Sonoma County Bankruptcy Lawyer Blog

After months of Republican resistence to the appointment of Richard Cordray as head of the Consumer Financial Protection Bureau, President Obama used to Congress' winter recess to appoint him in a recess appointment. Republicans had been trying to stop the appointment by having pro forma sessions, sometimes lasting only a minute, to establish that Congress was not "formally" in recess, according to Reuters.

Now, a legal battle may ensue as the ultra-pro-business U.S. Chamber of Commerce threatens to take the U.S. to court over the appointment. The White House says Congress is in recess as long as it is not performing legislative business.

Even if Cordray's appointment is not challenged in court, business and finance plan to challenge the Dodd-Frank financial regulatory law passed in the aftermath of the economic collapse, one industry insider said.

"The issue is not so much Cordray, or whoever is the director, but the CFPB itself and some of the powers it has been given under Dodd-Frank," said Bert Ely.

That's exactly the sort of attitude that drives the Occupy movement and middle-class outrage at banking's refusal to be regulated.

Occupy Petaluma is lauding the announcement of a holiday moratorium on foreclosures,
The Press Democrat reports. Fannie Mae and Freddie Mac announced a two-week halt to actual evictions, from Dec. 19 to Jan. 2.

CNN reports that the Big Banks will also hold off on foreclosure evictions during the period, although as always with banks there is plenty of wiggling.

Chase was the only major bank to commit to a full ban on evictions. Both Wells Fargo and B of A said they would not evict on their own loans but would still proceed when they are the servicers of other loans.

The foreclosure mortatorium is something Occupy movement across the state have been pushing for. Notes Steve Scauzillo in the San Gabriel Valley Times:

"Occupy leaders now demand: a moratorium on all foreclosures; a re-examining of complex laws that clearly favor banks; courts to examine foreclosure documents, many of which they say are fraudulent or in error.

"In California, banks don't have to prove they own the property and the judge will grant an eviction. This is so wrong," he said.

Bringing fairness to foreclosure evictions is a worthy battle for the Occupy movement, far more than occupying city parks all winter.

Well, today was Black Friday and everyone's interested in how much consumers are spending. Consumer spending is of course good for the economy, but is it good for individual consumers. If you're trying to beat back debt or save money for college or retirement or just cover the bills, getting hooked into the purchase of stuff may not be such a great idea.

The Occupy people were bringing that message to the malls today - with mixed results. It's not clear, for instance, how not shopping at Macy's helps education, as this protester said, as reported by ABC

"I see how the education deficit directly affects the schools; how the teachers struggle with so many kids in the classrooms and a lack of books. It's not fair to this generation."

There is a basic connection between giving money to corporations and struggling with debt - it's the mindset that tells us we have to have what they are selling, whether that was a home loan or a new car or a 47" TV. So there is a lot of virtue in Buy Nothing Day, but it's important that protesters don't make shoppers feel like criminals.

Down the street from Macy's massive store on Union Square in San Francisco, shopper Celia Collins of New Orleans said she worked hard to earn her MBA and pay off her student loans. She had every right to enjoy Black Friday, she said, and the protesters would be better off working within the system to find jobs and support the economy.

"I think they're a bunch of ... crybabies," said Collins, clutching her shopping bags as she watched the protesters march down Stockton Street. "I don't begrudge them the right to do it, but I just don't think they've really very smart."

Way back when, a few months ago, Santa Rosa City Hall was the focus of a huge Occupy rally and march - the sixth largest in the country. It was a middle-class affair - my friends and I were there - filled with a happiness that people had been moved to come and protest and speak out. Here's a pic from that day:

After the rally, Occupy Santa Rosa organizers vowed to occupy City Hall. They did.

But anyone who has driven past the encampment, as I do every day, since CalTrans has been tearing up Third Street, can see what the Press Democrat reports today - that City Hall is nothing but a homeless encampment.

It's important, as someone said, that Occupy be a movement that welcomes "my mom." No one's mom wants to be associated with a homeless encampment.

In this piece from the Daily Show, we learn about a couple who owned their house outright but Bank of American tried to foreclose on them anyway. No lawyer wanted their case except a rookie attorney with eight months' experience. They sued the bank and got a judgment for $3,000. When BofA wouldn't pay, they got a writ of execution and went down to the local branch with a sheriff and emptied the place out.

