Economy

The Home Mortgage Business, Where Cheaters Always Seem to Prosper

AP Images/Carlos Osorio
O cwen is a little company with a dream: to become the nation’s largest mortgage servicer. If they weren’t so uniformly terrible at mortgage servicing, they might even achieve that goal. And while state and federal investigations, multi-billion-dollar fines, and legal threats would seemingly throw a wrench in most companies’ high-minded plans for success, Ocwen is different. Because in America, rank incompetence need not impede a corporate quest, at least not in the financial services industry. As cracks in its public image continue to surface, Ocwen is attempting to pull off one of the most brazen schemes in recent memory: getting what amounts to a cash advance for the very work they can’t seem to do properly. Let’s take a step back. Ocwen is the biggest of a group of “non-bank” servicers, which don’t originate loans themselves. They merely handle the day-to-day accounting of loans for other owners, usually big institutional investors—collecting monthly payments, making decisions on...

Walking on Ukrainian Eggshells

AP Images/Darko Bandic
At times, you have to wonder where Europe’s strategic and economic sense has gone. Consider Ukraine, most of whose citizens clearly wish to become Ukrainian-European and have their country join the European Union. Some of whose citizens died for that this week. Until this week, however, Europe was doing all it could to repel them. Last autumn, Ukrainian President Viktor Yanukovych bitterly disappointed his compatriots by backing off his promise to sign an association document with the EU. The conventional wisdom is that he succumbed to Russian pressure—after all, it’s Russia that supplies Ukraine with its oil and gas. But Russian President Vladimir Putin was also offering Ukraine $15 billion, while the EU was offering it nothing, and telling Yanukovych that any real progress in integrating his country into the Union would depend not only on cleaning up Ukraine’s notoriously corrupt government but also on imposing austerity conditions on its already economically-beleaguered citizens...

How Big Banks Are Cashing In On Food Stamps

AP Images/Rich Pedroncelli
AP Images/Rich Pedroncelli T he Agricultural Act of 2014 , signed into law by President Obama last Friday, includes $8 billion in cuts to the Supplemental Nutrition Assistance Program (SNAP) over the next decade. One way the bill proposes to accomplish these savings is by reducing food stamp fraud. When the new farm bill is enacted, many of America’s hardest working families will experience cuts in services and have trouble putting food on their family’s table. But there will be major gains for an industry that most Americans might not expect: banking. Banks reap hefty profits helping governments make payments to individuals, business that only got better when agencies switch from making payments on paper—checks and vouchers—to electronic benefits transfer (EBT) cards. EBT cards look and work like debit cards, and by 2002, had entirely replaced the stamp booklets that gave the food stamp program its name. SNAP is the most well-known program delivered via EBT, but they also carry...

Just How Much Do Republicans Hate Unions?

The VW plant in Chattanooga. (Photo courtesy of Volkswagen USA)
If you ask Republicans about their antipathy toward unions, they'll say that letting workers bargain collectively reduces a company's ability to act efficiently in the marketplace. If you knew anything about business, the market advocates will patiently explain, you'd understand that unions, with all their rules and conditions and strike threats, only make it harder for the company to make its products. Let management make decisions about things like wages and working conditions, and the result will be higher profits and more jobs, which will benefit everyone. In almost all cases, the corporation agrees; after all, union workers always earn better wages than their non-union counterparts, and they give power to the employees, which no CEO wants. What most people probably don't realize is that this inherently hostile relationship between management and unions isn't something that's inherent in capitalism. In fact, in many places where there are capitalists making lots of money,...

The Ink-Stained Wretches of Wall Street

AP Images/Richard Drew
L ast year, upon the 10 th anniversary of the start of the war in Iraq, newspapers and magazines filled with soul-searching essays from journalists rethinking their advocacy of the invasion, documenting lessons learned and errors made. But a few months later, on the 5 th anniversary of the fall of Lehman Brothers, the unofficial beginning of the financial crisis, virtually nobody wrestled with their failure to anticipate the Wall Street wrecking ball. Indeed, to date, no major news organization has apologized for missing the biggest economic story of the decade, and most business journalists defend their profession, arguing that they sounded the alarm about financial industry greed and the makings of a catastrophe. “The government, the financial industry and the American consumer—if they had only paid attention—would have gotten ample warning about the crisis from us,” said Diana Henriques of The New York Times in 2008. Neither she nor her colleagues have really looked back since. As...

