Saturday, February 26, 2011

Allen Park Michigan Sent Layoff Notices to Entire Fire Department; Allen Park, Hamtramck, Detroit are Bankrupt

Allen Park, Michigan, a town of about 28,000, sent layoff notices to its entire fire department. This is a procedural move because the town is unsure how many it will need to lay off. However, the situation looks grim.

Please consider Allen Park official says layoffs needed to plug $600K deficit

The city's finance director said today that Allen Park must lay off 25 to 30 employees by June to avoid a $600,000 deficit for the current fiscal year.

Tim McCurley said in an interview that the city sent layoff notices to everyone in the fire department to comply with a clause in the firefighters' union contract requiring a 30-day notice. He said some or all of the firefighters could lose their jobs, and that the police department faces layoffs too.

"It's not easy to lay people off," McCurley said. "No one wants to do that. It's never easy, but we are trying to work through it."

The finance director said the layoffs would only keep the city's books balanced for this year and have nothing to do with any funding cuts in Gov. Rick Snyder's proposed budget for fiscal 2012.

According to McCurley, the city faces a fiscal crunch because revenue in several areas has fallen short of projections. Collections from traffic tickets are $819,000 below what was budgeted, and ambulance billing collections are $200,000 under budget, he said.

McCurley said the city also had to refund $80,000 under order of the Michigan Tax Tribunal.

In other areas, spending has exceeded projections, including $130,000 in parks and recreation. McCurley said the city failed to budget for $150,000 for unused sick and vacation time for employees who have retired.

Overtime in the fire department is $150,000 over budget, even after firefighters agreed to limit overtime pay as part of concessions negotiated last year, McCurley said.

City Council members approved laying off the 25-person fire department Tuesday night.

Fire Chief Doug LaFond said he would be laid off as well.

But LaFond questioned the need to eliminate his entire force to make up for shrinking revenue.

"The bottom line is there aren't any other cities in the state of Michigan that are eliminating fire departments because of it," LaFond said.

The fire chief said he did not believe the entire police department was being threatened with layoff, but said the police force is about double the size of his department and could see significant cuts.
This is the second such maneuver we have seen recently where a town sent layoffs to an entire department.

In case you missed it, please consider Providence School Superintendent to Send Dismissal Notices to All 1,926 Teachers; Providence is Bankrupt

Allen Park, Hamtramck,Detroit are Bankrupt

I recommend Allen Park outsource its entire police and fire departments. Moreover, the Mayor should be in touch with the governor about petitioning for bankruptcy.

I have written about Detroit and Hamtramck before. Here are a few links.

It is virtually impossible to solve problems in those cities outside of bankruptcy. Contracts needs to be rewritten, pension obligations shed, and new wage structures mandated (not negotiated).

That cannot be done via collective bargaining, or indeed any kind of bargaining. The mayors and city managers of those towns should all get together and announce intention to default if the governor will not approve a valid bankruptcy process.

Defend the American Dream!

In Wisconsin and around our country, the American Dream is under attack.

Instead of creating much needed jobs, Conservatives are giving tax breaks to corporations and the very rich all while cutting funding for education, police, emergency response, and vital human services.

This is only the first battle in the right wing’s attempts to destroy the American Dream. We must stop it before it spreads to other states.

On Saturday, February 26, at noon local time, rallies will be organized in front of every statehouse and in every major city to stand in solidarity with the people of Wisconsin.

Show Solidarity with Wisconsin! Join the Saturday rally to save the American Dream.

Lawmakers urge Obama to release emergency

(Reuters) - Three U.S. lawmakers on Thursday urged President Barack Obama to consider tapping America's emergency oil supply to help lower crude prices that have spiked above $100 a barrel over disruptions in Libya.

The International Energy Agency, which coordinates policy among the world's consumer nations, has said it would likely let OPEC move first to address any supply shortages. But the call by the Democratic Representatives suggests pressure is starting to build for Obama to get more involved.

The lawmakers wrote in a letter that releasing oil from the Strategic Petroleum Reserve would help prevent the kind of runaway increase in oil prices that occurred in the summer of 2008, when crude reached a record $147 a barrel and gasoline hit an all-time high of $4.11 a gallon.

"We therefore urge you to consider leveraging the SPR to respond to these supply disruptions and combat the rapid price escalations resulting from rampant speculation in the oil markets," the lawmakers said in their letter to Obama.

The lawmakers did not recommend how much oil to release, but said pulling out even "a small fraction...could have a significant impact on speculation in the marketplace and on prices."

