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Left
with nothing - (www.washingtonpost.com)
On
the day Bennie Coleman lost his house, the day armed U.S. marshals came to
his door and ordered him off the property, he slumped in a folding chair across
the street and watched the vestiges of his 76 years hauled to the curb. Movers
carted out his easy chair, his clothes, his television. Next came the things
that were closest to his heart: his Marine Corps medals and photographs of his
dead wife, Martha. The duplex in Northeast Washington that Coleman bought with
cash two decades earlier was emptied and shuttered. By sundown, he had nowhere
to go. All because he didn’t pay a $134 property tax bill. The retired Marine
sergeant lost his house on that summer day two years ago through a tax lien sale
— an obscure program run by D.C.
government that enlists private investors to help the city recover unpaid
taxes. For decades, the District placed liens on properties when homeowners
failed to pay their bills, then sold those liens at public auctions to
mom-and-pop investors who drew a profit by charging owners interest on top of
the tax debt until the money was repaid. But under the watch of local leaders,
the program has morphed into a predatory system of debt collection for
well-financed, out-of-town companies that turned $500 delinquencies into $5,000
debts — then foreclosed on homes when families couldn’t pay, a Washington Post
investigation found.
Find
the Loan Behind the Loans - (www.nytimes.com)
ONLINE lenders who charge
borrowers stratospheric interest rates are coming under pressure from state
regulators — and it’s about time. But to get at the root of the problem, the
regulators may need to dig much deeper. Last month,
for example, the New York attorney general followed other states’ regulators in
suing Western Sky Financial and its affiliate Cash Call Inc. The lawsuit contended that rates charged to
borrowers by the companies — from 89 to 343 percent, depending on loan size —
far exceed the caps determined by the state’s civil and criminal usury laws. A
borrower receiving $1,000 could wind up owing almost $5,000 in finance charges,
fees and principal over two years, the complaint said. Last Tuesday, Western
Sky suspended operations, saying it was a victim of regulatory overreach,
though its affiliate, Cash Call, was still functioning. Katya Jestin, a lawyer
at Jenner & Block who represents the companies, said that because Western
Sky operated on the Cheyenne River Indian Reservation in Eagle Butte, S.D., New
York officials had no jurisdiction over it.
GE
to IBM Ending Retiree Health Plans in Historic Shift - (www.bloomberg.com)
America’s biggest employers,
from GE to IBM, are increasingly moving retirees to insurance exchanges where
they select their own health plans, an historic shift that
could push more costs onto U.S. taxpayers. Time Warner Inc. yesterday said
it would steer retired workers toward a privately run exchange, days after a
similar announcement by International Business Machines Corp. General Electric
Co. last year said it, too, would curb benefits in a move that may send
some former employees to the public insurance exchanges created under the 2010
Affordable Care Act. While retiree health benefits have been shrinking for
years, the newest cutbacks may quickly become the norm. About 44 percent of
companies plan to stop administering health plans for their former workers over
the next two years, a survey last month by consultant Towers Watson &
Co. found. Retirees are concerned their costs may rise, while analysts
predict benefits will decline in some cases.
Banks
Seen at Risk Five Years After Lehman Collapse - (www.bloomberg.com) Ruth Porat didn’t see it coming. The Morgan Stanley (MS) banker who advised
the U.S. Treasury Department on its rescue of Fannie Mae and Freddie Mac in
September 2008 and thought she understood the risks to the financial system had
just spent a weekend trying to save Lehman Brothers Holdings Inc. when she got
a message: Would she come back to deal with American International Group Inc. (AIG)? “The
call I got was ‘We worked on the wrong thing,’” Porat, 55, said in an interview
last month at the New York headquarters of the bank where she’s now chief
financial officer. That AIG “could vanish that quickly and the impact that
could have throughout the country, and that nobody could see it coming, was
just staggering.” Porat’s own bank almost vanished when hedge funds, spooked by
difficulties getting money out of bankrupt Lehman Brothers, pulled more than
$128 billion in two weeks from Morgan Stanley. To stay afloat it sold a 20
percent stake, became a bank holding company and borrowed $107.3 billion from
the Federal Reserve on a single day.
US "Involuntary"
Borrowing Drives Debt to New High – (www.cnbc.com)
Americans cut back on using
their credit cards in July for the second straight month, while taking on more
debt to buy cars and attend school. The Federal
Reserve says consumers increased their borrowing $10.4 billion
in July from June to a record high of $2.85 trillion. That followed an $11.9
billion gain in June. A measure of borrowing that includes credit card debt
fell $1.8 billion in July following an even larger $3.7 billion decline in
June. A category that includes auto loans and student loans increased $12.3
billion after an even larger $15.6 billion gain in June. The reduction in credit
card debt suggests that consumers remain cautious about accumulating
high-interest debt. That could hold back consumer spending, which accounts for
70 percent of economic activity.
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