Liberals, Conservatives, and the Meaning of Work

Some young Americans getting a good lesson in the dignity of work. (Lewis Hine/Wikimedia Commons)
It isn't often that we spend an entire week talking about a Congressional Budget Office report and its implications, but the one currently occupying Washington's attention—about the effects of the Affordable Care Act on the labor force—is actually pretty revealing. To catch you up, the CBO said that due to the fact that under the ACA people are no longer tied to jobs they'd prefer to leave because they can't get health insurance on the individual market ("job lock"), many will do things like retire early, take time off to stay at home with kids, or quit and start businesses. They projected that these departures will add up to the equivalent of 2 to 2.5 million full-time positions. At first, Republicans cried "Obamacare will kill 2 million jobs!", but when everyone, including the CBO's director, said that was a blatantly misleading reading of what the report actually said, they changed their tune. And here's where it gets interesting, because this debate is getting to the heart of what...

Horrible Bosses

AP Images/John P. Johnson
AP Images/Warner Brothers D o you believe everything your boss tells you? The answer probably depends—if he tells you the Cubs are going to win next year's World Series then maybe not, but if he tells you your benefits are being cut and explains the reason why, you'll probably take him at his word. After all, he's in charge of the business, so he should know. But Tim Armstrong, the CEO of AOL (company motto: "More Than Just Your Grandmother's Email, Really!") must have thought his employees were pretty darn stupid when he told them last week that he was cutting their 401(k) contributions and blamed the change on the Affordable Care Act. He explained in an interview that the company had incurred $7 million in "Obamacare costs," whatever that's supposed to mean, and later complained that two employees who had "distressed babies" had cost the company $1 million each. It's been said many times that once he passed significant health care reform, Barack Obama came to "own" the health care...

Pipeline or Pipe Bomb?

AP Images/The Tyler Morning Telegraph/Sarah A. Miller
Chances are that you missed the State Department releasing the final environmental review of the Keystone XL pipeline last week. You were meant to: it came out on 4pm on the Friday before Super Bowl Sunday. The mainstream media only had a few moments to glance at the executive summary—the report itself is an un-skimmable eleven volumes long—before the news cycle moved onto the big game. But if you live or work in Washington, D.C., and take the Metro , you may well have been assailed for months by Canada's multi-million dollar advertising blitz promoting the pipeline. Commuters are being treated to homey images of happy little girls poking their heads out from behind the American and Canadian flags, side by side, and to awkward slogans like "America and Canada: Standing together for energy independence." The commuters the ads are targeted at are the people involved in deciding whether to approve TransCanada Corporation's application to build a pipeline that would carry up to 830,000...

Frankly Scarlett, You Should Give a Damn

AP Images/Gali Tibbon
O utside of being celebrities and having Jewish mothers, Benjamin Netanyahu and Scarlett Johansson aren't usually thought of having a lot in common. But they've been displaying another shared quality of late: the ability to act clueless about the suddenly snowballing economic boycott of Israeli settlements. To be fair, it's a lot more likely that Netanyahu is the one putting on an act. Johansson sincerely appeared to have little idea about what she was getting into when she agreed to be the straw-sipping poster girl of SodaStream, the Israeli maker of home fizzy-drink devices that produces wares in the industrial park of a West Bank settlement. "I never intended on being the face of any social or political movement… or stance," she said in a press statement responding to criticism of her role advertising the firm. This sounds painfully naïve: Nothing having to do with Israeli settlements in occupied territory comes packaged without a political stance, but Johansson may have noticed...

Could Postal Banking Be the Next Big Thing?

This doesn't actually have anything to do with postal banking. It's just awesome. (Flickr/grilled cheese)
It's often said that being poor is really expensive, and one of the most painful ways is what millions of Americans have to pay in order to make sure their bills are accounted for. If you're poor, time and money intertwine in ways that people who aren't poor don't have to worry about. When your income and your expenses are right around the same amount, you have to worry about timing constantly. I'm not getting paid for a week, but this utility bill is due in three days, and I have to set aside enough for food and gas—how should I handle that? If I write my rent check on the same day as I get my paycheck, will the former clear before the latter? For many, the only choice to avoid catastrophes like getting evicted or having your power cut off is going to one of the payday lenders and check-cashing operations you can find in every poor neighborhood. And since those payday lenders know their customers have no other options, they make them pay through the nose. As an analysis by the...

