I know who is making money on the the housing mess--LAWYERS!!!

I've yet to see a case where the attorney fees generated through a foreclosure action were LESS than the arrearage--if fact--they were generally equal. For example--owe $5320 in back mortgage payments to the bank? Attorney fees owed--$5633. Owe $2976 in back mortgage payments? Attorney fees owed are $2996. Hmmm. Every time. I have 15 separate numbers for one bank's loss mitigation department. Every time I call, attorney fees are racked up. A foreclosure negotiation could all be done in one phone call--but I've never been able to close a deal with less than 5 calls--and additional attorney fees the borrower is responsible for.

Posted at June 29, 2008 9:18 PM in response to Who Benefits from the Bailout: Banks or Homeowners?

Most places allow individuals or companies to purchase tax liens from the taxing authority. Does anyone have the difference in what he paid and what he owed? If allowed in California--you could pay off the remaining taxes and then you would own a lien on the property. That might be fun.

Posted at June 29, 2008 8:53 PM in response to McCains Delinquent On Tax Bill

You miss the point.

Poverty is NOT a social problem with economic consequences. It is an ECONOMIC problem with social ramifications. Not until poverty is addressed by policy makers from this point of view and not until poverty is addressed by politicians, think tanks, et al, as a problem of ECONOMIC CLASS will we be able to make a difference.

People are poor because they lack the opportunity to acquire and accumulate appreciating assets. It is when opportunity is denied through racism, classism, overweightism, bad teethism, bad social/economic policy, bad politics or whatever else ism or incompetence we use to deny opportunity, THAT is what makes us poor.

As an aside...Welfare reform, which was started by republicans daring democrats in the Wisconsin legislature to "End Welfare As We Know It", was in reality a way to assist businesses hire unskilled workers at low wages.

Think back to what was going on in the economy at the time--lots of low wage jobs and no one qualified to fill them. TANF was designed to have the GOVERNMENT provide/PAY FOR the training and job readiness skills to welfare recipients so employers wouldn't have to spend money getting welfare recipients "work ready" (understand work culture--get to work on time, call in sick--don't just not show up, respecting supervisors, how to dress appropriately, working with customers, etc) in order to put them to work. Government, through TANF, spent a LOT of money providing direct job training to TANF recipients to entice employers to hire them. The attitude at the time was "give them whatever they want".

This is one of the basic tenets of business--use "other people's money" whenever possible. When the republicans, specifically Newt Gingrich and those of his ilk, pushed the idea that government should "act more like a business", unfortunately, using the government's money to train potential employees was quickly incorporated. What happened? Employers cut money for training. What are we experiencing now? Lots of recently unemployed people with no job skills for current and future occupations.

Additionally, we are spending much more money on "work supports" than under AFDC. With TANF, the idea was to help the employee remain in the job by paying for things that would support/promote work. If your income is low enough, the government will pay for your food, your housing, your childcare, your health care, some job training, the Earned Income Tax Credit all to support you while you work at a minimum wage/low wage job. If the worker wants to move up--they face entitlement "cliffs"--increase your wages by $.10 an hour and you can kiss your childcare, food, housing, healthcare good-bye. Does $.10 an hour, or about $16 a month, cover all of those costs? Nope. Now studies are finding that many people who TANF put to work has also trapped them in "Entitlement Hell"--make a modest gain--and your "work supports" are stripped away.

The other side of the coin is that businesses are not under pressure to increase wages for these jobs. These jobs have seen tremendous declines in real wages recently in part because employees are punished if they pressure the market to pay better.

TANF will never work because it punishes workers for improving their earnings and rewards employers for paying low wages. People are not poor because they are urban black or rural white or stupid or lazy and absolutely not because of a lack of effort (I dare anyone to go to a Job Center/welfare office and try to get assistance you are eligible for and be treated with dignity, respect and provided accurate information on the first try.). It takes a LOT of energy and costs a LOT of money to be poor.

