On
Iran and Vendex, Sudan to No Bid Contracts, NYC Comptroller
Candidates Square Off
By
Matthew R. Lee
NEW
YORK, August 19 -- Veering from issues of no bid contracts and
corporate background checks, four candidates New York City
Comptroller were asked by Inner City Press on Thursday morning if in
investing City funds they would bar or penalize companies engaged in
predatory
lending, or which do business in Sudan, Sri
Lanka, Burma or
Iran. This being NYC, and all four candidates Democratic members of
the City Council, the answers ranged from "yes" to "of
course," with a few differences.
Melinda
Katz said
that seven years ago, she proposed such a ban on companies "having
anything to do with Hamas or Hezbollah." She added that when
current Comptrollers Thompson and DiNapoli proposed divestment
regarding Sudan and Iran, she applauded them. All four which she
named are Islamic, unlike
Burma and Sri Lanka were which asked about
but ignored.
John
Liu also
avoided mentioning the two Asian countries, along he answered
generically about human rights violators. He expanded the question to
companies with abusive human resources practices, and those which
took Federal bailout funds and still pay huge bonuses to their
executives.
David
Weprin said
he was an early proponent of divestment in Sudan and Iran, based on
genocide and terrorism respectively. He cited the precedent of the
campaign against apartheid. He also reminded the audience that under
Mario Cuomo he was a deputy superintendent of banks for New York
State, and required in-state checks to clear in three days.
David
Yassky, who
began the morning's debate by touting his endorsement by Felix
Rohatyn, said he sponsored a ban on Sudan, and co-sponsored one on
Iran. He said that the City should invest in companies whose
profitability came from such places. As such, at least he admitted
all moral decisions cannot be defended as economically best as well.
Similarly, to an audience of human services professionals, he said
that he is against member items in which Council members direct funds
to specific groups.
Candidates Weprin, Liu, Yassky and Katz on 8/20/09,
(c) M.R. Lee
The
event, held in
the auditorium of PricewaterhouseCoopers on Madison Avenue, was
co-sponsored by the United Way and the Human Services Council, and
the other questions were focused on how slow the City is to disburse
contract awards to non-profits and how burdensome the City's VENDEX
background check is. John Liu joked that the audience seemed tired
because they'll stayed up the night before filling out VENDEX forms.
There was polite laughter and then the event was over.
Footnote:
back in December 2007, Inner City Press put a similar question to
Adolf Carrion, who had just announced he would run not for Mayor but
Comptroller. Carrion said he would "also take into consideration
the return for pensioners" -- click here for that story.
* * *
Predatory
Lending Persists, Despite Rosy Views from DC,
Citi's Dark Side in Knoxville
By
Matthew R. Lee
SOUTH
BRONX, August 1 -- In Washington and New York, there is talk of an
uptick in the national housing market and a curtailment of
controversial subprime lending by such wounded giants as Citigroup.
On July 31, Inner City Press asked the
International Monetary Fund
about the regulation of subprime lending in the United States,
yielding a rosy answer
about consumer protection.
But a mortgage
broker in Knoxville, Tennessee long known to Inner City Press tells a
different story on both fronts. He has in the past been sued for
whistleblowing about Citigroup, and so will remain nameless in this
article. But he knows Citigroup's subprime business well, having
worked for and then against its consumer finance subsidiary
CitiFinancial.
Reflecting
the
collapse of the housing market, he compares 2006, when he closed over
100 home purchase loans, with the year to date 2009, in which he has
closed only six such loans.
His
income
from fees has plummeted, and
he faces a car repossession by Wells Fargo (which he calls Hells
Fargo). Still he laments others' problems more than his own,
describing to Inner City Press a sample CitiFinancial loan in
Knoxville.
"They
raked
her at twelve and a half percent," he said, referring to a 63
year old African American woman who was also charged $7,000 in fees.
"This is after they took TARP bailout funds, they won't show any
flexibility and she's about to lose her house."
He describes
another borrower who has a $1700 personal loan from Citifinancial at
25.5% interest, and a $6,000 loan at 16% from Washington Mutual
Finance, which CitiFinancial bought. The loans were consolidated at
the higher CitiFinancial rate of 25%. "They're still up to their
predatory lending," the maverick broker says. Even with the
go-go years over.