The federal consumer regulator says it's high time for private student lenders to provide transparency into their practices, Reuters reports.

"It has been operating in the shadows for too long," Raj Date, the Treasury Department adviser who is running the Consumer Financial Protection Bureau, said in a release. "Shedding light on this industry will benefit students, lenders, and the market as a whole."

The problem with student loans, from our perspective, is that they are not dischargeable in bankruptcy, and that schools are motivated to sign up students - even very marginal students - since the taxpayers are on the hook when the students default.

But since the debt can't be discharged, students find their financial lives ruined at a very early age, while the schools and the lenders are making out. Call in the Student Loan Bubble.

No idea what changes the agency will recommend or how hard the banks will fight, but any scrutiny is welcomed. But one thing that would make a huge difference is to make student debt dischargeable.

Remember Dippin' Dots - the ice cream of the future? It seems things arent going so well in the future. The company filed for Chapter 11 reorganization today, Bloomberg reports.

The company asked U.S. Bankruptcy Judge Thomas H. Fulton to let it use cash held as collateral for an $11 million loan from Regions Bank of St. Louis. Without using the collateral, Dippin' Dots "will have no ability to operate," the company said in court papers. It didn't file an explanation of the bankruptcy.

Hey, what are dippin' dots anyway? Here's an explanation from the website:

Jones, a microbiologist, pioneered the process of cryogenic encapsulation...a scientific way of saying he used super-cold freezing (read liquid nitrogen) methods to make little beads of ice cream. Not only were the ice cream beads delicious and fun to eat, Jones knew that flash-freezing the ice cream ingredients would lock in flavor and freshness. With those qualities established, Dippin' Dots were ready to take on the world!

So in a perfect example of government patsies covering for their corporate masters, New York Mayor Bloomberg says Occupy Wall Street should Occupy Capitol Hill instead. Check this out:

It was not the banks who created the mortgage crisis, it was, plain and simple, Congress," said Bloomberg to an Association for a Better New York breakfast meeting.

"They are the ones who pushed the banks to loan to everybody and now we want to vilify the banks because it's one target," said Bloomberg.

"It's easy to blame them and Congress is certainly not going to blame themselves."

So, Wall Street didn't want to make all that money pushing bad loans and collateralized instruments! They wanted to be responsible bankers like their fathers, but Congress pushed them into it!

Could be ... or perhaps Congress passed all these laws deregulating Wall Street at the behest of the financial industry lobbyists and think tanks, which comprise after all, the top givers to all presidential candidates, including President Obama.

As The New York Times says:

If Senator John Kerry had won the 2004 election, Chief Justice Roberts and Justice Samuel Alito Jr., conservatives who have led the court to the right, would not be on the court. And last year's devastating 5-to-4 ruling in the Citizens United case would likely not have happened.

The case came to the Supreme Court as a limited question about interpreting a federal campaign-finance statute. In an aggressive act of judicial activism, the conservative majority made the case a constitutional matter and the signature of the Roberts court. Sweeping aside established precedents that had not been challenged and inserting itself into politics, the conservative majority unleashed unlimited corporate and other money into American politics and gave the Republican Party a large advantage in fund-raising.

The Dodgers are in Chapter 11 bankruptcy. As part of the proceedings, Major League Baseball wants owner Frank McCourt removed. And both sides are using Brian Stow - the Giants fan who was beaten almost to death by hoodlums outside Dodgers Stadium - as a symbol of their arguments, the L.A. Times reports.

MLB says the attack on Stow is the inevitable result of McCourt's taking millions of dollars from the Dodgers for personal use: stadium security was sparce, parking lot lighting was inadequate, and the front office was filled with newbies.

The Dodger say Commissioner Bud Selig is stooping low to blame the Dodgers for the Stow attack.

He set about fabricating the public misimpression that security at Dodger Stadium was somehow inadequate. This is, by far, the most unforgivable action taken by the commissioner during this entire saga, and has caused enormous and irreparable harm to the Dodgers, Mr. McCourt and the game of baseball.