The letter was signed by Representatives Ed Markey, a relatively influential lawmaker who ran the House's erstwhile committee on climate change and energy independence, plus Rosa DeLauro and Peter Welch, all Democrats from Northeast states.

U.S. law allows the president to order the government to tap the reserve during a national energy supply shortage that raises petroleum prices and could damage the economy.

U.S. oil prices on Thursday touched $103.41 a barrel, the highest since September 2008, before settling at $97.28. Retail gasoline prices hit a national average of $3.19 a gallon this week, the highest pump price in nearly 2-1/2 years.

White House spokesman Jay Carney, asked about the lawmakers' request, declined to preview options to deal with lost Libyan oil exports and high petroleum prices.

"We have the capacity to act in case of a major supply disruption," said Carney. He added the United States was speaking with the International Energy Agency and major oil producing countries about oil supplies and prices.

Obama, in his campaign for president in 2008, said he would use the reserve to bring down high oil prices at the time.

The U.S. Department of Energy has released SPR stocks a handful of times -- most recently when Hurricane Katrina knocked out Gulf Coast refineries in 2005. DOE has generally said it would only dip into the 727 million barrel oil caverns in the event of a severe supply disruption.

While Libya's 1.3 million barrels per day (bpd) of oil exports is meaningful for the global oil market, the United States imports only about 77,000 bpd from Libya, around 0.4 percent of U.S. consumption. Saudi Arabia has already begun speaking to European refiners who buy most of Libya's oil.

The administration could have an impact on prices even if it said it was thinking about tapping the reserve, they said.

"Signaling your intent to consider selling oil from the SPR in the near term would send a strong signal to oil markets responding to the unrest in the Middle East," the lawmakers said.

Ex-Taylor, Bean Official Admits Guilt in $1.9 Billion Fraud

The former treasurer of Taylor, Bean & Whitaker Mortgage Corp., once the 12th largest mortgage lender in the U.S., admitted helping run a $1.9 billion fraud scheme that targeted the government’s Troubled Asset Relief Program and contributed to the failure of Colonial Bank.

Desiree Brown, 45, pleaded guilty in federal court in Alexandria, Virginia, to conspiring to commit wire fraud, securities fraud and bank fraud, and agreed to cooperate with prosecutors bringing Lee Farkas, former chairman of Taylor, Bean, to trial on April 4. Brown also settled civil charges with the Securities and Exchange Commission, the SEC said.

Until today, Farkas, 58, was the only person charged in what the government said was a massive scheme to deceive financial firms and TARP by covering up shortfalls at Taylor, Bean, once the largest non-depository mortgage lender in the U.S., according to the SEC’s statement on the case. Farkas was indicted on 16 counts in June and faces the possibility of spending the rest of his life in prison, according to a Justice Department statement.

“Were there other people besides Mr. Farkas who were involved in this scheme,” U.S. District Judge Leonie M. Brinkema asked Brown at the plea hearing?

“Yes ma’am,” Brown answered.

Brown, of Hernando, Florida, faces a maximum penalty of 30 years in prison, a $250,000 fine and an order to pay restitution to more than 250 victims. Brown, who is to be sentenced on June 10, was released on a $50,000 unsecured bond.

Hidden Overdrafts

The crime included conspiring to transfer funds between closely held Taylor Bean and Colonial Bank, a unit of Colonial BancGroup Inc., to hide overdrafts, prosecutors said. The bank was one of the 50 largest in the U.S., according to the government.

The SEC’s complaint alleges Brown violated antifraud, reporting, books and records and internal controls provisions of federal securities laws. She agreed to an injunction against future violations without admitting or denying the SEC’s allegations.

In the criminal case, Brown admitted that from late 2003 through August 2009, she, Farkas and other unidentified individuals conspired to defraud Colonial Bank, Colonial BancGroup Inc., shareholders of Colonial BancGroup, TARP, and investors in Ocala Funding LLC, which included Deutsche Bank AG and BNP Paribas SA, according to Brown’s statements in court and a Justice Department statement.

Scheme to Defraud

One of the goals of the scheme was to obtain funding for Taylor, Bean to help cover expenses for operations and “servicing payments owed to third-party purchasers of loans and/or mortgage-backed securities,” the department said in the statement.

The U.S. said the scheme contributed to the failures of Colonial Bank and Taylor, Bean, which was based in Ocala, Florida.

