StopTheSqueeze.org Newsletter - Americans For Debt Relief Now!

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-- 25 July 2007 --

IT’S YOUR TURN TO ACT.

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As you can see, the issues covered in the film and updated on this site affect all of us. We have to remain informed and get involved.

Danny Schechter Interviews Adam Chapnick, DocWorkers' president - DocWorkers specializes in national social awareness campaigns built around documentary films, and is managing the Stop The Squeeze campaign for Globalvision.Watch the interview on YouTube

Stop The Squeeze
Weekly Tip

Since late 2006, 106 major U.S. lenders have "imploded"

The website implode-o-meter is Tracking the housing finance breakdown: "a saga of corruption, stupidity, and government complicity"

Here's what they write:

"This page was set up on December 31, 2006, to keep track of mortgage lenders in the US going bust since late 2006, when it seems the first of them started going under (a couple did go kaput earlier in the year, as we have since discovered). Many observers (including your writer, Aaron Krowne) had been anticipating this for some time, as rising home prices (and other financial assets) have collided with deteriorating household finances and a transient period of low-as-they-can-possibly-go interest rates (set up by the Fed and imbalances with China and the oil exporters).

It appears what had to give is now finally giving: the latest subprime loans are going delinquent the quickest, and other vintages and tranches are following. Many of these loans will end up in foreclosure (the CRL estimates 20%+). Further, we expect a large swathe of allegedly "prime" loans to go bad—the prime/subprime distinction is only an approximation and assumes constant economic fundamentals.

Many originators cannot handle the buybacks, and so when challenged by them are quickly folding. The phenomenon is just getting started. What will the banking industry—which is now intimately coupled with mortgage lending—do? What will happen to the economy? Stay tuned."

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STOP THE SQUEEZE NEWSLETTER
In Debt We Trust director Danny Schechter reports on the film and campaign.

In my film IN DEBT WE TRUST, I introduce David Walker, the comptroller General of the Government Accountability Office, the man who audits the government. After my film came out—perhaps because I sent it to them--- CBS’s 60 Minutes discovered him too and featured him in a segment that was repeated this summer. They did not mention that he is also called DR. GLOOM because he warns of a collapse of our economy unless we get a handle on this problem.

He of course is not alone. I was pleased to see that MICHAEL MOORE referenced the Debt issue in his film SICKO on health care. What’s interesting and really scary is that many of the warnings and worries of outsiders like us are popping up in the mainstream media with increasing frequency. The bankers and stock brokers and business journalists who have been asleep at the switch or profiting from people’s misery are now waking up, shaking their heads and shouting like Mr. Walker that the sky is falling. Yet business goes on as usual with only a focus on the escalation of the DOW as if that is the only meaningful number.

Here are some of the recent worrisome stories:

Fed warns of $100bn credit losses

Credit Suisse sees big stock market fall in 6 months

FED CHIEF BLASTS “OUTRIGHT FRAUD”

Hello? Knock, knock, is anyone paying attention? In point of fact while the world press gets it---BBC and Reuters in this case, many in the US media are still downplaying the crisis. Here’s a contrast between our coverage and theirs:

Wow—here’s an admission by none other than President Bush’s Federal Reserve Chairman. It appears in the Guardian in England. Read this and I will tell how the NY Times handled the same story;

Fed chief condemns 'outright fraud' of easy mortgages for the poor.

Bernanke pledges to rein in sub-prime market abuse.
Dollar drops to 26-year low against the pound .

Larry Elliott, economics editor
Thursday July 19, 2007
The Guardian

"Ben Bernanke, chairman of the Federal Reserve, last night warned that the downturn in the US housing market would get worse before it got better as he pledged action by the central bank to rein in abuses in the sub-prime mortgage market.

Deploring what he described as "the outright fraud" involved in selling some home loans to those on low incomes, Mr Bernanke sent the dollar into a fresh slide when he stressed that the housing market would remain a drag on growth.

The Fed chairman's half-yearly health check on the economy stressed that growth would remain weak in the rest of 2007 before gathering steam in 2008.”

Ok that is what readers in England were being exposed to. And us? The headline on the business page of the NY TIMES on the same day was this: “FED TRIMS ITS FORECAST FOR GROWTH.”

The word fraud pops up in the third paragraph from the BOTTOM of the piece on the jump page on B-4, the EIGHTEENTH PARAGRAPH in the story. This just confirms my sense that if you want the real story you have to read these stories from the bottom up, not the top down.