\
CitiFinancial storefronts offer 25.5% loans, IMF and regulation not
shown
On
July
31, Inner
City Press asked the
Western Hemisphere Division Chief of the
International Monetary Fund Charles Kramer about U.S. regulation of
subprime lending, current and proposed:
Inner
City Press: What do you think of the proposal by the Obama
Administration of the economic effect of separating prudential
regulation of banks from consumer protection? It's pending in the
House. I was told that the IMF will have some view on that and you
are the guys to ask. What can you say to that?
MR.
KRAMER: There are two observations we'd make on that. First of all,
the key principle is that prudential regulation needs to be
strengthened and be uniformly strong across the board, and a clear
message coming out of the crisis is that prudential regulation needs
to be enhanced significantly. Part of your question goes to an
organizational issue, and looking around the globe we see financial
supervision and regulation organized in a number of different ways.
In some places we see it organized along functional lines where you
have regulators for insurance companies and securities companies
individually and so forth, and in some countries we have regulation
along conceptual lines you could say, so you have prudential
regulation and consumer and investor protection regulation. We're not
of the view that there is any one sort of magic bullet or any one
formula for this. Again the key thing is that you need strong and
sound prudential regulation across the system.
Inner
City Press: To the degree that unregulated subprime lending in some
cases by bank affiliates at least triggered or started the rumblings
of this. What protection do you think should be in place so that that
doesn't happen again?
MR.
KRAMER: Again I think the issue is that you need strong prudential
regulation across the board. Consumer products are obviously one
area, but there are a lot of others. You mentioned nonbanks, for
example. We think it's very important that the administration has
proposed to bring nonbanks under a stronger regulatory net to the
extent that they're systemic, so we think that the proposal in
particular to designate certain banks and nonbanks as tier one
financial holding companies that would come under stronger regulation
is a very good thing.
Whether
these
moves will help people for example in Knoxville with 12.5% mortgages
and 25.5% personal loans from CitiFinancial remains to be seen.
* * *
Bank
of America, Moving to Close 600 Branches, Blames Merrill Lynch Deal,
Regulators Conflicted
By
Matthew R. Lee
NEW
YORK, July 28 -- Bank of America's government subsidized takeover of
Merrill Lynch will now lead to the closing of 600 neighborhood bank
branches, it emerged on Tuesday. B of A spokesman James Mahoney said,
"'what we are heading to is a model where we have fewer but more
robust branches that incorporate the investment and mortgage services
that we have picked up with the acquisition of Merrill Lynch'...
People are accessing their money in new ways and have less need for
the traditional neighborhood branch."
But
is this lesser
need for bank branches true in the lower income communities of color
which Bank of America claims to care about? If anything, it has been
the lack of bank branches with normally priced credit which drove
residents of such neighborhoods to the subprime lenders, many of them
funded and enabled by Bank of America, which set off the financial
crisis. Click here
for an Inner City Press story on B of A's subprime ties.
As
Bank of America has fallen under financial, regulatory and finally
Congressional pressure, it has been jettisoning its stance on the
Community Reinvestment Act. In April of this year, and still
unexplained by Bank of America, B of A chief financial officer Joe
Price told stock analysts on
a
recorded conference call that while "CRA" loans are only 7%
of B of A's portfolio, they were 24% of their losses. Click here
for
audio, Price made his statement at Minute 26:25.
Price's name shows up in the contexted
e-mail chain about the
government's pressure on Bank of America's top officials, using their
desperation to keep their jobs and perks, to consummate its
subsidized takeover of Merrill Lynch.
B of A (and Merrill), 600 branch closings not yet
shown
Now that acquisition is cited
by Bank of America as a reason they will move to close down
neighborhood bank branches and consolidate into larger facilities
with Merrill's investment services, presumably in more affluent
areas.
Would the same regulators who pushed Bank of
America to close
the Merrill acquisition credibly constrain B of A from the branch
closings the bank says flow from the deal?
Inner City Press on Geithner (video stream) click
here
, 
