WBEZ | banks http://www.wbez.org/tags/banks Latest from WBEZ Chicago Public Radio en Seeing The Financial Crisis Through ‘The Big Short’ http://www.wbez.org/programs/here-and-now/2016-01-19/seeing-financial-crisis-through-%E2%80%98-big-short%E2%80%99-114517 <img typeof="foaf:Image" src="http://llnw.wbez.org//main-images/0115_big-short1-624x399.jpg" alt="" /><p><div id="attachment_99962"><p>Goldman Sachs agreed late yesterday to pay $5 billion to end investigations into claims that it knowingly sold faulty mortgage bonds in the run-up to the 2008 financial crisis. JPMorgan Chase, Bank of America and Citigroup have already settled.</p></div><p>This comes during a week that the financial crisis has been in the news for other reasons. Yesterday, &ldquo;The Big Short,&rdquo; based on the Michael Lewis book that documents the events that led up to the 2008 crisis, was nominated for five Oscars.</p><p><em>Here &amp; Now&#39;s</em> Robin Young takes a look at the film and how things have changed since 2008, with&nbsp;Barry Ritholtz&nbsp;of&nbsp;Ritholtz Wealth Management and&nbsp;Sylvia Alvarez&nbsp;of&nbsp;the Housing &amp; Education Alliance.</p><div id="attachment_99964"><a href="http://s3.amazonaws.com/media.wbur.org/wordpress/11/files/2016/01/0115_big-short2.jpg" title="In “The Big Short,” Christian Bale plays the eccentric real-life trader Dr. Michael Burry, one of the few who figures out how unstable the housing market is. (Paramount Pictures)"><img alt="In &quot;The Big Short,&quot; Christian Bale plays the eccentric real-life trader Dr. Michael Burry, one of the few who figures out how unstable the housing market is. (Paramount Pictures)" src="http://s3.amazonaws.com/media.wbur.org/wordpress/11/files/2016/01/0115_big-short2-624x351.jpg" style="height: 349px; width: 620px;" title="In “The Big Short,” Christian Bale plays the eccentric real-life trader Dr. Michael Burry, one of the few who figures out how unstable the housing market is. (Paramount Pictures)" /></a><p>&mdash; <a href="http://hereandnow.wbur.org/2016/01/15/financial-crisis-the-big-short" target="_blank"><em>via Here &amp; Now</em></a></p></div><p>&nbsp;</p></p> Fri, 15 Jan 2016 13:16:00 -0600 http://www.wbez.org/programs/here-and-now/2016-01-19/seeing-financial-crisis-through-%E2%80%98-big-short%E2%80%99-114517 Changes in taxi industry leave cab owners underwater http://www.wbez.org/news/changes-taxi-industry-leave-cab-owners-underwater-111920 <p><p>If you were looking for a good return on investment in the last few years, it was hard to beat a Chicago taxi medallion. Medallions, which are city-issued licenses to operate cabs, increased in value at least fivefold between 2006 and 2013. But now after huge shifts in the industry, many owners are deep underwater on their medallion loans, and some say they&rsquo;re nearly worthless.</p><p>&ldquo;I haven&rsquo;t written a new taxi loan in well over nine months? Ten months?&rdquo; said Charlie Goodbar, an attorney and taxi fleet owner. &ldquo;The access to capital&rsquo;s disappeared.&rdquo;</p><p>Chicago limits the number of medallions to roughly 7,000. Without those metal plates affixed to the hood, a taxi cannot operate in the city. Goodbar has facilitated hundreds of medallion sales over the years. But today, would-be buyers are finding it nearly impossible to find loans to purchase medallions.</p><p>&ldquo;I probably have put together at least 20-30 percent of all transfers, at some point probably more than half,&rdquo; said Goodbar. &ldquo;And as a market-maker, and as a license broker, and as an attorney, and someone who&rsquo;s in the lending business, how in good faith can I make a market when I can&rsquo;t value the asset or value cash flow?&rdquo;</p><p>Disruption in Chicago&rsquo;s taxi industry &mdash; both from the entry of competing rideshare services, and changes to city policies affecting medallion owners &mdash; have turned the business model on its head in just two years. At one time, investing or lending in a medallion purchase was a sound business decision, because cab owners could make a good living.</p><p>&ldquo;It was a way for an immigrant family to move up the social ladder and economic ladder through the use&nbsp; of leveraged financing in the taxi industry, and a lot of hard work,&rdquo; said Goodbar.</p><p>But today, Goodbar said it&rsquo;s nearly impossible to find a bank willing to lend money for a medallion purchase, and so the avenue that many immigrants once took is increasingly closed off.</p><div class="image-insert-image "><img alt="" class="image-original_image" height="233" src="http://www.wbez.org/system/files/styles/original_image/llo/insert-images/Taxi%20medallions%202.0.jpg" style="float: left;" title="" width="350" /></div><p>You can tell by looking at the numbers. Between 2011 and 2013, when the market was robust, an average of 30-40 medallions changed hands monthly. But starting in February of 2014, that number dropped sharply, and never recovered. In 2015, only seven medallions were transferred in the first three months.