In talks with the nation’s state attorneys general, the New Bottom Line Campaign campaign turned up the heat this week on the big banks responsible for billions of dollars in mortgage fraud. The NBL is a nationwide campaign representing 1,000 faith based and community organizations.
In conjunction with a state-by-state petition drive aimed at the 50 state attorneys general, NBL on Aug. 17 released a hard-hitting report that exposes bank practices and details a solution to the foreclosure crisis that would result in over one million jobs.
The petition calls on the state attorney generals to put “the interests of people ahead of huge corporate profits” and ensure that any foreclosure settlement with the big banks include “principal reduction on all underwater mortgages to current market value.”
The NBL report calculates that writing down the principals and interest rates on all underwater mortgages to current market value would:
- Pump $71 billion into the economy every year.
- Create more than one million jobs annually.
- Save families an average of $543 per month or $6,516 per year.
The report, entitled The Win-Win Solution: How Fixing the Housing Crisis Will Create 1 Million Jobs, shows that the $6 billion monthly currently going to mortgage payments would instead go into buying “groceries, school supplies and other household necessities.”
Putting an additional $71 billion annually into consumers’ pockets, the study calculates, would result in spiking consumer demand, encourage businesses to start hiring again and, consequently, translate into more than one million additional jobs per year.
The report cites s statistic reported in the New York Times showing that unemployment is now the “primary cause of foreclosures.” As of March 31, 23 percent of homeowners were underwater on their mortgages.
The homeowners among these million newly employed workers, the report argues, could, if employed, afford to pay their mortgages and stave off foreclosures, thus breaking the devastating cycle of unemployment and foreclosure.
The report notes that banks could well afford to implement the proposed plan.
The nation’s largest six banks last year paid out $146 billion in bonuses and compensation, more than twice the plan’s cost. Currently, the nation’s banks are sitting on cash reserves of $1.64 trillion, a historical high.
“For too long, Wall Street banks have avoided paying their fair share of taxes and drove this country into a financial crisis,” said George Goehl, executive director of National People’s Action, a NBL coalition member.
“Not one more child,” Goehl added, “should have to sacrifice her health care or education because big banks cook their books. Not one more senior should have to live in poverty because a bank shifted its profits to an overseas account.”
In May, the NBL campaign organized large-scale actions at shareholder meetings of JP Morgan Chase, Bank of America and Wells Fargo demanding the banks help the economic recovery. In addition to the principal reduction for defrauded homeowners now being demanded, the campaign demanded the banks:
- Pay their fair share of taxes. The banks must pay the federally mandated 35 percent tax rate, instead of the 11 percent of their pre-tax earnings they paid in 2009 and 2010. They should pay the $13 billion in back taxes they owe from the two years.
- Invest in American jobs. The banks should start making loans to small businesses to create more jobs, instead of shipping jobs overseas. JP Morgan, for example, has reduced small business lending by 75 percent in the wake of taxpayer-funded bailouts designed to spur lending.
After all, the report points out, the banks received $14 trillion in taxpayer-funded bailouts and backstops in large measure so they would start lending in order to jumpstart the economy.
Photo: taberandrew// CC 2.0
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