The New York Times' Sunday Business section leads today with a smart story on the foreclosure crisis down in Florida—the woefully backlogged courts, the contentious tactics the courts are using to plow through the backlog, and the powerful law firms used by banks to handle those hundreds of thousands of foreclosure cases. Mother Jones readers should recognize the multimillionaire foreclosure attorney the Times spotlights, 50-year-old David J. Stern: A month ago, I broke the full story on Stern, his rise to become Florida's Ferrari-owning foreclosure king, and his controversial and lawsuit-riddled past. Moreover, my story on Stern, and on a breed of law firms (including his) dubbed "foreclosure mills," showed how America's biggest (and most bailed out) banks, not to mention the taxpayer-subsidized housing giants Fannie Mae and Freddie Mac, retain Stern's sprawling operation and others like it to push through foreclosures using a high-pressure, assembly line-like process that's often accused of steamrolling homeowners who get in the way. As it happened, not long after my story came out, in early August, the Florida Attorney General announced an investigation into Stern's firm and two others like it.
The Times' story devotes an entire section to Stern but doesn't include much not reported by myself and others. The story spends more time exploring the mess that is Florida's judicial system, and how that system created new foreclosure-only legal divisions staffed by retired judges to process the foreclosure backlog, estimated at 471,000 cases. Late last month, I sat in on a morning's worth of foreclosure hearings in one of these divisions in Broward County, the epicenter of the housing market's boom and bust. As I described in my foreclosure-mill story, the hearings in Broward are an eye-opening experience: They take place in what's essentially a wide spot in a drab hallway; literally you step off the courthouse elevator on the fifth floor and...there you are, in a foreclosure hearing, judge, attorneys, staffers, and all.
These particular hallway hearings concerned uncontested foreclosure cases, meaning it's usually just the bank's attorney on hand with no homeowner present. Standing near the front of the room was a woman who rattled off names of banks—US Bank, HSBC Bank, JPMorgan Chase, etc.—and then the names of anonymous homeowners, names like Judy Upton, Indira Llanos, Guy Marc Saint-Fleur. Under banks of fluorescent lights it was a grim scene, foreclosure cases announced, decided, signed, and sealed all in a matter of seconds. The woman doing the announcing sounded like an auctioneer, spewing one long monotone stream of names and banks and legal jargon. Occasionally convicts in blue and green jumpsuits straggled by, their arms and ankles chained together. In one hour this uncontested court dispatched nearly 165 foreclosure cases. Sitting there watching, I felt like I'd arrived at the place where the American Dream goes to die.
The fear among legal experts and foreclosure defense attorneys—like Margery Golant, quoted in both my story and the Times'—is that this fast-paced foreclosure system, pushed ever faster by the banks' lawyers, could steamroll homeowners who have a good shot at saving their homes. As Golant told me for my initial story, "The judges are so swamped with this stuff that they just don't pay attention. They just rubber-stamp them." Worse yet, some defense attorneys fear that having older, retired judges deciding complex legal matters in a rapid-fire setting poses even more problems. "They're too fucking old to understand what's going on," one defense attorney, who asked to remain anonymous to avoid damaging work relationships, says of the senior judges. "It's the truth."
The Times mentions that the Florida legislature earmarked $9.6 million for this "foreclosure express." The paper fails to mention that some of that money comes from Obama's stimulus program. In other words, it's all our taxpayer money funding the foreclosure express, which can hardly be said to create jobs.
Think of what's going in Florida right now as the third act of the housing meltdown. There was the mania of the housing boom, then the market's breathtaking collapse. We're now witnessing the aftermath of that rise and fall. And Florida is unique in this because this kind of judicial crisis isn't the case in other hard-hit states because Florida requires judicial handling of foreclosures. In Nevada and California, for instance, foreclosures are an administrative affair, far less costly and painful, but with fewer chances for homeowners to push back.
The goal of Florida lawmakers and judges is to clear 62 percent of the backlog by next July. Time will tell whether they reach that goal—and what sort of new mess they might leave behind.
The Labor Department's numbers for August are out, and here are the highlights: The unemployment rate nudged up last month, to 9.6 percent. The private sector added 67,000 jobs, but the government lost 121,000—114,000 of which were Census jobs—giving us a net jobs loss of 54,000.
There are some brighter spots: The Bureau of Labor Statistics revised its job-loss figures for July, saying 54,000 were lost instead of 131,000 and changed its June estimate from 221,000 to 175,000. The number of long-term unemployed edged downward as well, from 6.6 million to 6.2 million, or 42 percent of all unemployed Americans. In the last year, the economy has added 229,000 jobs; since the recession started in December 2007, we've lost 7.6 million jobs.
Prior to Friday's numbers, economists feared larger job losses and a bleaker outlook. Goldman Sachs' number crunchers predicted a net loss of 125,000 jobs. The White House, for one, is touting today's numbers, noting that it's the eighth-straight month of private sector jobs gains. However, the real unemployment rate—including the underemployed and those "discouraged" workers who've stopped looking for work and left the labor force—rose again in August, to 16.7 percent from 16.5 percent.
