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Occupy Austin, Occupy Bronzeville

Occupy Austin and Occupy Bronzeville, joined by people from Occupy Chicago, will begin a new drive to occupy foreclosures at actions on the West and South Sides tomorrow.

They’ll rally with tenants of a foreclosed building who are resisting what they say are illegal attempts to evict them from a 12-unit rental building, just two weeks after foreclosure.

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‘An amazing convergence’

It’s been a remarkable week in Chicago, a nonstop whirl of protests targeting the financial industry and government collusion with corporations, and demanding action on jobs, housing, and schools.

Coming Friday:  a rally for “jobs not cuts,” with MoveOn, Stand Up Chicago, Chicago Jobs With Justice and Occupy Chicago joining forces, at noon at the Federal Plaza.

Occupy Chicago gets much credit for capturing the public’s imagination – and for their 24-7 commitment and important organizational innovations.  But it was community groups and unions that staged some of the most dramatic and creative actions here this week.

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This could be the start of something big

New and old strands of youth, community, labor and peace organizing – voicing growing anger over the state of our economy and our democracy – will come together in a series of events here over the next week, with thousands expected for a major Columbus Day demonstration.

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Communities to banks: You can fix housing crisis, economy

Banks caused the housing crisis — and the financial crash which threw millions out of their jobs — and they can fix it, according to a new report.

By writing down underwater mortgages to market value – using a relatively small portion of bailout financing they’ve received – banks could put a floor on the housing market, stem spiraling foreclosures, and provide the economy with a badly-needed second stimulus, creating millions of jobs over the next decade, the New Bottom Line Campaign argues in a new analysis.

It was released in Chicago last week at a vacant home on the West Side that’s being rehabbed under a new program — which demonstrates how community pressure can force banks to step up and take responsibility, organizers say.

(And it came out the same day Mayor Rahm  Emanuel announced a foreclosure recovery program that includes not one single community on the hard-hit West Side.)

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Building credit in low-income communities

A few years ago, Ricki Lowitz noticed a problem with individual development accounts offered by Centers for Working Families and similar groups: the savings generated by low-income people in IDAs could be completely eaten up by high interest rates when they purchased a home or another major asset.

CWF clients were getting high interest rates because they had low – or no — credit scores.

In response, CWF developed a new credit-building loan program which the group says has shown “tremendous results” in its first year.

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Charge ‘toxic rate swaps’ cost CPS millions

With budget deficits on every horizon, there’s new attention on banks that are raking in exorbitant windfall profits from their business with public entitities.

A couple weeks ago community groups targeted JP Morgan Chase, demanding the bank renegotiate “toxic rate swaps” which are costing the state hundreds of millions of dollars (see previous post).

Tomorrow the Chicago Teachers Union will demand that banks end interest rate swap agreements with CPS – some of which run through 2036, according to the union.  They want four banks to return $125 million they’ve made from the deals since interest rates plummetted following the financial crash in 2008.

Cook County Clerk David Orr with join CTU president Karen Lewis at a press conference at 9:45 a.m., Wednesday, May 25, outside the Bank of America Building, 135 S. LaSalle.

Bank of America: ‘pay your taxes’

Community activists will deliver a message to Bank of America today, and another one to Senator Mark Kirk.

Members of ten community groups, under the umbrellas of the Chicago Housing Initiative and the Illinois Indiana Regional Organizing Network, will march on Bank of America (135 S. LaSalle) at 4 p.m. today demanding that they stop evading taxes.

Then they’ll head to Kirk’s office (230 S. Dearborn) to call on him to stand against cuts to services for low-income families until major corporations pay their share of taxes.

Chicago Housing Initiative maintains that Bank of America evaded a $3.8 billion tax bill this year using “accounting tricks and offshore tax havens” – reducing the bank’s stated earnings and actually netting it a $666 million tax rebate.

“That $3.8 billion in lost revenue could single-handedly prevent all the cuts to Head Start, LIHEAP, community health centers, and housing for the elderly, people with disabilities, and homeless veterans under consideration in the Senate currently,” according to the group.

