Catch 22

My dear neighbor spent the last few days carefully constructing a very-well written email regarding our issues with the squatters. Today she emailed it to various police jurisdictions (including the officer that was so helpful in the beginning, but has recently become absent), Bank of America executives and our local government officials. The first responses were one person passing the buck off to another. One person passed the buck off to the officer we have been in contact with regarding this situation -- not knowing he was already on the email. He quickly responded when asked by the government official to assist (he had not responded to our last few emails).

Essentially, he told us that he had contacted Bank of America. They apparently came out to secure the home, but found occupants and left. They cannot secure the home while people are residing there. Bank of America is not the owner of this property. The legal owner (the people kicked out of their home by Bank of America) will need to come back and do a formal eviction through the courts. The police cannot even vacate the premises with the permission of the former owner. 

It would take a really big person to come back and help rid the house that they once owned of squatters. Most people would throw their hands up and say, "good riddance."Now we have to somehow convince this person to come back and help us. We are determined to do so. We have a plan and I hope it will work.

How long does it take for the bank to take ownership? My assumption is that they are prolonging taking ownership just so they do not have to deal with these squatters.

My neighbors and I are living the real-life version of novel Catch 22...

Here's a riddle for you: How does Bank of America have the authority and power to remove the former owners of the property, but they cannot do anything about these squatters?

My letter to President Obama and the Federal Reserve

I just sent this email to both President Obama and the Federal Reserve. There is a very small word count when sending an email to either place, that is why it is so short:

I have been trying to wrap my mind around the 2008 financial crisis for the past few months. My question is not meant to be accusatory. Instead, I am genuinely curious. Why were bail out funds given to the banks? Why were they not funneled first to homeowners to pay their loans, which would have ultimately made their way to the banks? The reason I have become so curious about the financial crisis lately is because there are several empty homes in my neighborhood that are occupied by criminal squatters.  Our neighborhood can do nothing to get rid of them -- believe me, we have tried. If the homes would not have been foreclosed upon, and the previous owners would have been given the bailout funds, then we wouldn't have this issue.

I appreciate any insight you have to give.

Thank you!

The Dirty Dozen: No. 11, Kathleen Corbet

Time to continue with my list...

The financial crisis required willing participation from many industries. One of those was the credit rating industry, more specifically the companies Standard & Poor's, Fitch and Moody's. These credit agencies slapped AAA creditworthiness ratings on the riskiest of loans.

Standard & Poor was the largest player of all the credit agencies  during the housing boom and their president from 2004 to 2007 was Kathleen Corbet.

Why would S&P put their stamp of approval on these risky and uncertain loans? Well, its because they were receiving payments from the bond issuers. You may ask yourself -- "is this a conflict of interest?" Let's see what Kathleen has to say about that in her April 23, 2010 testimony before the congressional subcommittee:

"During my tenure -- and indeed long before and since -- S&P employed an "issuer pays" model. As with any business model in which one party pays another, the "issuer model" has inherent potential conflicts of interest. In order to manage such conflicts S&P had a number of policies and procedures in place."

Let's now hear from an analyst at S&P on how these "policies and procedures" worked: 

"A bond could be structured by a cow and we would rate it."

Good work, Ms. Corbet. I like how you managed to remove yourself from the sticky situation before the rest of the world caught onto your "policies and procedures."

Quick Update on the Squatters

Nothing has changed.  Nothing has been done by Bank of America.  There is a whole new group of people living in the house -- in and out at all hours of the night. Maybe if they were living in one of Bank of America's banking locations they would do something about it. 

Also, a fellow neighbor tried to do his part by putting flyers in the mailboxes of his neighbors the other night warning people about the drug dealing squatters residing in three of the houses near his. He is in trouble for illegally putting things in people's mailboxes. Insanity.

If you haven't already, please move your money out of this bank!!

The End.

The Dirty Dozen: No. 12, Dick Fuld

This post is the start to a series of blogs I'd like to call "The Dirty Dozen." Each post will detail one of the twelve individuals MOST crooked and responsible for the 2008 financial crisis -- according to me.

Since this week marks the 5 year anniversary of Lehman Brothers bankruptcy, I feel there is no one better to kick this list off with than good, old Dick Fuld.  Just his smug face irks me.

