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The Subprime Mess and Phil Gramm: An Experiment in Deregulation

Paul Kiesel — Tue, 24 Jun 2008 16:12:58 GMT

In 1933, a few years following the stock market crash, Congress passes the Glass-Steagall Act, in hopes that regulating banks will help prevent market instability, particularly amongst Wall Street banks. The purpose of the act is to separate commercial banks that focus on consumers from investment banks, which deal with speculative trading and mergers.

The Glass-Steagall Act provided the proper oversight and entity separation that would prohibit banks and other financial companies from merging into giant trusts (conflict of interests) -- giant trusts or corporations being more powerful, naturally, and having the seemingly limitless capital to lobby their corporate interests, however, with a very myopic scope (particularly when it comes to factoring in potential losses -- most banks, as seen in contemporary times, chose not to anticipate losses in the mortgage market; they presumed home prices would continue to appreciate).

In 1999, former Senator Phil Gramm (who is, incidentally, Senator John McCain's economic adviser and cochairs his presidential campaign) set out to completely gut the Glass-Steagall Act, and did so successfully, replacing most of its components with the new Gramm-Leach-Bliley Act: allowing commercial banks, investment banks, and insurers to merge (which would have violated antitrust laws under Glass-Steagall). Sen. Gramm was the driving force behind the Gramm-Leach-Bliley Act, as he had received over $4.6 million from the FIRE sector (Finance, Insurance and Real Estate donations) over the previous decade, and once the Act passed, an influx of "megamergers" took place among banks and insurance and securities companies, as if they had been eagerly awaiting the passage of Gramm's Act. Everything in between Glass-Steagall and Gramm-Leach-Bliley (i.e. Savings and Loan crisis/bust) was, in large part, the incubation period for what would take place over the nine years that would follow the passage of Gramm's Act: an experiment in deregulation.

Shortly after George W. Bush was elected president, Congress and President Clinton were trying to pass a $384 billion omnibus spending bill, and while the debates swirled around the passage of this bill, Senator Phil Gramm clandestinely slipped a 262-page amendment into the omnibus appropriations bill titled: Commodity Futures Modernization Act. It is likely that few senators read this bill, if any. The essence of the act was the deregulation of derivatives trading (financial instruments whose value changes in response to the changes in underlying variables; the main use of derivatives is to reduce risk for one party). The legislation contained a provision -- lobbied for by Enron, a major campaign contributor to Gramm -- that exempted energy trading from regulatory oversight. Basically, it gave way to the Enron debacle and ushered in the new era of unregulated securities. Interestingly enough, Gramm's wife, Wendy, had been part of the Enron board, and her salary and stock income brought in between $900,000 and $1.8 million to the Gramm household, prior to the passage of the Commodity Futures Modernization Act.

In 2003, Gramm left the Senate to join UBS, which had acquired investment house PaineWebber due to his deregulation bill. At UBS, Gramm lobbied Congress, the Fed and the Treasury Department. During Gramm's tenor at UBS and as a lobbyist, Congress passed the Responsible Lending Act, billed as an anti-predatory-lending measure, but was called the "Loan Shark Protection Act" by consumer advocates, as it was designed to preempt stronger state laws against anti-predatory lending. The Fed largely ignored the underlying and growing problems within the subprime mortgage/housing markets, as Bernanke famously acknowledged the housing market in April, 2007 as, "[showing] signs of softening," but said that a "sharp slowdown," is unlikely. Then, according to Mother Jones magazine, Henry Paulson became the Treasury Secretary in July, 2007, when, "In 2005, [at] Goldman [he] securitized $68 billion in residential mortgages and $23 billion in 'other assets' primarily related to CDOs," (Mother Jones, August, 2008). With such self-interest, and a lack of the nation's interest, we can see how this subprime mess was allowed to escalate to such great proportions.

Some justice was served, however, this spring, as UBS became one of the subprime debacle's biggest losers, having to write down $37 billion -- the same amount as their previous four years of profits combined. UBS also made the public aware that two-thirds of its losses were due to reckless investing in collateralized debt obligations (CDOs).

