banks & credit – Chicago Newstips by Community Media Workshop Chicago Community Stories Mon, 05 Feb 2018 23:03:57 +0000 en-US hourly 1 SW Side community bank is resurrected Fri, 20 Sep 2013 19:55:52 +0000 While hundreds of community banks were taken over by larger institutions following the recent financial crash, an historic small bank that has served immigrants on the Southwest Side is bucking that trend — it’s being resurrected (as it were) as a community-based institution.

The Resurrection Project and the Self-Help Credit Union will celebrate what they’re calling  the re-opening of Second Federal Credit Union on Saturday, September 21, with a press conference at 10 a.m. and cultural program at 11 a.m. at 3960 W. 26th.

That’s the location of the main office of Second Federal Savings and Loan, which opened in 1923.  As the needs of its immigrant clientele changed over the years, Second Federal pioneered making loans to undocumented immigrants who lacked Social Security numbers.  Like many institutions, it was weakened as home values dropped for properties on which it held mortgages.

Last year the FDIC closed Second Federal, rejecting a bid for the bank’s assets and loans by TRP and Self-Help, and sold its  three branches and $176 million in deposits to Rosemont-based Wintrust Financial Corp, which has been actively acquiring failing banks in the area.

At the time, U.S. Representative Luis Gutierrez slammed the FDIC’s decision, saying it needlessly placed hundreds of Latino homeowners at risk of foreclosure.

But Wintrust didn’t want Second Federal’s mortgages; those were subsequently spun off to TRP and Self-Help, a North Carolina-based institution that focuses on services for minority and low-income consumers.  And late last year, Wintrust decided to sell Second Federal’s assets to the TRP group.

It’s the first time a credit union has acquired a community bank, said Ed Jacobs of Neighborhood Housing Services.  Self-Help is one of the largest credit unions in the nation, with operations in North Carolina and California; this is its first involvement in the Midwest.

“It’s an important community financial institution,” he said of Second Federal.  The deal will “take a financial institution with the scale and mission of Self-Help and pair it with the local knowledge on the ground that TRP has.”

TRP has said the new institution will be dedicated to preventing foreclosures and community deterioration, driving out predatory lenders, and providing financial services for residents through the new credit union.

Founded by six Pilsen parishes in 1990, TRP has grown into a mutli-faceted community organization, developing affordable housing, conducting financial education including foreclosure prevention, and offering a range of programs including digital access, health, and arts and culture.

Bank locks out homeowners Thu, 11 Oct 2012 19:55:52 +0000 Eight homeowners facing foreclosure will return Friday to a Bank of America branch in Albany Park where they were locked out last week.

Like other community groups, Centro Autonomo of Albany Park has held many similar actions at bank branches, with foreclosure victims and their supporters showing up to ask for face-to-face attention – and often they get results like loan modifications, principal write-downs, or just postponements, said Roberto de la Riva.

“Usually when we show up, the bank sends out a p.r. representative and we can have a decent conversation — we can talk to a flesh-and-blood person, get them to look at the case, and often we end up moving forward,” he said.

But when they showed up at the Bank of America branch at 4747 W. Irving last Friday, the bank locked the doors.

So Centro Autonomo and eight Bank of America clients are returning to the branch on Friday, October 12 at 12 noon.

The homeowners include Luis Ponsiano, whose whom went into forclosure after the bank stopped making autonomic withdrawals – which he could afford – from his account, according to CAAP.

There’s Lisa Nadig-Mehdipour, whose troubles started with a difficult divorce.  After repeated demands for resubmission of paperwork from the bank, her application was lost.  A month ago another BOA department told her to submit a new application, and a third department initiated foreclosure.

Vincente and Guadalupe Salgado, who live with their children and grandchildren, lost their jobs two years ago and are seeking an interest rate reduction to make their monthly payments affordable.

Jose Luna got a double-whammy from the economic crisis – he lost his job and his $250,000 home lost half its value.  But with rental income from an apartment he could pay his mortgage, if he could get a principal reduction.

Bank of America has transferred Katrina and Randy Patterson from department to department for over a year while they pursued a modification.  Now the bank has listed their home for sale — for one-third the amount on their mortgage.

Government programs to help homeowners have not worked well, de la Riva said, particularly with banks initiating foreclosures on homeowners while they are in trial modifications.  He supports a moratorium on foreclosure evictions.

