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Mortage Lender GMAC Retaliates Against Massachusetts Lawsuit By Ending Most Lending In The State

This week, Massachusetts Attorney General Martha Coakley announced that she will be suing five major banks for financial crimes that include wrongful foreclosure, in a major victory for the 99 Percent.

Today, one of those financial institutions announced that it would be retaliating against the state of Massachusetts for this lawsuit. GMAC now plans to end most of its lending in the state of Massachusetts, claiming that lending in the state is now “no longer viable“:

GMAC Mortgage, the mortgage lender of Ally Financial Inc., is exiting the vast majority of its lending in Massachusetts a day after the state sued it over its foreclosure practices. The nation’s fifth-largest mortgage originator said it “has taken this action because recent developments have led mortgage lending in Massachusetts to no longer be viable,” ratcheting up the high-stakes mortgage fight there.

By pulling business from Massachusetts after being sued for illegal practices such as wrongful foreclosure — which is, in essence, stealing people’s homes — GMAC is basically practicing a capital strike, tweets blogger Matthew Stoller.

Update

Troubled Asset Relief Program (TARP ) Inspector General Neil Barofsky tweets that GMAC parent company Ally’s behavior is disgraceful:

GOP Stimulus Critic Launches Senate Campaign At Company That Benefited From Stimulus Funds

There has been plenty of stimulus hypocrisy within the GOP — as Republican lawmakers try to take credit for jobs and projects funded by the Recovery Act that they opposed — but few have managed to register on the hypocrite dial before even getting on the campaign trail. However, that’s what former Gov. Tommy Thompson (WI) did when he announced yesterday that he will contend for the GOP nomination for Wisconsin’s Senate seat that is being vacated by retiring Sen. Herb Kohl (D).

Thompson has been a critic of the Recovery Act, saying that he was “disturbed” with the direction of the country following the stimulus vote, and his advisers highlighting it as an example of “runaway government spending.” But as it turns out, Thompson decided to kick off his campaign at a company that has benefited from stimulus dollars:

Former Gov. Tommy Thompson hasn’t been afraid to attack others for backing President Barack Obama’s controversial stimulus package. [...] So isn’t it odd that Thompson is officially launching his bid for the U.S. Senate today at a company that directly benefited from the Recovery Act?

Federal records show Weldall Manufacturing in Waukesha was awarded $300,000 in stimulus dollars in October 2010 under an energy project overseen by the state Department of Administration. Here are the project specifics.

The funding created about 100 jobs at the company. Not only did the Recovery Act help at that company, but it also went to aid several companies with which Thompson is involved. In fact, “Logistics Health of La Crosse – of which Thompson is the president – got $277,000 stimulus dollars for 3 contracts.”

Thompson explained that he was unaware that the company at which he made his announcement had received Recovery Act funding, but that “it was a good thing if it created jobs.”

Education

Bloomberg: If I Could, I’d Fire Half Of New York City’s Teachers

New York City Mayor Michael Bloomberg has already run into his share of educational policy problems, like appointing Cathie Black, a former publishing executive with no professional education experience, as chancellor of the city’s public schools. That experiment failed, lasting just three months. And in an effort to balance the city’s budget without tax increases, he introduced a plan that cut 6,000 teaching jobs. That followed warnings that he may have to lay off 15,000 teachers a year after proposing a budget that sought 6,700 teacher layoffs.

But those cuts pale in comparison to what Bloomberg wants to do to the city’s educational workforce. Speaking at the Massachusetts Institute of Technology, Bloomberg said his version of education reform would include firing half of the city’s teachers and doubling class sizes, CBS New York reports:

“Education is very much, I’ve always thought, just like the real estate business. Real estate business, there are three things that matter: location, location, location is the old joke,” Bloomberg said. “Well in education, it is: quality of teacher, quality of teacher, quality of teacher. And I would, if I had the ability – which nobody does really – to just design a system and say, ‘ex cathedra, this is what we’re going to do,’ you would cut the number of teachers in half, but you would double the compensation of them and you would weed out all the bad ones and just have good teachers. And double the class size with a better teacher is a good deal for the students.”

The size of Bloomberg’s ideal cut is astounding. The city of New York employs roughly 75,000 public school teachers — so if Bloomberg had his way, he would fire 37,500 of those, leaving the remaining 37,500 in charge of the city’s 1.1 million students. Doubling class size, meanwhile, would grow average class sizes in high school core subject areas (Math, Science, and English) to more than 50 students, according to data from the New York City Department of Education. According to the United Federation of Teachers, some class sizes would exceed 70 students.