Dick was the CEO of Lehman Brothers (an investment firm) from 1994-2008. Fuld led Lehman Brothers into doing investments heavily in subprime mortgages. They bankrolled lenders across America to issue these loans en masse. Lehman even participated in the lending process by issuing their own subprime loans. The firm then took all these loans and turned them into bond derivatives and sold them to investors. They were the biggest underwriter of these securities at the peak of the housing boom. And on September 15, 2008 they filed for bankruptcy -- the biggest in the history of the US.

It could be argued that Dick was the whipping boy for the rest of Wall Street. The day after Lehman filed for bankruptcy, the feds swooped in and fixed the issues for the rest of the investment banking world with bailout funds. Don't feel too badly for him. He walked away earning over $500 million from 2003-2008. According to testimony, he even had four $20 million bonuses distributed to himself and three other executives four days before the firm filed for bankruptcy.

My question is this: What makes a business executive so special that they should earn $500 million dollars within 5 years? Especially considering that the average American earns $42,000 a year. And to top it off, Mr. Fuld gambled all of our meager retirement funds, lost them and then walked away with $500 million!!!

In November of 2008 he tried to hide millions in assets by selling them to his wife for $100 in order to avoid them being taken away in lawsuits.

The greed is mind blowing. When is enough money, enough?

The Squatter Issue in a Nutshell

The US financial sector was regulated from 1940 through 1980. This is considered to be the most prosperous time in our nation's history. Income disparity was not an issue and one parent could go to work and make enough for the family to thrive. Deregulation of the financial institutes started back in the 1970s and continued through the Reagan Administration. Bush & Clinton followed suit by continuing to deregulate and control the practices of these institutions all under the advice of Alan Greenspan.

The banks, including Bank of America adopted these reckless and foolish lending habits in the mid 2000s. Their practices were predatory and they made home loans to people that could not afford the payments. They doled out bonuses to their employees and executives for creating these loans. Huge Bonuses. Bonuses that incentivized more destructive financial behavior. During this time derivatives became very popular. A derivative is a type of securities or financial instrument which derives its value from the value of underlying entities such as an asset, index, or interest rate—it has no intrinsic value in itself. In addition, Bank of America gambled retirement funds on the derivatives of these faulty loans. Retirement funds are only allowed to be invested into AAA rated bonds. AAA means that the creditworthiness of the bond is exceptional and that a default on the bond is highly unlikely. The three top credit agencies -- Moody's, Standard & Poor's and Fitch -- fraudulently granted AAA ratings on these sub-prime mortgages.

These ratings and the easy lending caused house prices to continue to rise.  Because of the rising prices of homes, people took out money against their mortgages to make more investments. People were told "You can't lose."

To top it all off, AIG (American International Group) which was the largest insurance company in America was insuring the mortgage loans and also insuring the derivatives. If the bottom fell out, AIG would have to pay out twice on the loss.

The bubble burst in September of 2008. Fannie Mae & Freddie Mac were about to go bankrupt. The US government stepped in and placed them under a conservatorship. A week later, the investment bank Lehman Brothers filed for bankruptcy and created a domino effect with the rest of the financial community following suit. AIG was bailed out by US taxpayers. It was determined that if AIG was not bailed out the whole economy would crumble. Bank of America purchased Merrill Lynch with bailout funds. Many other banks were bought by larger institutions with bailout money.

In addition, millions of Americans lost their homes and their retirement funds. Banks began foreclosing on homes around America at a rapid rate -- foreclosures caused by their faulty lending practices. This left homes all around America empty. In my neighborhood we have 6 houses within a 3 block radius that are occupied by squatters. Let me be clear that these are NOT the kind of people anyone would want living next to them. They have extensive criminal records. They have broke into my car, my neighbor's car and created a HUGE sense of uneasiness in our simple, quiet neighborhood. 

The old owners were kicked out of the house by Bank of America in December of 2011. In late 2012 Bank of America put a notice on the house saying it would be up for auction by Bank of America in October of 2012. This never happened. The house has been empty and they have not even put a for sale sign in front. The squatters moved into the house the first weekend of August 2013. It was easy for my neighbors and I to realize that they were squatters. They told all of us that they were renters, but they cleaned the whole house themselves. Who cleans a house that they are renting? 