</p><p>&ldquo;There&rsquo;s no buyer in the market,&rdquo; said Shyam Arora, a medallion owner. &ldquo;So it&rsquo;s a piece of garbage.&rdquo;</p><div id="responsive-embed-taximedallions">&nbsp;</div><script src="http://s3.amazonaws.com/wbez-dailygraphics/dailygraphics/graphics/taximedallions/js/lib/pym.js" type="text/javascript"></script><script type="text/javascript"> jQuery(document).ready(function(){ var pymParent = new pym.Parent( 'responsive-embed-taximedallions', 'http://s3.amazonaws.com/wbez-dailygraphics/dailygraphics/graphics/taximedallions/child.html', {} ); }); </script><p>Arora is one of those immigrants who found success in the taxi industry. He came from India in 2002 and bought a medallion a few years later. Today, he has three. He and his son drive two of the cabs during the day, and he leases the third. At one time, he had as many as four drivers for his small fleet &mdash; but those days seem long ago.</p><p>On a recent early morning, he took one of his cabs to a city-owned site on the South Side for an annual taxi inspection.</p><p>&ldquo;This inspection process is stressful, very stressful,&rdquo; he said.</p><p>This day, he was especially nervous. The car is a 2010 Toyota Prius with a whopping 313,000 miles on it. Arora knew inspectors would be looking for even the smallest flaw to take it out of operation.</p><p>&ldquo;Yesterday I spent $200 to the mechanic and the day before yesterday I paid $100 for detailing,&rdquo; he recounted.</p><p>He also got the engine cleaned, and drove an hour out to the suburbs just to pick up a small paint marker that he could use to cover minor exterior nicks. Altogether, he estimated spending $500 to get the car in tip-top shape &mdash; about three days&rsquo; earnings.</p><p>&ldquo;I&rsquo;m losing nowadays, every day, in my business,&rdquo; said Arora. Three months ago, he fell behind on his mortgage and medallion loan.</p><p>Arora explained that most of his income comes from leasing his taxis to other drivers, rather than driving his own cab. But amid a shortage of taxi drivers in Chicago, he&rsquo;s struggled to find people to use his taxis. That&rsquo;s meant his vehicles sit empty about one-third of the time, while he still foots the bill for their medallion loans, the car payments, taxi affiliation fees and other expenses.</p><p>Even when Arora does have drivers, he said it&rsquo;s gotten much more difficult for them to find passengers. He blamed rideshare companies like UberX, Lyft and Sidecar for stealing business.</p><p>&ldquo;When you don&rsquo;t get a customer for an hour, the [taxi] driver gets so frustrated, he goes to Starbucks or he goes home,&rdquo; explained Arora.</p><p>Arora would love to sell his medallions and be done with it. But he knows he won&rsquo;t find a buyer at a good price. Plus, he&rsquo;s facing the same dilemma that homeowners once did during the recent housing crisis. Many borrowed significant sums of money against their homes as housing values increased, only to find themselves underwater on those loans once the market settled.</p><p>Similarly, Arora and many other owners borrowed heavily against their medallions while they increased in value. Arora said that helped his family get through the recession.</p><p>&ldquo;Medallions were the source of feeding everybody &mdash; every expense we have,&rdquo; he explained.</p><p>But now, he owes $600,000 against his medallions, and he knows that nobody will buy them for anything close to that amount.</p><p>Arora believes his only way out may be a loan modification. Goodbar says medallion lenders have every reason to cooperate.</p><p>&ldquo;There will be shakeout in the market, the lenders will have to work with the borrowers,&rdquo; he said, &ldquo;because I think the last thing a large medallion lender wants is a bunch of medallions sitting in a drawer.&rdquo;</p><p>Arora hopes that&rsquo;ll be true in his case, because he wants to stay in the taxi business.&nbsp; Otherwise, he&rsquo;s looking at filing for bankruptcy.</p><p><em>Odette Yousef is WBEZ&rsquo;s North Side Bureau reporter. Follow her <a href="https://twitter.com/oyousef">@oyousef</a> and <a href="https://twitter.com/WBEZoutloud">@WBEZoutloud</a>.</em></p></p> Tue, 21 Apr 2015 19:06:00 -0500 http://www.wbez.org/news/changes-taxi-industry-leave-cab-owners-underwater-111920 Twice hit with foreclosure, family looks to proposed renter protections http://www.wbez.org/news/twice-hit-foreclosure-family-looks-proposed-renter-protections-107538 <p><p><img alt="" class="image-original_image" src="http://www.wbez.org/system/files/styles/original_image/llo/insert-images/HildaQuiloCROP.jpg" style="margin: 4px 0px 0px 0px; float: right; height: 222px; width: 300px;" title="If the Chicago City Council enacts the ordinance Wednesday, Hilda Quilo and her family could keep their home. (WBEZ/Chip Mitchell)" />The three-bedroom house where Hilda Quilo and her husband thought they would be raising their three children stands on a quiet, leafy block in Chicago&rsquo;s Logan Square neighborhood.