Posted at June 9, 2008 10:21 PM in response to Dear Paul Krugman - The Welfare Debate Didn't Change Anything

I got the sense, after seeing the 60 Minutes piece, that they really didn't want to give him asylum--as I'm sure BushCo has to be complicit in all of this muck--and once he had asylum it would be harder for him to keep quiet about that. Imagine yourself an Iraqi in the US with the goods on the current Administration and an application in at the State Department--would you go mouthing off about what you know?

Posted at May 14, 2008 3:24 PM in response to Today's Must Read

I agree. Brandy Britton worked for me while she was in college (as a waitress...)--I would NEVER have thought she would commit suicide.

Posted at May 1, 2008 5:47 PM in response to Report: D.C. Madam Commits Suicide

"People almost never make use of the freedoms they have, for example, freedom of thought: by way of compensation they demand freedom of speech."

Soren Kierkegaard
Journals

Posted at April 22, 2008 7:20 PM in response to Acceptable Commenting

If it is a branded (Visa or Mastercard, typically) front-loaded (generally by parents) card V &MC get to take a cut off of every transaction--through the interchange rates they charge and sometimes card holders are charged a fee for these transactions as well.

A large number of states have gone to branded paycards to pay welfare benefits and most significantly (because it is a TON of money) child support. States pass BILLIONS of dollars through to custodial parents on these front-loaded pay cards and then the paycard company/V&MC take a fee off of the top every time the card is used. The fees are taken out of the card holders account--so it really comes down to V&MC taking money out of the hands of CHILDREN who are being supported in part through child support. These cards are quite the money spinner--obviously.

States make these deals with the paycard industry because it is a much better deal for taxpayers--in that child support is expensive to administer and it significantly reduces over payments, fraudulent payments and the cost of printing and mailing checks. The tragedy is that states make these contracts with these companies not understanding how much money is going to be made off of them--and actually PAY for the service--when the paycard companies and V&MC make a ton of money handling government entitlement benefits (food stamps, Temporary Aid to Needy Families, Unemployment, Worker's Compensation, State Disability Programs, etc. and especially child support.) And sadly, these paycard companies are self-regulating--with the exception of Regulation E--which mostly just spells out that consumers must be given information about their cards and how to file a dispute. No real regulation except through their industry association.

There is a law proposed by Senator Conyers--The Credit Card Fair Fee Act that enjoys bipartisan support--but as one would expect--it isn't likely to get passed under the current administration.

Posted at April 21, 2008 1:00 PM in response to Credit Card University

Is this not the first time this has happened? I seem to recall prior problems--clearly the Fed's have not resolved this problem. Maybe they should let the Social Security Administration or the Internal Revenue Service or the Food Shares program administer the oversight for these expenditures--those programs do pretty well when it comes to finding entitlement recipients who have been overpaid.

Posted at April 9, 2008 2:08 PM in response to The Daily Muck

You missed the point. Utterly.

Posted at March 21, 2008 7:01 PM in response to Payday Lending in Ohio

Parasites or not--payday lenders do provide a product that a LOT of people purchase. What worries me about states like Arkansas, North Carolina, et al, who pass laws that basically run payday lenders out of business is that there is an OBVIOUS demand for these short-term loan products and there are few alternatives. The banks and the credit unions have had YEARS to compete with these very profitable businesses--but have not offered a product to compete with them. Nope. In fact, a lot of these payday lenders are OWNED by the very banks that have a lot of influence on our elected officials. Not long ago I read a news release that the Federal Reserve (whose job it is to REGULATE banks) was going to spend a bunch of tax money to go around the country and try to FIND these products being offered by banks. Now--this says to me that if the FED has to go hunting for them--and they know the banks business pretty well--then there aren't many around. Banks and credit unions have had years to offer up competitive products that meet the demand for them--but haven't. And they are not going to. The only way I can see that happening is if somehow the legislation is changed so that they will be profitable--and in order to be profitable--these short-term loan products need to cost around 36%--or you just can't make it cash-flow.

