June 2, 2012 Bank Action Move Your Money!
We will picket on McHenry Ave with signs urging people to move their money to community banks and credit unions, and to stop home foreclosures. We will be handing out fliers telling people why we are picketing BofA and instructions on how to move their money, and a list of local banks and credit unions that can use instead for their banking needs.
Bank of America branch on McHenry Ave. south of Sylvan Ave. in Modesto, CA
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STOP FORECLOSURES
Foreclosures are destroying our nation’s economy. In many instances foreclosures may be proceeding unlawfully. Many other states are enacting laws to insure that foreclosures are legal and proper and in several instances suing the major mortgage banks to set things right. Sadly, California is doing little to insure legal, proper foreclosures. Together, we can change that. Nevada recently passed a law requiring Trustees to file an affidavit of authenticity for each foreclosure. This has delayed 97% of the foreclosures.
We are a grass roots organization trying to help people with foreclosure. We do not charge a fee. If you are facing a foreclosure, we can:
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Review your documents for signs of fraud
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Assist in preparing letters or other steps to delay the sale
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Help homeowners work together to gain the same rights as homeowners in other states
Join us at the Modesto Peace Life Center, 720 13th Street, Modesto on Tuesday evenings at 5:30 or Friday evenings at 6:00
WE ARE NOT ATTORNEYS
WE CANNOT GIVE LEGAL ADVICE
You may contact us athttp://www.occupymodestoca.org/
Occupy Modesto Foreclosure Group Successfull in Stopping Foreclosures
Hi All,
As of April 6th, Occupy Modesto, the foreclosure group has sent out three Demands for the Note letters. Of those three, they have all been successful. All three have gone to different servicers and agents. All three have also been from different Counties. One was 4 days before the Auction. And all three have gotten the auction dates moved forward.
The next phase of all three will be coming up. That phase will be where there is action taken to make the servicer prove that they have the standing to do a foreclosure. Wish us luck here.
Paul
Occupy Groups from Sacramento to Merced Foreclosure Forum 2012: CJ Holmes Presenter
Sacramento attorney and activist David Mandel presentation from Occupy Modesto March 11, 2012 Foreclosure Forum
National Union of Healthcare Workers: Picket and Strike in Modesto CA January 31 2012
FDR’s Second Bill of Rights
In a speech during WWII President Franklin Delano Roosevelt proposed a Second Bill of Rights. When people ask “What does occupy want?” you can use these concepts to help them understand what we want.
The right to:
1. a useful and remunerative job
2. to earn enough to provide adequate food, clothing and recreation
3. for every farmer to raise and sell his products at a return that will give him and his family a decent living
4. of every businessman, large or small to trade in an atmosphere of freedom from unfair competition and domination by monopolies at home or abroad
5. to adequate medical care and the opportunity to achieve and enjoy good health
6. to protection from the economic fears of old age, sickness, accidents and unemployment
7. the right to a good education
All of these rights spell security. If there is not security here at home there cannot be lasting peace in the world.
To see his speech enumerating these rights, go to FDR’s Second Bill of Rights which is on YouTube.
Credit Defaults Swaps Explained - From Occupy Foreclosures NW Washington
Credit Default Swaps
I’ve had a couple of requests for an explanation of credit default swaps. I’m not sure I can improve on the discussion in the second This American Life episode in our Radio shows section, but I’ll give it a shot.
A credit default swap (CDS) is a form of insurance on a bond or a bond-like security. A bond is an instrument by which companies raise money. A company, say GE, issues a bond with a face value of $100 and a coupon of, say, 6%. This means that if you hold the bond, they will send you $6 per year (6% of $100) until the bond matures (say in 10 years); at they point, they will pay you $100 (the face value). To buy that bond, you pay them about $100. If you pay exactly $100, the yield is 6% ($6 divided by $100). If you pay less, the yield is more than 6%. How much the bond actually sells for depends on how risky you think GE is (the chances that they will go bankrupt and won’t pay you) and on what interest rates you can get for other, similarly-risky bonds in the market. Bond-like securities, like CDOs, are similar in these basic respects.