None of that, however, seems to faze Bloomberg. “The best thing you can do is put the best teacher you can possibly find and afford in front of the classroom,” he said. “And if you have to have fewer because there’s only a certain number of dollars to go around, I’m in favor of that.”

After Signaling Support, John Boehner Calls Tax Break For Middle Class ‘Chicken-Shit’

Despite their stated opposition to tax increases, Republican lawmakers have been largely cool or even hostile to a proposed extension of the temporary payroll tax cut, pushed by President Obama and Democrats. Finally, this week, Republicans seemed to relent as GOP congressional leaders publicly urged their caucuses to vote for an extension of the plan. “The fact is that Republicans are doing everything we can to allow American families and small businesses to keep more of what they earn,” Speaker John Boehner (R-OH) said this morning of efforts to whip GOP lawmakers to support an extension.

But in private, Boehner seems to hold a different view. Politico reports that in a closed-door GOP meeting this morning, Boehner referred to an extension of the payroll tax holiday as “chicken-shit,” saying he wanted to tack on unrelated legislation favored by Republicans to make it palatable:

GOP leadership told its membership at a closed-door meeting Friday morning it would couple with the expiring tax provisions an easing of environmental regulations on boilers, selling broadband spectrum and paving the way for the controversial Keystone XL pipeline. [...]

Speaker John Boehner referred to the package he’s putting forward as turning “chicken-sh — into chicken salad,” according to people attending the meeting in the Capitol basement Friday morning.

Translated, he’s going to pass President Barack Obama’s preferred tax cut, but he wants some skin from Democrats for it.

So which is it? Does Boehner actually believe in extending the payroll tax holiday for the middle class, or is that “chicken-shit”? An extension of the payroll tax holiday would help 95 percent of working families, but would disproportionately benefit working and middle-class people, as there’s a cap that prevents wealthy people from being taxed on anything they make over about $100,000.

Last night, Republicans in the Senate killed a Democratic bill that would have extended the middle-class tax holiday while raising taxes slightly on just the wealthiest 0.4 percent of Americans.

Taking A Moral Stand, American Airlines CEO Retires With No Severance Package As Company Goes Bankrupt

American Airlines CEO Arpey decided to retire and skip the golden parachute.

This week, American Airlines, the world’s fourth largest airline, filed for Chapter 11 bankruptcy. This is a step that former CEO Gerard Arpey, who just resigned, did not want to take.

For years, major airlines have “slashed wages and pensions after similarly declaring bankruptcy,” using the financial process to avoid obligations to their workers. For example, when United Airlines declared bankruptcy, its employees faced the “single largest pension default in U.S. history.” Some pilots at Aloha Airlines lost 90 percent of their retirement benefits after that business declared bankruptcy.

So instead of leading the company through bankruptcy, Arpey decided to retire after 30 years with the company, denying him any severance pay.

D. Michael Lindsay, the president of Gordon College, interviewed Arpey for a New York Times op-ed about his choice. Arpey told Lindsay that he wanted his company to honor its commitments to its workers:

When we discussed the prospect of bankruptcy at American he spoke with an almost defiant tone of the company’s commitment to its employees and holders of its stock and debt. “I believe it’s important to the character of the company and its ultimate long-term success to do your very best to honor those commitments,” he said. “It is not good thinking — either at the corporate level or at the personal level — to believe you can simply walk away from your circumstances.”

“This country would be so much better off if we had more people who had Gerard Arpey’s sense of responsibility and character as well as ability,” said David Boren, the president of the University of Oklahoma and a former governor and U.S. senator.

Arpey distinguishes himself from his predecessor, Donald Carty. Carty resigned “after it was disclosed that…executives’ pensions were protected in a separate trust, at a time when union members were being asked to approve deep concessions for their members.”

Serial Vacationer Newt Gingrich Falsely Claims People Use Food Stamps To Go To Hawaii

Gingrich has mastered the art of wearing Hawaiian leis.

As GOP contender Newt Gingrich rides an unexpected surge in the polls, he’s drawing a lot of criticism for his comments deriding poor children for not working and suggesting they should take up janitorial positions at their own schools.

Attacking poor Americans who need government aid is a favorite pastime for Gingrich — in nearly every speech he attacks President Obama for being a “food stamp president.” He took his routine even further this week when he claimed that food stamp recipients use their government aid to take trips to Hawaii:

So more Americans now get food stamps therefore and we now give it away as cash,” Gingrich said of President Obama. “You don’t get food stamps. You get a credit card and the credit card can be used for anything. We’ve had people take their food stamp money and use it to go to Hawaii.”