That's pretty laughable. It was well known that LA was a dangerous place to watch a ballgame, there had been all manner of incidents before Brian Stow. In my opinion, the Dodgers were well aware of how little security they had out there. Dodgers Stadium was a disaster waiting to happen.

Unfortunately for Brian Stow, it happened to him.

The White House has launched a major expansion of the Home Affordable Refinance Program (HARP), as Reuters reports.

The HARP program had been limited to borrowers whose homes were no more than 125 percent underwater. That made the program of extremely limited usefulness to borrowers who bought at the top of the market only to find their values at half of the mortgage amount.

It should be relatively easy to qualify - just show you made the last six mortgage payments.

And banks may be more willing to participate in loan mods than they were before:

To encourage banks to participate in the revamped program, FHFA moved to protect lenders from having to buy back loans if underwriting problems are later found. "Of all the barriers, this may be the most significant," said Gene Sperling, director of the White House National Economic Council.

It will be interesting to see how this pans out in the real world. The White House says a million people will be helped. In the past, banks have strung borrowers along only to decide they don't qualify. With the rules eased, hopefully that will change, and people with 6+ percent mortgages can at least refi.

But as Lawrence Summers points out - what we really need is to cram down the ridiculous principal balances. It's hard to imagine that will ever take hold but the banks should realize they are to blame for the absurd prices people bought at and that rational people are not going to keep paying on a mortgage that will never come above water again.

So, why does P.J. O'Rourke thinks it's just about bongo drums???

So I attended Occupy Santa Rosa on Saturday and it was thrilling to see some 3,000 people, from hippies to vets, from working class to blue oxfords all carrying the same message. My sign? "Class Warfare Now," which I'll attempt to explain in a bit. First some media reporting (from the Press Democrat):

A Santa Rosa woman who identified herself only as Darcy stood on the corner of First Street to protest the pending foreclosure of her house of 20 years. She and her husband both lost jobs and have been unable to negotiate lower payments, she said.

"I'm fed up. I'm totally fed up," said the woman, who described herself as an independent voter. "It's time to stand our ground."

A retired Santa Rosa teacher, Mauri Wilber, criticized the government for spending money on wars and Wall Street bailouts while ignoring schools.

Handling bankruptcies and tenant-side work, I see the impact of this economy on people first hand. Times are tough. But as the Occupy protests show, people are starting to understand that the very financial institutions that caused the meltdown, through greedy policies that were nothing more than inside-job gambling, are now profiting. At the same time, Republicans are demanding drastic cuts in government programs, and Democrats don't seem to care enough to do anything about it.

Mad as hell and not going to take it anymore? That's about the size of it.

The response is pretty much exactly the reason for Occupy Wall Street - the failure of the Democratic Party - the one that controls the White House to take the pain of the broken economy seriously.

Congressional Democrats met with Obama's housing chief Edward DeMarco last week to demand stronger action on the travesty of underwater homes in California. His response was "tepid and defensive," according to Rep. Anna Eshoo of Palo Alto.

The Dems want to see homeowners able to refinance at today's low interest rates rather than the high rates they originally financed at. That would mean less profits for banks but a huge benefit to the economy at large as hundreds of dollars a month move from mortgage payments to groceries, gas dining and entertainment.

And isn't it possible that many more people paying their mortgages instead of defaulting will be better for the banks than foreclosing?

Congresswoman Zoe Lofgren of San Jose says it won't cost the taxpayers anything. Banks, she says, are another story. "The banks are going to eat a loss eventually," she says. "The question is when." Lofgren says the banking industry's financial hit "has been deferred to the detriment of the American public."

So Occupy Santa Rosa is tomorrow at 2:00 p.m. The parade starts at Sonoma and Santa Rosa Ave. and will march on downtown streets.

The City has denied the movement's request to camp out downtown through Christmas Eve, the Press Demo reports but organizers on Facebook state that "So yeah, basically we aren't "allowed" to camp out at city hall. Contingency plans are being worked out. Don't worry, we aren't going to cancel an occupation ;)"

Not sure what that means but it could be interesting. If you're not getting Occupy Wall Street perhaps some future posts will put matters into perspective.