</p><p>They bought the place in 1999. Quilo, 40, said everything was fine until the recession, when her husband&rsquo;s construction work dried up and they couldn&rsquo;t keep up on the mortgage payments.</p><p>&ldquo;We wanted to refinance and we asked the bank to help us,&rdquo; Quilo said in Spanish.</p><p>All they got was an eviction notice. So, after 10 years in the house, the family had to move out.</p><p>It turns out their foreclosure troubles were just beginning. The family went on the rental market and eventually found another house just down the block. They signed a lease in 2010 and, Quilo said, always paid their rent.</p><p>This January, however, the family started getting bank and court notices in the mail. And the landlord went missing. &ldquo;We discovered that this house was in foreclosure too,&rdquo; Quilo said.</p><p>This time, Quilo and the rest of the family were even more helpless because they were just renters. &ldquo;We&rsquo;re expecting an eviction notice,&rdquo; Quilo said. &ldquo;It&rsquo;s an uncertainty that keeps me from sleeping.&rdquo;</p><p>The Quilos are not the first Chicago family to be hit twice by the foreclosure crisis, tenant advocates say. &ldquo;Hilda&rsquo;s story is a common experience for many people who go from being a homeowner to a tenant,&rdquo; said Marcelo Ferrer, foreclosure-prevention director of the Logan Square Neighborhood Association.</p><p><img alt="" class="image-original_image" src="http://www.wbez.org/system/files/styles/original_image/llo/insert-images/Trausch.jpg" style="float: right; height: 259px; width: 250px;" title="James E. Trausch, general counsel of the Illinois Mortgage Bankers Association, calls the measure ‘a backdoor attempt at rent control.’ (WBEZ/Chip Mitchell)" />When landlords face foreclosure, renters like the Quilos need some extra help, Ferrer said. &ldquo;It can&rsquo;t just be one person versus the bank.&rdquo;</p><p>The help Ferrer has in mind is <a href="http://chicago.legistar.com/LegislationDetail.aspx?ID=1156573&amp;GUID=4F709387-96EE-4BD0-9950-C692DE714378&amp;Options=Advanced&amp;Search=" target="_blank">Keep Chicago Renting</a>, a proposed ordinance the City Council could approve Wednesday. The measure would require a bank that forecloses on a rental building to let the tenants stay, and to cap the rent, until selling the property. As an alternative, the bank could pay the tenants a relocation fee of $10,600 per unit.</p><p>An earlier version of the proposal, introduced by Ald. Richard Mell (33rd) last July, would have banned post-foreclosure evictions outright except under narrow circumstances such as failure to pay rent.</p><p>Mayor Rahm Emanuel&rsquo;s administration helped develop the current version and says the measure would keep such units occupied.</p><p>Mell agrees. &ldquo;All I want is the banks to say, &lsquo;Hey, let&rsquo;s figure out how we&rsquo;re going to take some haircuts on some of these properties and put them back on the market, not just sit on it.&rsquo; &rdquo; the alderman said during a hearing on the measure last month.</p><p>The implications are huge. A <a href="http://lcbh.org/wp-content/uploads/2012/07/LCBH-Three-Year-Impact-Assessment-Apartment-Building-Foreclosures-and-the-Depletion-of-Rental-Housing-in-Chicago.pdf" target="_blank">study by the Lawyers&rsquo; Committee for Better Housing</a>, another backer of the legislation, found almost 52,000 Chicago rental units went into foreclosure between 2009 and 2011.</p><p>But banks, landlords and realtors are trying to put brakes on the measure. &ldquo;I think it&rsquo;s a backdoor attempt at rent control,&rdquo; said James E. Trausch, general counsel of the Illinois Mortgage Bankers Association, pointing to an <a href="http://www.ilga.gov/legislation/ilcs/ilcs3.asp?ActID=748&amp;ChapterID=11" target="_blank">Illinois statute that prohibits</a> local governments from setting up rent control.</p><p>The proposed ordinance would also discourage lending in the city, Trausch said. &ldquo;And that&rsquo;s always a bad thing. The [fewer] lenders you have loaning money, the less competition they have to offer the best rates.&rdquo;</p><p>Asked what he would tell renters such as Hilda Quilo, Trausch does not hesitate.</p><p>&ldquo;I&rsquo;d say, pick her landlords better,&rdquo; Trausch answered. &ldquo;A tenant who wants to rent a unit can go into the public records and see if there has been a foreclosure filed. And foreclosures take two years so you have ample notice that you shouldn&rsquo;t be renting this property.&rdquo;</p><p>That advice is cold comfort for the Quilo family.</p><p>&ldquo;My kids have grown up on this block,&rdquo; Quilo said. And that&rsquo;s where she wants them to stay. So she&rsquo;s planning to be at Wednesday&rsquo;s City Council meeting.</p><p>Quilo said the outcome could keep her family from losing its home again because of foreclosure.