Crime and No Punishment

First Known Bank Malfeasance of the Week:

With the $25 billion attorneys general settlement, banks are supposed to reduce the principal and interest on thousands of mortgages that are in trouble. When they do this, they get credit towards their portion of the settlement obligation. Leave it to the banks, however, to find a way to maximize their credit while minimizing the help they give to families in need. Let’s say a family has a first and second mortgage. If the first mortgage goes into foreclosure, the banks will get the house, but they’ll rarely collect on the second mortgage. Knowing this, the banks are forgiving the second mortgage, thereby getting a credit towards their settlement obligation, then foreclosing on the first mortgage and taking the home. According to attorney Elizabeth Lynch, “The second mortgage forgiveness is basically a loophole, which allows the banks to continue foreclosures unabated.”

Second Known Bank Malfeasance of the Week:

The lead, front-page story in Sunday’s (Feb. 24) NY Times reveals the connection between our country’s largest banks — JP Morgan Chase, Bank of America, and Wells Fargo — and the online payday loan industry. Although these banks don’t make the loans, “[T]hey are a critical link for the lenders, enabling the lenders to withdraw payments automatically from borrowers’ bank accounts, even in states where the loans are banned entirely. In some cases, the banks allow lenders to tap checking accounts even after the customers have begged them to stop the withdrawals.” Payday loan companies, of course, prey with usurious interest rates on those whose financial circumstances are the most fragile: people who cannot make it from one paycheck to the next.

So how usurious are these interest rates? Try 584% (Advancemetoday.com), 730% (Loanshoponline.com), and 1,564% (Sureadvance.com). Here’s what’s in it for the big banks: If the borrower’s account is overdrawn, when an automatic payment occurs, the bank collects penalties and fees. When the borrower tries to close his/her account, the bank refuses and continues to collect overdraft fees. The banks are making a killing off the dispossessed.

With shell corporations in Grenada, the Bahamas, and Malta, these online corporations represent capitalism’s sleazier side. But even given the fees and penalties why would Chase, BofA, and Wells Fargo — the refined, Ivy League pillars of finance capitalism — sully their reputations by getting into bed with such lowlife? One common explanation is greed. But is greed all there is to it?

Capitalism:

The dominant economic system that characterizes today’s world economy is capitalism. About 500 years ago when it began evolving out of feudalism, capitalism was in its infancy, starting its rise as the main mode of production in the early 1800s. Before that there were combinations of mercantilism, feudalism, and slavery. A definition of capitalism and its laws of motion could take volumes (at least three), but in the very simplest terms it is a mode of production where there are two main classes of people: those who own and manage the big corporations and banks (i.e., the capitalists); and those who work for the corporations and create value and wealth (i.e., the workers). The goal of the capitalists is to accumulate profit; so they can reinvest this profit into their companies to make more profit. (The capitalists also use the profit to buy themselves mansions, yachts, and jet planes, but these baubles represent only a fraction of the total profit produced.) Because of competition, capitalists must constantly be reinvesting their profit, replacing workers with new and better machinery in order to reduce their costs to get an edge on their competition, creating chronic unemployment. If they don’t, their competitors will put them out of business.

If a capitalist decides s/he has enough money and sells his or her company or retires, then that person is no longer a capitalist. Capitalists are those who continually accumulate more and more profit to reinvest. In other words, capitalism demands unlimited growth. And given what we know about climate change, it also demands unsustainable growth.

When the accumulation of profit is society’s reason for being, nothing stands in its way, especially not the government, which is bought and paid for by the capitalists. When the accumulation of profit is the be-all and end-all, nothing else matters, not the people, not the water we drink or the air we breathe, not even our planet.

The bankers are greedy, but we don’t want to suggest we could improve matters by merely replacing the greedy CEO’s with socially conscious bankers, corporate board members, politicians, etc. For the problem is not greed, but our political-economic system. Until we change our society from one based on profit to one based on human need, our lives — and the planet itself — will suffer.

Upcoming Actions:

• Mar. 1, Friday, 5:30 PM: Candlelight Vigil: In front of Jeremy’s South Park home (725 S Henderson St, Seattle). This will also serve as preparation for an anticipated eviction blockade.