My Grandmother, Standard Oil & the Banks
My grandmother, Lena Ames, was born in 1899. She passed away in 1994. She lived most of her life in New York City, Brooklyn to be specific, but she took the train into Manhattan on most days, and she kept on doing it right through her eighties.
Something else she kept doing right through her eighties and into her nineties… hating Standard Oil.
At one point in our nation’s history Standard Oil was the largest and wealthiest company in existence, but it crushed it s competitors ruthlessly and finally had to be broken up by the government as a monopoly. Standard Oil was John D. Rockefeller’s company, at one time the richest man in the world, and possibly the richest man ever. But he went too far. And he was never allowed back.
Standard Oil had to abandon its brand because consumers simply wouldn’t patronize it after a certain point, and many of them… would never patronize it again.
It’s an important lesson about consumer sentiment and behavior. You can push our citizenry to a point, but go past that point and after that we wouldn’t buy hundred dollar bills from you even if you were selling them for fifty dollars. Never again… never ever. Rockefeller spent the rest of his life as a philanthropist; giving away much of his vast fortune, but it never took where my grandmother was concerned. I wonder if he ever forgave himself.
Fast forward to today…
Wells Fargo, Bank of America… Chase… let alone the rest of the cast, have been abusing homeowners in this country for some time now. They choose to participate in the government’s lending programs, and then refuse to comply with the rules governing loan modifications. People are paying attention… and they’re approaching being enraged.
I can’t blame them in the least. I mean, I would be hopping mad if I were losing my home due to the abuses of the lenders and servicers in this country. And I’m not sure I’d forgive the bank all that easily either… maybe never.
The news, however, about lenders and servicers is worsening every week. They’re known to foreclose when not allowed, charge up front fees for a loan modification, and in general put homeowners through an extraordinary degree of runaround. Judges are calling in bank executives to testify as to their lackluster performance. Even the White House has more than just voiced its displeasure at how lenders and servicers have handled HAMP.
No question about it… the banks aren’t improving their collective image at this point. If the situation continues, we’re going to be thinking about bankers like we think about used car salespeople, but without the latter’s unwavering ethics and caring nature.
With the foreclosure crisis still being allowed to ravage the country unchallenged, the risk to banks going forward is both significant and real. The line between being accepted by the public and being a pariah, is as thin as the bank’s excuses for failing to modify mortgages.
In reference to homeowners who have sought loan modifications in order to remain in their homes, but found their lenders and servicers unresponsive and uncaring, the San Luis Obispo Tribune, Jim Wasserman of McClatchy Newspapers writes:
“Their rejections have aligned them with a broad and growing swath of public opinion: sore that a U.S. banking industry that has received billions of dollars in taxpayer support in the past year hasn’t reciprocated on their behalf.
“I don’t know a single person who has benefited from the money that was given to lenders,” Egan said.
Added Seeley, “The taxpayers are the largest investor in these companies, so I would think they would be taking care of us first.”
Banks and financial institutions aren’t usually adored even in best of times. But after absorbing much blame for exuberant lending that created the housing bubble, they are increasingly absorbing a backlash for their response to the subsequent foreclosure crisis.
It’s not hard to see why. While banks and loan servicers have promised for almost three years to better address rising stresses on their home loan borrowers, foreclosures and defaults still haven’t seriously slowed.”
In fact, they haven’t slowed at all… to the contrary, they’ve only increased. Almost three years. And nothing.
Can you imagine the people. Their faces. Their inner thoughts and feelings. The children who can’t possibly understand. The shame. The anger. The loss of hope as nothing has changed.
I looked up my blog’s analytics to see who’s been reading these pages I write. The Treasury Department… The United States Senate… Health & Human Services… CBS News… Senator Fred Thompson… countless mayors, a few governors’ offices… many Attorneys General. Many others at universities and major media outlets… AND EVERY MAJOR BANK IN AMERICA… no offense to the so many others I couldn’t list here, but that are every bit as important to me.
Are you reading this? Can you hear me? As of this very morning the news that foreclosures have just finished their sixth straight month above the 300,000 level. That’s almost two million people that have lost their homes since last March, give or take a few days in whatever direction. Can you hear them?
The article in the Tribune went on to say:
… it’s not just borrowers griping about the inability of banks to contain the crisis. Elected officials, besieged by complaints from constituents, are increasingly applying pressure as well.
This month, the League of California Cities, convening in San Jose, will consider a resolution urging 480 cities to yank deposits from banks that “fail to cooperate with foreclosure prevention efforts.”
“If you count up the money cities have in banks, that’s an amazing amount of power,” said Los Angeles City Council member Richard Alarcon, a former state lawmaker. “We have never tried to seize it. I’m trying to seize it. If you’re not a good player on the foreclosure front, we’re not going to put our money in your bank.”
