Wednesday, June 24, 2015

Banking on the Supremes

It’s been several years since I had to file bankruptcy. It’s a very emotional and dispiriting process and is a frustrating and laborious. To succeed in bankruptcy court means that you have to prove that you’re unable to pay your debts. For most people who are not looking to scam the system that’s a startling thing to go through. The other side of Chapter 7 liquidation is the prospect of having a fresh slate to start anew. The consequences of having your debts dismissed is no access to credit for many years – literally having to live within your means. The Supreme Court on June 1st just took away that fresh slate.

According to the Wall Street Journal “All nine Supreme Court justices agreed that filing for chapter 7 bankruptcy protection doesn’t give homeowners the power to cancel a second mortgage when their properties aren’t even worth the value of the first mortgage.”

Bankruptcy is not something new. According to Wikipedia debt bondage was common as far back as 600BC. When people couldn’t pay their bills they literally were turned into slaves to work off the debt. By the Middle Ages debtors were locked up in debtors prison and forced to work for the state.   The U.S. had a similar model in the early years of the republic. After the War of 1812 when the populations swelled in the prisons there were a variety of attempts at creating bankruptcy code. By 1898 the first “modern” act was implemented and has been revised several times, the latest being 2005.

The punishment for being poor or not being able to pay one’s bills moved away from criminalizing and more towards creating the ability to start fresh. With the consequences and low access to capital there is a punishment to individuals. Conceptually, too, banks and lenders know that they are at risk of having the debt eliminated – so it is then incumbent upon them to make sure that the person whom they’re lending to has the ability to repay.

The 2005 revision and this ruling continues the trend of punishing debtors and protecting those who make the loans. My house lost more than 50% of its value, so I lost the property, the deposit I paid and the improvements I made along with my home. I had a mortgage and a second – with the house leveraged at 80% of value at purchase, well within reasonable guidelines. Several banks competed to give me those loans. Should they have? Based on the result, no. But they did.

The economy changed, I was laid off, the property’s value plummeted. As I’ve previously written, I am fully responsible for that failure even though there are lots of “reasons.” I’ve paid the price for that through high interest rates, no access to capital, etc. The bank lost money – so maybe they shouldn’t have made the loan. That lesson would indicate that they should change lending practices. But instead of the bank bearing any of the responsibility, the homeowner is now left will the bill.

Under the ruling by the Supreme Court I would still be responsible to pay the second mortgage even though I didn’t own the property any more and once it’s paid would have no value for having done so. It’s punitive. It benefits the banks. Instead of turning the house over to the bank and facilitating an orderly transfer, squatting would make much more sense.

This ruling is one of hundreds that the court makes each year, and it’s a pretty dry and below-the-radar type of issue. The decision – which impacts millions of people – was only carried in one major news publication in the two days from its determination.

If the people of the United States want to move back towards debtor prisons and punishing people for making poor financial choices –that should be something that’s part of the political discourse and engaged with in a legislative way. Right now, however, the banks can count on the Supreme Court to keep them in business.

Thursday, June 18, 2015

Magna Constitution

As I prepare to leave the US for a ten-day international business trip, I have been thinking about my own Ugly Americanisms. I only speak one language and while I appreciate other cultures and other ways of doing this, I do know what I like and how I like it. Writing this blog allows me to exercise one of my most passionate interests – freedom of expression. The right to say what I think, no matter how whacked out some may think it is, generally without fear or concern of consequence. That freedom is thanks to the freedoms enshrined in the U.S. Constitution that is a direct descendent of the Magna Carta – which happened to have a birthday this week.

On Monday, June 15, 2015 the Magna Carta turned 800. She doesn’t look a day over 700. According to CNN: “The catalyst for Magna Carta was the tyrannical rule of King John and, in particular, his imposition of arbitrary taxes upon the barons. The sealing of Magna Carta marked the first time that the notion that an unelected sovereign should be restrained under law was officially recognized. From then on, the idea that citizens should not be subjected to the arbitrary rule of a tyrannical monarch but instead be ruled and governed upon foundations of accepted legal process and law had a legal foundation.”

Throughout history, according to Wikipedia: “It influenced the early American colonists in the Thirteen Colonies and the formation of the American Constitution in 1787, which became the supreme law of the land in the new republic of the United States.”

In a timely analysis, The Fiscal Times wrote: “Mr. Obama has pursued an ambitious agenda since he entered the White House, increasingly acting alone.” The article goes on to detail a long list of examples that the President has acted unilaterally, in conflict with the Constitution.

Adapting their list to include my own points:
  • Maintaining a “kill” list where he alone decides who lives and dies based on information only he has.
  • The defunct PATRIOT act reborn as the FREEDOM act that encourages and allows the Government to look into people’s personal lives and activities in the guise of security
  • Using the Executive Order to bypass legislative processes
  • Military action without consultation with the Congress or authorization

The list can go on and on. There are political realities for the workarounds. On the anniversary of the document that was created to restrain unilateral action its worth remembering the President Obama was elected and the law applies to him. As a former professor of Constitutional law, it’s an appropriate time to refresh his memory on the source of the document that frames the country he was elected to serve.