My neighbors and I have been calling Bank of America on a regular basis to try to get them to remove the squatters. At first, they seemed like they were going to be very helpful. They verbally confirmed that the house belongs to them. When I saw no action on the part of the bank, I started to get upset. I was no longer polite and complacent. Now when I ask Bank of America for help, they tell me there is nothing they can do. The homes do not belong to them and I cannot prove that they do. I have a number for a company that safeguards the homes for Bank of America. They have told me that they have put in work orders to Bank of America, but they cancelled the one by my house recently.

I have been working with law enforcement to get them removed, but their hands are tied as well until Bank of America tells them to kick the people out. I have contacted my local new agencies, the newspaper and the mayor. No one can help.

This is how I see it: The banks have caused this huge issue. They tricked people into buying homes they could not afford. When the bottom fell out, they took money from us to stay in business. Instead of the money going to the homeowners, to pay off their loans (which would have eventually made its way back to the banks) they gave it to the banks who kicked people out of their homes. Now they don't want to help. They have yet again figured out a way to work the system by not taking responsibility for these empty homes.

Ridiculous.

My break-up with Bank of America in 2006

I opened my first bank account at the age of 15 with Bank of America.  I put my first paychecks into that account.  I received my first debit card and checkbook with that account when I turned 18.

At the age of 18 I joined the Air Force and decided to stick with Bank of America since they are located everywhere.  When I was stationed in Georgia I assumed that banking with them would be easy since they had locations in the town where I was located. Yeah right.  Since my account was opened in California, the banking locations in Georgia were useless to me.  I couldn't deposit checks in the banks, I couldn't even go in the banks and get customer service.  Every time I walked into the bank for helped they treated me horribly and were so UNWILLING to help me.  AND I was serving my country!!  I had to do everything via phone with their 1-800 number.  Thank goodness I had direct deposit.  I ended up having to open a Wachovia account in Georgia in order to deposit live checks.

When I got out of the Air Force, I returned to California to attend school.  I had very little income during this time, but I did work part-time.  During this time the place that I worked paid us every Friday.  On Fridays during lunch I would head to the bank and deposit my check.  During the weekend I would spend money on groceries, gas, etc.  When Monday arrived, they would post my check first and my all my debits after. After I would be comfortable with this routine, one Friday they decided to hold my check for three days.  Every single little charge I made over the weekend was an overdraft fee of $36.  When I looked at my account I was $500 overdrawn.  I was a college student, with no money!!  I called them hysterical and begged them to give me my money back.  They were cold, unfeeling and unsympathetic and said no.  

I decided to go down to the bank and close my account. When I went in to close it the lady said she would give me 1/2 of the fees back if I agreed to stay.  So I did.  A year later, they did the same thing to me.  But this time the damages were even greater.  I called crying...again.  They were cold...again.  I went and closed my account.  This time no offer to give me any of my money back.  After being a customer of their's for 10 years, I finally left at the age of 25.

During my years of being a customer at Bank of America, I was continually charged fees: monthly fees, annual fees, membership fees, overdraft fees, non-sufficient funds fees, minimum balance fees, returned deposit fees, transaction fees, too-many-debit-card-transactions fees, ATM fees, etc. During my time as a customer it could safely be estimated that Bank of America stole no less than $5,000.00 from me. And somehow, I always felt like it was my fault -- like I was a poor money manager and irresponsible.

Bank of America's banking practices are predatory.  However, they only target people with lower to middle income.  They would never treat their millionaires in such a way. Last year I received a check in the mail from Bank of America for $11.  They lost a class action suit for their predatory banking practices -- and I got $11 whole dollars from them.

I moved to Umpqua Bank (a regional bank in Oregon, Washington & California) in 2006.  I haven't been charged an overdraft fee once in 7 years.  In fact, I haven't been charged more than $6 in any given month since I have been a customer.  And they pay ME back when I use an ATM that doesn't belong to them.  They are always friendly, kind and willing to help.  It's amazing how great good customer service can feel!

Make the change today people.  Move your money from Chase, Citibank, Wells Fargo, Bank of America, US Bank...pick a small, local or regional bank.  You'll be glad you did.