</p><p><em><a href="“http://www.wbez.org/users/cmitchell-0”" target="_blank">Chip Mitchell</a> is WBEZ&rsquo;s West Side bureau reporter. Follow him on Twitter <a href="“https://twitter.com/ChipMitchell1”" target="_blank">@ChipMitchell1</a> and <a href="“https://twitter.com/WBEZoutloud”" target="_blank">@WBEZoutloud</a>, and connect with him through <a href="“https://www.facebook.com/chipmitchell1”" target="_blank">Facebook</a> and <a href="“http://www.linkedin.com/in/ChipMitchell1”" target="_blank">LinkedIn</a>.</em></p></p> Wed, 05 Jun 2013 07:49:00 -0500 http://www.wbez.org/news/twice-hit-foreclosure-family-looks-proposed-renter-protections-107538 City Council panel OKs protections for renters after foreclosure http://www.wbez.org/news/city-council-panel-oks-protections-renters-after-foreclosure-106941 <p><p><img alt="" class="image-original_image" src="http://www.wbez.org/system/files/styles/original_image/llo/insert-images/Abandoned.jpg" style="margin: 4px 0px 0px 0px; float: right; height: 225px; width: 300px;" title="Abandoned rental buildings like this one hurt Englewood, a neighborhood on Chicago’s South Side. (Photo courtesy of Action Now)" />A proposal aimed at protecting renters in foreclosed buildings won the backing of a Chicago City Council panel on Wednesday, but not without a few sparks.</p><p>The council&rsquo;s Housing and Real Estate Committee passed the measure in a voice vote after about 90 minutes of debate.</p><p>Ald. Matthew O&rsquo;Shea (19th), who said he supported an earlier version, decried provisions that would require the foreclosing banks to pay tenants a &ldquo;relocation assistance&rdquo; fee of $12,000 per unit or offer them rent-controlled leases until selling the building.</p><p>&ldquo;Making foreclosed properties considerably more expensive to hold will further drive down their price at sale or auction,&rdquo; said O&rsquo;Shea, the only alderman who voiced opposition to the measure. &ldquo;We are in essence reducing the value of all surrounding properties.&rdquo;</p><p>Other aldermen, including Walter Burnett Jr. (27th), said what&rsquo;s dragging down home prices in their wards is the abandonment of properties after foreclosure. &ldquo;How many people are sitting in their house every night, worried about if there&rsquo;s going to be a fire next door to them because [banks] made the people who were renting there move out and leave the building vacant?&rdquo; Burnett asked.</p><p>The earlier version, introduced by Ald. Richard Mell (33rd) and dubbed &ldquo;Keep Chicago Renting,&rdquo; would have banned post-foreclosure evictions except under limited circumstances such as the tenant&rsquo;s failure to pay rent.</p><p>Mayor Rahm Emanuel&rsquo;s administration said it agreed with the goal &mdash; keeping renters in their homes &mdash; but raised legal concerns. <a href="http://www.wbez.org/news/advocates-push-emanuel-protect-renters-foreclosed-units-106197">Months of negotiations between city officials and tenant advocates</a> led to the version now in the council.</p><p>Before the hearing, members of 11 community groups behind the measure donned orange T-shirts and rallied outside the council chambers. The groups included the Lawyers&rsquo; Committee for Better Housing, which brandished new research showing crime in abandoned buildings and vacant lots is up nearly 48 percent since 2005.</p><p>At the rally, Mell responded to an Illinois Mortgage Bankers Association <a href="http://www.wbez.org/news/mortgage-bankers-slam-proposed-tenant-protections-106917">claim that the ordinance would lead to litigation</a> and congest a court system already struggling with a huge backlog of foreclosure cases. &ldquo;Why would it clog it up if the banks go along with it?&rdquo; Mell asked.</p><p>The most detailed testimony against the plan came from Brian Bernardoni, senior director of government affairs and public policy for the Chicago Association of Realtors. &ldquo;This ordinance is bad for the market and bad for transfer-tax revenues,&rdquo; he said.</p><p>Bernardoni claimed that forcing lenders to renew leases would amount to an unconstitutional &ldquo;taking,&rdquo; a legal term describing government acquisition of private property without fair compensation. &ldquo;Landlords have the right to evict a tenant at the expiration of a lease,&rdquo; he said.</p><p>An Emanuel administration representative at the hearing said Chicago officials considered such claims while developing the legislation. &ldquo;If that&rsquo;s the lawsuit, we&rsquo;ll take that one on,&rdquo; Rose Kelly, senior counsel in the city&rsquo;s law department, told the aldermen.</p><p>No mortgage lenders addressed the committee but some voiced opposition to the measure Wednesday.</p><p>&ldquo;If a lender is compelled by the ordinance to provide relocation assistance of $12,000, it may opt to release its lien and walk away from the property &mdash; thereby causing more, not less, building abandonments,&rdquo; James E. Trausch, general counsel of the mortgage bankers association, wrote Wednesday in a message to WBEZ.