Weekly Audit: Foreclosure Mills, Social Security and the Fed’s Failures
by The Media Consortium, Tue Aug 10, 2010 at 12:00:39 PM EDT
by Amanda Anderson, Media Consortium blogger
Editor’s Note: Zach Carter is out this week, but we’ve compiled a rundown of the biggest economy-related stories, including the rise of foreclosure mills and why social security isn’t in jeopardy. Zach will be back next Tuesday, so stay tuned!
Who needs ethics when you’ve got foreclosure mills?
Want to make money quickly, but don’t want ethics to get in the way? Big banks are outsourcing their foreclosure duties to fraudulent law firms, known as foreclosure mills, and getting away with it. Zach Carter explains the latest get rich quick scheme for AlterNet. Foreclosure mills are ethically questionable law firms that process legal documents for foreclosures. They tend to have an emphasis on quantity, not quality. Carter writes:
Big banks are not outsourcing their foreclosure processing to shady law firms with a history of breaking the law for a quick buck. These foreclosure scammers forge documents, backdate signatures, slap families with thousands of dollars in illegal fees and even foreclosure on borrowers who haven’t missed a payment.
Andy Kroll chronicles the evolution of foreclosure mills for Mother Jones. Kroll also exposes a notorious Floridian law firm founded by David J. Stern that is using every trick in the book—including backdating documents and illegally charging clients massive fees—to profit from the foreclosure crisis:
While rushing foreclosures isn’t illegal, Stern’s fledgling firm was promptly accused of something that is: gouging people who are trying to get out of default. In October 1998, Tallahassee attorney Claude Walker filed a class-action lawsuit involving tens of thousands of claimants, alleging that Stern had piled excessive fees on families fighting to keep their homes. (Walker, who visited Stern’s offices in 1999 to collect depositions, described the place as “a big warehouse” where hordes of attorneys holed up in tiny, crowded offices “like hamsters in a cage.”)
Don’t blame Social Security for the deficit
Fact: Social Security benefits will be able to be paid, in full, through 2037.
Fact: 75% of Social Security benefits will be able to be paid thought 2084.
Fact: There is a huge surplus in Social Security trust fund- $2.5 trillion. So why the big push to trim the program? In an interview with The American Prospect, Rep. Ted Deutch (D-FL) explains his proposed legislation that will actually expand benefits:
Ninety-five percent of the people in our country [already] pay Social Security tax on 100 percent of their income. The bill provides both contribution and benefit fairness: Even as people are going to be paying in more, they’re going to receive more benefits. Doing that, by the way, will also ensure the solvency of Social Security, which is terribly important.
The Fed’s failure and the AIG Bailout: A brief history
In The Nation, William Greider explains how the Federal Reserve Board gambled with American taxpayers’ money by not considering alternatives to the AIG bailout. Grieder highlights a report from the Congressional Oversight Panel, which “provides alarming insights that should be fodder for the larger debate many citizens long to hear—why Washington rushed to forgive the very interests that produced this mess, while innocent others were made to suffer the consequences.”
In short, the Fed acted “under the business-as-usual expectations of the private financial system, while skipping lightly over the public consequences.”
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