How to Give America Its Best Christmas Ever

Citibank is suspending foreclosures and evictions for 30 days, until after the holidays.

Mighty white of them.

Who knew bankers could be so amusing? In an interview, Citi mortgage czar Sanjiv Das acknowledged that “moratoriums are not permanent solutions” and said his company was looking for “some long-term fundamental alternatives” to throwing people out of their homes because they’ve fallen behind on their payments. But he didn’t offer a specific example.

Here, allow me. There’s one “long-term fundamental alternative” that’s righteous, makes sense, and legal: Let’s foreclose on the banks. It’s time for the U.S. government to show Mr. Das and his buddies down at the country club who is the boss.

Seriously. Yes we can.

But first, let’s go back to February 2009. Ah, February: a new president, hope and change in the air. Especially for bankers. President Obama’s TARP program doled out hundreds of billions of federal taxdollars to gangster capitalists like Citibank and Bank of America, which get off on charging $4 for using ATMs and 29.99 percent interest in credit cards.

The big banks were supposed to use TARP cash to buy back “toxic assets” backed by home loans to distressed homeowners, thus loosening the mortgage credit market. In fact, The Los Angeles Times reported a few days ago, “The fund has done little to address that problem directly.” Instead, the feds bought bank stock at over-market prices.

In exchange for those bailouts, the banks were expected to free up credit.

They didn’t. They haven’t. Instead, they gave obscene raises to their already overpaid executives. They remodeled their plush offices. Now their loan officers are sitting on their hands, laughing all the way to their own banks.

There’s still money in the U.S. economy. But it’s not moving around—and extreme lack of liquidity is the definition of a Depression with no end in sight. As anyone who runs a small business can attest, the same dirtbag bankers who were lending to anyone and everyone two years ago have suddenly become tightwad tight-asses. Consumers with high credit ratings have seen their credit limits slashed. Banks are even refusing to refinance high-interest home loans at today’s rates, reasoning that lower property values have reduced the value of their collateral—thus ensuring still more foreclosures in 2010.

Because the Obama Administration didn’t pressure them, the banks stonewalled the president’s $75 billion loan modification program, which was supposed to reduce payments for the approximately ten million Americans who face foreclosure. JPMorganChase, for example, blew off or rejected 85 percent of homeowners who asked them for help. That’s better than Citibank, which enrolled 100,000 distressed homeowners in the program but only managed to actually modify loans to 270. And it’s a lot better than Bank of America, bringing up the rear with a pathetic whopping 98 modifications out of the 160,000 borrowers who signed up as of the end of November.

More lowlights:

One out of seven American homeowners will probably lose their homes by the end of 2010.

Only 4.7 percent of distressed homeowners who enrolled in the modification plan have gotten any help.

Out of Obama’s $75 billion program, only $2.3 million has been spent—or 0.03 percent.

Obama’s performance on the foreclosure crisis—along with unemployment, the biggest problem America faces—makes Bush’s laissez faire approach to Hurricane Katrina look caring and loving in comparison. If ever there were a cause for impeachment, look no further.

No doubt recognizing political peril, Obama is now attempting to jawbone the banks into doing the right thing, even calling banking CEOs “fat cats” on “60 Minutes.” Whatever.

“America’s banks received extraordinary assistance from American taxpayers to rebuild their industry,” Obama said after meeting with banking executives. “Now that they’re back on their feet, we expect an extraordinary commitment from them to help rebuild our economy.” But there were no teeth in his demand—just a polite pretty-please with a trillion-dollar-plus bailout on top.

But that’s Obama’s choice. If he wanted, he could foreclose on the banks—and personally give millions of desperate homeowners the best Christmas ever.

Here’s how.

True, the Treasury Department didn’t receive any written assurances from the banks that they would start lending again when they collected their bailout loot back in February. But as Obama recalled in the above quote, it was widely understood at the time that the federal government expected looser credit markets in exchange for the bailout. There were thousands of reports in the media to this effect, hundreds of statements by government officials, and—no doubt—dozens of discussions between government and bank lawyers to this effect. No one was confused. Everyone got it at the time.

Obviously Obama should have gotten it in writing. But the bailout-for-credit quid pro quo was a widely witnessed oral contract. And oral contracts are just as legally binding as written ones.

The classic example of an oral contract is two roommates who agree to share an apartment. The lease may be in the name of one person, but the non-leaseholder may not skip out on the rent. But the stakes can be bigger. Pennzoil made a handshake deal—no contract—to buy Getty Oil in 1984 but then reneged in favor of another suitor, Texaco. Pennzoil sued and won $11.1 billion in damages.

The United States government could, and should, sue Citibank, Bank of America, JPMorganChase and other defaulting miscreants for breach of contract. With one out of seven Americans having been foreclosed upon by one of these institutions, it would be difficult to imagine any jury finding them not guilty. Mercy, after all, wasn’t something these banks showed their victims.

Since damages would likely exceed the defendants’ ability to pay, the U.S. could then seize the banks. The newly nationalized banks, owned by we the people, could reduce or cancel outstanding mortgages to the unemployed, sick and other worthies. They could increase credit lines and start making loans again—you know, do what they promised to do. It wouldn’t necessarily get us out of the Depression. But it would be a beginning.

Foreclose on the banks! It’s fair. It’s smart. And it’s long overdue.

(Ted Rall is the author, with Pablo G. Callejo, of the new graphic memoir “The Year of Loving Dangerously.”)