Thursday, June 11, 2015

Wit of Fools

I’ve been known to use irony in order to mock and make a point. (Once or twice.) Would this blog even exist if it were not for sarcasm? I tend to use it as a way to make my point in a less than direct way or to open a challenging subject or event to diffuse tension. It’s often successful. There are situations where my teasing/sarcastic approach isn’t experienced as intended and the results aren’t always pretty. I like to think I’m astute enough to realize when somebody doesn’t ‘get it’ and then I shift my tactic/technique to accommodate the difference in communication styles. The government is trying to learn how to differentiate when people are seriously making a threat versus when they’re making a joke.

The Washington Post reported that the Secret Service “is looking to buy software that can detect sarcasm on social media.” I guess it’s a positive thing that they recognize their own deficiency. The whole concept reminds me of the TSA after 9/11 when passengers were asked “Has anyone packed anything in your bag without your knowledge?” it seemed to be an invitation for remarks other than “yes” or “no.” (“Sorry, my ESP was down, not sure.”) It took a few years but the TSA finally realized that real terrorists might actually lie in answering those queries and the information gathered was not particularly useful.

In response to the intrusiveness, a teen traveler put a note in their luggage that read:  “[Expletive] you. Stay the [expletive] out of my bag you [expletive] sucker. Have you found a [expletive] bomb yet? No, just clothes. Am I right? Yea, so [expletive] you.” The TSA didn’t get the irony, punished the kid and proved the need for a technological solution to determine sarcasm.

More than a decade after that incident the Secret Service work order “asks for a long list of specific tools, including the ability to identify social media influencers, analyze data streams in real time, access old Twitter data and use heat maps. And it wants the software to be compatible with Internet Explorer 8.” Yes, IE8! I guess that means that they'll be monitoring my old My Space page too? [That remark should tilt the meter.] “Then there's the request to sift through the heaps of snark on Twitter and other social media services: ‘Ability to detect sarcasm and false positives,’ the request reads.”

It is, of course, important for the agency that does threat assessments in order to protect national and visiting leaders be able to determine what is real and what’s a wise-ass remark. Well, I’ve got that skill so maybe I should apply? Oops - the job was posted from June 2 to June 9 – the fastest I’ve ever seen the Government move in a hiring situation. Maybe they already had somebody in-house who was perfect for the gig? Or perhaps there's a ton of people who can recognize obnoxious remarks? Nah, that’s just foolish.

Thursday, June 4, 2015

Counter Secure

I’m a regular gym goer. Four to five times I week I rise before the roosters and put my body through its paces. The facility I use now is a great suburban club, meets my needs and hasn’t been updated in a generation. It is quite a difference from the brand new 24-Hour Fitness I used in Minnesota where everything was so shiny I worried about scuffing the dumbbells. The wide range of spiffy health clubs I belonged to in Los Angeles had every nifty new gizmo to take away the reality of exercise. These newer venues have the latest greatest equipment and have allocated precious space for a cafĂ©. Before or after your work out you can get a latte and a snack. I was always amused to see the various cookies and cakes on display. From a business perspective it’s a great move – ancillary income plus by selling sugar laden goodies you guarantee that your clientele will continue to need to use your club to work off the calories. From a ‘health’ and ‘wellness’ perspective it’s counter intuitive. Much like the U.S. approach to security as it played out this week.

The U.S. Patriot Act expired on May 31, 2015. (Yea!) The law was enacted shortly after the terrorist attacks of September 11, 2001 and has been renewed with huge majorities of votes several times. Privacy advocates like myself have long bucked the expansive nature of the bill. Less than 72 hours later the USA Freedom Act has been passed “overwhelmingly” and has become law. Every element of the Patriot Act has been renewed except for Section 215 – that permitted the government’s gathering of individual’s telephone and internet metadata. Section 215 was deemed illegal less than a month ago. (See my recent blog “Deflated Consequences”) Nearly a third of the Senate wanted to retain a law that was found it to be unconstitutional. Now that’s terrifying!

On June 2 – days after the Patriot Act expired and right before the Freedom Act was implemented – ABC News reported on widespread security failures at US airports. “According to officials briefed on the results of a recent Homeland Security Inspector General’s report, TSA agents failed 67 out of 70 tests, with Red Team members repeatedly able to get potential weapons through checkpoints.” 95% failure rate. The consequence? The TSA Administrator was reassigned – not fired – just given a different job.

“This is not the first time the TSA has had trouble spotting Red Team agents. A similar episode played out in 2013, when an undercover investigator with a fake bomb hidden on his body passed through a metal detector, went through a pat-down at New Jersey's Newark Liberty Airport, and was never caught.”

After a 2009 review that found similar results $540 million for checked baggage screening equipment and another $11 million for training has been spent. There’s been no change in effectiveness. Americans must undress, have restrictions on shampoo and other assorted insults in the name of security.

The immediate renewal of the provisions of the Patriot Act shows that American political leadership would find it natural to have a bakery inside of the gym. The message is mixed: pass laws in the name of security, but then have a level of implementation that is so inept to render the goal useless. It’s not counter-intuitive, it’s counter-secure.