A wrap-up of stories and posts you might have missed or overlooked — the ones below the fold.
Part 1: Wells Fargo Freezes Bank Account
Back in May I covered Martin Andelman’s article on mandelmanmatters.com about a homeowner committing suicide as a result of Wells Fargo « mistakenly » foreclosing on his home. Andelman’s breaking story went viral. It showed up on Facebook, Twitter and numerous media outlets – it’s probably the most press Wells Fargo has received in a while.
Here we are a couple of weeks later and Wells Fargo has taken action against ML-Implode, who hosts Andelman’s site, by freezing its bank account.
Andelman blogs independently, is not paid by ML-Implode, and ML-Implode does not dictate or control what he writes. If Wells’ actions are in retaliation for the articles, they may have violated federal law USC 47 USC § 230, which forbids holding an internet « common carrier » (such as an ISP, forum, or any sort of hosting outfit) liable for content users post.
According to the post, « ML-Implode Gets ‘Wikileaks Treatment’ As Wells Fargo Freezes, Closes Business Account » (I recommend you read the whole thing):
It is believed that the actions were taken in retaliation for a recent series of articles by ML-Implode blogger Martin Andelman which pulled no punches in criticizing Wells Fargo over its foreclosure practices — in particular the tragic and horrific case of Norm Rousseau who was driven to suicide after Wells Fargo lost a mortgage payment and mistakenly foreclosed on the family’s home, despite a lengthy back-and-forth process which gave the bank ample opportunity to correct the mistake.
In « Wells Fargo Turns Their Stagecoach in to The 4 Horsemen Of The Apocalypse » at MFI-MAIMI, Steve Dibert confirms the claim:
After reading Aaron’s Press release, I contacted my sources at Wells Fargo who told me the same thing this morning.
If Wells Fargo got this riled up over the REST Report, criticism of how they handled the foreclosure and unnecessary death of Norman Rousseau and the testimony of Beth Jacobson about Wells Fargo’s « Ghetto Loans » initiatives that was profiled in yesterday’s Washington Post, I can only imagine what will happen next week when I post about the « special perks » we received in wholesale lending during the boom from Wells Fargo and other lenders.
Stay tuned for that one. Knowing Dibert it should be a fun read.
This isn’t about Wells Fargo freezing the accounts of some drug cartel using the bank to launder money – they actually have no problem with that. Wacovia (at the time a subsidiary of Wells Fargo) helped launder $400 billion in drug money in 2011. This is about Wells Fargo freezing a standard checking account that was used to pay rent, buy food, and pay bills because some sniveling, sanctimonious, cry baby got his feelings hurt and had a tantrum about an article written by an unpaid blogger trying to help homeowners.
Well Fargo has a history of going after businesses helping homeowners and consumers. In 2009, according to another article by Andelman, the bank unilaterally closed the business checking accounts of companies simply because they offered loan modification services.
From the 2009 article, Wells Fargo Closes Accounts if Firms Offer Loan Mod Services:
That is truly unbelievable. Can you imagine if that were happening to any other segment? Like coffee shops… banks don’t like coffee shops… so they can’t take credit cards anymore and we’ll cancel their checking account too. It would be on the news every single night. I’ve been all over the world and I can tell you that I’ve seen some sleazy, clip joint places… hey, I was in the service – so sue me… but they all accepted payment by credit card. But help someone get their mortgage modified so I don’t lose my home to foreclosure and… Oh dear… I’m sorry, no… we simply could not allow that.
It’s not as if they don’t know this sort of behavior makes them look bad, they simply don’t seem to care. Not too long ago, Wells Fargo, wrote in their own 2011 Annual Report, under the « Risk Factors » section on page 108 (emphasis mine):
The reputation of the financial services industry in general has been damaged as a result of the financial crisis and other matters affecting the financial services industry, and negative public opinion about the financial services industry generally or Wells Fargo specifically could adversely affect our ability to keep and attract customers. Negative public opinion could result from our actual or alleged conduct in any number of activities, including mortgage lending practices, servicing and foreclosure activities, corporate governance, regulatory compliance, mergers and acquisitions, and disclosure, sharing or inadequate protection of customer information, and from actions taken by government regulators and community or other organizations in response to that conduct. Because we conduct most of our businesses under the « Wells Fargo » brand, negative public opinion about one business could affect our other businesses and also could negatively affect our « cross-sell » strategy.
Interestingly, in 2010 ML-Implode made case law when they won a case related to free speech in the New Hampshire Supreme Court.
From the Nashua Telegraph reporting on the implications of the case:
The case drew national attention for its potential First Amendment implications. The case also had broad implications in determining who constitutes the media in an Internet age that has blurred the line between traditional news outlets and bloggers or citizen journalists.
Aaron Krowne, ML-Implode.com’s founder and publisher is one of the more respected and well known bloggers in the financial activist community. It’s surprising that Wells Fargo would willingly poke that potential hornet’s nest and risk the backlash from his supporters.
I spoke to Krowne earlier today, and while he, like the rest of us, is loath to ask for help, ML-Implode does have a PayPal donation up on its site that you can find here.
