Predatory Lending

Over at The American Prospect, Tim Fernholz provides a thorough rundown of how the financial reform conference committee will work. The whole piece is worth reading. If you don't have time, here's one key point:

The committee will use the Senate bill, with a few House-bill substitutions, as the default working text, which gives an advantage to reformers, since the Senate bill -- which includes the Volcker rule and tough derivatives-reform provisions -- is stronger than the House bill. 

The final bill is likely to be far closer to the Senate version than the House bill, because the unified bill will again need to clear the 60 vote hurdle in the Senate but will only need a simple majority in the House.

Some key points of what is in and what will be debated are below:

Consumer Protection is in and will stay there, but whether it's a standalone Agency (as in the House bill) or a Bureau housed at the Fed (as in the Senate version) is up for debate. The likely outcome is that this hot button issue will hew closely or exactly to the Senate version in order to hold the coalition of Senators necessary to prevent a filibuster. A standalone agency is preferable, but the inclusion of meaningful protection for consumers of financial products looks like it will be one of the major victories of this effort. It's not time to celebrate until the bill is signed into law. Thanks are due to our members who raised their voices in support of it and to all of our coalition partners for getting it this far.

Say on Pay is in as well. There is nothing in either bill that will directly and concretely end the worst excesses of CEO pay and bonuses in the financial industry. Say on Pay is at least a step in the right direction. That's why we started sponsoring a series of Say on Pay shareholder resolutions last year. Our coalition helped to build momentum for the right of shareholder to have a say on the pay of top executives at publicly traded companies. It's good news that Say on Pay is about to become the law of the land for finance.

Derivatives Reform is the hottest topic for the conference committee. The Senate bill includes the Lincoln amendment on derivatives that the banks hate and one of the worlds greatest living economists loves. We know Senator Lincoln (D-AR) best for her disturbing pro-Walton stance against common sense and popular opinion on the estate tax. Her strong amendment on derivatives reform was a pleasant change of pace. Whether it makes it through the conference is one one of the more interesting questions for the bill. Whatever the fate of the Lincoln amendment, it is great news that the requirement that derivates be traded through a clearinghouse will almost certainly make it into the final bill.

More Details: Annie Lowrey has the schedule. And the Washington Post put out a nice summary of some of the differences to be resolved between the House and Senate bills. Mike Konczal has an excellent summary of some keys to what's at stake in the conference committee. 

Photo credit: DavidDubov

The US foreclosure crisis was cause for mass hysteria leading up to the 2008 financial meltdown, and the crisis continues to this day.  Despite that, the mainstream media has recently largely ignored widespread foreclosures and the deceptive and racially-discriminatory financial practices behind many of them.

Being that the housing bubble was the flimsy core of this Great Recession—and it has resulted in the biggest loss of wealth to communities of color in US history, we’d like to see this issue paid all due attention.

Today, we’ve got the good, the bad and the ugly on the foreclosures situation. We’ll start with the ugly so we can end on a high note.

The ugly: Subprime loans were at the epicenter of the initial stage of the foreclosure crisis, and even now, foreclosure rates are holding steady at high levels that are not expected to drop any time soon. Last month, we learned that one-tenth of all US mortgages are delinquent. Of those who’ve managed to hold onto their homes, one in four is “underwater,” meaning they owe more than their house is actually worth (January 2010 data).

Chart h/t Rortybomb

Communities of color are most impacted by this prolonged crisis, because high-cost home lending was racially targeted. People of color—including many who solidly qualified for prime-rate loans—were over three times more likely to receive a subprime loan than whites. Many banks are engaging in loan modifications, but more than 70% of those modifications are leaving homeowners with more to owe on their principal, which increases their probabilities of re-default.

The bad: Most of the moratoria on foreclosures have expired, without an effective solution to the crisis in place. Last year, a bill was brought to the Senate advocating for judicial modification of loan principles (also known as “cramdown”). But the banking lobbyists flexed their too-powerful political muscles, effectively cramming down cramdown and preventing the bill from passing.

