On Thursday, the Justice Department announced a record $17 billion settlement with Bank of America over accusations that the bank—as well as companies it later bought—intentionally misled investors who purchased financial products backed by toxic subprime mortgages. It's the largest settlement the US government has reached with any company in history, and it is roughly equal to the bank's total profits over the past three years. But as is the case with similar settlements involving Citigroup and JPMorgan Chase, Bank of America probably won't end up paying that much.
Bank of America will pay $9.65 billion in cash and provide consumer relief valued at $7 billion…Whether cash payments are structured as penalties or legal settlements can determine whether targeted companies can declare them as tax-deductible business expenses. Also, consumer relief is an amorphous cost category: If Bank of America's deal resembles the department's previous settlements with JPMorgan and Citigroup, that part could be less costly to the company than the huge figures suggest.
...[M]uch of the relief will come from modifying loans that the banks have already concluded could not be recovered in full. Reducing the principal on troubled loans often just brings the amount that borrowers owe in line with what the banks already know the loan to be worth.
Settlement math also affects the actual cost of the deals, allowing banks to earn a multiple for each dollar spent on certain forms of relief. Under Citi's deal, for example, each dollar spent on legal aid counselors is worth $2 in credits, and paper losses on some affordable housing project loans can be credited at as much as four times their actual value.
Banks generally regard the consumer relief portion of settlements as "stuff they're doing anyway," banking analyst Moshe Orenbuch told the AP.
The Bank of America settlement resolves more than two dozen investigations by prosecutors around the country.
Senate minority leader Mitch McConnell (R-Ky.) will not say if he will stop blocking a major spending bill in the Senate that contains funding to help identify and prosecute rapists—or whether he would support a separate bill to break the log jam.
As I reported last week, since June, Senate Republicans have held up a $180 billion appropriations bill that would fund several federal agencies, including the Department of Commerce, the Department of Agriculture, and the Department of Justice. Part of the funding allotted for the DoJ is supposed to go toward a $41 million grant to help states and localities go after rapists by funding jurisdictions to process backlogs of rape kits, the samples of DNA evidence that are taken after a sexual assault and used to identify assailants. There are over 100,000 untested kits waiting to be processed at crime labs and police departments around the country, partly because states and localities don’t have enough money to test them. The kits can go untested for decades, allowing countless rapists off the hook.
The sweeping spending bill has hit a wall in the Senate because McConnell and other Senate Republicans want Dems to let them add several unrelated amendments to the legislation. The amendment McConnell introduced would make it harder for the EPA to enact new rules on coal-fired power plants. Democrats have complained that GOPers are abusing the amendments process to hold up a bill they don’t like. "Regardless of the outcome of the amendment votes…Republicans have indicated that they are not willing to support the underlying bill," a Senate staffer told me last week.
On Tuesday, the Louisville, Ky. Courier-Journal asked McConnell if he would withdraw his amendment, which would indicate that he and fellow Republicans would be willing to vote for the underlying bill, including the $41 million in funding to process rape kit backlogs. McConnell dodged the question. His office did not respond when Mother Jones asked the same question this week.
Lawmakers may be able to add the rape kit funding into an temporary spending measure in October. However, neither McConnell's office nor Republicans on the House and Senate appropriations committees will say whether they would support doing so.
Ferguson, Mo. residents protesting the shooting of Michael Brown retreat after police detonate tear gas cannisters.
On Saturday, a police officer in Ferguson, Missouri gunned down unarmed black teenager Michael Brown. Eyewitnesses say Brown was killed while trying to run away or surrender, but Ferguson police claim that Brown reached for the officer's gun. It will be a long time before all the facts are sorted out, but research suggests that such claims may be rooted in something deeper than the need to explain actions after the fact: Race may literally make people see things that are not there, whether it's a gun or a reach for a gun.
