2010 - %3, November

Under Fire, Foreclosure King Resigns

| Fri Nov. 19, 2010 5:55 PM EST

It's all unraveling for David J. Stern, the South Florida foreclosure attorney who built a once-formidable foreclosure empire only to see it crumble in recent months. On Friday, DJSP Enterprises, Stern's publicly traded foreclosure processing company, announced his resignation as president and CEO. Replacing him is Stephen Bernstein, a prominent real estate executive in Florida. It's Bernstein's job now to turn around a company that's lost 96 percent of its initial market capitalization of $300 million in less than a year. The company has never recovered from an unexpected dip in business that caused DJSP's stock to plummet this spring. DJSP's stock value has hovered around $.50 a share for the past week.

The downfall of DJSP, which handles non-legal processing work for Stern's law firm, stems largely from David Stern's own fallout with some of his biggest clients, both in Washington and on Wall Street. After media reports, including MoJo's own eight-month investigation exposed the questionable, dubious practices at Stern's firm (one former employee called it a "legal sweatshop") and widespread evidence of rampant corner cutting and even alleged fraud, the scrutiny of Stern's multimillion-dollar operation increased. Soon after MoJo published its story on Stern in August, the Florida attorney general announced a probe into Stern's firm to see whether bogus paperwork had been cooked up to speed up the foreclosure proceed and churn out more profit.

Before long, facing pressure from members of Congress and the public, Fannie Mae and Freddie Mac, the taxpayer-rescued government housing corporations who'd previously counted Stern among their retained attorneys, stopped doing business with him. It was a major blow to Stern; so important (and lucrative) to him were Fannie and Freddie that he referred to them as his "babies." Citigroup, GMAC, and Wells Fargo followed Fannie and Freddie's lead soon after. As a result, Stern's new business plummeted by more than 90 percent, he wrote to employees in a November letter. His operation has laid off more than 400 of its 1000-plus employees in recent weeks as a result of the slowdown in foreclosure referrals, and is expected to fire even more.

Stern began building his foreclosure empire, which today stretches from Florida to Puerto Rico to the Philippines, nearly two decades ago, in a North Miami Beach office with "ugly blue carpet and pink walls," he once recalled. Over time, though, he built, fine-tuned, and expanded his foreclosure law firm, adding new employees and finding new ways to speed up the foreclosure process. Foreclosure mills like Stern's get paid by the case, so the faster they plow through cases, the more money they make.

But as Stern's firm grew and grew, it allegedly began to play fast and loose with due process and the law. As I reported,

Beyond the backdated assignments, employees told me that the firm routinely doctored legal filings. Case chronologies—the timeline of important events in a foreclosure—were changed "all day long" to create the appearance of propriety, notes a former Stern paralegal. Internal documents show that the firm attempted to push cases through the courts even when key documents like the assignment of mortgage—or the mortgage contract itself—were missing from the file. "Need to re-set. No original loan docs," a Stern attorney wrote in a July 2008 memo after being rebuffed at a Tampa court hearing. At a Stern hearing in April, Pinellas County Judge Anthony Rondolino got so fed up with bad behavior by the mills, he declared, "I don't have any confidence that any of the documents the court is receiving on these mass foreclosures are valid."

That same month, a Fort Lauderdale attorney filed a class-action lawsuit against Stern and his firm, accusing them of racketeering and claiming the firm deliberately hid the true ownership on mortgages in cases involving "tens of thousands" of homeowners. A second suit, filed just days later, claimed that Stern's firm had refused to hold up a foreclosure on a couple in Port St. Lucie, even after it was clear that they hadn't had so much as been late with a payment.

Those practices eventually caught up with Stern. The financial health of DJSP Enterprises had gotten so bad lately that, in a financial filing, the company revealed it had defaulted on both its office rent and a $15 million line of credit with Bank of America. You couldn't miss the irony.

While Stern still retains control of his firm, the Law Offices of David J. Stern, the future's unclear for Stern and his publicly traded outfit.

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Two Clinton-Era Laws That Allow Cruel and Unusual Punishment

| Fri Nov. 19, 2010 4:04 PM EST

If the lame duck Congress is looking for legislation to pass before the Republicans take hold, it should look no farther than two laws passed as part of the so-called War on Crime, which gives the War on Terror a run for its money when it comes to violating Constitutional and human rights.

The Anti-Terrorism and Effective Death Penalty Act of 1996 (AEDPA), passed after the Oklahoma City bombing with broad bipartisan support, undermined habeas the corpus rights of US prisoners long before the Bush Administration sought to withhold them from "enemy combatants." AEDPA placed severe limitations on prisoners' ability to challenge death sentences—or life sentences, or any unjust convictions—in federal courts, even when they had new evidence of their innocence.

Under AEDPA, proof of "actual innocence" does not necessarily prohibit the execution or continued incarceration of prisoners. (A recent Supreme Court decision in the Troy Davis case questioned, but did not eliminate, this reality.) And while the pace of executions has slowed in recent years in spite of the AEDPA, the law still stands in the way of appeals by many prisoners across the country who might have just grounds for seeking to have their convictions overturned.