“Our message to Kirk is that until big banks and corporations start paying their share of taxes, cuts to services for low-income families shouldn’t be on the table,” said organizer Leah Levinger.  “It’s inhumane – and it doesn’t do anything significant to shore up the budget.”

Last gasp for RALs?

It could be the last gasp for tax refund anticipation loans: Jackson Hewitt is reported to be considering bankruptcy while its bank fights an FDIC order to cease and desist funding the loans, known as RALs.

“It looks like [RALs] are on the way out,” said Katie Buitrago of the Woodstock Institute.

Woodstock and other consumer advocates have long called on regulators to clamp down on RALs – and on banks to stop financing them – arguing they are high-cost credit products which drain wealth from low-income taxpayers and communities of color.

Woodstock estimates that RALs divert well over $100 million a year from Illinois taxpayers’ returns.  The product is marketed at recipients of the earned income tax credit, undercutting the effectiveness of this anti-poverty program.

The “continual push for stricter guidelines and policies regarding RALs” by consumer advocates and financial regulators “seems to have paid off,” commented Karen Harris at the Shriver Center’s blog.

A year of setbacks

The past year has seen a series of setbacks for RALs.

Last February, Newstips reported that the Office of the Comptroller of the Currency was cracking down on deceptive marketing about RALs.

In April, JPMorgan Chase announced it would no longer offer RALs.

In August, the IRS announced it would no longer provide tax preparers with “debt indicator” information, which reveals whether a taxpayer has outstanding tax liabilities that could reduce an expected refund.  Consumer advocates had pushed for the change, arguing that the only use of the debt indicator was to facilitate the sale of RALs.

In October, HSBC announced it would stop financing RALs for H&R Block, and H&R sued the bank.  But in December the OCC ordered HSBC to get out of the RAL business, and H&R followed by dropping the product.

In December, Jackson Hewitt and Liberty Tax Service entered agreements with Republic Bank and Trust, based in Louisville, the last major bank financing RALs. But in February, the FDIC began an administrative proceeding aimed at ordering Republic out of the business.  The agency said the product is too risky and that it “is of no value to the end user.”  Republic is fighting the proceeding in court.

Jackson-Hewlitt’s financial difficulties are linked to the clampdown on RALs, which are the company’s most profitable product, according to Reuters.

Market factors are also undercutting the attractiveness of RALs.  Electronic filing and direct deposit makes tax refunds available in a week or two, about the same timeframe as RALs offer.

Republic is charging about $62 for a RAL on a $1,500 refund – an APR of 149 percent, according to the National Consumer Law Center.  Tax preparation fees can boost costs to well over $100.

A free alternative

Meanwhile, volunteer income tax assistance (VITA) services continue to provide free tax preparation for low-income families.  The challenge is getting the word out, said Rolando Palacio of the Center for Economic Progress.

With nearly 1,000 volunteers at almost 30 locations in communities around Chicago and Illinois, CEP provides free assistance to help taxpayers claim the EITC and other tax benefits. (Locations and other information is available at 888‐827‐8511.)

The group celebrated its 20th anniversary last year.  Since 1990 CEP has served 270,000 families and brought $400 million in refunds to Illinois taxpayers.

CEP has partnered with banks to provide low-cost accounts for filers, helping them get direct deposit of refunds as well as access to banking services and a head start on saving.  The Treasury Department is now piloting a similar program, Palacio said.

The City of Chicago and the Illinois Department of Human Services have helped publicize the program with inserts in mailings, Palacio said.  But more could be done.

In the 2007 tax year, more than half of 6.3 million filers in Illinois used professional tax preparers; 110,000 used VITA and other free services, he said.

Increased federal funding is one thing that would help, Palacio said.  An $8 million demonstration program providing federal funding for VITA programs was increased to $12 million last year, but the need is far greater, according to the National Community Tax Coalition, a coalition of VITA services spearheaded by CEP.  The coalition calls for increased federal funding to VITA services on a permanent basis.

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