More MoJo coverage of the Michael Brown police shooting
In a 2001 study, participants were shown a picture of a white face or a black face followed immediately by a picture of a weapon or a tool. They were asked to identify the object as quickly as possible. Study participants more often identified weapons correctly after they saw a black face, and more accurately identified tools after seeing an image of a white face. What's more, "they falsely claimed to see a gun more often when the face was black than when it was white," the report's author wrote. He goes on:
Race stereotypes can lead people to claim to see a weapon where there is none. Split-second decisions magnify the bias by limiting people's ability to control responses. Such a bias could have important consequences for decision making by police officers and other authorities interacting with racial minorities. The bias requires no intentional racial animus, occurring even for those who are actively trying to avoid it.
This study has been repeated by severaldifferent groups of scientists with the same results. (When participants are primed with female as opposed to male African-American faces, however, they are less likely to assume the object is a gun.)
A 2005 study by University of Colorado neuroscientists bolsters these findings. The scientists measured threat perception and response in the brains of 40 students to targets in a video game, some of whom were carrying pistols while others carried wallets or cellphones. The study authors predicted that because there is a cultural perception that African-Americans are "more threatening," participants' "shoot response" would come more naturally. Indeed that’s how it panned out. The study found that the students shot black targets with guns more quickly than white targets with guns, and took longer to decide not to shoot unarmed blacks than unarmed whites.
We may never know what was going on in the head of the officer who shot Brown—or, for that matter, in the heads of George Zimmerman or Michael Dunn, or many other killers of unarmed African-Americans in disputed situations. But studies like the above suggest that the underlying problems run deep.
For weeks, Republicans in the Senate have held up an $180 billion spending bill that would direct money to several federal agencies, from the Justice Department to the Department of Transportation. Funding for all kinds of measures—from rent subsidies for the poor, to a new NASA rocket, to transportation projects—has been left in limbo. But one specific provision that's being held up has victims' advocates particularly worried: a $41 million grant to help states and localities go after rapists by funding jurisdictions to process backlogs of rape kits, the samplings of biological evidence that are taken after a sexual assault and used to identify attackers.
The kits, which contain semen, blood, saliva, hair, and other DNA evidence from rape victims, can be held in storage for decades, allowing rapists to roam free. Experts estimate that there are over 100,000 untested kits sitting on shelves at scores of police departments and crime lab storage facilities around the country, partly because states and localities lack the money needed to process them.
Kym Worthy, the county prosecutor in Wayne County, Michigan, has pushed hard to get through Detroit's backlog, but has run up against funding shortages. She plans to apply for a chunk of the $41 million grant as soon as it's approved. "I'd like it to happen tomorrow," she says. "Every day that goes by is other day that the victims have to wait for justice. This is first grant of it's kind where they really got what it takes."
But since June, the money has been stalled because Republicans, led by Senate Minority Leader Mitch McConnell (R-Ky.), want Democrats to allow them to add several unrelated amendments to the huge appropriations bill. One of those amendments, sponsored by McConnell, would make it harder for the EPA to enact new rules on coal-fired power plants. (His home state of Kentucky has a big coal industry). Another amendment—a longtime favorite of Sen. David Vitter (R-La.)—would strip Obamacare subsidies from congressional staffers. Republicans don't have any intention of passing the main spending bill, argues a Senate Democratic leadership staffer; they're just using the amendments process to stall it. "Demanding amendment votes is meant to distract from [Republicans'] disagreement over popular bills," the staffer says. "Regardless of the outcome of the amendment votes…Republicans have indicated that they are not willing to support the underlying bill." McConnell's office did not respond to requests for comment, but the minority leader has previously accused Democrats of "shutting out" Republican amendments, and other Senate Republicans have accused red state Dems of not wanting to vote on controversial amendments in an election year.