Now, Gramm has a second chance of extending his out-of-touch and ill-performing policies, as Senator John McCain appointed Gramm to be his "economic expert" and cochair of his presidential campaign, last year. Also, it is likely that if Senator McCain were to win in November, Gramm would be our next Treasury Secretary, which means more of the same deregulatory mess and the continuation of failed and insidious economic policies.

Originally posted at InjuryBoard by Paul Kiesel

FBI: Beware of Loan Modification Scams

Paul Kiesel — Tue, 28 Oct 2008 16:08:26 GMT

According to the Justice Department, San Joaquin Valley has been a hotbed for loan modification scams, as cities like Stockton, Modesto and Merced top the foreclosure rankings among cities nationwide.

Last week, Representative Dennis Cardoza (D-Modesto), urged Attorney General Michael Mukasey to investigate mortgage-reduction schemes that are being marketed to distressed homeowners throughout the Valley.

Most of these scams ask homeowners for an upfront fee in order to start a loan modification program. At best, the homeowners may end up paying for work that is completed by the group asking for the money, however, it's work that likely could have been done for free through other non-profit organizations or loan-modification assistance programs (i.e. Community Housing Council, a non-profit based in Fresno). At worst, the homeowners pay for work that isn't done at all.

Cardoza wrote to Mukasey that it was "imperative" that law enforcement authorities "crack down on these foreclosure scams quickly and comprehensively. Cardoza pointed out that San Joaquin Valley residents are particularly vulnerable because of the region's foreclosure crisis.

The scams are typically initiated over the phone or through the mail, however, the people running the scams sometimes show up at the homes they're targeting. The companies will then offer the distressed homeowner their services to renegotiate the mortgage in exchange for an up-front fee amounting to one month's mortgage payment or more.

Just last week, in Modesto, "some homeowners attended a workshop in which they were asked to pay $3,500 for getting their mortgage woes resolved," (San Jose Mercury News, 10/27/08).

The FBI is aware of this problem, as they report to having 1,569 pending mortgage fraud investigations open as of last month. However, it is clear that number will rise and more resources will need to be poured into combating mortgage fraud, as incidences of it has annually doubled between 2003 and 2007.

The FBI has also been taking some flack recently due to their late arrival to all of the rampant mortgage fraud that's been taking place over the last couple years, but part of that is due to the agency not having enough agents to cover the continuing spread of mortgage fraud, as the housing and foreclosure crisis gets worse. The bureau slashed its criminal investigative work force to expand its national security role after the Sept. 11 attacks, shifting more than 1,800 agents, or nearly one-third of all agents in criminal programs, to terrorism and intelligence duties. Current and former officials say the cutbacks have left the bureau seriously exposed in investigating areas like white-collar crime, which has taken on urgent importance in recent weeks because of the nation’s economic woes.

Originally posted at InjuryBoard by Paul Kiesel

Message to Archbishop Joseph F. Naumann: Leave Gov. Kathleen Sebelius Alone

Paul Kiesel — Tue, 10 Mar 2009 16:15:20 GMT

Archbishop Joseph F. Naumann of Kansas City has been spewing his vile opinions in regards to President Obama's selection of Kansas Governor Kathleen Sebelius as the Health and Human Services secretary nominee with several media outlets this week. These opinions include: being openly, however, unfairly critical of the governor and her political party (i.e. Vice President Joe Biden, California Senator Nancy Pelosi, etc.), suggesting her political and social views are evil or wicked ("Such acts [abortion] are judged to be intrinsically evil..."), and he has called for the Catholic Church to deny Governor Sebelius communion.

First, Archbishop, Governor Sebelius has maintained that her Catholic faith is the basis of her belief that "life is sacred." She INSISTS that her personal belief is that abortion is wrong. However, bullying her to try and criminalize abortion will not stop the practice of abortion, but only make it more deadly. Governor Sebelius has stated several times that her goal is to implement policy to prevent unwanted pregnancies, obviously in a hope to lessen the number of abortions that take place in the U.S.