The Tribune also reported that last week in Elk Grove, California (population 141,000), the City Council voted to support the idea of pulling the city’s money from the major banks. Vice Mayor Sophia Scherman, who lives next door to a foreclosed home, said:
“It’s time. It’s past due. We should have done this some time ago. It’s going to send a very strong message to these institutions.”
I pray it does, but I also know that we all can and need to do more. A damn sight more.
But to the banks out there who are reading this… it may seem that you hold the lion’s share of the cards today, but I assure you that it is an illusion. You have already gone too far. And once your brand is destroyed, you will have nothing. Nothing but a lifetime to wonder what might have happened if you had acted differently.
Oh… people will come Ray. People will most definitely come.
May you hear them screaming in your own field of dreams.
And God forgive us all for allowing this to go on one more day.
Bravo!
Well Done! I am glad that you wrote about the true power of the people and I am glad that more people are seeing what can be done. I would like to see this message spread to the general public and see how the BANKS react to millions of Americans that have either lost their home or know someone who has DECIDE that ENOUGH is ENOUGH!
Thank You for Writing about this!
Banks can be blamed from now until forever but government has the ability to stop the nonsense. Obama has the ability to call a stop to it all. This is simply a national crisis, a national security hazard to this country. This is terrorism at it's finest and we are all effected. Take our retirement, take our jobs, and take our homes, then take what is left through taxes to pay off the bailing out of the terrorists. Oh and take our government officials too, who have benefited repeatedly with terrorist payoffs. After all this financial terrorism we should be seeing many brought to justice BUT there is no justice for the dirty capitalism that has rampaged through this country.
Banks are nothing more than organizations dedicated to greed. They will literally say and do anything for the sake of profit. Their executives would put their own mothers on the street if it meant making another dime. Watching the aggregation of dozens of banks into the big 4 which now control the overwhelming majority of mortgage loans and other consumer credit should be cause for serious concern. These organizations have grown so large that they and their stooge servicers blatantly disregard any "rules" or "regulations" they are supposed to follow because they know they are "too big to fail."
Today, these institutions represent the greatest threat to our freedoms to have ever existed. They can almost literally impose their will on our elected officials. Consider just a few examples. The "cramdown" bill was passed by the House of Representatives but LOST in a Senate comprised of 60 "Democratic" Senators AND despite the supposed support of the President. The President has all but forgotten about the MILLIONS of homeowners faced with foreclosure the vast majority of whom are now "Prime" borrowers. If the millions of foreclosures this country faces are not stopped the financial crisis we face today will become tomorrow's fond memory. The middle class of this country is being decimated and despite absurd fantasies to the contrary our economy will continue to decline until and unless the housing crisis is directly and immediately addressed. The very notion that "irresponsible" homeowners created the current crisis exemplifies total ignorance of what actually happened. As a former "insider" (First Vice President of a bank) here's what really happened.
Mortgage lenders were told by FNMA and FHLMC to begin using "FICO scores" in the mortgage underwriting process (1995). Non-bank, non-thrift mortgage lenders gained access to money from Wall Street allowing them to bypass regulated lenders. Well over half of all mortgage loans were being originated by Mortgage Brokers. By 1999 some lenders were approving loans based solely on a borrower's FICO score. The problem was that FICO scores have NO RELATIONSHIP to a borrower's ability to pay a loan yet borrowers presumed there was a connection. When Countrywide introduced the "Final Solution," the No Income, No Asset loan, the end was near. Every single loan product that has brought us to where we are was designed and developed by LENDERS not homeowners. World Savings invented the "Option ARM" but few consumers understood it meant their loan balances would increase every month. "Stated income" loans were developed by lenders. NO CONSUMER ever dreamed up even the idea of a loan that would vastly exceed a borrower's ability to pay the loan - that kind of vision required blind, unabated greed.
Learn the facts about these loan products, the loan origination systems that would automatically approve a loan for anyone with a FICO score over 700, the decision to stop verifying income or assets and the all to real fact that easy credit lead to exploding real estate prices and then explain why a homeowner who was told his or her payments would be $1,500.00 is at fault for where we're at when the payments quadrupled 12 months later. There are 3 parties at fault for where we're at: Lenders, Investment Banks and the Federal Government which refused to regulate this industry.
It's time to stop the madness, stop foreclosures and, hopefully, save this country. My only hope is that it is not too late.
After reading this week about simmons bankruptcy we can see that not only home mortgages are involved in these gangster transactions but a good deal of commercial and business loans are also. We have yet to see all of what this depression has to offer up, there will be more to come. That is my case for government responsibility in rules and regulations governing out capitalistic society from harming the whole country.