COPYRIGHT 2009 TED RALL

The Empty Gesture of Copenhagen

Our parents and grandparents fell down on the job.

“The politicians in Copenhagen have the power to shape history’s judgment on this generation: one that saw a challenge and rose to it, or one so stupid that we saw calamity coming but did nothing to avert it.” A concise summary of how the world sees this week’s U.N. climate change conference, courtesy of the editorial board of the U.K. newspaper The Guardian.

The paper continued: “In scientific journals the question is no longer whether humans are to blame, but how little time we have got left to limit the damage,” wrote the Guardian’s editors. The implication is that time is short. And that there’s still time.

Only two sides of the climate debate get covered by the media: corporate-backed pseudo-scientists who deny the greenhouse effect or claim that it’s inconsequential, and liberal environmentalists pushing for the United States and other major air polluters to act to reduce carbon emissions.

Both sides of the “debate” are liars.

The energy company-financed stooges are barely worthy of contempt, much less serious rebuttal. Their claims have been addressed and thoroughly debunked, over and over, for decades. Cut from the same toxic cloth as those who collected paychecks from tobacco companies to testify that smoking was safe, they are to be pitied, reviled and, with a little luck, imprisoned after the revolution.

More problematic—and embodied by the Guardian quote above—is the Big Lie of climate change: the implication that there’s still time to stave off environmental disaster.

“The clock has ticked down to zero,” said Yvo de Boer, the United Nations climate chief. No. That happened years ago.

One interested party has been left out of the news from Copenhagen: scientists. “Quietly in public, loudly in private, climate scientists everywhere are saying the same thing: it’s over,” reported George Monblot in the Guardian from Copenhagen. “The years in which more than 2°C [above average temperatures at the start of the Industrial Revolution] of global warming could have been prevented have passed, the opportunities squandered by denial and delay. On current trajectories we’ll be lucky to get away with 4°C. Mitigation (limiting greenhouse gas pollution) has failed; now we must adapt to what nature sends our way. If we can.”

Leading scientists like James Hansen say the maximum safe upper level for the concentration of CO2 particles in air is 350 parts per million. We’re currently at 387. According to a study recently cited in Time magazine, we could ban automobiles and the internal combustion engine and abolish all industrial production, worldwide, and it would still take at least 900 years for CO2 levels to drop back below the 350 ppm tipping point.

Ocean levels will rise an average of at least six to 16 feet by 2100. Goodbye, lower Manhattan. Ciao, south Florida. The northern half of Antarctica’s giant Wilkins ice shelf has begun breaking off; it will be gone within a few years. In the highest mountains in and around the Himalayas, millennia-old glaciers have vanished in the last decade, causing water shortages for hundreds of millions of people in the cities of China, Central and South Asia.

The greenhouse effect is a simple model. The math is straightforward and devastating: so much particulate has been pumped into the air since the dawn of the Industrial Revolution two centuries ago, so much energy has built up in the closed system that is our atmosphere, that the damage is irreversible. Human-built technology has billowed more than 200 billion metric tons of carbon waste into the atmosphere; we continue to add another six or seven billion annually.

“People have imagined that if we stopped emitting carbon dioxide that the climate would go back to normal in 100 years or 200 years,” said Susan Solomon, a climate scientist with the National Oceanic and Atmospheric Administration. “What we’re showing here is that’s not right. It’s essentially an irreversible change that will last for more than a thousand years.”

The idyllic global climate that has prevailed for the last 10,000 years is going to change, is changing, and we won’t be around long enough to know whether it will ever come back. “Human activities have reached a level that could damage the systems that keep Earth in the desirable Holocene state,” wrote Johan Rockstrom of the Stockholm Environmental Institute in an article in the magazine Nature.

Catastrophe no longer looms. Catastrophe is upon us. For example, the polar ice cap is doomed. Summer ice will vanish entirely within 20 years; winter ice will be gone by 2085. Nothing can be done to stop it. It doesn’t matter whether the U.S. and other countries reduce CO2 gas production by 30, 50 or 80 percent. The Amazon rainforest feeds the Amazon River, which by some accounts produces 20 percent of the world’s fresh water; it has begin its death spiral. South Asian monsoons are shorter and arriving later. The American southwest will become a Dust Bowl.

The Greenland and northern Antarctic ice sheets are going, going, gone. Seas will rise between four and six meters above the levels cited above. It’s been nice knowing you, Boston and San Francisco. Thousands of animal species, including polar bears, will live in zoos or not at all. After a certain point, plants themselves will become a net source of CO2—all part of the feedback loop that occurs when you mess things up as badly as we have. Giant storms will rage, famine will spread, drought will be ubiquitous. Or maybe we’ll just choke to death. Whatever, at 6°C plus, the human race is outta here.

It is almost certainly too late to save ourselves. Like recycling and not littering, reducing CO2 output amounts to mere politeness. It’s a nice gesture. But it won’t make any difference.

Of course, the only sane action is to pretend otherwise and enact radical change that might/might have saved the earth. The human race is probably destined for extinction. But we might as well be courteous on the way out…and stop BSing about our chances.

(Ted Rall is the author, with Pablo G. Callejo, of the new graphic memoir “The Year of Loving Dangerously.” He is also the author of the Gen X manifesto “Revenge of the Latchkey Kids.” His website is tedrall.com.)

COPYRIGHT 2009 TED RALL