And the Governor will likely have the opportunity as HHS secretary to make several policy changes in an effort to reduce the amount of abortions that take place in this country, but that will only occur if the number of unwanted pregnancies decreases, as well. However, I'm sure the Archbishop will oppose that, too, since his church is adamantly against the use of condoms, except in the most narrow circumstances (and that latter exception is only a recently amended doctrine rule).

Now the Catholic Church and Archbishop Naumann will state that 100 percent extramarital abstinence will prevent unwanted pregnancies and abortions. See, the problem with this argument is 1) That'll never occur. Never. We're humans. We're mammals. And sex is natural. And it'll naturally occur among teenagers, young adults and other non-married couples. 2) These guys, the clergy and other leaders within the Catholic church, can't even practice what they preach. Just because they're not having sex with consenting adults, doesn't make sex with children morally correct.

Archbishop Naumann is essentially saying that the Catholic Church's doctrine should dictate public policy. He wants to surreptitiously make church and state one in the same. And if the Archbishop had his way, his views on all church doctrine being vigorously enforced, then condoms would be prohibited. In fact, Archbishop Namann and his church's doctrine essentially sacrifices the lives of thousands of women each year. For instance...

Human Papillomavirus (HPV) is now the most common sexually transmitted disease in the United States. The virus infects over half the American population and causes nearly five thousand women to die each year from cervical cancer; the Center for Disease Control (CDC) estimates that more than two hundred thousand die worldwide. We now have a vaccine for HPV that appears to be both safe and effective. The vaccine produced 100 percent immunity in the six thousand women who received it as part of a clinical trial. And yet, Christian conservatives [and Catholic conservatives] in our government have resisted a vaccination program on the grounds that HPV is a valuable impediment to premarital sex. These pious men and women want to preserve cervical cancer as an incentive toward abstinence, even if it sacrifices the lives of thousands of women each year.

Sam Harris, "Letter to a Christian Nation"

There is nothing wrong with discouraging teenagers from having sex at a young age. But, as seen by Sarah Palin and her daughter's unwanted pregnancy, abstinence only is not a good way to curb teen pregnancy nor is it the responsible approach to prevent the spread of sexually transmitted diseases.

Also, in preemption to the Catholic Church's uproar in regards to President Obama lifting the Bush ban on embryonic stem-cell research, that I'm sure will be heard vociferously later today or this week, your qualms and complaints are similarly obtuse.

Until you guys (Archbishop Naumann, Cardinal Mahony, Dolan, etc.) quit contradicting yourselves, quit acting in nefarious ways when it come to clergy sex abuse matters, quit saying you appreciate all forms of life, when in fact that's a flat out lie (i.e. see the church's recent views on most things scientifically progressive; the Catholic church seemingly wants society to be shackled in the ways and mores of medieval Europe, much like Islamic-extremists would like us to revert to the Stone Age) then most people, rational people, do not want to hear anything you've got to say.

Most of your opinions and belief are anachronistic and invalid. So leave Governor Sebelius alone.

Originally posted at InjuryBoard by Paul Kiesel

Bank of America May Have Influenced Dodd-Shelby Housing Bailout Package

Paul Kiesel — Mon, 23 Jun 2008 17:49:15 GMT

A House staffer told Examiner.com, demanding anonymity, that the Dodd-Shelby Senate housing bill is beginning to be referred to as the "Bank of America bill on steroids." The Dodd-Shelby bill (Sen. Richard Shelby is a Republican from Alabama) continues to be scrutinized since revelations of Senator Chris Dodd's "VIP mortgage" showed that he was receiving more than a courtesy from Countrywide and Angelo Mozilo: he would be saving $75,000 over 30 years, or just over $200 a month. Dodd has also received approximately $70,000 in campaign contributions from Bank of America since he became chairman of the Senate Banking Committee.