Heat or Something to Eat? New SNAP Rules Might Force Poor Families to Choose

AP Images/Gerry Broome
The Senate is expected to vote on the Farm Bill today , which could reach President Obama’s desk later this week. A new version of the bill, which comes up for reauthorization every five years, has been delayed for two years; Congress has simply been renewing the most recent farm bill for short periods of time while the House and Senate fought over the details in the new one. Most of the fights were over agricultural subsidies, but most of the spending in the $100-billion-a-year bill goes to the program formerly known as food stamps, the Supplemental Nutrition Assistance Program, or SNAP. Participation has more than doubled since the start of the recession—from 20 million every month to about 47 million every month —largely because more people qualify for aid. That has led to attacks on the program from conservatives who said the spending levels were “unsustainable,” and the House of Representatives voted in September to cut food stamps by $40 billion. The Senate voted to cut it by $4...

Why Alt-Labor Groups Are Making Employers Mighty Nervous

AP Images/John Minchillo
Union membership remained steady last year—steady at its near-hundred-year low. A mere 6.7 percent of private-sector workers are union members, as are 11.3 percent of U.S. workers overall, according to figures released last Friday by the Bureau of Labor Statistics (BLS.) Those government union membership statistics, however, don’t capture an entire swath of new, exciting and emerging labor activists—“alt-labor” activists—whom alarmed employers would like to see regulated by the same laws that apply to unions. Yet before we regulate them as unions, shouldn’t we first count them as unions? Consider those striking fast food workers you’ve been reading about, the ones calling for a $15 an hour wage. Their numbers are not counted in the union membership figures. How about those Wal-Mart workers who struck for Black Friday and just won a key court case? Uncounted. What about the day laborers who joined any one of hundreds of workers’ centers nationwide? You got it, not included. Neither are...

Obama Punts on Immigration

AP Photo
AP Photo/Charles Dharapak President Barack Obama gives his State of the Union address on Jan. 28, 2014. I t is easy to overstate the importance of the State of the Union address in defining Obama’s legacy —particularly in an election year, when presidential pressure can become a liability for those running in down-ticket races—but there are at least two areas where progressives say the president should have pushed harder last night: immigration and protections for gay, lesbian, and transgender people in the workplace. The Employment Non-Discrimination Act (ENDA), which would outlaw workplace discrimination against LGBT people, passed the Senate in November but has floundered in the House, where Speaker John Boehner, who has said publicly the legislation is unnecessary, said he will not bring it to a floor vote. Obama made no mention of ENDA last night, and has on a number of occasions downplayed the use of executive action to ensure rights for LGBT workers. The president did, however...

Obama Threads the Needle

For Democrats, for liberals, today’s political climate poses a singular challenge. On one hand, poll after poll shows the public believes the economy is rigged against all but the rich. On the other, poll after poll shows that the same public—particularly after the disastrous roll-out of Obamacare—doesn’t believe government is the answer to the failings of the market economy. Indeed, recent polls show that the public mistrusts big government more than it does big business (which does not mean it holds big business in high, or even middlin’, esteem). Now, there’s precious little that can mitigate the growing inequalities of the current American market other than government and unions. But government is in disrepute and unions, in the private sector, have all but vanished. To his credit, President Obama not only knows this but has on occasion delivered robust defenses of government’s ability to counteract the structural deficiencies of the market through programs like Social Security,...

The Six Constituencies the State of the Union Actually Mattered To

AP Images/Charles Dharapak
AP Images/Charles Dharapak I t was a strange State of the Union Address—mixing emotional tugs on the heartstrings with anodyne rhetoric that made it seem like everyone from Barack Obama to the angriest Tea Party Republican was bored with the annual exercise. The speech had no over-arching theme save (yawn) America’s enduring greatness. There were hard-hitting sentences and paragraphs, but no dramatic policy proposals nor even bold, if unattainable, dreams. The State of the Union address was unlikely to anger anyone whether it was financial titans fearing economic Kristallnacht or Bashar al-Assad. For all of Obama’s rhetorical gifts, it was another speech that was mangled beyond recognition by the State of the Union sausage grinder. Before the speech, the agony of White House wordsmiths struggling with the State of the Union was memorably captured by Jeff Shesol, a Bill Clinton alum, who described the standard text as “written by a flash mob—a sudden aggregation, inside and around the...

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