Bad Deeds for 11-3-2011

 

Republican Committee in Virginia E-mails Graphic Featuring a Zombie President Barack Obama With a Bullet Hole in His Forehead – A Halloween-themed graphic featuring a zombie President Barack Obama with a bullet hole in his forehead provoked widespread outrage and the attention of the Secret Service Monday after a local Republican committee in Virginia used it to scare up interest in Halloween parade political activities. The montage, a banner on a mass email to Loudoun Republicans, mingles seasonal images including a jack-o-lantern, a disfigured U.S. Rep. Nancy Pelosi and a throng of flesh-hungry zombie Obama supporters.

 

Foreclosure Firm Mocks Their Victims – On Friday, the law firm of Steven J. Baum threw a Halloween party. The firm, which is located near Buffalo, is what is commonly referred to as a “foreclosure mill” firm, meaning it represents banks and mortgage servicers as they attempt to foreclose on homeowners and evict them from their homes. Steven J. Baum is, in fact, the largest such firm in New York; it represents virtually all the giant mortgage lenders, including Citigroup, JPMorgan Chase, Bank of America and Wells Fargo.

A former employee of Steven J. Baum recently sent snapshots of last year’s party. In an e-mail, she said that they showed an appalling lack of compassion toward the homeowners — invariably poor and down on their luck — that the Baum firm had brought foreclosure proceedings against. She added that the snapshots are an accurate representation of the firm’s mind-set. “There is this really cavalier attitude,” she said. “It doesn’t matter that people are going to lose their homes.” Nor does the firm try to help people get mortgage modifications; the pressure, always, is to foreclose.

Let me describe a few of the photos. In one, two Baum employees are dressed like homeless people. One is holding a bottle of liquor. The other has a sign around her neck that reads: “3rd party squatter. I lost my home and I was never served.” My source said that “I was never served” is meant to mock “the typical excuse” of the homeowner trying to evade a foreclosure proceeding.

A second picture shows a coffin with a picture of a woman whose eyes have been cut out. A sign on the coffin reads: “Rest in Peace. Crazy Susie.” The reference is to Susan Chana Lask, a lawyer who had filed a class-action suit against Steven J. Baum — and had posted a YouTube video denouncing the firm’s foreclosure practices. “She was a thorn in their side,” said my source.

 

Bank of America Trying To Stick Taxpayers With A $74 Trillion Bill By Moving Derivatives Into FDIC-Insured Accounts – And this is why we’ve been screaming about regulating derivatives! Bank of America Corp. (BAC), hit by a credit downgrade last month, has moved derivatives from its Merrill Lynch unit to a subsidiary flush with insured deposits, according to people with direct knowledge of the situation. Now you would expect this move to be driven by adverse selection, that it, that BofA would move its WORST derivatives, that is, the ones that were riskiest or otherwise had high collateral posting requirements, to the sub. Bill Black confirmed that even though the details were sketchy, this is precisely what took place.

And remember, as we have indicated, there are some “derivatives” that should be eliminated, period. We’ve written repeatedly about credit default swaps, which have virtually no legitimate economic uses (no one was complaining about the illiquidity of corporate bonds prior to the introduction of CDS; this was not a perceived need among investors). They are an inherently defective product, since there is no way to margin adequately for “jump to default” risk and have the product be viable economically. CDS are systematically underpriced insurance, with insurers guaranteed to go bust periodically, as AIG and the monolines demonstrated.

 

Companies Charge Outrageous Prices for Drugs During Shortages – The number of prescription drug shortages tripled between 2005 and 2010. Besides having serious consequences for people’s health and well-being, drug shortages drive vendors to charge outrageous prices for drugs that are normally affordable when in stock. One report found that price-gouging vendors mark up prices on drugs in short supply by 650 percent, on average. Another report about these “grey market vendors”—companies that inflate prices of drugs running in short supply—found that a leukemia drug whose typical contract price is about $12 per vial was being sold at $990 per vial. At the extreme, a drug used to treat high blood pressure that was normally priced at $25.90 was being sold at $1,200 due to a drug shortage.

The Good News: Today, President Obama signed an Executive Order that will help prevent shortages that lead to this type of price gouging. The order directs the Food and Drug Administration to expand reporting about situations that might lead to drug shortages, and also to work with the Department of Justice to investigate illegal price gouging.

Regards,

Jim