The Dodd-Shelby housing bill came before the Senate last week amid controversy that Dodd received preferential treatment and a "special" interest rate on his mortgage, thanks to a "Friends of Angelo Mozilo" program at Countrywide Financial. However, it's not Countrywide that should be scrutinized along with Dodd's motives, but the company that just bought Countrywide at $7 a share: Bank of America.

It is being alleged by House and Senate staffers that Bank of America, who agreed in principal to buy Countrywide back in January, wrote the Senate's version of the bailout, the same housing relief package sponsored by Senator Dodd (who received the VIP loan from Countrywide; see the connection).

Another Senate staffer, remaining anonymous, was told by a lobbyist that, "the bailout is exactly what Bank of America and Countrywide wanted [. . .] it's obvious they got what they asked for," (Examiner.com, 6/19/08).

Looking deeper into the obvious conflict of interest, Bank of America's political action committee (PAC) has donated $20,000 to Dodd since he became chairman of the Senate Banking panel. And from January, 2007 to March, 2008, Bank of America employees have donated at least $50,400 to Dodd's campaign, according to the Center for Responsive Politics. His chairmanship earns him politically more than $1,000 per week, on top of the $200 a month he's saving on his mortgage.

The only counterargument to Dodd receiving this kind of treatment from Countrywide and Bank of America is: that it might not be as personal as we think. I don't believe Bank of America is courting Dodd because he is the senior Senator from Connecticut. Rather, anybody who was to head the Senate Banking Committee would likely have been strongly courted from a variety of major lenders who helped usher in the subprime fallout; and in times of a credit crisis, it's important for the struggling banks to have themselves firmly inserted into the pockets of powerful politicians, in order for the politician (i.e. Senator Dodd) to see the situation from the bank's perspective. However, that does not excuse Dodd from being bought into seeing Countrywide's and Bank of America's "logic."

Bank of America stands to profit most from a bailout, after reexamining the bill, and not Countrywide. Countrywide is more like the pawn in a bigger game of economic chess (even though just over a year ago Countrywide was yet to feel any financial tumult from the pending subprime fallout). Bank of America is about to take on Countrywide's bad loans, and under Dodd-Shelby, it could shift the worst loans onto the shoulders of taxpayers, via the FHA; the FHA will buy the worst loans off of Bank of America, therefore, Mozilo, Countrywide, and B of A are off the hook for some of the worst loans originated by Mozilo (via crooked TILA forms, among other shady lending practices).

How ironic is it that Bank of America has bought Countrywide, and is "flipping" its bad loans onto the government, which has yet to prove anything other than complete ineptness throughout this whole foreclosure crisis, as if Bank of America was like an investor trying to "flip" a house: in buying a run-down property (Countrywide) for a discount, shelling out some campaign cash (Dodd) and earning some "equity" through lobbying. If the Dodd-Shelby bill continues through with out any further revisions, you can bank on Dodd never having to worry about finding friends in the lending industry, they'll always make sure he feels like a VIP.

Originally posted at InjuryBoard by Paul Kiesel

Bernanke, Greenspan and Paulson were Wrong on Fannie and Freddie, Housing Crisis

Paul Kiesel — Mon, 08 Sep 2008 17:38:06 GMT

On July 16, Federal Reserve Chairman Ben Bernanke told Congress that he believed Fannie Mae and Freddie Mac would be able to make it through the storm of the U.S housing crisis. In front of Representative Barney Frank's House Financial Services Committee, Bernanke also said that troubled Fannie Mae and Freddie Mac were adequately capitalized and "in no danger of failing."

Fast forward to last Friday evening, September 5, when reports started circulating over news wires that Fannie and Freddie were about to be taken over by the federal government, which, of course, ended up happening within 48 hours of that news breaking.

Did Bernanke really miss all of the troubles at Fannie and Freddie -- their inability to raise capital, amid a multifarious of other issues -- only seven weeks ago, and all of a sudden saw that the two GSEs needed the backing of the federal government? How did Alan Greenspan overlook or not understand the housing bubble that was taking place while chairman of the Fed, and warn the country of the potential ramifications from that bubble bursting? (Greenspan made several claims that the worst of the housing market's problems were over, towards the end of 2006.) Why did Treasury Secretary Henry Paulson assume that Hope Now would be the one and only answer to the flood of foreclosures and default notices hitting the most problematic housing markets, even though within a year of its creation President Bush would sign a sweeping housing bill into law, designed to do what Hope Now never could have done?