When you buy a bond, you are taking on two types of risk: (a) interest rate risk and (b) default risk. Interest rate risk is the risk that interest rates in general will go up. If interest rates go up, the value of your bond goes down (bonds are traded in the secondary market), because you are still only getting $6 per year. Default risk is the risk that the bond issuer goes bankrupt and doesn’t pay you back. A CDS is called a “swap” because you are swapping the default risk – but not the interest rate risk – to another party, the insurer. The bond holder pays an insurance premium – typically quoted in basis points, or one-hundredths of a percentage point, per year – to the insurer. In exchange, the insurer promises to pay off the bond if the issuer goes bankrupt and fails to pay it off. At the time the CDS goes into effect, the expected value of the premium payments (a small amount every year) should exactly equal the expected value of the insurance payments (a large amount, but only if the issuer defaults).
This sounds pretty simple, right? So how did CDS become a dirty word? There are two main wrinkles to be aware of.
First, in order to buy a CDS (I call the bondholder in the above example the “buyer,” and the insurer the “seller”), you don’t actually have to own the bond in question. These are over-the-counter derivative contracts, which means they are individually negotiated between buyers and sellers. As a result, CDS became the tool of choice for betting on the likelihood of a company going bankrupt. If you thought the chances of company A going bankrupt were higher than everyone else thought they were, you would buy a CDS on company A. Three months later, when everyone else realized company A was in trouble, the market prices for CDS would have gone up, and you could either sell your CDS to someone else at the higher price, or you could sell a new CDS at the higher price. (In the latter case, you still have your original contract, and you write a new contract with a new buyer.) As a result, there are a lot of CDS out there; estimates are generally around $60 trillion, which means the total face value of the bonds insured is $60 trillion.
Second, CDS are not regulated, and in fact there was a measure inserted into an appropriations bill in December 2000 that blocked any agency from regulating them. Traditional insurance, by contrast, is highly regulated. Insurers have to maintain specific capital levels based on the amount of insurance they have sold; certain percentages of their assets have to be investments of specified quality levels; and, for personal insurance and workers’ compensation at least, private insurance companies are generally backed up by state guarantee funds, which charge a percentage of all insurance premiums and, in exchange, pay off claims for bankrupt insurers. The CDS market had none of that, so a bank could sell as many CDS as it wanted and invest the money in anything it wanted.
So, 2008 rolled around, and bonds started going bad. There were CDS not just for traditional corporate debt, but also for mortgage-backed securities, CDOs, and secondary CDOs. During the boom, when everyone was optimistic, CDS for these exotic products were cheap; when they started failing, the price of CDS shot up, and anyone who had sold these swaps was looking at losses on them. So CDS were one way that losses on subprime mortgages triggered writedowns at other financial institutions. This only got worse as banks, such as Bear Stearns and Lehman, started failing, and people who had sold CDS on their debt faced even larger losses. So the most basic problem with CDS is that the insurers selling them (and many of the companies selling them were not insurance companies) sold them at excessively low prices, and now they are facing major losses.
Second, you have the risk that the insurance companies won’t be able to pay. If a financial institution – say, AIG – sold a lot of CDS based on the debt of a particular company – say, Lehman – there is a risk that it won’t be able to honor all of those swap contracts. In that case, their counterparties – other banks – may be looking at losses they thought they were insured against. If Bank B bought a CDS from Bank C on the debt of Company X, and Company X defaults, Bank B thinks it has a payment coming to it from Bank C; but if Bank C doesn’t have the cash, Bank B won’t get its payment. Even worse, let’s say Bank B bought a CDS from Bank C, and then sold a different one to Bank A. Bank B thinks it is perfectly hedged, and Bank A thinks it has a payment coming. But if Bank C can’t pay out, Bank B may not be able to pay Bank A – and these chains can go on and on and on. So CDS are one of the things that create uncertainty in the banking sector; a bank may look healthy, but it may be counting on CDS payouts from other banks that you can’t see, so you can’t be sure it’s healthy, so you won’t lend to it.
The cumulative effect of CDS is to spread risk, which sounds good, but to spread risk in unpredictable and invisible ways. One of the major reasons why the government refused to let AIG fail – one day after letting Lehman fail – was that AIG was a large net seller of CDS, and if it had defaulted on those swaps no one could predict what the implications would be for the rest of the financial sector. At this point in the financial crisis, it would be a mistake to blame the whole thing on CDS, but they have had the effect of amplifying and spreading uncertainty in ways that have reduced confidence in the financial sector.