CAAP is also advocating a community land trust, as provided for in the recent foreclosure fraud settlement with state attorney generals, de la Riva said.  Banks would donate vacant homes to a trust which would provide permament affordable housing and stabilize neighborhoods.

Questions remain on infrastructure trust Sun, 15 Apr 2012 21:53:07 +0000 Illinois PIRG is calling on aldermen not to approve Mayor Emanuel’s infrastructure investment trust without more public safeguards, and the Grassroots Collaborative is urging a “no” vote on the proposal.

Leaders of community groups and union members in Grassroots Collaborative will hold a press conference Monday, April 16 at 9:30 a.m. on the 2nd floor of City Hall to call on aldermen to vote against the ordinance establishing the trust.

The council’s finance committee holds at hearing on the ordinance at 10 a.m. Monday.

Emanuel’s new tweaks to the ordinance go just partway to addressing the groups’ concerns.  “He’s dealing with the easy stuff,” said Celeste Meiffren of Illinois PIRG.

PIRG has called for far more stringent conflict-of-interest protections than Emanuel has offered: “Members of the board of directors should be free from conflicts of interest and instead should represent Chicagoans as primary stakeholders,” Meiffren writes in a blog post.

She calls for requiring board members to divest from any holdings in companies doing business with the city and in banks investing in the trust, and to agree not to work for them for a period after serving on the board.

As it stands the board looks to be comprised of CEOs and CFOs who will be “controlling taxpayer assets” and “accountable to nobody,” Meiffren said.

She doesn’t think putting an alderman on the board “solves the problem.”  She’d like to see watchdog groups represented on a board structured so that business leaders had a purely advisory role.

More bad backroom deals

Beyond that are larger concerns about the purpose of the trust.  “The ordinance is so vague that worst-case scenarios are really possible,” said Meiffren.

PIRG says the trust should be specifically committed to getting the best deal for the city and taxpayers rather than investors; and each deal should be subject to an independent evaluation to make sure that happens.

“There’s nothing in the ordinance that would prevent another bad backroom deal from happening,” Meiffren said.  “We have a history of bad deals, so we need to go above and beyond to ensure that taxpayers aren’t ripped off again.”

She cites the one project Emanuel has specified for the trust: a $225 million effort to retrofit city buildings for energy efficiency.  “Why can’t we do that with municipal bonds, which will get us a much better interest rate?” she asks.

“Instead of just going to private investors every time, we need a mechanism for determining what the best deal is – that evaluates every deal against other options,” she said.  “Nothing here does that.”

While the city does have a large debt load, its bond rating remains strong, and it continues to issue bonds:  last October Chicago issued over $400 million in general obligation bonds and $330 million in sales tax revenue bonds.

Who will pay?

Grassroots Collaborative is concerned that low- and middle-income communities will be shortchanged by the trust, said Eric Tellez.

“We’ve seen the TIF program focus resources downtown,” he said.  “With (infrastructure trust) investors’ goal to make money,” they could also concentrate on downtown and wealthy areas, he said.

And user fees to pay back private investors could hurt moderate-income residents.  “It injects a profit-making factor into public assets,” Tellez said.

“It could open the gate to [creating] revenue-generating streams for public services,” he said. “Will we have to pay to go to the park?  Will higher fares prevent people from getting to work?”

Such concerns are fed because “we haven’t been given any details,” he said.  “The actual proposal doesn’t have a lot of clarity.”

The trust could also “create a union-busting environment” if there’s pressure to cut labor costs in order to pay back investors, he said.

The Illinois Coalition to Protect the Public Commons has also come out against the deal. “It is too big, too vague, too secretive and too unaccountable,” said Lora Chamberlain of Illinois Citizens for Public Banking, a coalition member.

“We don’t put money into a farebox to make some guy rich,” said Charles Paidock of Citizens Taking Action, a group of public transit-dependent residents.

As the Emanuel administration stretches for the most creative and innovative solutions to the city’s financial situation, it’s worth noting that these often entail higher risk.  One innovative approach in recent years was the variable-rate bond issued by many municipal entities.  The costs of these deals have been much higher than anticipated.

Chamberlain cautions that the trust should offer investors revenue sharing rather than dedicated revenue streams, an approach that has gotten some European countries into deep trouble.

Her group offers a much more conservative approach: a public infrastructure bank.  It would leverage a portion of the city’s TIF surplus to fund infrastructure projects, but the rate of return would be kept relatively low and the city would retain control over public assets.