(When President Bush was days away from signing the housing bill into law -- a drastic change of heart considering just a week before he was adamantly opposed to a housing bailout package -- he made several comments on how it would shore up Fannie and Freddie's capital troubles, however, Wachovia economist Mark Vitter felt that housing bill would not successfully provide that relief, "[Won't] speed up or lessen the impact of the correction of the housing market [. . .] It's too late for that. There's nothing that can be done." Again, if Fannie and Freddie had capital troubles towards the end of July and that was Bush's definitive reason for signing the housing bill, then why did Bernanke tell Congress two weeks prior that the two GSEs were "adequately capitalized" and "in no danger of failing?")

All of these questions will be asked long after the housing market, credit markets and Wall Street have rebounded (sometime in 2010?), but ultimately, three of the nation's supposed most erudite individuals on macro- and microeconomics ended up disastrously wrong in their observations and predictions. If Bernanke, Greenspan and Paulson truly didn't know what was going on and what was going to be outcome of mistaken ignorance, then the housing/mortgage crisis is further evidence that banks and lenders lacked oversight and regulation, thus, subsequently allowing banks and lenders to be more inconspicuous in their lending practices (TELA violations). Or maybe all three knew, and chose not to tell the public in fear of expediting a problem that appears, after all of the deregulation that took place in the banking industry in the late-90s and early-2000s, to have been inevitable.

Academic economists, like Yale economist Robert Shiller and NYU economist Nouriel Roubini (a.k.a. Dr. Doom), were more perspicacious to the housing and mortgage fallout, so it's not as if the signs weren't there. The writing had been on the wall for awhile. (I wrote a blog back in May, "A Trillion Dollar Risk," that examined Fannie's and Freddie's financial problems.) These two men based their economic theories off empirical data suggesting that the fallout would be in greater losses and more impacting to the economy than any information given to us from an economic surrogate of the Bush administration or CEOs on Wall Street (speaking of which, 18 year veteran CEO of WAMU, Kerry Killinger, was ousted earlier this morning).

For instance, The New York Times' Irving Fisher gives a compelling argument as to why Fannie and Freddie needed to be bailed out -- one of many opinions on the matter and proof that market observers and financial journalists were keen to the mortgage industry's dilemma -- and that the two GSEs should have been financially backed at an earlier date, in hopes of circumventing a lot of the chaos that's recently taken place among other financial institutions. The reason: debt deflation. Fisher does argue, however, that the government take over of the two mortgage giants will prove beneficial to future mortgage borrowers.

As the economist Irving Fisher observed way back in 1933, when highly indebted individuals and businesses get into financial trouble, they usually sell assets and use the proceeds to pay down their debt. What Fisher pointed out, however, was that such selloffs are self-defeating when everyone does it: if everyone tries to sell assets at the same time, the resulting plunge in market prices undermines debtors’ financial positions faster than debt can be paid off. So deflation in asset prices can turn into a vicious circle. And one consequence of what he called a “stampede to liquidate” is a severe economic slump.

That’s what’s happening now, with debt deflation made especially ugly by the fact that key financial players are highly leveraged — their assets were mainly bought with borrowed money. As Paul McCulley of Pimco, the bond investor, put it in a recent essay titled “The Paradox of Deleveraging,” lately just about every financial institution has been trying to reduce its leverage — but the plunge in asset values has nonetheless left these institutions with more debt relative to their assets than before.

And the numbers keep getting worse. In July 2007 Ben Bernanke suggested that subprime losses would be less than $100 billion. Well, last month write-downs by banks and other financial institutions passed the $500 billion mark — and the hits keep coming.

