.” A postwar boom that built the American middle class suddenly reversed in the 70s, thanks to weakening of unions and government, so that gains of productivity growth stopped going to workers and were captured by a shrinking slice of the very richest. “I’ve written about the ‘declining middle,’ and that’s not an abstraction,” Kuttner said. “Middle class and working class people are working harder and not getting ahead, and they’re substituting debt for income growth.”

For Kuttner, the failure to hold big banks accountable and honestly deal with their insolvency and the failures of their executives was a huge mistake. “You guaranteed a wounded financial system years into the future,” he noted. Even after the banks demanded bailouts, they went back to back to business as usual.

“We’ve lost the concept that having a strong middle class also creates a strong and stable economy,” noted economist Heather Boushey. People in the political system forgot this, Boushey said, and noted that the lack of a strong middle class creates bubbles, as people go into debt to sustain their standard of living and keep up with costs. The decline of working people’s power becomes self-fulfilling, Boushey said. “A strong middle class creates better governance and better institutions. what’s going on in our economy affects what goes on in our democracy.”

“We have to be aware of what we’re up against,” she added, noting that when you have 40% of corporate profits from the financial sector, that has a big effect on who has power in Washington, DC.

America’s overall wealth continues to grow, Boushey said, but Middle America doesn’t share in it. The wealth is going to the very top while scarcity and tightening is the rule for the middle. Middle-class and working-class people work more hours, have less flexibility, and are forced to take on too much debt. We have 14 million people out of work, and the crash stripped trillions of dollars from housing value, so there’s just less money flowing through and thus fewer jobs.

The first task is to get working people engaged with the political process again, Kuttner said. “Until we get the political imbalance changed we’re not going to fix this.” He noted that the political imbalance is leading to bad policies. “You can’t deflate your way out of a depression. Austerity makes a depression worse.”

One consequence of this imbalance of power is accountability, Kuttner said. “More people have gone to jail for peaceful protest on wall street than went to jail for systematic fraud through the financial system.” The shady mortgage industry and the investment firms who financed them, regulators, ratings agencies, the writers of credit default swaps – not one of them was punished.

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Serving the Banks

This about says it all:

“In Washington, the view is that the banks are to be regulated, and my view is that Washington and the regulators are there to serve the banks,” he said.

Who said that? Only the incoming chair of the House Financial Services Committee, Rep. Spencer Bachus (R-AL).

He plans to spend his time in charge of that committee serving the banks. How do you think that’s going to work out for the average bank customer?

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Fourteen Cents and Foreclosed

Wow. Just wow.

CLEVELAND, Ohio — Michael and Pamella Negrea have never been late on a mortgage payment in the 15 years they’ve owned their home in Eastlake. But they’ve been foreclosed on three times.

Martin and Kirsten Davis, meanwhile, lost their home in Cleveland to foreclosure two years ago. The reason: a mess that started when they accidentally paid 14 cents too little on their monthly payment.

And Michael Rendes of Berea had his mortgage sold last year to Bank of America. The bank foreclosed on him in November, after insisting for months that it didn’t hold his loan and wouldn’t accept his payments.

Again, this is the kind of thing that’s going on while the banks and their allies are saying “well, you owe the money, so it doesn’t matter if our paperwork is fraudulent, we should be allowed to foreclose anyway.”

They’re not even bothering to confront this kind of thing, for the most part. They brush it off as “some mistakes have been made, but none that matter,” even as people are losing their homes that they have been paying for all along. And in brushing it off, they’re aggressively saying that the rule of law doesn’t and shouldn’t matter. This is how corrupt the American financial industry is.

Remember that next time the banks are pushing against being regulated by the government.

(Via Atrios)

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Banks “sidestepped 400 years of property law”

The New York Times quotes contrasting views on the foreclosure crisis from two finance experts:

Banks “have essentially sidestepped 400 years of property law in the United States,” said Rebel A. Cole, a professor of finance and real estate at DePaul University. “There are so many questionable aspects to this thing it’s scary.”

Others are more sanguine about the dispute.

Joseph R. Mason, a finance professor who holds the Louisiana Bankers Association chair at Louisiana State University, said that concerns about proper foreclosure documentation were overblown. At the end of the day, he said, even if the banks botched the paperwork, homeowners who didn’t make their mortgage payments still needed to be held accountable.