Their model is the Bank of North Dakota, the nation’s only state-owned bank, created during a populist upsurge in 1919.  BND holds the state’s deposits, lends to small banks in the state, and sends half its profits back to state coffers. It’s part of the reason North Dakota has no deficit.

On the other hand, there’s lots of money out there looking for public investments right now – especially as big financial firms back off trading under pressure from new regulations.

They’re looking for the safety of public investments and hoping for something approaching the high profit rates they got used to during the boom, said Tellez.  “They want to have their cake and eat it too,” he said.

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Robo-signing settlement called ‘good step,’ ‘sell-out’ Fri, 10 Feb 2012 04:40:33 +0000 Responses from community groups and advocates to the robo-signing settlement announced Thursday ranged from “good first step” to “sell-out to Wall Street.”

The Woodstock Institute emphasized the significant precedent of requiring banks to write down principals for homeowners who owe more than their homes are worth – an approach lenders have generally avoided taking until now.

The settlement “won’t end the troubles of homeowners” but is a “significant step in the right direction,” said Dory Rand.  She said resources need to be targeted to the hardest-hit communities. She called it “a real victory for homeowners.”

The $1 billion in homeowner relief expected for Illinois “will not suffice to restore all of homeowners’ lost wealth” but “it can potentially turn back the tides of default in hard-hit communities,” she said.

Woodstock estimates that 400,000 Chicago-area homeowners are underwater on their mortgages, together owing nearly $25 billion more than their homes are worth.

Rand reiterated Woodstock’s call on the Federal Home Finance Authority to stop blocking Fannie Mae and Freddie Mac from writing down principals in mortgage modifications.

Paltry restitution

In contrast, a coalition of community groups said the settlement “let banks off the hook.”

“Our elected officials completely sold out the people again to their Wall Street friends,” said IIRON, a regional network including Northside POWER and Southsiders Organized for Unity and Liberation.

IIRON emphasized the paltry sums given in restitution to homeowners who lost their homes due to fraudulent foreclosure practices.  They stand to receive up to $2,000 each.

The federal government and state attorney generals “let banks off the hook” for what amounts to “moving costs for families defrauded of their homes by criminal banks,” according to the group.

(“We’ve now set a price for forgery and fabricating loans,” comments Yves Smith at Naked Capitalism.  “It’s $2,000 per loan.  This is a rounding error compared to the chain-of-title problems these systemic practices were designed to circumvent.” Smith gives 12 reasons “why this deal stinks.”)

(“Does a $2,000 check … make up for losing your home because it was foreclosed upon illegally?” asks R.J. Eskow at the Campaign for America’s Future.)

Grassroots pressure

The “flawed settlement” is stronger than it would have been without the pressure of grassroots groups who fought for more relief to homeowners and to ensure that banks aren’t absolved of all legal liability, IIRON said.  The group had called on Attorney General Lisa Madigan not to sign a settlement granting banks broad release from liability, protesting outside a meeting of state AGs at the O’Hare Hilton last month.

The final settlement was closely focused on robo-signing and foreclosure fraud, and it allows investigations to continue into other criminal activity by banks in the housing and financial crash.   It provides some funds for legal aid and housing counseling.

While the settlement includes new standards for mortgage services, including an end to the “dual track” where foreclosure was pursued while loan modifications were in the works, Smith points out that servicers have consistently failed to comply with past consent decrees.

She also points out that the cost of principal reductions will be borne not by the banks themselves but by mortgage investors, including taxpayer-backed Fannie Mae and Freddie Mac along with pension funds.  She calls it a “stealth bailout.”

Call for full investigation

The deal is “suspect on its face” because it was reached before a full investigation into the robo-signing scandal was carried out, said Robert Borosage of CAF.  The state AGs lacked the resources for such an investigation, and the Obama administration  “has been committed to keeping insolvent banks afloat [rather than] holding them accountable.”

The settlement “gets a relatively small sum from the banks in exchange for limited liability on their flagrantly illegal robo-signing,” he said

He called for sustained pressure on the administration for a full investigation of banks, leveraged into serious, broad relief for homeowners

“What’s clear is that the banks trampled the law in their wilding while blowing up the housing bubble,” Borosage said. “They abused homeowners, committed routine forgery and perjury before the courts, and defrauded investors. The housing market then collapsed, leaving homeowners about $700 billion under water.”