</p><p>&ldquo;Chicago will become an unfriendly lending environment as more lenders simply pass on lending in the city because it is not worthy of the investment,&rdquo; Trausch wrote.</p><p>The Illinois Bankers Association and the Chicagoland Apartment Association also indicated opposition.</p><p>Ald. Ray Suárez (31st), the committee chairman, said he would not refer the measure to the full council until June 5. He said the delay would allow more time to hear from the legislation&rsquo;s opponents.</p><p><em><a href="“http://www.wbez.org/users/cmitchell-0”">Chip Mitchell</a> is WBEZ&rsquo;s West Side bureau reporter. Follow him on Twitter <a href="“https://twitter.com/ChipMitchell1”">@ChipMitchell1</a> and <a href="“https://twitter.com/WBEZoutloud”">@WBEZoutloud</a>, and connect with him through <a href="“https://www.facebook.com/chipmitchell1”">Facebook</a> and <a href="“http://www.linkedin.com/in/ChipMitchell1”">LinkedIn</a>.</em></p></p> Wed, 01 May 2013 18:08:00 -0500 http://www.wbez.org/news/city-council-panel-oks-protections-renters-after-foreclosure-106941 Mortgage bankers slam proposed tenant protections http://www.wbez.org/news/mortgage-bankers-slam-proposed-tenant-protections-106917 <p><p><img alt="" class="image-original_image" src="http://www.wbez.org/system/files/styles/original_image/llo/insert-images/FronCROP.jpg" style="margin: 4px 0px 0px 0px; float: right; height: 261px; width: 300px;" title="But Patricia Fron of the Lawyers’ Committee for Better Housing says the plan would help keep buildings occupied and discourage crime. (WBEZ/Chip Mitchell)" />A group of mortgage lenders has a warning about a proposed ordinance that Chicago Mayor Rahm Emanuel&rsquo;s administration helped craft to protect tenants of foreclosed buildings. The Illinois Mortgage Bankers Association says the plan, set for a City Council hearing on Wednesday, would clog courts already struggling with a huge backlog of foreclosure cases.</p><p>&ldquo;Illinois has the second-largest backlog in the nation,&rdquo; said Robert Emanuel (no relation to the mayor), a Chicago attorney who serves on the association&rsquo;s executive committee. &ldquo;This is going to add either a new form of litigation or it&rsquo;s going to complicate existing foreclosures.&rdquo;</p><p>The proposal, called the &ldquo;Protecting Tenants in Foreclosed Rental Property Ordinance,&rdquo; would require banks to pay a $12,000 &ldquo;relocation assistance&rdquo; fee to renters evicted after a repossession or offer them rent-controlled leases until selling the building. The ordinance would apply to tenants in buildings large or small, even single-family houses.</p><p>An earlier version of the proposal, known as &ldquo;Keep Chicago Renting&rdquo; and introduced by Ald. Richard Mell (33rd) last July, would have banned post-foreclosure evictions except under limited circumstances such as the tenant&rsquo;s failure to pay rent.</p><p>The goal is to keep renters in their homes and keep the buildings from standing vacant and breeding crime. On Tuesday, the Chicago-based Lawyers&rsquo; Committee for Better Housing released a study based on city data that showed crime in abandoned buildings and vacant lots is up nearly 48&nbsp;percent since 2005.</p><p>&ldquo;At a time when overall crime rates have been decreasing in the city of Chicago, crimes occurring within abandoned properties are actually increasing,&rdquo; said Patricia Fron, the committee&rsquo;s building programs administrator.</p><p>Tenant advocates and city officials negotiated for months before agreeing on the proposal&rsquo;s main elements in early April. The council&rsquo;s Housing Committee is holding the hearing Wednesday morning.</p><p>The mortgage bankers association says it&rsquo;s planning to send representatives to the hearing. The group says the proposal should not include single-family homes and says the blame for abandoned buildings belongs less to banks than to investors who are out to buy and sell properties for quick gain &mdash; a practice known as flipping. The bankers say the tenant ordinance would make Chicago less attractive for lending and increase costs for borrowers.</p><p>Officials of the Illinois Bankers Association, another group likely to oppose the proposal, did not return calls or messages about it Tuesday.</p><p><em><a href="http://www.wbez.org/users/cmitchell-0">Chip Mitchell</a> is WBEZ&rsquo;s West Side bureau reporter. Follow him on Twitter <a href="https://twitter.com/ChipMitchell1">@ChipMitchell1</a> and <a href="https://twitter.com/WBEZoutloud">@WBEZoutloud</a>, and connect with him through <a href="https://www.facebook.com/chipmitchell1">Facebook</a> and <a href="http://www.linkedin.com/in/ChipMitchell1">LinkedIn</a>.</em></p></p> Wed, 01 May 2013 00:42:00 -0500 http://www.wbez.org/news/mortgage-bankers-slam-proposed-tenant-protections-106917 U.S. Government seals $25 billion mortgage settlement http://www.wbez.org/episode-segments/2012-02-10/us-government-seals-25-billion-mortgage-settlement-96249 <img typeof="foaf:Image" src="http://llnw.wbez.org//segment/photo/2012-February/2012-02-09/021012 seg a3.jpg" alt="" /><p><p>On Thursday, federal and state prosecutors reached a $25 billion settlement with banks over foreclosures.