In all, today's is a very mixed, mostly weak report. There was a slight increase in the percentage of working-age people participating in the labor force, up to 64.7 percent from 64.6. That's good and bad: It means a few more people are sending off resumes and looking for work, but it will also likely increase the headline unemployment rate because the number of jobless Americans is growing. That means if and when the economic recovery starts to accelerate, the jobless rate will increase before it starts to go down, a politically toxic situation for both parties—and that could begin right around election time.
Some groups are holding up today's numbers as evidence of the need for more jobless assistance. Here's the National Employment Law Project's Christine Owens:
"Today’s employment report closes a summer of uncertainty that has demonstrated how far away we are from an economic recovery that creates jobs and brings unemployment down. With extraordinarily high long-term unemployment continuing—affecting over 6.2 million people—today’s jobless workers cannot wait any longer for work and income support. We need stronger policies that will help put workers back on payrolls, stimulate the economy with consumer spending and help us move out of this lethargic period of stagnant growth,” said Christine Owens, Executive Director of the National Employment Law Project.
It's a classic move by an industry player feeling the squeeze of pending regulation: Hire a lobbying firm to create the appearance of widespread opposition via a carefully stage-managed astroturf campaign. One of the latest outfits to give this strategy a try: Education Management Corporation (EDMC), a multibillion-dollar heavyweight in the for-profit higher education industry that's the subject of multiple lawsuits and ample criticism from investors, lawmakers, and government officials who accuse the company of a range of deceptive business practices. The company, whose majority stockholder is Goldman Sachs, recently hired a GOP-linked lobbying shop known for its astroturfing prowess to fight a proposed federal rule that has the entire industry fretting about its future.
Education Management Corporation operates Argosy University, Brown Mackie College, South University, and various Art Institutes. On August 24, EDMC CEO Todd Nelson blasted out an internal email, first reported on by the New America Foundation's Higher Ed Watch blog, saying that the company had hired DCI Group, a Washington-based lobbying and public relations firm with a controversial history, to coordinate a campaign against the Education Department's proposed "gainful employment" rule. The rule would establish metrics for assessing graduates' ability to repay their student loans as a way of judging whether an academic program is truly fulfilling its mandate: preparing graduates for "gainful employment."
For-profit colleges have made no secret of their opposition to this rule; Harris Miller, president of the Career College Association, the industry's top trade group, described it as "unwise, unnecessary, unproven." And for-profit colleges have let the Education Department know their displeasure in a major way. Little wonder why: Education Department officials say the new rule would disqualify 5 percent of programs from receiving federal student aid money, and 55 percent would face limits on growth and mandates to warn students about the risks of excessive borrowing.
Reid's ad features Nevadan Debra Harding, who the ad says has been out of work for a year, pushing back against Angle's positions on unemployment, including her stated opposition to extending jobless benefits. And in response to Angle's claim that unemployed Americans "want to be dependent on the government," Harding replies, "I'm not spoiled and I don't want to be dependent on anybody. If Sharron Angle doesn't get that, she should be out of work. Not people like me."
And of course the 35-second ad concludes with a popular Reid campaign tagline: "Sharron Angle: Just too extreme."
Yes, you read that right. Apparently some GOPers are rethinking their vehement opposition to Harvard law professor and bailout watchdog Elizabeth Warren running the new Bureau of Consumer Financial Protection. A short item in the Wall Street Journal's gossipy "Heard on the Street" column today says there are whispers that "some Republicans are warming to Ms. Warren as the first consumer financial-affairs regulator over another candidate, Treasury Department Assistant Secretary Michael Barr. The thinking: Ms. Warren isn't shy about speaking her mind, so banks would know what was coming." Whereas Barr, the Journal says, might be more likely to spring big regulatory surprises on the banks, something no banker—or Republican, presumably—wants.
In one regard, the GOP is right: Warren is clear and plain-spoken in her defense of consumers and their rights. (Read David Corn's profile of Warren for more on that.) The consumer bureau, you'll remember, is largely her idea, based on a 2007 article she penned in the journal Democracy calling for a new "Financial Product Safety Commission." That commission would regulate mortgages, say, much like the existing Consumer Product Safety Commission regulates toasters.
As I reported last month, there's also been considerable opposition in the banking sector to Warren leading the new, independent consumer bureau, which will be housed in the Federal Reserve. Multiple state banking association chiefs have lobbied Congress against her potential nomination. Those same chiefs suggested that the American Bankers Association, the top banking trade association, didn't want her to run the bureau, either.
Here's my quibble with the Journal's optimistic report: Unlike the anonymous GOPers the Journal refers to, the bankers I interviewed who oppose Warren, on the record, aren't about to warm to her because she's outspoken. They oppose her because they think she doesn't understand the realities of running small community banks, the type sure to be impacted by the new consumer agency. Warren just doesn't get it, these chiefs claim. (Warren, I'm sure, would disagree.)
Sure, it's somewhat heartening for Warren supporters to hear Republicans might yet support her nomination. But don't believe for a minute that her path to running the bureau is now wide open.