The fact that  the settlement allows further investigations — due to insistence by attorney generals in New York, California, and a few other states — “could be a big deal,” comments Eskow, but only “if the administration stops coddling banks and devotes a lot more resources to helping homeowners and upholding justice.”

Bank fraud investigation hailed Thu, 26 Jan 2012 00:21:41 +0000 President Obama’s State of the Union announcement of a new investigation into bank fraud represents a victory for community groups, said National Peoples Action on Wednesday.

“We’ve been calling for a full investigation for over a year,” said Liz Ryan Murphy of NPA.  “This is a big win, but we still need to see results.

“We need a complete investigation to get to the bottom  of what they’ve done, with penalties and restitution that are commensurate with the crimes.”

The Woodstock Institute also hailed the announcement.  “Making it clear that criminal activity in the financial sector will not be tolerated is necessary to restore confidence in the mortgage market and the broader financial system,” said Tom Feltner.

Obama announced that New York Attorney General Eric Schneiderman will head a new task force looking into abuses in the mortgage origination and securitization sector.

Schneiderman’s appointment came as NPA and other groups (including IIRON in Chicago) expressed concern that the administration was pressing for a settlement in the robo-signing scandal that would release banks from legal claims covering a sweeping range of misconduct.  Schneiderman was among state attorney generals said to be raising similar concerns

Principal reduction

If it is narrowly focused on relieving claims arising from fraudulent foreclosure filings, a settlement could begin to bring relief to hard-hit communities in the form of loan modifications which reduce principal to reflect depressed home values, Feltner said.

Principal reduction is “a critical missing piece in the response to the foreclosure crisis,” he said.

NPA has argued that homeowners have lost billions of dollars of equity since the housing market collapsed due to the malfeasance of big banks, and that wholesale principal reduction would constitute a massive economic stimulus.

Both groups have called on the Federal Home Finance Authority to direct Fannie Mae and Freddie Mac, which own 70 percent of home mortgages, to allow principal reduction.

Murray said Obama should replace Edward DeMarco, acting director of the FHFA, who has ruled out principal reduction.

The president “should consider a change in leadership” at FHFA, Feltner said.

Groups tell Madigan, Donovan: ‘No’ to foreclosure deal Tue, 24 Jan 2012 01:11:05 +0000 Community groups confronted HUD Secretary Shaun Donovan and Illinois Attorney General Lisa Madigan on Monday over a foreclosure fraud settlement the groups say is entirely inadequate.

Protestors sang, prayed, and testified outside a room in the O’Hare Hilton where Donovan and Justice Department officials were meeting with staff from state attorney generals to urge them to sign on to a settlement in a case arising out of the “robo-signing” scandal of October 2010 (see 10-21-10 Newstip).

The groups object to the deal with the five largest mortgage services – including Bank of America and JPMorgan Chase — as a “slap on the wrist” that would shield them from legal liability for a wide range of foreclosure misconduct.

(Van Jones of Rebuild The Dream and George Goehle of National Peoples Action spell out some concerns at Huffington Post.)

“President Obama and Attorney General Madigan must choose,” says Rev. Marilyn Pagan-Banks of Northside POWER. “Will they settle for a deal that benefits the 1 percent and lets the big banks off the hook? Or will they stand with the 99 percent and fight for accountability and a solution that will help millions of people?”

The O’Hare meeting may have been called to create an aura of inevitability around the settlement, Firedoglake reports, but none of the state attorney generals who have criticized its provisions were expected to attend.

Dissension in the ranks

Attorney generals of New York, California and other states have opposed provisions of the settlement that would give banks blanket immunity for misconduct and shut down ongoing investigations in New York and elsewhere.

Last week attorney generals from a dozen states (not including Illinois) met in Washington DC to discuss coordinating investigations — and their displeasure with settlement talks, according to Huffington.

Madigan is on the committee that is negotiating the settlement. After 50 state attorney generals began an investigation in 2010, the Obama administration began pressing for a settlement. (At Politico, Simon Johnson calls the case the administration’s “last chance” to stand up to banks.)

Several weeks ago members of the regional organizing network IIRON met with Madigan staff to express their displeasure with the deal. “They seemed surprised that we didn’t think the settlement is a great thing,” said Kristi Sanford.

When they learned of the meeting Monday, they organized a rally at the State of Illinois building – and upon learning the meeting’s location, a contingent set out for O’Hare.