Which brings us to Fannie and Freddie. They’re the only big financial institutions that haven’t joined in the rush to deleverage, which is why they now account for about 70 percent of new mortgage loans. But their financial foundations have been undermined by debt deflation, even though their lending was more responsible than average. (A subprime borrower is basically someone whose credit wasn’t good enough to qualify for a Fannie- or Freddie-backed mortgage.)

So Fannie and Freddie had to be rescued — otherwise debt deflation would have gotten much worse. Indeed, their financial troubles have already caused problems for would-be home buyers: mortgage rates are up sharply since earlier this year. With the federal takeover, which removes the pressure on the lenders’ balance sheets, we should see mortgage rates drop again — which is definitely good news.
The New York Times, 9/7/08

How we're able to prevent a future financial crisis like the one that's been taking place, and that will still continue well into 2010, can only be answered when we're able to understand its initial causes. Until then, we'll be wondering what else was overlooked by our bank regulators during the build up to the mortgage crisis, and when/how that will hit the U.S. economy.

Originally posted at InjuryBoard by Paul Kiesel

Interim Head of Government Bailouts, Neel Kashkari, Called a "Chump" by One Congressman, While Another Compares Him to Mel Gibson

Paul Kiesel — Fri, 14 Nov 2008 19:09:16 GMT

Neel Kashkari, the interim head of the Troubled Asset Relief Program (aka the Treasury Department's $700 billion financial rescue plan or TARP), came under heavy fire today at a House Oversight and Government Reform subcommittee hearing, after Maryland Democrat Elijah Cummings got his chance to ask Kashkari questions relating to an expanded $154 billion that was given to American International Group Inc. (AIG) this week, even though AIG still plans on setting aside $503 million in compensation for executives.

Cummings asked Kashkari, "I'm just wondering how you feel about an AIG giving $503 million worth of bonuses on the one hand, and accepting $154 billion from hard-working taxpayers? [And] what really bothers me is all these other people lining up. They say, well, is Kashkari a chump?"

Kashkari responded by telling the panel he was "outraged" that AIG will do this, but he then said he recently learned that AIG has set aside money in order to eliminate an incentive to leave the insurer.

"I'm not defending it," Kashkari said. But, in actuality, he had done just that.

After Cummings prodded Kashkari further, and laid a minor guilt-trip on him, explaining that families, due to the economic situations that many in the country currently face, will "probably be sitting under the Christmas tree with no presents" this year due to his decisions inadvertently determining consumer behavior, Dennis Kucinich, the chairman of this subcommittee, repeatedly interrupted the Treasury official during the more than two-hour session.

Kucinich harshly criticized Treasury Secretary Henry Paulson's decision this week to abandon the TARP's original intent of purchasing toxic mortgage assets from financial firms.

"The secretary just essentially took some scissors and cut it out and threw it away [. . .] Maybe this is some kind of game to some people in the administration," Kucinich said. "They're [Bush's Administration] on their way out of office and they just feel they can do whatever they want."

Is Kashkari a Chump

Kashkari reitterated to the subcommittee that his department isn't in charge of bank oversight, and that financial regulators are more concerned with bank using this capital to increase lending.

The top Republican on the subcommittee, Darell Issa (R-CA), chided Kashkari saying that his efforts have done little to help families stay in their homes. "It's very clear that the Treasury cannot and will not make the effort to keep people in their homes."

After further accusations by some other members of the committee, California Republican Brian Bilbray, with an absurd veneration, compared Kashkari to Mel Gibson's character from Braveheart, "I guess you sort of got a taste of how Mel Gibson felt in the last scenes of 'Braveheart' [. . .] You're probably the best spokesman the administration has [and] you've come across with more credibility than anyone else that I've heard."

Originally posted at InjuryBoard by Paul Kiesel

If You Have an Option ARM Loan with FDIC IndyMac, Read This!

Paul Kiesel — Fri, 10 Oct 2008 21:47:57 GMT

Any Californian who has a Pay Option ARM loan from IndyMac (now FDIC IndyMac) that was originated between 2004 and 2007 and has faced or will be facing an interest rate reset (ballooned monthly payment), should contact the bank or seek legal counsel before next Friday, October 14.