There is one credit union product--Stretch Pay--which is available to limited markets that isn't all that successful. I applaud the credit union for trying. I really really do. But these loans are at 18% (would be illegal in Arkansas) and require that borrowers attend financial education classes and most are not able to borrow money until after they have worked to improve their bill-paying history/credit score--generally taking several months. These loans are NOT made at 2:30 on a Sunday afternoon when you get a flat tire and you need to buy a new one before work on Monday. They are a WONDERFUL product for people trying to improve their credit scores, improve their financial knowledge and get back into mainstream banking. They are also not very popular. There are a few non-profits that are also trying to provide these small amount loans--one I am familiar with has been unable to break even after almost 3 years. They are not for everyone because they require that you actually plan your spending, spend less than you earn (which is getting harder and harder for most of us to do) and to take classes with others who, like you, can't seem to manage their money and are embarrassed by that.

Nope. I think what Arkansas will find that a great number of their payday loan borrowers will do what others have done--get their payday loans from another state or from an offshore payday lender--where they have limited or no protection under the law if the deal should go south. The other thing that is happening in these areas is that Loan Sharks are making a comeback. Yep. The kneecap breaking kind.

I agree that these products can become an addiction that one may never be able to get out from under (we call that "Perma-Debt--like permafrost). Unfortunately, most people in our country do not do a very good job of planning how to spend their money and consequently they make decisions based on immediate need that are harmful to their own economic best interest. We have such innumeracy in this country--people thinking that they can't do math or balance their check book or not taking the time to understand the terms of the credit card contracts they sign (and it DOES NOT take a degree from the Wharton School of Business to understand the bloody things--just very good lighting and a magnifier! And why would you sign something you don't understand? How dumb is that? If you don't understand it CALL the credit card company and keep their operator occupied until you DO understand it. They hate that.) that is the original sin...but then with the cost of living ever increasing and budgets being squeezed so tightly and our government giving away our tax money to people who don't need it and other useless endeavors--well--don't get me started.

The thing that this whole argument says to me is that we need an additional tier of 'banking' for cash conversion and small loan products. These activities are not profitable for banks. They are not profitable for credit unions and I doubt very much that mainstream financial service businesses want to deal with these small sum exchanges. On the other hand--banks aren't willing to locate in low income neighborhoods, are making a TON of money off of over-draft fees and charge you to keep and spend your money if you don't have very much. It costs a lot of money to spend your money when you are poor.

The Payday Lending Industry--in fact all of the Alternative Financial Services--have got some very bad players that ought to be drummed out of business either by the better performers or by legislation. The Alternative Services Industry would be very smart to start to redefine their industry and to police themselves--figure out a way for them to stay in business in the face of this backlash--by figuring out how to provide better services to people who deserve it--borrowers who pay back their 2 week loan on time--why not offer them a discounted rate? Require them to pay for "Community Reinvestment" like banks do and offer financial education for free on TV or classes or on the internet or something. They don't seem to be thinking in this direction (frankly--few people that I've spoken with are--and those who are only started doing so after I suggested it.)

It really isn't the products that are bad--because it is immensely better to borrow $200 for $20 even if the annualized interest rate is 512% if the alternative is to bounce even one check at $29 a pop--or to lose your job because you can't get your car fixed or find day care for your baby.

The problem is that when things were good we let the government and business owners bust up our unions--and now we are suffering because real wages--our spending power--is DECLINING. It isn't the payday lenders fault--it is BECAUSE WE LACK FAMILY SUPPORTING WAGE JOBS, we lack affordable education and job training and our traditional work supports--like Unemployment Compensation and Job Training are being de-funded by the people we have elected to office to represent us. We also lack confidence in our ability to manage our money. I see that all the time. If our schools don't educate us--we need to learn on our own.

(One interesting historical note--these kinds of products--as well as all of those goofy mortgage products like ARM's and Balloons and Interest Only--are NOT new. The last time they were popular was right before the Great Depression. Now THAT scares me.)

Posted at March 21, 2008 12:09 AM in response to Payday Lending in Ohio