In response to the GOP's shenanigans, Senate majority leader Harry Reid (D-Nev.) pulled the bill from the floor in mid-June. Victims' advocates are livid. "Every day that passes without this funding allows perpetrators to continue to roam the streets, confines potentially innocent individuals to prison, and deprives survivors the justice they deserve," says Sarah Tofte, the vice president of policy and advocacy at the Joyful Heart Foundation, which runs a data project called End the Backlog that collects information about rape kit backlogs around the country.
If the Senate can't pass the main appropriations bill, lawmakers may be able to squeeze the rape kit funding into a stop-gap spending measure this fall. But that option hinges on support from both House and Senate Republicans. Republicans on the House and Senate appropriations committees did not respond to a request for comment on whether they would back such a move.
The federal government does not count or track untested rape kits. Most cities and states don't, either. In much of the country, the work has been left to journalists, human rights researchers, and victims' rights advocates. The states with the largest known backlogs are Texas and Tennessee, which each have 20,000 untested kits sitting in storage. There are more than 11,000 unprocessed kits in Detroit, and over 12,000 in Memphis. Detroit recently tested 1,600 of its backlogged kits, which helped the city identify 87 suspected serial rapists and led to at least 14 convictions.
Here is a look at what we do know about the rape kit backlog around the country:
More Americans than ever before are unable to afford rent. Here's a look at why the rent is too damn high and what can be done about it.
Part of the problem has to do with simple supply and demand. Millions of Americans lost their homes during the foreclosure crisis, and many of those folks flooded into the rental market. In 2004, 31 percent of US households were renters, according to HUD. Today that number is 35 percent. "With more people trying to get into same number of units you get an incredible pressure on prices," says Shaun Donovan*, the former secretary of housing and urban development for the Obama administration.
It's not just working-class folks who have been pushed into the rental market. More middle-class Americans are renting too.
Alongside the foreclosure crisis, the financial collapse and ensuing recession jacked up unemployment and squeezed incomes. Check out how rental costs compare to renter incomes over the past quarter century:
Republicans, in an effort to shore up what they say is a dangerous budget deficit (it's not, really), have pushed to cut spending on federal programs, including housing assistance. Nearly all government housing aid programs have taken funding cuts in recent years.
In 2013, about 125,000 families lost access to housing vouchers—which make up the largest share of rental assistance—due to across-the-board budget cuts. "Budget cuts were doing exactly the wrong thing," Donovan says.
Those cuts come on top of years of stagnating rental voucher aid. Even though the government increased funding for housing vouchers between 2007 and 2012, the program was not able to reach more households because that extra money was eaten up by higher rents and lower incomes.
Because federal housing assistance was not able to keep up with the growing population of low-income people created by the recession, the number of very-low-income renter households that received some form of housing assistance dropped from 27.4 percent in 2007 to less than a quarter in 2011.
What happens when you combine a shortage of rental units with lower incomes and less federal support? You get the "worst rental affordability crisis in history," and a lot of people finding it harder to get by.
The share of households spending more than a third of their income on rent has grown by 12 percent since 2000. Today, half of all renters pay more than 30 percent of their monthly income in rent. For 28 percent of Americans, more than half of their salaries go toward rent.
The rental crisis is worse in some places than in others.
And the crisis has hit people of color harder than whites.
The stimulus act Congress passed in the wake of the recession directed $1 billion into rental housing. And HUD is not sitting on its hands while the rental market goes to shambles. The department has launched severalprogramsaimed at bolstering the number of low-income and public housing units.
But these initiatives aren't enough to stem the unfolding rental crisis, Donovan says. Legislation in Congress aimed at reducing the government's role in housing finance would take a bigger bite out of the problem. It would direct nearly $4 billion a year to affordable rental housing. The bill was recently approved by a key Senate committee. And as far as its chances in the obstructionist, GOP-dominated House? "I think better than most people might think," Donovan says. "I say that because I do think there's a confluence of more and more people understanding that the status quo is unacceptable."
Correction: An earlier version of this piece misspelled Shaun Donovan's name. It is Donovan, not Donavan.