Retired Republican Rep. Warns Party: Ignore Climate at Your Own Risk

| Fri Nov. 19, 2010 3:29 PM EST

Sherwood Boehlert, the former Republican House member from New York , penned an op-ed in the Washington Post today taking members of his party to task for denying climate change. Boehlert represented New York's 24th District in Congress from 1983 until he retired in 2007, and is now a special adviser to the Project on Climate Science.

Like his fellow Republican Bob Inglis of South Carolina, Boehlert is baffled by the position of his colleagues:

It is a stance that defies the findings of our country's National Academy of Sciences, national scientific academies from around the world and 97 percent of the world's climate scientists.
Why do so many Republican senators and representatives think they are right and the world's top scientific academies and scientists are wrong? I would like to be able to chalk it up to lack of information or misinformation.
I can understand arguments over proposed policy approaches to climate change. I served in Congress for 24 years. I know these are legitimate areas for debate. What I find incomprehensible is the dogged determination by some to discredit distinguished scientists and their findings.

Boehlert continued that the "natural aversion to more government regulation" should not be used "as an excuse to deny the problem's existence." He also warned that it's short-sighted. "My fellow Republicans should understand that wholesale, ideologically based or special-interest-driven rejection of science is bad policy," he said. "And that in the long run, it's also bad politics."

Both Boehlert and Inglis stand as rare examples in their party today; as a comprehensive survey of the scene from the Center for American Progress notes, the breakdown of the incoming class on the subject is pretty bleak:

Well over half (55 percent) of the incoming Republican caucus are climate zombies. Thirty-five of the 46 (76 percent) Republicans in the U.S. Senate next year publicly question the science of global warming. Of the 240 Republicans elected to the House of Representatives, 125 (52 percent) publicly question the science.

Friday Cat Blogging - 19 November 2010

| Fri Nov. 19, 2010 2:48 PM EST

On the left, Domino peers suspiciously at the camera while enjoying a warm day under a beautiful azure sky. On the right, Inkblot plays games with the camera while skulking around in the garden. Currently, he's doing his skulking a couple of houses away, safely distant from all the carpet installation and floorboard renovation currently being done on his house. He doesn't get it, though. The floor doesn't squeak when he walks on it, so what's the problem?

Ireland and the Eurozone

| Fri Nov. 19, 2010 2:10 PM EST

Mohamed El-Erian says that instead of being bailed out, Ireland should default on its debts and devalue its currency:

In a wider policy debate, debt restructuring would be considered as a possible pre-emptive option rather than a disorderly inevitability; thought would be given to the possibility of the weakest Euro-zone members taking a type of sabbatical from the club and rejoining on a stronger and more sustainable basis.

That sounds great — though whether Irish leaders think it sounds great is another thing entirely. What's more, it seems to me that this has been considered before. Here is Felix Salmon's take:

Right now [...] it’s possible to structure a default and devaluation in such a way that the country concerned emerges in a strong fiscal position and with a healthy growth outlook. But the longer we wait, the harder that becomes.

I do think that it would be grossly unfair should the lenders to Ireland’s insolvent banks find themselves getting bailed out by Irish and EU taxpayers at 100 cents on the dollar. Is a sovereign debt restructuring the only way to avoid that? I’m not sure. And it’s also politically all but impossible to build a mechanism into the eurozone allowing countries to exit and re-enter again at a more competitive level, now that the currency union has been deliberately designed without that possibility in place.

Well, I'm confused. A debt default is certainly possible — default is always possible — but exiting and re-entering the eurozone is more than just politically difficult, isn't it? Once something like that happens, there just isn't a eurozone anymore. No one will believe it. If Ireland leaves (and I'm not even sure how that would work technically), it needs to be gone for good.

And who knows? If there's a way to pull that off, maybe that's what will happen. But that's always been the core of the problem. Countries have defaulted on debt lots of times, and often it works out just fine. But it has to be accompanied by devaluation, and that can't happen in a country that's part of a wider currency union and has no control over its exchange rate. Or am I missing something here?

Rep. Jack Kingston Announces Approps Chair Bid

| Fri Nov. 19, 2010 1:47 PM EST

Since the 2010 midterms, Republican lawmakers have gone to war over earmarks. In the Senate, the battle culminated in pro-earmark Minority Leader Mitch McConnell's concession to Sen. Jim DeMint's call for a (non-binding) ban on earmarks from GOP senators on Monday.

Despite the House's similar ban on earmarks, the debate in the lower chamber hasn't generated the same fireworks as it has in the Senate. With candidates for the chairmanship of the appropriations committee—which directs a sizable chunk of federal money, including earmarks—touting their fiscal conservative bonafides in their pursuit of the gavel. But some of the top candidates for the job, including California's Jerry Lewis and Kentucky's Hal Rogers, have garnered pretty pork-friendly reputations over the years. 

In a letter to the members of the House Republican Conference, Georgia Republican Jack Kingston threw his hat in the race for committee chair. Kingston, the fifth-ranking Republican on the committee, cites his spotless conservative credentials, including perfect ratings from FreedomWorks and the Eagle Forum, and his record of cutting spending as the chairman of the Legislative Branch Subcommittee [of the Appropriations committee] "when Republican spending was at its worst." And on earmarking, he cites his 2007 bill calling for a moratorium on earmarks and bipartisan hearings on reforming the practice.