According to the FDIC, Option ARM borrowers have 90 days to respond to the notice of IndyMac being taken over by the federal government, if they want to be able to modify their loan or take legal action against IndyMac. When does the 90 day period end? October 14. Where did the notice come from? The FDIC claims that when newspapers reported that the Office of Thrift Supervision transferred control of IndyMac to the FDIC, on July 11, the newspaper articles throughout the State of California served as a notice to the public.

However, most borrowers of Option ARM loans never got a formal notice. Regarding this issue, the only notices that have been sent out are to named plaintiffs in class action lawsuits against IndyMac Bancorp. In fact, the FDIC has refused to notify other Californian consumers of Option ARM loans that their time to take action is running out, and this is a big problem because tens of thousands of Option ARM borrowers have been left in the dark and do not realize that the date is rapidly approaching for them to seek a fair remedy to their troubled mortgage situation (or pending situation).

The FDIC has a contact number listed on their website under the page titled: FDIC Loan Modification Program for Distressed IndyMac Mortgage Loans. On the bottom of this page it states: Borrowers who are delinquent or who are experiencing financial hardship and are falling behind on their IndyMac Federal mortgage should call 1-800-781-7399 to speak with an IndyMac Federal customer service representative.

Originally posted at InjuryBoard by Paul Kiesel

Expedia, Travelocity and Other Online Travel Companies Owe the City of Anaheim $21.3 million in Transient Occupancy Taxes

Paul Kiesel — Thu, 19 Feb 2009 19:59:51 GMT

As the California Legislature passed a budget package today that raises taxes and cuts billions of dollars in school funding, I felt that sharing the below press release was worthwhile and applicable to these difficult economic times: Online travel companies haven't been paying their full share of transient occupancy taxes for years, keeping millions from local municipalities.

ANAHEIM, Calif., Feb. 18 /PRNewswire/ -- After years of underpaying transient occupancy taxes on hotel rooms, the nation's top online travel companies are being forced to pay the City of Anaheim the difference, plus penalties and interest, said a spokesman for the city's legal counsel, Dallas-based Baron & Budd, P.C. The $21.3 million ruling, handed down on February 9 by Anaheim Hearing Officer Michael Miller is expected to influence a host of similar suits filed on behalf of local governments throughout the country.

"All along, this has been a very clear case of online travel companies cheating local governments by paying taxes only on the purchase price of discounted hotel rooms instead of on the retail price they charge consumers for them," said Patrick O'Connell of Baron & Budd, who tried the case along with William Larson and Paul Kiesel of Kiesel Boucher & Larson; Gary Cruciani and Steve Wolens of McKool Smith; and Moses Johnson, Assistant City Attorney for Anaheim. "They tried to mislead consumers with unclear tax and service fees, but the hearing officer saw right through them."

At issue in the case was the companies' tax liability per the Anaheim Municipal Code - and the assessment of taxes owed over an undetermined period of time. According to the hearing officer, the defendants in the case, Expedia, Hotels.com, Orbitz, Priceline, Hotwire and Travelocity, will be required to pay the 15% transient occupancy taxes on the difference between the wholesale and retail rates of hotel rooms they purchased and resold in Anaheim between 2000-2008, as well as all service fees associated with the transactions.

"This is especially good news at a time when local governments and the taxpayers they represent are feeling the effects of the economy," said O'Connell. "We hope this is the first of many successful rulings to bring much-needed tax revenues back to the communities."

Originally posted at InjuryBoard by Paul Kiesel

On Mortgage Fraud: McCain vs. Obama

Paul Kiesel — Thu, 04 Sep 2008 20:13:19 GMT

Senators Barack Obama and John McCain want to go after predatory lenders. Senator Obama, contrary to Alaskan Governor Sarah Palin's claims about his Senate record in her acceptance speech at the Republican National Convention (RNC) last night, introduced the STOP FRAUD Act in the Senate with Senator Dick Durbin, and now it is a major part of the Illinois senator's platform. Senator McCain called for creating a task force to investigate criminal wrongdoing in the mortgage lending and securitization industry, which, incidentally, had already been created by the FBI long before McCain urged its formation. (The task force was created in 2005, and McCain didn't call for one until this year, just a few months ago; however, certain states ramped up the effort in the last half of 2007 and the first half of 2008, like California, which created an FBI task force named SCAM in May 2008.)

