Andy Kroll

Andy Kroll

Senior Reporter

Andy Kroll is Mother Jones' Dark Money reporter. He is based in the DC bureau. His work has also appeared at the Wall Street Journal, the Detroit News, the Guardian, the American Prospect, and TomDispatch.com, where he's an associate editor. Email him at akroll (at) motherjones (dot) com. He tweets at @AndrewKroll.

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Blacks Shut Out of Obama's Housing Rescue

| Thu Mar. 25, 2010 5:10 AM EDT

Black homeowners hit hard by the housing crisis and economic downturn are disproportionately shut out of the Obama administration's multibillion-dollar homeowner rescue effort, the Home Affordable Modification Program (HAMP). This startling new finding appears in a first-of-its-kind poll conducted by a leading housing advocacy group, the National Community Reinvestment Coalition, in conjunction with a hearing by the House oversight committee today investigating why HAMP has failed beleaguered homeowners and hardly slowed the rising tide of foreclosures. A copy of the report laying out NCRC's findings was first obtained by Mother Jones before its public release.

According to NCRC's findings, white homeowners eligible for the HAMP program are 50 percent more likely than blacks to receive a loan modification, which can lower monthly mortgage payments and help homeowners keep their homes. Loan servicers, the poll finds, foreclosed on black homeowners who were late on their mortgage payments noticeably faster than white or Hispanic borrowers. The poll's finding here "suggests that lenders and servicers push delinquent Black or African-American borrowers into the foreclosure process much sooner than borrowers from other racial and ethnic groups." Black homeowners who did receive modifications also saw smaller reductions in their loan's interest rate—an average drop of 2.84 percentage points—than did whites and Hispanics—3.32 and 3.35, respectively. So telling is NCRC's finding relating to racial differences that the group calls for "fair lending investigations of [the] HAMP program and participating servicers."

NCRC's poll is the first to investigate whether servicers and lenders treat people differently during the modification process due to race.

The poll is equally damning in its broader examination of HAMP, the Treasury Department's flagship homeowner initiative. As others have pointed out, HAMP's results have been dismal at best: Despite originally claiming that HAMP would help 3 to 4 million people—around 270,000 every three months—the program has only resulted in 170,000 permanent mortgage modifications in a year's time. In NCRC's poll, they found homeowners surveyed were more likely to get lasting help if they weren't eligible for HAMP than if they were.

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Big Finance's Derivatives Battle

| Wed Mar. 24, 2010 3:56 PM EDT

Gary Gensler, a top government regulator of tricky financial products like swaps and futures, singled out today big Wall Street firms and their lobbyists in Washington as a leading force specifically trying to kill new reforms of derivatives, the opaque deals that helped crash the global economy. Gensler told reporters at the US Chamber of Commerce today that Big Finance was "undercutting" efforts to regulate and shed light on derivatives, which help utilities and other companies hedge risk but are also used as gambling chips. "Wall Street has been expressing great opposition on Capitol Hill," Gensler said. "We've seen the emails."

Gensler, the chairman of the Commodity Futures Trading Commission, appeared at the Chamber to deliver a speech advocating for far more rigorous and reaching oversight of the $600 trillion, "over-the-counter" derivatives market. (Over-the-counter means they're traded in the dark, between buyers and sellers, without much transparency and information on bids and prices.) Unlike the speaker who preceded Gensler, Sen. Blanche Lincoln (D-Ark.), who vaguely hinted at the need to exempt certain users from derivatives regulation, Gensler took a strong stance by calling for complete regulation of the shadowy derivatives market. To illustrate his point, Gensler compared the derivatives markets to our streets system:

Can anyone imagine a traffic system without safety regulation? Of course not. Think about a regulation-free highway network: no traffic lights, no street lamps, no cops on the beat, not even a stop sign. Think about how we would be as a nation.

By placing a few street lights and stop signs, so to speak, in the derivative markets, it would "lower risk in this marketplace." Gensler said that, while not ideal, he could palate a narrow exemption for those companies that use derivatives solely to hedge risk and control for fluctuations in prices. But he insisted several times—and challenged the Chamber's top brass in attendance at the conference to back him—on the need for moving nearly all derivatives trades onto clearinghouses, where the prices and participants in trades are made public, and to make dealers register publicly as well. "I would think the Chamber would want to embrace this," Gensler said in his remarks. "This is not red meat."

Watchdog Rips Obama Housing Rescue

| Wed Mar. 24, 2010 1:12 PM EDT

A top watchdog for the government's bailout programs today blasted the Treasury Department's main homeowner rescue program, a multibillion-dollar effort that's done little to combat the still-roiling housing crisis. The special inspector general for TARP, Neil Barofsky, released the results of a new audit (PDF) today criticizing the paltry results of the Home Affordable Modification Program (HAMP) and the Treasury's efforts to airbrush the effects of its troubled program. As the audit points out, Treasury officials initially said the program would "help up to 3 to 4 million at-risk homeowners avoid foreclosure," but months later the Treasury made a quiet revision. Now, the department says the program aims to extend 3 to 4 million offers to homeowners—not necessarily real help. "Continuing to frame HAMP's success around the number of 'offers' extended is simply not sufficient," the audit says.

