It’s Time to Hold Banks Accountable

by on June 8, 2011 · 0 comments

in Economy, San Diego

By David Lagstein

Note: There will be a Town Hall Meeting on this issue on Thursday, June 9 at 6pm at Memorial Prep School at 2850 Logan in San Diego.  The forum will highlight the impact of the foreclosure crisis, connect families in danger of losing their homes with resources, and discuss solutions to hold bad actors accountable.

The big banks shattered our economy and left workers and our communities to clean up the pieces. We’ve lost 8 million jobs, our retirement savings vanished, entire neighborhoods sit abandoned by foreclosure, and cities and states are facing an ever widening budget crisis.

Vacant foreclosures unattended by banks have become a magnet for blight and illicit activity that further destabilize neighborhoods already decimated by foreclosures.  One study showed that when the foreclosure rate increases by one point in a neighborhood, violent crime is increased by 2.33 percent.

When banks foreclose on homes, they lower property values and property tax revenue.  The resulting blight also increases the budget deficit due to failure to maintain many foreclosed properties. A single foreclosure can cost up to $34,000 for local government agencies, which have to absorb the cost of inspections, public safety, unpaid water and sewage charges and trash removal fees.

The jobs crisis only accelerates this problem.  With the unemployment rate at 9.1 percent, more families are at risk of losing their homes to foreclosures.  In fact, it is estimated that as many as a million homeowners fell into foreclosure because of insufficient assistance for the unemployed.

Yet the worst has not passed. Banks are currently foreclosing on 200,000 families each month and foreclosures have not yet peaked. According to a recent LA Times editorial, “Three years have passed since the housing bubble burst, and yet the number of mortgage defaults and foreclosures continues to increase…Analysts estimate that there is a “shadow inventory” of 1.7 million to 7 million homes in foreclosure that lenders haven’t yet put up for sale.”

In spite of the devastating impacts of their practices on the community, Wall Street CEOs are continuing to receive incredible salaries.  JP Morgan Chase CEO Jamie Dimon received $20.8 million in compensation in 2010 while Wells-Fargo CEO John Stumpf managed to survive on a mere $17.56 million.

The banks are doing everything they can to undermine the newly created Consumer Financial Protection Bureau and to stop virtually any consumer protection.  In California alone, the financial industry spends $50,000 a day to buy influence in Sacramento, as documented in the report, “All the Foreclosure Money Can Buy”.  In spite of an incredible grassroots campaign throughout the state, the industry successfully killed a package of state bills this year that would have prevented foreclosures and mitigated their effects.

The good news is that Californians are starting to fight back.  A few months ago, 22 people were arrested in a protest against Chase Bank.  Last month, thousands of people crashed the shareholders meeting of Wells Fargo in San Francisco and challenged their board of directors to implement a five-point plan to keep families in their homes.   A brave woman in the Bay Area even squatted in her house after she lost her home of 27 years to foreclosure.  Locally, hundreds of people have participated in events, actions and press conferences where homeowners have stood up to the banks.   The town hall forum is being hosted by a group of community, labor and faith organizations to discuss the crisis in our neighborhoods and to organize at the local, state and national level to make the banks pay for the mess they created.

David Lagstein is the director of the San Diego county office of the Alliance of Californians of Community Empowerment (ACCE), one of the co-sponsors of the Town Hall Forum.  ACCE launched the Home Defenders League, a statewide group of homeowners that are standing up to the Big Banks and Wall Street.

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