There a couple dozen members of community groups from across the city asked a Madigan staffer if the attorney general could spare a few minutes to talk with them. The aide never returned – but police came to ask the protestors to leave, Sanford said.

The groups want banks to agree to write down underwater mortgages, and they say there must be a full-fledged investigation of bank misconduct. Criminal behavior by banks in the scandal is alleged to include perjury, filing false documents, illegal foreclosures, and investor fraud.

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Lakeview protest targets record bank bonuses Thu, 15 Dec 2011 00:44:59 +0000 Lakeview residents plan to move $170,000 out of big banks Thursday as a protest against astronomical – and growing – executive compensation at big banks.

They’re targeting branches of JPMorgan Chase and Bank of America in an action planned for Thursday, December 15, 5 p.m.,  at Clark and Belden.

Lakeview Action Council members are among thousands of community activists across the country who have signed a letter to the CEOs of Chase, BofA, and Wells Fargo, calling on them to forgo bonuses and use the money to keep families in their homes, provide credit for businesses, and pay their fair share of taxes.

While media reports have suggested bank executives will face a pay cut this year, the New Bottom Line campaign analyzed compensation pools for the first three quarters of the year and projects that compensation will be up by 3.7 percent.

At BofA, despite heavy losses and plummeting stock prices this year, compensation setasides have increased by 7 percent, according to the group.

Last year JPM Chase CEO Jamie Dimon earned $10,400 an hour, according to NBL.

“These bonuses [represent] families facing foreclosure that can’t stay in their homes, taxes not paid, student loans not made.,” said Liz Ryan Murray of National People’s Action, which is part of NBL.   “These execs are rewarding themselves for damaging our communities and economy.”

Changes in executive compensation are credited with driving the high-risk investment strategies that crashed the economy three years ago.  With longterm unemployment and foreclosures still climbing, recovery is still a long way off.

But with the help of federal bailouts, big banks have recovered nicely; they currently sit on $2 trillion in cash reserves.  Rather than using the money to create jobs, they have spent lavishly on mergers and acquisitions, stock buy-backs, dividend payments, and executive bonuses, Murray said.

Occupy Homes targets bank’s bad faith Thu, 08 Dec 2011 01:27:50 +0000 Just as the Occupy movement gives voice to the widespread perception that our economic system isn’t fair and  doesn’t work for ordinary people, the growing movement to occupy homes responds to a foreclosure crisis caused by banks that are unresponsive and unfair to homeowners.

Case in point:  Sherri Norris.  She’s one of thousands of homeowners who’ve made good faith efforts to deal with mortgage troubles and been stonewalled and misled by banks.

Thursday she’ll announce that, with the support of her neighbors and of Communities United Against Foreclosure and Eviction, she’s staying in her home, despite an eviction order.

The announcement is scheduled for 6:30 p.m., Thursday, December 8, at her home at 2029 S. 17th Avenue in Broadview, a near-west suburb.

For over ten years, according to CAUFE, Norris made her mortgage payment every month, totalling over $70,000 in payments.  In the summer of 2008 she began struggling and wrote the bank a hardship letter.  US Bank suggested a modification and subsequently offered six trial modifications, charging up to $4,000 in upfront fees each time – but never making a modification permanent.

In 2010 she sought a modification under the government’s Making Homes Affordable program.  She says a bank official requested more documentation from her on November 27 of that year, and when she checked back two weeks later, she was told her home had been sold at auction.

According to CAUFE, US Bank then bought the property back for $33,000 – less than half of what Norris paid over them for it over 13 years.

Bank got bailed out

Simon Swartzman of CAUFE points out that in 2008, at the same time Norris was asking US Bank for help, the bank was going to the federal government for help, getting a $6.6 billion bailout.

“At the same time she was going to them for help – and they said they were helping, but they weren’t doing anything except taking her money – they were going to the government for help, and they were getting money on both ends,” he said.  “So when the bank asks for help, or when one of us asks the bank for help – either way they make money.”

Occupying homes is a way of forcing banks to negotiate, Swartzman said.  “It’s effectively going on strike,” he said, and if enough people do it, “it’s how we’ll get collective bargaining.”

In a letter to the bank, Norris said she wants them to “negotiate in good faith,” saying she wants to buy her home back – at its current value, and with a fixed-rate mortgage.  But, she says, she’s not leaving.

She’s been knocking on doors and finding much support among neighbors, Swartzman said. He estimated that there are 100 to 150 homes in the foreclosure process within her immediate neighborhood.