&nbsp; So, what now? That's the question on many current and former homeowners' minds.</p><p>Ed Jacob, the executive director of the Neighborhood Housing Services of Chicago (NHS), sussed out the details and answered callers questions.</p></p> Fri, 10 Feb 2012 14:00:00 -0600 http://www.wbez.org/episode-segments/2012-02-10/us-government-seals-25-billion-mortgage-settlement-96249 Illinois to get about $1 billion in national mortgage settlement http://www.wbez.org/story/illinois-get-about-1b-national-mortgage-settlement-96262 <img typeof="foaf:Image" src="http://llnw.wbez.org//story/photo/2012-February/2012-02-10/foreclosed house_Ashley Gross.jpg" alt="" /><p><p style="text-align: center;"><img alt="" class="caption" src="http://llnw.wbez.org/story/insert-image/2012-February/2012-02-10/foreclosed house_Ashley Gross.jpg" style="width: 630px; height: 354px;" title="(WBEZ/Ashley Gross)"></p><p>The $25 billion mortgage settlement with big banks means about 1$ billion in relief to Illinois homeowners.</p><p>People who owe more than their homes are worth and have fallen behind on payments may qualify for loan reductions, while other people who are underwater but current on their loans may be able to refinance. And people who lost their homes to foreclosure may be able to get cash payments.</p><p>Illinois attorney general Lisa Madigan helped negotiate the deal and spoke at a Washington, D.C., press conference announcing it.</p><p><img alt="" class="caption" src="http://llnw.wbez.org/story/insert-image/2012-February/2012-02-10/foreclosures_ashley gross.jpg" style="width: 281px; height: 500px; float: left; margin: 5px;" title="The view inside a vacant, ransacked building in the West Humboldt Park neighborhood. (WBEZ/Ashley Gross)">"Today’s settlement should serve as a warning to financial institutions - there are consequences for engaging in practices that jeopardize the stability of our communities and our economy," Madigan said.</p><p>But whether this deal means a major boost for the housing market is still a question.</p><p>Amir Sufi is a finance professor at the University of Chicago Booth School of Business.</p><p>"It’s marginally going to have a positive impact," Sufi said. "I just don’t think it’s going to attack the really huge problem in a really major way."</p><p>That really huge problem, Sufi says, is the large number of homeowners who owe more than their homes are worth. The housing data firm CoreLogic says the total amount of negative equity in the U.S. as of last fall was $700 billion.</p><p>Illinois homeowners who are underwater on their loans say they’re hopeful the new mortgage settlement will help them. But many also say they’re beaten down after years of battling with banks.</p><p>Aimee Gendusa-English owns a home near Midway airport that’s now worth at least $50,000 less than she owes on the mortgage. She says she’s been trying to refinance her loan under a federal program for underwater borrowers. But she says her servicer keeps misunderstanding and bungling her request.</p><p>"I’m really glad to hear that anyone is going after the banks for any aspect of the wrongdoing that they engaged in," Gendusa-English said. "But as a consumer, it fills me with frustration because I feel like all these agencies are doing stuff but none of it helps me. I’m always the one who slips through the cracks."</p><p>Gendusa-English may not even qualify to refinance under the new agreement because she says her loan is held by Freddie Mac. Freddie Mac and Fannie Mae refinancings are covered under a separate federal program.</p></p> Fri, 10 Feb 2012 04:51:00 -0600 http://www.wbez.org/story/illinois-get-about-1b-national-mortgage-settlement-96262 Venture: Chicago author Bethany McLean peels apart the financial crisis http://www.wbez.org/story/venture-chicago-author-bethany-mclean-peels-apart-financial-crisis-93387 <img typeof="foaf:Image" src="http://llnw.wbez.org//story/photo/2011-October/2011-10-23/5285810644_8e19f77763_b.jpg" alt="" /><p><p>We'll find out this week how fast the U.S. economy has been growing - and that's important news for all of us - whether you're President Obama or someone looking for a job. The Occupy protests have sparked even more uproar over the state of our economy - and who's to blame. Acclaimed journalist Bethany McLean talked with WBEZ about what she makes of this populist outrage. McLean's new book is called "All the Devils Are Here: The Hidden History of the Financial Crisis."&nbsp; McLean began by explaining what most outraged her when she was working on the book.