“You borrowed money,” he said. “You are obligated to repay it.”

Ok. Yes, if you borrowed money, you are obligated to repay it. But at this point, is that really what we’re talking about?

Take this:

In a complaint filed this month in Washington, D.C. federal court, Bank of America said the FDIC has wrongly denied claims by Ocala noteholders to recover from Colonial Bank and an Illinois lender also in receivership, Platinum Community Bank.

Bank of America accused executives at Taylor Bean, Colonial and Platinum of having fraudulently schemed to “double- and triple-pledge mortgages and steal assets” to hide their faltering conditions as the housing market declined.

Atrios asks the key question here:

So how widespread was this double-pledging of mortgages? How many people have homes that multiple entities think they are entitled to foreclose on? How screwed up is all the paperwork that nobody has any clue?

Also via Atrios, a consumer lawyer lays out the kind of bank practices that are apparently widespread:

First, Mr. and Mrs. Jackson did not face a foreclosure hearing after simply stopping payment – they paid the entire amount due per a statement sent to them by GMAC, and paid by certified check. GMAC mistakenly refused the check, alleging it was an NSF payment (not possible with certified funds), then placed the couple in foreclosure. I was simply trying to track the facts of the payment by deposing a witness who had sworn in court documents that she had reviewed the entire file and was familiar with the payment history, when, as it turned out, she was not only not familiar with the payment history, but the substance of her entire affidavit was false, including the allegation that the affidavit was sworn to in front of a notary. These were substantive questions I needed answers to – not an excuse for a delay. Further, the judge did not “throw out the case” – it is still pending, with GMAC still suing the Jacksons, years later.

I, and most of my fellow consumer attorneys who are members of the National Association of Consumer Advocates, do not raise these issues for delay – we raise them because we all have cases (this is the bulk of my foreclosure defense practice) where all or part of the foreclosure is purely the fault of the servicer or mill law firm – from homeowners whose payments were misrouted by the servicer, to servicers who simply changed the address of the property and then force-placed flood insurance, to servicers who ignore insurance plans the borrowers paid for (all examples from my cases) to servicers who refuse to even accept HAMP-type loan modification documents – all are substantive, real problems that were not the fault of the borrowers. The deposition was, in the Jackson case, merely an effort to get at the truth of the reversed payment – instead, GMAC admitted to wholesale manufacture of court documents, then promised to fix the practice, then continued that practice unabated for 4 more years.

How do you look at this and say “well, they borrowed the money. They have to repay it” as if it was just that simple? Are homeowners obligated to pay any bank that claims to hold their mortgage? Are they obligated to pay any charge that any bank has fabricated paperwork for? How many homeowners have to be wrongly foreclosed on before someone like Joseph R. Mason, holder of the Louisiana Bankers Association chair at Louisiana State University, concedes that perhaps it is a matter of some concern that working people are losing their homes because of fraudulent behavior by the banks?

The scope of illegality here is just staggering, and the Times gives a hint of how widespread it’s been—remember that quote about how the banks have “essentially sidestepped 400 years of property law in the United States”? Seriously not kidding there.

For years, lenders bringing foreclosure cases commonly did not have to demonstrate proof of ownership of the note. Consumer advocates and consumer lawyers have complained about the practice, to little avail.

But a decision in October 2007 by Judge Christopher A. Boyko of the Federal District Court in northern Ohio to toss out 14 foreclosure cases put lenders on notice. Judge Boyko ruled that the entities trying to seize properties had not proved that they actually owned the notes, and he blasted the banks for worrying “less about jurisdictional requirements and more about maximizing returns.”

He also said that lenders “seem to adopt the attitude that since they have been doing this for so long, unchallenged, this practice equates with legal compliance.” Now that their practices were “put to the test, their weak legal arguments compel the court to stop them at the gate,” the judge ruled.

Yes. That was a federal judge observing—apparently correctly, to this day—that banks had been getting away with foreclosing on homes they couldn’t prove they owned for so long that they had decided it was legal. And that’s the claim they’re still making today, despite all the recent revelations about robosigners and fraud.


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