While federal spending has spun out of control, earmarks "got out of hand numerically and in the quality or the substance of them...and [are] things that the federal goernment should not be involved in," Kingston told Mother Jones recently. Given the tea party's momentum, Kingston's anti-earmark and fiscal conservative credentials could make him an attractive candidate for the powerful approps committee post.

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Ousted Texas Textbooks Czar: I Shall Return

| Fri Nov. 19, 2010 1:44 PM EST

Texas' textbook standards might not dictate the market like they used to, but the state still has a bigger public school system than just about any other state, so it's a pretty big deal when those standards encourage the teaching of, say, intelligent design or the collected works of Jefferson Davis. And for the last 12 years, the man who's done the most to lead the State Board of Education's rightward shift has been Don McLeroy, a dentist, Sunday school teacher, and board member who thinks liberals have taken the America out of American history and the God out of science.

Last spring McLeroy lost his primary and was thought to be just about done with public education. This week, McLeroy told the Texas Tribune, somewhat ominously, that he'll be back:

"I mean, golly, I love this stuff. You haven't seen the last of Don McLeroy," he says, noting that while he'll watch to see what happens during this legislative session's redistricting process, he'll likely run for his old spot on the board in two years.

Emphasis mine, obviously. But don't expect any fireworks from the Board's final lame-duck meetings. Members are set to discuss mathematics and fine arts, and while math has been subject of controvery in the past, McLeroy expects that debate to be "pretty blah," because—creeping Islamification of our textbooks notwithstanding—how can you politicize algebra?*

COICA To You Too

| Fri Nov. 19, 2010 1:10 PM EST

Yesterday the Senate Judiciary Committee unanimously approved the Combating Online Infringements and Counterfeits Act, which allows the Attorney General to summarily blacklist internet domain names that are "dedicated to infringing activities." Meaning, of course, copyright infringement. Tim Lee is unimpressed:

Under COICA [...] the courts would issue orders not against the owners of the domain name (who may be overseas) but against domain-name registrars and the operators of DNS servers here in the United States. This means that thousands of systems administrators would be required to maintain a large and constantly-changing list of blacklisted domains. This is a significant and unfair administrative burden on private parties who have absolutely no connection to infringing activities.

The legislation falls far short of constitutional due process requirements. Legal injunctions would be issued upon the attorney general’s mere accusation of “infringing activities.” Not only would the owner of the domain name not have an opportunity to contest the allegations, he would not even have to be notified. And the parties who would receive notice under the legislation—DNS registrars and server administrators—will typically have no knowledge of or connection to the accused domain, which means they would have neither the knowledge or the motivation to dispute unreasonable orders.

This, apparently, is something important enough to try to ram through the lame duck session. That shows a truly excellent sense of priorities, doesn't it?

The Great TSA Backlash

| Fri Nov. 19, 2010 1:00 PM EST

I meant to link to this yesterday but forgot. Dave Weigel has a genuinely interesting Slate piece about TSA's security procedures that sheds some light on the partisan origins of today's backlash:

According to Tom Blank, the deputy administrator of TSA in the post-9/11 years, the agency was always cognizant of how unpopular scanning could be.

"I used to sit around and look at these images, dial them back, and ask myself how do I take this to Capitol Hill and not be thrown out on my head?" said Blank. "When [Bush's second TSA administrator] Kip Hawley came in [in 2005], he changed that. He saw the politics of it and deep-sixed the program. He deep-sixed it. It got revived after the Christmas bomber."

The point about how full-body scanning got restarted is essential—it was the Obama administration picking up an idea that Republicans had cooled on. Republicans accused the administration of degrading security by dialing back war-on-terror prosecutions in the name of human rights; the response was a security measure that would affect all travelers randomly.

There's much more at the link. Basically, Dave suggests that the libertarian/conservative wing of the Republican Party has long been skeptical of TSA's powers, but felt constrained to shut up and support President Bush while he was in power. So they didn't say much of anything. Now, though, there's nothing stopping them: "The return of [their mistrust and fear of TSA] is a lagging reaction to the fact that Republicans no longer have to toe the party line on homeland security. They can say what they think, which is that the state can't be trusted." Interesting stuff.

Eco-News Roundup: Friday November 19

| Fri Nov. 19, 2010 12:54 PM EST

Stories on health, the environment, and other Blue Marble topics from other Mother Jones blogs

Lady Power: Empowering women increases health and development in all countries.

Renegade: Republican Sen. Scott Brown is breaking with the GOP pack on health care reform.

All Mine: Pranksters advertise an iPhone free of "conflict minerals."

Unkindest Cut: San Francisco anti-circumcision activist working for next year's ballot.

Green State: Arizona joins 14 other states in legalizing medical marijuana.

Time of Cholera: UN peacekeepers are at the center of the Haiti cholera outbreak.

Baby Fat: Photo proof that not all African babies are starving waifs.