</p><p>To hear an extended version of this interview, click here:<audio class="mejs mediaelement-formatter-identified-1332483805-1" src="http://llnw.wbez.org/story/insert-image/2011-october/2011-10-24/bethany-mclean-long-web.mp3">&nbsp;</audio></p><p><img alt="Journalist and author Bethany McLean (Photo/University of Louisville)" class="caption" src="http://llnw.wbez.org/story/insert-image/2011-October/2011-10-24/author.jpg" style="margin-right: 15px; margin-top: 15px; margin-bottom: 15px; float: left; width: 325px; height: 487px;" title="Journalist and author Bethany McLean (Photo/University of Louisville)"><strong>MCLEAN</strong>: I think the way that people’s voices weren’t heard for so many years. Consumer activists were going to Washington starting in the '90s, telling banking regulators, congressmen, Alan Greenspan, that people were getting loans they could never pay back. And whether you think it was predatory lending or predatory borrowing almost is beside the point, the very notion that people were getting loans they couldn’t get back told you that something had gone very wrong in our financial system and yet, nothing was done about it.</p><p><strong>WBEZ: </strong><em>And you mention Alan Greenspan, and he was just a true believer in not regulating.</em></p><p><strong>MCLEAN</strong>: A true believer in the market. And a lot of people were true believers in the market, by which I mean they thought the market would make the right decisions. It’s almost as if the market became a kind of god that was omniscient and would make all the right decisions. So Greenspan believed that the market simply wouldn’t permit the bad loans to be made because investors wouldn’t buy them and banks wouldn’t make them and so therefore this couldn’t be happening. He allowed his ideology to get in the way of the facts.</p><p><strong>WBEZ:</strong>&nbsp;<em>People are really angry about the banks having been bailed out and homeowners not having been bailed out. Do you think that’s a fair complaint?</em></p><p><strong>MCLEAN</strong>: I do think it’s a fair complaint. I’m not sure there’s anything we could have done differently, but I do think it’s a fair complaint. What I mean by that is you look at the big picture – banks got bailed out, homeowners didn’t, how can you possibly think that that’s fair? But then you get into the dirty details – okay, what should we have done differently? Should we have not bailed out the banks? I’m not sure. You can’t go back and hit repeat and see what would have happened if we hadn’t bailed out the banks. But there’s certainly a decent chance that the worst-case scenario, which is that the world melts down would have come to pass. And then you look at the other side of this – how do you bail out homeowners? And you would have had a lot of outrage out there if next-door neighbors, one person was getting a check for $50,000 in order to get out from under their underwater mortgage, where the family beside them who had lived responsibly and stayed within their means, wasn’t.</p><p><img alt="" src="http://llnw.wbez.org/story/insert-image/2011-October/2011-10-24/devilsSUB_0.jpg" style="margin-left: 15px; margin-top: 15px; margin-bottom: 15px; float: right; width: 250px; height: 378px;" title=""><strong>WBEZ:</strong>&nbsp;<em>What do you think of the Wall Street reform that was passed a year ago? Do you think this is enough to clean this all up?</em></p><p><strong>MCLEAN</strong>: I don’t, no. I think the only thing that would have been enough would have been breaking up the banks. And I think it’s really hard to say it was done perfectly when banks were back to paying big bonuses less than a year after the financial crisis. But the fundamental problem is a financial system that is too complicated for anyone to really control and a system that rewards the financialization of everything at the expense of the real economy.</p><p><strong>WBEZ:</strong>&nbsp;<em>What do you mean by that?</em></p><p><strong>MCLEAN</strong>: What I mean by that is these financial innovations like collateralized debt obligations, where the people who create them and trade them can make a great deal of money from them, yet to see their benefit or even relationship to the real economy is really, really difficult. Somebody described finance to me in the book as – the financial system is supposed to be the friction in our economy. It’s supposed to be a necessary cost that makes the gears of the economy move, but just a cost, friction. And when the friction has become a huge percentage of our economy, that’s a problem. Especially because the financial industry by its nature makes a small sliver of people very wealthy while not providing jobs or doing much for the rest of the population.</p><p><strong>WBEZ:</strong>&nbsp;<em>Do you think the financial state we’re in right now is as grave as say, the Great Depression? Say, 50 years from now, are we going to look back and say, `Wow, it’s unbelievable what we went through’?</em></p><div class="inset"><p><em><span style="font-size: 22px;"><span style="color: rgb(255, 0, 0);"><span style="font-family: georgia,serif;">"These financial innovations like collateralized debt obligations, where the people who create them and trade them can make a great deal of money from them, yet to see their benefit or even relationship to the real economy is really, really difficult."