The completely bogus claim earned Gingrich a rare “pants on fire” from PolitiFact:

Can food stamps “be used for anything”? No. The food stamp program… known as the Supplemental Nutrition Assistance Program, or SNAP…has very precise rules about what can and cannot be paid for.

According to the Agriculture Department, which runs SNAP, households can use benefits to buy groceries or to buy seeds and plants which produce food…in general, SNAP funds cannot be used for restaurant meals. Other types of foods and beverages cannot be paid for with SNAP funds, including beer, wine or liquor; vitamins; food that will be eaten in the store; or hot foods. [...]

If the food stamp system bars beneficiaries from buying decorative gourds rather than pumpkins, you can be sure it also bars the purchase of airline tickets.

The average monthly SNAP benefit is less than $134 per person — not nearly enough to cover the cost of an airline ticket to Hawaii. So the suggestion that families that are struggling to feed themselves blow their food budget on a lavish tropical vacation is absurd on its face. Fraud in the food stamp program actually reached an all-time low in 2009. Gingrich’s comments were so ridiculous they prompted PolitiFact to wonder “whether he was really intending to be serious.”

It was a deeply ironic charge coming from a man whose own frequent vacations nearly destroyed his presidential campaign not so long ago. In June, Gingrich’s campaign staff quit en mass to protest his lengthy vacations with his wife and refusal to campaign seriously. Gingrich himself took a trip to Hawaii in August, ostensibly to campaign (in the most Democratic state in the nation).

Gingrich has even tried to turn his vacationing into an asset, claiming that he has a much better understanding of the European financial crisis thanks to a recent luxury cruise in Greece.

In 2007, Gingrich Praised Fannie And Freddie For ‘Important Contributions’ To Boosting Middle Class Homeownership

The Republican presidential primary has thus far been devoid of ideas on how to address America’s collapsed housing market, as multiple candidates have advocated doing nothing for homeowners who are underwater or in foreclosure. Instead, the candidates have inaccurately focused blame for the crisis on the government and its mortgage giants, Fannie Mae and Freddie Mac.

Former House Speaker Newt Gingrich (R), now the race’s frontrunner, has been among those candidates, despite his past work on behalf of both Fannie Mae and Freddie Mac. But that wasn’t always the case for Gingrich, who in 2007, while working for the mortgage agencies, talked up the importance of government-sponsored enterprises (GSEs) like Fannie and Freddie and their vital roles in filling gaps that neither the government nor the private sector can do efficiently and cost-effectively. Gingrich specifically praised Fannie and Freddie for their role in boosting America’s middle class by making homeownership “accessible and affordable,” telling conservatives they “should embrace” such policies, as Verum Serum reports:

Certainly there is a lot of debate today about the housing GSEs, but I think it is telling that there is strong bipartisan support for maintaining the GSE model in housing. There is not much support for the idea of removing the GSE charters from Freddie Mac and Fannie Mae. And I think it’s clear why. The housing GSEs have made an important contribution to homeownership and the housing finance system. We have a much more liquid and stable housing finance system than we would have without the GSEs. And making homeownership more accessible and affordable is a policy goal I believe conservatives should embrace. Millions of people have entered the middle class through building wealth in their homes, and there is a lot of evidence that homeownership contributes to stable families and communities. These are results I think conservatives should embrace and want to extend as widely as possible. So while we need to improve the regulation of the GSEs, I would be very cautious about fundamentally changing their role or the model itself.

When asked why he took a position on Fannie and Freddie “not normally associated with conservatives,” Gingrich responded by saying he was “more in the Alexander Hamilton-Teddy Roosevelt tradition of conservatism. I recognize that there are times when you need government to help spur private enterprise and economic development. … All of these are examples of government bringing about desired public purposes without creating massive, taxpayer-funded bureaucracies. To me that is a pragmatic and effective conservative approach.”

But now that he is leading presidential primary polls and needs conservative voters who are opposed to Fannie and Freddie, Gingrich is attempting to distance himself from that position. Joe DeSantis, a spokesperson for Gingrich, told the Wall Street Journal that the collapse of the housing market has forced Gingrich to reassess the situation. He now supports overhauling the mortgage giants, DeSantis said:

Mr. DeSantis said that Mr. Gingrich now advocates a more aggressive overhaul of Fannie and Freddie. “The total collapse of the global financial system has a tendency to make one look at a situation with a fresh set of eyes,” he said.

Why Gingrich needs to re-examine his support of Fannie and Freddie, however, is unclear, given that they were not the cause the housing crisis, as conservatives like to claim. In fact, the private mortgage industry triggered the collapse, underwriting more than 84 percent of subprime loans, including 83 percent of such loans that went to moderate- and low-income borrowers. Thus, if Gingrich is truly committed to reassessing the situation, he’ll most likely come to the same conclusion he made in 2007.