William Cummings, a lawyer for Farkas, attended today’s hearing. In an interview, he said he expected more guilty pleas before his client goes to trial. He said his client, who has pleaded not guilty, has had some settlement discussions with the government though “nothing has come out of it yet.”

Brown said in court that she has been talking with the government for the past six months. Brown was vice president of special projects at Taylor, Bean starting in October 2002. In 2004, she was named controller and then treasurer.

Fake Mortgage Assets

Brown, Farkas and unnamed conspirators sold Colonial Bank more than $400 million in fake mortgage assets in a scheme they called “Plan B,” according to the Justice Department statement.

The conspirators sent mortgage data to Colonial Bank for loans that didn’t exist or that Taylor, Bean had already committed or sold to other third-party investors, the Justice Department said.

“As a result, the Plan B loan data was recorded in Colonial Bank’s books and records, and gave the false appearance that Colonial Bank had purchased legitimate interests in mortgage loans from TBW,” the department said.

Brown, Farkas and the conspirators diverted more than $1 billion from Ocala Funding, a mortgage lending facility controlled by Taylor, Bean & Whitaker to cover its losses, according to the statement.

Ocala Funding sold asset-backed commercial paper to financial institutions including Deutsche Bank, Germany’s biggest bank, and Paris-based BNP Paribas, according to Farkas’s indictment.

Operating Losses

In 2008, when Taylor, Bean’s operating losses mounted, Farkas and his conspirators allegedly tried through Colonial BancGroup, Colonial Bank’s Montgomery, Alabama-based holding company, to obtain about $553 million through TARP, prosecutors said.

The application for funding included false information, and investigators detected irregularities before any TARP money was released, according to the Justice Department.

Alabama regulators seized Colonial Bank in 2009 and the Federal Deposit Insurance Corp. was appointed as receiver. Colonial BancGroup filed for bankruptcy in 2009.

The Brown case is USA v. Brown, 1:11-cr-00084, and the Farkas case is USA v. Farkas, 1:10-cr-00200, U.S. District Court, Eastern District of Virginia (Alexandria).

Politicians Slash Budget of Watchdog Agencies ... Guaranteeing that Financial Fraud Won't Be Investigated or Prosecuted

As I noted last year, you can tell how interested Congress and the White House are in uncovering the truth by looking at how much money is actually budgeted for investigation:

The government spent $175 million investigating the Challenger space shuttle disaster.

It spent $152 million on the the Columbia disaster investigation.

It spent
$30 million investigating the Monica Lewinsky scandal.

The government only authorized $15 million for the 9/11 Commission.

And how much has the government authorized for the Financial Crisis Inquiry Commission? You know, the commission charged with getting to the bottom of what caused the financial crisis?

Just $8 million.

These figures don't account for inflation. For example, the Challenger investigation cost over $300 million in today's dollars.

You can tell alot about the questions which the government is truly interested in finding answers to by the amount of money it authorizes for the various investigations.

The lack of any real interest in uncovering - let alone prosecuting - financial fraud is again on display.

Specifically, as the Wall Street Journal reports today (via MarketWatch):

The Commodity Futures Trading Commission has halted development of a technology program used to flag suspicious trading because of an $11 million cut in its technology budget, increasing rancor within the small agency about how it should spend its money.


The tensions offer a taste of spending battles to come at the CFTC and Securities and Exchange Commission if, as seems increasingly likely, Congress refuses to increase the agencies' funding to deal with new mandates created by the Dodd-Frank financial-reform act.

These squabbles have a long history, and often involve budget-process bluffing and gamesmanship between Congress and regulators. The regulators say it's different this time because of the extensive new responsibilities they have been handed under last year's Dodd-Frank legislation. The two agencies say they need another 1,200 staff in total to implement and enforce the sweeping financial overhaul.

"If the requested budget increases are not granted, we will manage within our allocated resources but we'll face a lot of bad choices," Luis Aguilar, a Democrat SEC commissioner, said in an interview.

Such tough choices are already being faced by the CFTC, which has cut $11 million from this year's technology budget, some of which was supposed to help the agency expand an automated surveillance system to examine trades in the futures market.

The system is used to scan millions of trades, looking for patterns that suggest potentially illegal activity. It has only a "handful of alerts, when we need dozens of them," according to someone familiar with the situation.

"It's something we should already have had," Mr. O'Malia, the Republican, said in an interview. "Technology is important in every investigation. We need to look at massive amounts of data, millions of trades."