</span></span></span></em></p></div><p><strong>MCLEAN</strong>: I do. Not because I think that the actual state of our economy has deteriorated to the levels of the Great Depression yet but because I think that if we don’t make some tough choices now, it will. I think we’ll look back and see this as a turning point, where we either made the tough choices we need to or we didn’t. And I mean not only tackling entitlement programs like Medicare and Social Security and making real decisions about how these things are fiscally sustainable, but I mean also looking at our economy and figuring out how we have an economy with middle-class jobs again and we don’t have that right now. And we need to get to a place where people can go to school, work hard, graduate and earn enough money to support their families.</p><p><strong>WBEZ:</strong>&nbsp;<em>While you were working on this book, how did you keep from becoming terribly depressed about human nature? Or did you become terribly depressed about human nature?</em></p><p><strong>MCLEAN</strong>: I did become terribly depressed about human nature. I get terribly depressed whenever I write stories about business gone wrong, and not because I’m such a cynic about business. I actually think business is the driver of our world. You look at a guy like Bill Gates and what he’s been able to create and not just the money he’s now giving away to charity, but the jobs he created for people and the products that made people’s lives better. So when you see business gone wrong, on the other hand, and the devastation it wreaks, it’s just hard not to be sickened and mad.</p></p> Mon, 24 Oct 2011 20:28:00 -0500 http://www.wbez.org/story/venture-chicago-author-bethany-mclean-peels-apart-financial-crisis-93387 Surveying the market amidst potential Bank of America cuts http://www.wbez.org/episode-segments/2011-09-12/surveying-market-amidst-potential-bank-america-cuts-91852 <img typeof="foaf:Image" src="http://llnw.wbez.org//segment/photo/2011-September/2011-09-12/5712963104_6d80037254_b.jpg" alt="" /><p><p>Last week, President Obama last week pitched his plan to put the country back to work. But not everyone should expect a break from the unemployment lines: Bank of America was said to be considering a cut of about 40,000 jobs. The company also looked a little peaked in the market – which of late, proved an unkind place for many firms. Particularly to companies that toyed with going public – the IPO stream turned to a trickle. <a href="http://www.chicagonewscoop.org/author/david-greising/" target="_blank">David Greising</a>, an editor with the <a href="http://www.chicagonewscoop.org/" target="_blank">Chicago News Cooperative</a>, joined<em> Eight Forty-Eight</em> to talk about banks and other business news.</p><p><em>Music Button: Memory Tapes, "Today Is Our Life," from the release Player Piano (Carpark Records)</em></p></p> Mon, 12 Sep 2011 14:42:00 -0500 http://www.wbez.org/episode-segments/2011-09-12/surveying-market-amidst-potential-bank-america-cuts-91852 Neighborhood banks used to be so money--architecturally speaking http://www.wbez.org/blog/lee-bey/2011-09-07/neighborhood-banks-used-be-so-money-architecturally-speaking-91586 <img typeof="foaf:Image" src="http://llnw.wbez.org//blog/photo/2011-September/2011-09-07/Harris Bank branch_WBEZ_Lee Bey.jpg" alt="" /><p><p style="text-align: center;"><img alt="" src="http://llnw.wbez.org/blog/insert-image/2011-September/2011-09-06/untitled shoot-014.jpg" style="width: 500px; height: 506px; margin: 5px;" title=""></p><p>A national bank is building a new branch on a commercial intersection not far from where I live. A few lengths of structural steel went up, and the rest seems to be plywood and brick veneer.</p><p>That's why this bank building pictured above caught my attention while I was driving past 100th and Kedzie in Evergreen Park a few days ago. Built 50 years ago as Evergreen Savings &amp; Loan, this Harris Bank branch is a well-preserved example of what neighborhood banks used to be, architecturally. It's substantial, sober, efficient and modern. You know you'd get a desk-set, a calendar, a bronze paperweight--<em>something</em>--for opening an account there, back when. The architecture tells you.</p><p>I like the <a href="http://www.pietmondrian.org/">Mondrianesque</a> curtain wall facing Kedzie:</p><p style="text-align: center;"><img alt="" src="http://llnw.wbez.org/blog/insert-image/2011-September/2011-09-06/untitled shoot-019.jpg" style="width: 500px; height: 485px; margin: 5px;" title=""></p><p>That bank branch that's under construction? It's not finished, but already you can tell the completed building won't stand out. It won't register visually. And it's not supposed to. The building is only built for speed: just enough architecture to collect the money--collect the fees--lock up for the night and repeat the next day. The architecture is telling us something there as well.</p></p> Wed, 07 Sep 2011 13:49:00 -0500 http://www.wbez.org/blog/lee-bey/2011-09-07/neighborhood-banks-used-be-so-money-architecturally-speaking-91586