Below are the two candidates' stances on "Mortgage Fraud." To see the candidates' other economic policies, click here: CNNMoney.com.

McCain

· Create a Justice Department task force that punishes individuals or firms that defrauded innocent homeowners or forged loan application documents.

· Task force would also assist state attorneys general investigating abusive lending practices.

· Improve transparency in the lending process so that borrowers know exactly what they are agreeing to.

"Lenders who initiate loans should be held accountable for the quality and performance of those loans and strict standards should be required in the lending process." -- McCain

Obama

· Boost funding for law enforcement programs aimed at housing fraud by $40 million.

· Establish new federal criminal penalties for mortgage professionals found guilty of fraud.

· Require lending professionals to report suspicious or fraudulent activity.

· Establish a database of censured or debarred mortgage professionals, so borrowers can easily check the credentials of lenders.

· Establish a standardized estimate of the total annualized cost of a mortgage loan to make it easier for borrowers to compare different loans.

"We must establish stiff penalties to deter fraud and protect consumers against abusive lending practices."-- Obama

Originally posted at InjuryBoard by Paul Kiesel

Salesian Order of Priests are the Last Standing in Los Angeles

Cheryl Buchanan — Sat, 26 Jan 2008 16:15:25 GMT

Or maybe it would be more appropriate to say that they are the last lying? But, I've always had trouble with the whole question over when to use "lying" or "laying" in a sentence. If one means not telling the truth and the other means hiding out in the weeds and avoiding responsibility and continuing to hope it will all just go away... well then I guess they both work. Its just a matter of semantics.

Anyway, on January 22nd Plaintiffs represented by Kiesel, Boucher and Larson filed an amended complaint for Punitve Damages against the Salesian Order of priests. This particular complaint pertains to the sexual molestation by: Father Titian (aka "Jim") Miani, Father Larry Lorenzoni, and Brother Ralph Murguia who are the perpetrators named in the trial scheduled for this April 2008. The Salesians are the only Order left who did not take part in the global settlement with the Los Angeles Archdiocese in July of 2007. Several other Salesian cases involving additional perpetrators: Brother John Verhart, Brother Mark Epperson, Brother Anthony Juarez, Brother Ernie Martinez, and Brother Jessie Dominguez are also currently being scheduled for trial.

Father John Itzaina, described as "second in command of the Salesians of the West Coast" recently told the Los Angeles Times on January 24, "We abhor any abuse, especially of the young, be it sexual or psychological, physical, or emotional." He went on to say that the Salesians do not defend Miani, but "absolutely deny" that the Order had any notice that he posed a danger to youth. (Siblings File Abuse Lawsuit Against Catholic Order, LA Times, 1/24/08)

Speaking of semantics... by "abuse" Itzaina must mean someithing other than the sodomy, and oral copulation that Miani was committing before he even came to California and abused the children who are the Plaintiffs in the case set for trial this April. By "notice", he must mean something other than the multiple reports, to two different Salesian Directors, by the children at the orphanage at St. Mary's Salesian boy's home, before he even came to California. By "notice" does Itzaina mean there should have even been something more they needed to know than the fact that Miani was kicked out of a previous seminary for molesting a child, more than a decade before he abused the first Plaintiff in our California case?

Standing, laying, lying, whatever. Its about time, with the growing mountain of evidence against them, for the leadership of the Salesian Order to take some responsibility for the children they have hurt in the past and continue to hurt everyday through their abusive legal tactics, the parishioners who look to them in the present, and for any priests and brothers among them who actually took their vows for reasons that had something to do with truth.

Originally posted at InjuryBoard by Cheryl Buchanan