Barofsky's audit also highlights the abysmally low number of permanent mortgage modifications—somewhat lasting, legitimate relief for homeowners—which total a meager 170,000 so far. The reasons for HAMP's flop, Barofsky says, are three-fold: vaguely defined rules and constant revising of those rules; allowing mortgage servicers to begin modifications without getting all the required paperwork from homeowners; and a lack of promotion and marketing of HAMP by the Treasury. Too few people, Barofsky concludes, just didn't know about HAMP's offerings, if they know of the program at all.

Meanwhile, as the program limps along, the housing crisis rumbles onward. One telling statistic the SIGTARP audit found was that the average homeowner eligible for HAMP is underwater, meaning they owe more on their loan than their house is worth. And while homeowners make payments and wait for their equity to return, the Treasury, SIGTARP found, has mostly shied away from reducing homeowners' principal owed amounts—arguably the fastest way to help struggling homeowners. The watchdog paints a bleak portrait of a program that's done little to help beleaguered homeowners. And when comparing HAMP to the swfitness and effectiveness of the Treasury's rescue of the nation's banking system, it's little wonder average Americans are so angry with Wall Street and their government.

 

GOPer: Senate Wall St. Reform "Dysfunctional," Wants to Hold Hands

| Wed Mar. 24, 2010 9:03 AM EDT

Sen. Bob Corker (R-Tenn.), a top GOP negotiator in the Senate, today blasted the Senate's decision to fast-track a financial reform bill out of the banking committee with no negotiations over amendments and with no Republican votes. In remarks at the US Chamber of Commerce today, Corker called the tactic to pass a "very, very partisan bill" by a party-line vote in banking committee a "dysfunctional" move, and said the committee "missed a tremendous opportunity on financial reform." "We had an opportunity this Monday to pass a bill out of our committee in a bipartisan way," Corker said, "and then stand on the Senate floor and hold hands" and begin negotiating together to craft a bipartisan bill.

By choosing to bypass committee negotiations, Senate Democrats have set the stage for a bitter partisan battle on the Senate floor, Corker said, a showdown that's far less likely to produce a bill on which both parties can agree. "It is going to be far more difficult since we missed an opportunity coming into committee to have bipartisan bill," the Tennessee senator said. "It's going to be far more difficult to have a regulatory bill that seeks the middle ground and stands the test of time." Corker lamented that now that the Senate's talks on financial reform were beyond the committee, the talks would likely take place "in a back room someplace." "I think a very strategic mistake has been made," he said. "

He also criticized the Obama administration, calling it "out of balance" for advocating for an independent consumer protection agency. In previous negotiations, Corker has supported enhanced consumer protection but housing it within, say, the Federal Reserve and weaving consumer protection into more traditional bank regulation powers. Overall, Corker said the bill had become a much more liberal bill, and that it will be an uphill struggle to change that. "Now, we've moved way to the left," he said, "and it's going to be difficult to hold people together to get it back in the middle of the road."

Most Americans Despise Wall St.

| Wed Mar. 24, 2010 8:42 AM EDT

A new national poll from Bloomberg today finds that nearly two out of every three Americans dislike top executives in big business, reflecting a broader disdain of Wall Street and Big Finance that wasn't as prevalent as before. 70 percent of those polled, the poll also found, favor giving consumer protection powers to existing bank regulators and not to a new consumer protection agency, as proposed by the House, Senate, and President Obama. And to no one's surprise, a majority of Americans think the government should have the power to limit executive compensation for top Wall Street executives.

Here's more from the Bloomberg poll:

The majority of poll participants—56 percent—say big financial companies are more interested in enriching themselves at the expense of ordinary people, while 40 percent say such firms play a vital role in enabling the economy to grow.

At the same time, Americans are divided over the scope of government regulation. More than 40 percent of Americans say the government has gone too far in measures to fix the financial industry; 37 percent say it hasn’t done enough. Almost six out of 10 people say Wall Street hasn’t gone far enough on its own to protect against future emergencies.

“Anything the government gets their fingers in, they mess it up,” said poll participant Norman White, 60, a community college electronics instructor who lives in Colfax, Louisiana. “I don’t have a very high opinion of the government running anything.” ...

The Fed could use some marketing help, the poll shows. More than a quarter of participants don’t have an opinion about the central bank, while 42 percent have a favorable view and 31 percent hold an unfavorable view.

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