MASSACHUSETTS IN THE LEAD

This points to what is scary about this because it is not just poor people that are getting hurt or foreclosed upon —many are. (CNN’s Money section reported last week that foreclosure laws vary from State to State. (eg. You can be forced out of your home in 30 days in Alabama while it will take as long as a year in New York.

In Massachusetts, the state is setting up a $250 million dollar fund to help delinquent borrowers to stay in their homes. This is the first such effort in the country under Governor Deval L. Patrick who had earlier called for CRIMINAL penalties against the people profiting off of other people’s misery. The state is going to use “hardball negotiating tactics," according to the Boston Globe, “to force lenders to take a financial hit on the troubled mortgages the state will refinance.”

Some of these companies are going under—not to jail. More than 100 have “imploded” because of the defaults on their shaky loans. And this is effecting the rest of the market and many other companies because much of the money generated from these loans were recycled back into Wall Street through securitization trusts, as explained in IN DEBT WE TRUST. That money was then turned into what is called “LIQUIDITY” to finance what are now being seen as highly risky investments—what financiers call “JUNK.” Bear Stears reported “Unprecedented declines in the valuation of a number of highly rated AA and AAA securities.”

You don’t have to be a financial genius to see that this is a house of cards, shaky, insecure and about to tumble. We are also learning that the Rating agencies accepted bogus determinations and made improper valuations. Now they may have to downgrade their assessments. Wall Street is worried that a chain reaction may follow.

WHAT ABOUT THE DOW AT 2000?

But you have to burrow into the financial pages to lean about all this because all the news last week was about how the market was surging (even if Iraq is not) bringing the Dow to 2000. Bear in mind that the Dow—up 12.3 this year—only tracks 30 large companies. What about all the other eco indices, the ones that affect the rising costs, higher interest rates and mortgages. Yes, the rich are getting richer but what about the rest of us.

But even here, not all that meets the eye is true. Check this corrective in the NY Times:

New York Times: Some Records Aren’t Worth the Hoopla (7/18/07) by David Leonhardt

"This column, on how the media-hyped "record high" Dow Jones number isn't really a record at all, is an implicit indictment of virtually every recent news report on the stock market. Pointing out that if you take the basic step of adjusting for inflation, stocks are worth far less than their 2000 high, Leonhardt writes that "if we are going to talk about a stock market record, we should be doing the same for a whole lot of other things: Loaves of Bread Surge to New Highs."

PREDATORY LENDING FINALLY BECOMING AN ISSUE

"WASHINGTON, July 17 (Reuters) - Several Democrats on Wednesday will introduce a bill aimed at protecting consumers by limiting finance charges for certain home mortgages, banning prepayment penalties and verifying a borrower’s ability to repay a loan.

Rep. Keith Ellison of Minnesota, a member of the House Financial Services Committee, said the legislation takes a tough stand against predatory lending by state-regulated mortgage brokers and is modeled after a new Minnesota law.
“They are the protections that we believe the rest of the nation deserves as well,” Ellison said in a statement.

The bill comes less than a week after Rep. Spencer Bachus of Alabama, the top Republican on the House Financial Services panel, offered legislation that would set up a national registry of mortgage brokers and other loan sellers.
Among other things, Bachus’ bill would require loan originators to submit to a criminal background check and fingerprinting, and would ban loan originators recently convicted of fraud from the registry. U.S. lawmakers and consumer groups have criticized federal banking regulatory agencies for being slow to protect consumers from predatory lending practices and fraud involving home loans and credit cards. Rep. Barney Frank, the Massachusetts Democrat who heads the Financial Services panel, wants to pass legislation by the end of 2007 to deal with the subprime crisis and predatory lending. He is expected to introduce his own bill in coming months.
The outlook for legislation is less clear in the Senate.

Christopher Dodd, chairman of the Senate Banking Committee, has expressed disappointment with the Federal Reserve for failing to act when the agency began seeing problems three years ago in the subprime mortgage market. Subprime mortgages are made to consumers with a poor credit history. Dodd, a Democrat from Connecticut and a U.S. presidential hopeful, said he prefers to prod regulators to use their existing powers rather than addressing the issue with new legislation."

EDWARDS WANTS NEW LAW

Presidential candidate John Edwards used the Cleveland leg of his “Road to One America” tour to call for a national predatory lending law.

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