Seems grim, doesn’t it? Don’t throw your hands up quite yet.

The good: Effective solutions are out there.  Read more >>

On May 21, the Senate voted to pass an overhaul financial regulations in response to the financial crisis that brought on the Great Recession. The House of representatives passed their version of financial reform months ago. Progress is being made, but the job is far from done.

As you may recall, merely passing the two houses of Congress is not all it takes for a bill to become law (or if you're not from the School House Rock generation, this chart shows the lawmaking process about as clearly as it can be presented). Conference committee to combine the House and Senate version, a vote in the House and votes in the Senate on the unified bill remain before financial reform makes it to the President's desk.

The conference committee schedule has been set in the hope of getting President Obama's signature on a financial reform bill before the July 4th Congressional recess. The first meeting will be this Thursday June 10th. And thanks to the pressure from many reform-minded activists and the public, much of the negotiations will be open to the public and televised. You can watch live at SunlightFoudnation.com with context about committee members top donors.

Whatever the result of the conference committee, the law that emerges will not end the need for systemic reform of the financial industry. The House and Senate bills have many good things in them but leave many of the problems with the financial sector entirely unaddressed. Read more >>

Photo credit: Pan-African News Wire

The Bureau of Labor Statistics released updated unemployment numbers for May 2010, and the story hasn’t yet changed…sort of. Nearly one in ten US workers continue to go without work, but the reality is still more unsettling for people of color.

Unemployment for white workers has fluctuated a few tenths of a point in recent months, and now sits at 8.8 percent. Workers of color, on the other hand, are still weathering unemployment storms of double-digit magnitudes. Latino unemployment fell 0.1% from the previous month to 12.4 percent. And, Black unemployment, despite a one-point drop, is still highest of all at 15.5 percent.

It's worth noting that last month's unemployment numbers are slightly distorted due to a rise in temporary government employment for Census 2010. That aside, we should continue bracing ourselves for a long and rough ride back to full employment.

Treasury Secretary Tim Geithner and others in the Obama administration have said we shouldn’t expect a return to a more stable employment situation for a few years, at best. According to Mr. Geithner:

“The worst is behind us...However, the country faces significant and ongoing challenges: high unemployment, the need to build a new and stable foundation for prosperity in the years and decades ahead, and a medium- and long-term fiscal situation that could ultimately undermine future job creation and economic growth.”

Challenges to come, absolutely. But the worst being behind us? That has yet to be seen.

Read more >>

UFE's seventh annual Martin Luther King, Jr. Day report has finally arrived! State of the Dream 2010: Drained - Jobless and Foreclosed in Communities of Color explores the U.S. racial economic divide in the wake of the Great Recession and spotlights a targeted policy approach as the best way to close that divide and rebuild our economy. Read the report now!

"What do you call a society that in a period of crisis leaves its weakest to fend for themselves, while rushing to the aid of its most powerful? The United States." Daniela Perdomo writes about the current racial economic divide in the US, citing UFE's new State of the Dream 2010 report, on AlterNet.

UFE's seventh annual State of the Dream report, this year entitled, Drained: Jobless and Foreclosed in Communities of Color, sheds light on the question of who is right about how to better support our Black communities - President Obama or the Congressional Black Caucus?

UFE supports the Congressional Black Caucus' actions to ensure that financial reform also address the crises of unemployment and homeownership in communities of color. UFE's Brian Miller states, "With so much of the economic recovery legislation focused on the financial services industry and Wall Street, it's a welcome breath of fresh air to see someone stand up for [those] trying to find decent work and hold onto their homes."

UFE's Mazher Ali & Sarah Burris of Future Majority to co-lead a discussion on the impacts of the economic crisis on the housing market at the 2009 A Better Deal conference hosted by Demos.