NEWS FLASH

Labor Force’s Share Of National Income Plunges To New Lows | According to data from the Federal Reserve Bank of St. Louis, the labor force’s share of income has fallen to its lowest level on record, with workers collecting just 57.1 percent of national income, down from an average of nearly 64 percent before 2000. Since 2009, 88 percent of national income growth has gone to corporate profits, while just 1 percent has gone to wages and salaries. (HT: Huffington Post)

Why Did Scott Brown Filibuster The Payroll Tax Cut?

Senate Republicans yesterday filibustered the Democrats’ legislation for extending the soon-to-expire payroll tax break, with the plan going down by a vote of 51-49 (shy of the 60 votes necessary to invoke cloture). The GOP leadership’s alternative plan for extending the tax break went down by an overwhelming vote of 20-78.

The reason that the GOP voted down the Democrats’ plan is that it would have been paid for by a small surtax on income above $1 million. Just one Republican — Sen. Susan Collins (R-ME) — broke with her colleagues, who have consistently protected tax breaks for the wealthy while showing little more than indifference about a tax increase on the middle class.

One of the most mystifying actors in this particular debate has been Sen. Scott Brown (R-MA). While he has been trying to play the populist recently, Brown voted with the GOP to protect tax breaks for the wealthy rather than tax millionaires. But earlier this week, Brown explained that he was fine with extending the payroll tax break without paying for it at all:

Brown declared Tuesday that he favors extending a payroll tax cut without finding a way to make up for the lost revenue, while last year he opposed extending unemployment benefits unless Congress offset the $56 billion cost. [...]

But Brown saw no reason to go with the Democrats’ plan to tax the rich or with McConnell’s to find the cash elsewhere, noting that Congress did not pay for last year’s break.

“It wasn’t paid for before, so why is it paid for now?” Brown told several reporters Tuesday. “Through economic activity, it’ll pay for itself. I think we need to get it out there, get the money in people’s hands.”

Though Brown is mistaken in thinking that tax cuts pay for themselves, his unpaid for extension would actually provide the most boost to the economy. So in a roundabout way he is advocating the most stimulative approach of all.

The surtax proposed by Democrats would have affected just 0.6 percent of Massachusetts taxpayers, who have an average income of more than $2 million. Yet Brown has somehow convinced himself that these few wealthy people should be shielded from a tax increase, even if it ultimately means that taxes go up on 113 million households.

NEWS FLASH

120,000 Jobs Created Last Month, Unemployment Falls To 8.6 Percent | According to the latest data from the Bureau of Labor Statistics, 120,000 jobs were created last month, bringing the unemployment rate down to 8.6 percent. Analysts had predicted job growth of about 130,000. 140,000 private sector jobs were created, while the public sector continued to shed jobs, losing 20,000. 72,000 jobs were added as revisions to previous reports, including a revision in the September number from 158,000 jobs created to 210,000 jobs created. The wider U6 measure of underemployment dropped from 16.2 percent to 15.6 percent.

Econ 101: December 2, 2011

Welcome to ThinkProgress Economy’s morning link roundup. This is what we’re reading. Have you seen any interesting news? Let us know in the comments section. You can also follow ThinkProgress Economy on Twitter.

  • According to a new study, “just 7 percent of those who lost jobs after the financial crisis have returned to or exceeded their previous financial position and maintained their lifestyles.” [New York Times]
  • The Senate yesterday voted down both Democratic and Republican plans for extending the soon-to-expire payroll tax break, with the GOP’s plan going down by an overwhelming majority. [BusinessWeek]
  • Mortgage giants Fannie Mae and Freddie Mac, as well as several private mortgage lenders, “have pledged not to foreclose on delinquent borrowers during the Christmas season.” [CNN Money]
  • German Chancellor Angela Merkel yesterday “flatly rejected any quick-fix ideas to try to resolve the European financial crisis.” [Associated Press]
  • Gov. Jerry Brown (D-CA) is set to unveil a tax package that includes an income tax hike for the wealthy and an increase in the Golden State’s sales tax. [Reuters]
  • According to the latest data, manufacturing grew for the 28th straight month in November “and faster than it has since June.” [The Hill]
  • The nation’s freight railroads and their workers “reached a tentative agreement Thursday to avoid a strike that threatened to halt shipments of consumer goods three weeks before Christmas.” [McClatchy]
  • Honda “is recalling 304,000 vehicles globally for air-bags that may inflate with too much pressure in a crash.” [Associated Press]
  • I was on Countdown with Keith Olbermann last night discussing banks behaving badly. Watch it:
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