Part 2: Wall Street’s Whining
One of the more noteworthy resignations, at least this year, was that of Greg Smith, who publicly quit Goldman Sachs after twelve years at the firm. He did it in an Op-Ed piece in the New York Times titled, Why I Am Leaving Goldman Sachs.
Of course Goldman and the rest of Wall Street didn’t take that lying down and went with the disgruntled employee meme. « Some employees told Fox Business’ Charlie Gasparino that Smith doesn’t know what he’s talking about because he « never made more than $750,000 a year, » ThinkProgress.org reported. At the very least it gave them something to whine about for a couple of months.
The latest rash of Wall Street whining has to do with them having little time to visit their other homes.
Take this managing director at Goldman Sachs for example; who told CNBC’s John Carney over a few drinks that JPMorgan Chase’s $2 billion trading loss has him so « rattled » the he hasn’t been able to make it to his Long Island vacation home at all so far this summer.
It’s hard not to feel for sorry for the poor guy, considering, « We really haven’t had one good summer since 2006. No one can relax on the beach–again! » Realizing they’re being interviewed and in an effort to redeem themselves a couple of Wall Street women provide the final quote for John Carney’s article:
Oh my God. Are you going to write about investment bankers complaining about not having enough fun while they are sunning themselves in the Hamptons? » she asked. « That’s going to do our image a load of good.
There are fourteen million unemployed people in the country, who according to Rush Limbaugh, have food, cable, cell phones, televisions and are saying, « what more do I need? » Foreclosures have reached astronomical numbers and there’s no end in sight. Pension plans, retirement funds and savings have been sucked dry by Wall Street shenanigans. To make matters worse, according to a CNN article, the average American Family’s net worth has dropped 40 percent as have income levels.
Much of the drop off in net worth — to levels not seen since 1992 — was attributable to a sharp decline in housing values, the Fed said. In 2007, the median homeowner had a net worth of $246,000. Three years later that number had fallen to $174,500, a loss of more than $70,000 on average.
Additionally the article states, « The stunning drop in median net worth — from $126,400 in 2007 to $77,300 in 2010 — indicates that the recession wiped away 18 years of savings and investment by families. »
With most of the average American Family’s wealth in their homes – the one investment we were all led to believe was secure, the best we can hope for, after seeing that investment lose 30-60 percent of its value seemingly overnight, is that someone with the stones to complain about not having enough fun while they are sunning themselves in the Hamptons will take pity on us and grant us a loan modification so that we can move on with our lives. Even if that means working two jobs just to put a roof over our heads and food on the table.
What happens instead is a loan modification with a balloon payment of $200,000 when you’re 100 years old, collecting social security, and working for $9/hr. That’s what happened to Gloria Schrager, a 76-year-old who applied for a modification with JPMorgan Chase.
During the first few years of the housing crisis, banks and other institutions that service loans made life miserable for hundreds of thousands of homeowners who tried — and failed — to receive a loan modification. The institutions lost paperwork, made accounting mistakes and even pushed into foreclosure some homeowners who were current on their payments.
Most of America has little hope of retiring with any dignity and Wall Street is crying because they can’t visit their weekend homes.
Lucky for us, Simon Constable of the Wall Street Journal (a publication not exactly well known for catering to the interests of the middle and working class) has come up with some ingenious solutions for those of us wondering how to survive through our golden years of retirement. It’s a real contender for the « Let Them Eat Cake » award.
In the article, « Beyond the Tried-and-True: Generating Cash in Later Life, » Constable, who has written other noteworthy articles such as « Viacom’s ‘SpongeBob’ Ratings Crisis; Gingrich Officially Exits Campaign » and « Dinosaurs’ Gas May Have Warmed the Air; The Oscars of the East Coast » takes a look at five atypical ways to boost income in retirement, according to the articles subtitle.
There’s the requisite « Don’t forget about preferred stock » advice, which could bring a whopping six percent, but according to Constable carry more risk and could tank if the company went south – scratch that idea.
Tutoring students, Constable figures, could get you, in some cases, $200/hour. That’s assuming, of course, you’re not working in a neighborhood that could actually benefit from your tutelage.
« Rent out a room » is another one of Constable’s suggestion , because there’s nothing a retiree wants more, after 50-60 years of consecutive 60-80 hour work weeks, than to argue with a tenant about who used the last roll of toilet paper.
The number one suggestion in the mercifully short list however is « Grow Trees. » As Constable puts it:
If you live in an area where people routinely burn wood to heat their homes, you might consider buying some woodland. Not only can you use the wood to heat your home, you can sell logs to others.
If you played your card’s right, and are fortunate enough that your neighbors didn’t, you may be able to profit from their misery.
« An awful lot of people in the Northeast use wood for fuel because they can’t afford anything else, » he writes, quoting Robert Maloney a Financial Advisor.
This seems to be his favorite suggestion and he dedicates quite a few paragraphs to the process of growing, harvesting, and cutting trees for profit.
So cozy up to your roommate in front a fire, crack open a can of cat food, and grow some trees. We’re about to live the American dream.