Enforcement work at the SEC is also suffering from an austerity drive, say SEC officials. A ban on nonessential travel has left a number of investigations "in limbo," according to a person familiar with the situation. The person said that foreign bribery cases are being hit particularly hard, because of the need for overseas travel to investigate the allegations.

Complex accounting-fraud cases are also being affected by curbs on the use of expert witnesses, the person said.

"We've had budget freezes before. But this level of clampdown, with every nickel being flyspecked before we can spend it, is unprecedented in my experience," the person said.

Mr. Aguilar warned that the current funding squeeze was "debilitating" for the SEC. "The adverse impact that it has cannot be overstated," he said.

Rep. Scott Garrett (R., N.J.) a top member of the House Financial Services Committee, last month argued that the big spending increases being sought by the agencies "would further the mindset that our nation's problems can be solved with more spending, not more efficiency."


Both the CFTC and SEC took on extra staff last year, in anticipation of budget increases pledged—but not guaranteed—by Congress to meet their new responsibilities under the Dodd-Frank law. Now they are being forced to cut other spending to meet their higher staffing costs.

The CFTC on Thursday discussed rules to curb "disruptive trading" required by the Dodd-Frank Act. But the agency says it will be unable to use new powers it has under the act to tackle fraud and manipulation unless it is given more funding.

"We've had this terrible track record [on prosecuting manipulation cases] because the law has not been strong enough," said Bart Chilton, a Democratic CFTC commissioner.

"We finally got the authority we needed and now we're not going to be able to use it," Mr. Chilton said.
It is very telling that we have enough money to extend the Bush tax cuts, to throw boatloads of cash at the big banks so that they can give lavish bonuses, and to continue fighting never-ending wars on multiple fronts giving no-bid contracts to favored contractors, but we can't scrape together a little spare change to fund the regulators and prosecutors.

The economy cannot stabilize unless fraud is prosecuted. But the folks in D.C. seem determined to turn a blind eye to Wall Street shenanigans.

House Republicans Move to End Foreclosure Aid Programs

HAMP isn't working and actually serves to entrap borrowers into foreclosure, by the millions in fact, which makes this the smart and correct policy decision. But politics is about perception, and this is not a good headline. For anyone.


Source - Bloomberg

U.S. House Republicans plan to move forward with bills that would end anti-foreclosure programs put in place by the administration of President Barack Obama, saying they are doing more harm than good.

The House Financial Services Committee will consider bills next week to terminate four mortgage assistance programs, including the Treasury Department’s Home Affordable Modification Program, or HAMP.

“In an era of record-breaking deficits, it’s time to pull the plug on these programs that are actually doing more harm than good for struggling homeowners,” Representative Spencer Bachus of Alabama, the chairman of the panel, said today. “These programs may have been well-intentioned but they’re not working and, in reality, are making things worse.”

While the Treasury Department reported that more than 30,000 homeowners permanently lowered their mortgage payments in December as participation in HAMP accelerated, the program has failed to reach Obama’s goal of helping 3 million to 4 million homeowners avoid foreclosure. Troubled borrowers continue to fall out of the program at a faster rate than they join. A total of 58,020 loan modifications had been canceled through December, according to the Treasury.

Continue reading...


HAMP Needs to Go

Liberals agree it's the correct decision

"What is infuriating is that their logic is practically unassailable at this point," writes David Dayen of FireDogLake, a longtime critic of the program. "And this is why HAMP was so damaging. The government ruined its own brand with a program that hurt the people it was meant to help. This is why I've said for almost a year that HAMP gravely hurt liberalism. I cannot argue with Issa and Jordan and McHenry when they say that HAMP has to go."

The House bill would snag the unspent HAMP money and return it to the Treasury to pay down the national debt.

"A Banking Banana Republic": Wall Street's Record $130 Billion Bonus, FCIC Report - Michael Lewis & Dylan Ratigan

Video - Dylan Ratigan with Michael Lewis - Feb. 2, 2011

The real unemployment rate hovers above 22%, new job creation is stagnant, but Wall Street pay is up 5.7% this year to $130 billion.

All thanks to you, Mr. and Mrs. Taxpayer.

Michael Lewis and Dylan Ratigan wonder why taxpayer outrage seems to have dissipated so quickly. Has it really? Wisconsin doesn't happen without the residual, underlying, seething anger from the Wall Street bailouts. It's a hell of a lot easier now to stand up and so no f^^^ing way when you can point to a group of unappreciative fatcat bastards, living high on your hog.

Further reading...