Organizing Bank Customers
A TPM reader saw the conversation here about SEIU's challenge to Bank of America. He sent along news that UNITE HERE launched a campaign last week against Countrywide Financial Corp., calling on their members and on other consumers to boycott the mortgage lender's banking subsidiary. The union wants Countrywide to halt foreclosure actions against borrowers who have fallen behind on escalating loans.
The union push back against financial services companies is a sharp reminder that the channels of organized consumer interest are very limited. Some have argued that unions should stick to collective bargaining issues, but I'm not sure I follow the criticism. If the union is willing to provide a platform and an organizational structure for a consumer boycott, they can bring a little balance to a playing field that is badly tilted in favor of big banks. No other group with the organizational reach of unions seems willing to do this.
The marketplace drowns out individual consumer complaints. Collective action magnifies consumer voices, but no single consumer or group of consumers has the resources to organize a broader action. Anyone who doesn't like the message is, of course, free to stay away, but the unions give those who want to register their protest a place to have some impact.
This isn't business-as-usual for the unions. Instead, this is a case of unions stepping up to give consumers (union and nonunion) a chance to be heard. I think that's good for unions and good for consumers.
The union could really help consumers get out of the victim seat in loan negotiations.
I'd like to see the loan companies pressed to provide several numbers for every loan in danger of foreclosure:
1) How much the mortgage company stands to make/lose from a property if they go ahead and foreclose. (The worst-case number.)
2) The buyout number. "If I had a friend who wanted to buy me out of this loan but not for a penny more than they had to spend, and that person drove a hard bargain with you, what is the minimum number at which you would agree to walk away from this loan?"
3) The good-neighbor number. "Knowing that this property is not now (and perhaps never was) worth the amount of debt on it, knowing that I would like to honor reasonable business obligations to you, and knowing that I genuinely want to stay in this home and this neighborhood, what is a reasonable combination of loan value write-down and preferred interest rate, that you think would make sense?"
Knowing these numbers would help consumers negotiate. I suspect that the loan companies want to do this on a case-by-case basis because once consumers figure out a formula for negotiating, everybody is going to be doing it, including those who actually are able to pay. That's why the companies are making such a big deal about ability to pay and dragging their feet about renegotiating.
If I were one of the mysterious investors who hold the securities on these loans gone bad, I'd be pushing hard for companies to stop foreclosing and start working to snare me 60-80% of my investment, which actually seems like it would be pretty easy for the loan companies to do if they'd get busy negotiating with consumers.
December 14, 2007 8:59 AM | Reply | Permalink
The Union that exists in name only today was formed to be the means to address injustice such as this. Unfortunately for its membership it has been taken over by the actual groups of whom it was formed to bargain with. It has responded to its own
membership's complaints with a locked out.
That Union is the Union of States and is formally know as The United States Of America.
We need another Bobby Kennedy to address the corruption in the leadership of this Union and another Lennie Bruce to express to Power the membership's emotions about this situation.
If you can't say Fy(@k, you can't say Fy(@k the government.—Lennie Bruce
-----------------------------------------------
Today, are we searching for I deals or Ideals?
-Thinking
December 15, 2007 7:48 AM | Reply | Permalink
Some have argued that unions should stick to collective bargaining issues,
I agree with that,
but I'm not sure I follow the criticism.
because your thinking implies that the banks "want to be good citizens."
How can this be true when the Fed creates dollars (capitol) out of nothing and then, subsequently, swaps their pieces of paper for real capitol (skilled labor and hard assets).
Moreover the Fed likes printing out more money (figuratively) and this devalues "real capitol" since more dollars in circulation means existing ones lose value.
Thus, the Fed intentionally and methodically destroys the value of skilled labor (the middle class) through it's policies!
Even "our friends," like Israel, have asked the US government to stop paying them in dollars since fewer people around the world are willing to exchange hard assets, and skilled labor, for worthless dollars!
If the union is willing to provide a platform and an organizational structure for a consumer boycott, they can bring a little balance to a playing field that is badly tilted in favor of big banks.
The SEIU and others cannot change that tilt since the Fed decides when it should run its printing presses; i.e. as a private entity, it isn't accontable to the public good.
but the unions give those who want to register their protest a place to have some impact.
as long as the proposed solution to the problem has merit, the protest is worth it. But, from my viewpoint, the big banks and their policies aren't the problem, the Fed is and, thus, the unions should go after the Fed.
This is dangerous; i.e. people speculate that JFK was assasinated (source) because he signed an executive order which allowed the US government to print out its own money (backed by silver) and challenge the Fed.
If the unions stand up against the Fed-- because the Fed devalues the value of skilled labor, then that's impoortant since the protest would be based on principle, the principle of protecting the value of skilled workers by eliminating the inflation tax (more here) which is nothing more than "taxation without representation."
i.e. the boycott needs to be against the dollar, not the banks, so maybe the SEIU should demand that GM, for example, pay its wages in Euros-- just as supermodels are demanding now.
i.e Since 1913, the US dollar has lost 94% of it's value! "Victims" of the housing bust won't lose that much and "unions" could simply tell their union members to stay away from credit cards unless they can pay them off.
To boldly go...
December 15, 2007 10:39 PM | Reply | Permalink