Countrywide Again Adds to Homeowner Misery

The payment of debts is necessary for social order. The non-payment is quite equally necessary for social order. For centuries humanity has oscillated serenely unaware, between these two contradictory necessities.
Simone Weil (1909-43), philosopher

Open Letter to Countrywide Bank:

I find your organization to be despicable and if it didn’t further hurt the country or the economy, I would love to see Countrywide Bank go bankrupt. I believe your former CEO should be fined and jailed for the reminder of his days.

It seems to me that if there was a ground zero on this loan fiasco that is causing so much grief to so many, Countrywide Bank was there. What has inspired this note is your latest missive informing your customers that they no longer have a line of home equity credit. I didn’t even ask or apply for a home equity credit line, but you sent me a credit card with an astronomical amount of available credit. I locked it away in a safety deposit box in case of emergency, good thing I didn’t count on Countrywide Bank.

Thankfully, I did not have to use mine, but there are many now who may need it. Once again, Countrywide Bank is right there to add to the misery of others. The Countrywide Bank rationale is that home values have declined so rather than attempting to find a solution to a problem Countrywide Bank so readily help make, you are kicking your customers when they are down.

I was shocked when I applied for my home loan and was told that copies of my pay stubs were not necessary. I thought maybe it had to do with our down payment, but you were not requiring any documentation before handing out sums of money to many people who could not afford it, but you convinced them they could take out a crazy adjustable loan even when loan rates could do nothing but go up because they were at historic lows. Again, because I knew better, I did not fall prey to your thimblerig tactics, but far too many did.

Congress needs to impose regulations on financial institutions, which of course won’t happen until we get the current disastrous administration the hell out of office, because greed instead of corporate responsibility is always the rule when there are no rules.

Corporate Greed and the Need for Regulation

Economic depression cannot be cured by legislative action or executive pronouncement. Economic wounds must be healed by the action of the cells of the economic body - the producers and consumers themselves.”
Herbert Hoover (1874-1964) Last Republican president to lead the country into depression

Why do we need government regulation? Because we cannot count on companies to have the best interest of the consumers in mind, ever! It’s all about CEOs and management bonuses, stock options and enriching the executive branch or to use corporate jargon, enriching the C-suite.

The latest news is that shipping companies (FedEx, UPS, etc.) and wireless (AT&T, Verizon, etc.) providers all round up charges to their customers. As the article in the Sunday LATimes points out your butcher does not round up and the technology is there to install the precise measurements to determine cell phone usage to one-millionth of a second or weigh your package to the microgram or even on-millionth of a gram.

Unfortunately if all the companies are doing the same thing there is no incentive for the marketplace to change the practice, which is why government regulation is needed.

Gilded CEOs

The wish to acquire more is admittedly a very natural and common thing; and when men succeed in this they are always praised rather than condemned. But when they lack the ability to do so and yet want to acquire more at all costs, they deserve condemnation for their mistakes.
Niccolò Machiavelli (1469–1527), political philosopher

In just twenty-five years we have gone from the American century to the American crisis.” Felix Rohatyn, the financier and social critic, tells David Halberstam. “That is an astonishing turnaround – perhaps the shortest parabola in history,” so reads the dust jacket to the book "The Reckoning" by Halberstam from 1986.

The Reckoning is the account of Detroit automakers’ arrogance toward the Japanese automakers and the predicted oil crisis. Surprisingly, this country continues to do little. The not so big three manufacturers continue to produce oversized cars and trucks, layoff thousands of employees, lose billions of dollars. Still, they do little.

Most brazenly, Ford paid its new president and CEO Alan Mulally $39.1 million for four months on the job last year. Five million dollars of the compensation was his signing bonus. Last year, the company lost $12.7 billion in 2006, the largest loss in its 103-year history. I suppose Mulally could see his bonus increase if Ford loses even more next year.

In today’s Los Angeles Times, it reports that Occidental’s CEO received $460 million in compensation. This is outrageous! We have heard ever excuse from the oil companies about high prices ranging from mice, hurricanes, to refinery capacity. If companies and their board of directors put some of this excess money back into the business it would help them, employees and the country stay competitive. Greed is not good.

Get a Raise – Lose your Job

Unemployment insurance is a pre-paid vacation for freeloaders.
Ronald Reagan (1911 - 2004), Republican president

Insecurity in the workforce is getting worse, according to this New York Times article. It’s bad enough that companies fire or lay off employees at will when management's bonuses are threatened, but now if you have been in the workforce too long and bring experience it will also count against you.

Circuit City, which deserves to be out of business based on my personal experience of trying to get any kind of customer service, has fired 8% of its employees (3,400 people, no doubt all frontline staff and no upper management), because their pay has inched up too high. God forbid that someone should be able to make a real living without working two jobs or even the equivalent hours of two jobs!

The laid-off Circuit City employees worked in the company’s stores and warehouses, selling electronics, unloading boxes and the like. They generally earned $10 to $20 an hour, making them typical of the broad middle of the American work force. Nationwide, the median hourly wage of all workers is about $15.

A key part of the story is that when store managers divvied up the yearly percentage increases, giving the employees 3% to 4% it apparently put them in danger of losing their positions. Hmm, I wonder what percentage increases and bonuses management passed out to themselves?

Not all is lost. These employees can apply for their old jobs, but at a lower wage. If an employee who applies for his/her job back at a lower wage, what do think the chances of loyalty to the company will be? The employee will leave in a heartbeat and a one- or two-week notice be damned. And, what if she/he does a good job and receives an increase does that put the employee at threat of losing his/her job, again?

Circuit City had already lost my business, I think it’s time they lose yours too.

We believe that if men have the talent to invent new machines that put men out of work, they have the talent to put those men back to work.
John F. Kennedy (1917–63), Democratic president

Update: From the Wall Street Journal nightly wrap up -- Circuit City Falters, Best Buy Soars Circuit City seems to have spent the last few months stumbling around in the dark. Bruised by a price battle on flat-panel televisions, the company said in February that it would shutter over 60 of its international stores and seven of its U.S. stores as part of a huge restructuring plan. Maybe it should start with a new CEO.