'Across the Atlantic, this same deep mutual distrust morphed into an entire way of life; what the Sicilians call omertà -- a rigorous code of silence and non-interference in the illegal acts of others'.
The key words here are monopolies and governments tied to the corruption----this happened throughout history when the 99% allows corporations to garner too much power and wealth. Our founding fathers knew this and built our government and US Constitution to PROHIBIT MONOPOLIES AND EXTREME WEALTH----but WE THE PEOPLE have not fought the election corruption since CLINTON/BUSH/OBAMA---NOW TRUMP.
How Mexico Became So Corrupt
From Sicily to Tijuana, how monopolies and governments perpetuate one another.
- Lawrence Weiner
- Jun 25, 2013
A protester gestures next to traffic police outside Mexico's Federal Electoral Institute (IFE) in Mexico City on July 4, 2012.
The placard reads, "Comrades, to your trench, to the theatrical trench. Because this is a festival, the people have awakened and will fight for their people." (Edgard Garrido/Reuters)Grupo Televisa, the world's largest Spanish-language media company, is famous for its logo, a gold-colored eye gazing at the world through a television screen. According to The Guardian, this logo "captures the company's success at controlling and dominating what Mexicans watch".
In a country where newspaper readership is tiny and the reach of the Internet and cable is still largely limited to the middle classes, Televisa -- and its rival TV Azteca -- exert a powerful influence over national politics. Through its scores of stations and repeater towers, the former accounts for roughly two-thirds of the nation's free-to-air television; most of the rest belong to Azteca.
Accused for decades of politically slanted news coverage, Televisa represents another rarely spoken fact: modern Mexico has never functioned without corruption, and its current system would either collapse or change beyond recognition if it tried to do so.
Just before the 2012 elections, Mexican news magazine Proceso and The Guardian released evidence of a series of shady deals struck between Televisa and the nation's powerful Institutional Revolutionary Party (the "PRI").
In return for multimillion dollar payouts, the network provided the PRI's candidate a special "public awareness campaign" that gave him glowing coverage on its flagship news and entertainment shows; "hushed" criticism on the network's talk shows; and "subliminal" promotion to strengthen his overall image.
In its typically artful way, the PRI had managed to secure a lock on the nation's airwaves.
Although the exposé provoked widespread student protests for weeks leading up to the election, it barely made a blip in the results. The PRI's candidate, Enrique Peña Nieto, won by a landslide.
In the aftermath, Peña Nieto immediately clinched a deal -- again, in typical PRI fashion -- called "Pact for Mexico," a set of 95 vague proposals that gathered together powerful actors from every political party under one broad tent.
In the early 1960s a psychologist named Douglas McGregor observed two basic theories of management. Theory X assumes that most people are naturally indolent and seek to get away with something for which they are not entitled. Theory Y assumes the reverse -- that most people are basically honest and hardworking and, if provided with reasonable expectations of satisfactory performance, strive to achieve it.
It may come as no surprise that Mexican companies are overwhelmingly theory X organizations.
Why this is true is deeply rooted in the nation's past. One telling sign is the way business came to rely on government; not just in terms of policy decisions (which affect business in every nation) but personal relations with government officials.
Since the nation's founding, few private fortunes were made without colmillo ("fang" or cunning), the owner's ability to cultivate ties to the right officials and master the art of "mutually convenient" relationships.
In this scheme, the mindset of politicians drove (and was driven by) the mindset of business leaders: wary, secretive, suspicious, and cynical. Each group deeply distrusted the other, yet both intermingled in the same tight-knit social and business circles.
An entire foundation supported this symbiosis: classism, Catholicism, a gulf between pre-Hispanic and European values, strong authoritarian and elitist traditions, and, of course, corruption. On all sides, trust was minimal. Most transactions were made between family, friends and neighbors.
In time, the sense of "us versus them" gave rise to deep-seated paranoia, subtle and often unspoken expectations to keep outsiders outside -- the knowing wink, the sealed lips.
Across the Atlantic, this same deep mutual distrust morphed into an entire way of life; what the Sicilians call omertà -- a rigorous code of silence and non-interference in the illegal acts of others.
Back in the 1920s, a famous Italian official named Cesari Mori was appointed prefect of Palermo, the capital of Sicily. Mori was a model police officer, later chosen by Mussolini to lead his national campaign against organized crime.
For years, Mori lived in Trappini on the western part of the island. In his writings, he claimed to have "penetrated the Sicilian mind" which he found to be:
"Simple and kindly, apt to color everything with generosity of feeling, inclined to deceive itself, to hope and believe; ready to lay all its knowledge, affection and cooperation at the feet of a powerful figure who assumes their legitimate need for justice and redemption," according to Cosa Nostra: A History of the Sicilian Mafia.
The key to the Mafia's success, he argued, was its ability to understand this complex dynamic and exploit it.
And so in Mexico: the entrenched power of monopolists, party bosses, cardinals and mafias are reflections of something much deeper -- a perspective that arose from what Cosa Nostra calls the "painful scars of... tyranny and oppression."
Not just in terms of crime, as in legendary mafiosos who steal from the rich and give to the poor, but as way of life; a way of facing adversity and relying bravely on your own people.
Just as in Sicily, these cultural norms required centuries to coalesce, punctuated by watershed moments when outsiders came to be viewed with deep suspicion. Imagine the Aztec natives' reaction when the Conquerors showed up off the coast of Vera Cruz.
The PRI was founded in the late 1920's by a generation of leaders whose ranks were not only influenced by the Conquest and everything this implies, but also decimated by revolution and anarchy.
In the midst of the Mexican Revolution, a multi-sided civil war with dangerously shifting power struggles, the PRI decided to bridge wildly divergent ideological and political gaps by putting "everyone under one roof" -- in effect fusing the party and the Mexican nation-state.
To this end, any means became justified: Between 1929 to 1982, the PRI won every presidential election by margins of over 70 percent -- which were obtained usually by massive electoral fraud. The party also held an overwhelming majority in the Chamber of Deputies, every seat in the Senate, and every state governorship.
During its long reign, the PRI learned not only how to buy votes but also how to corrupt the army, exploit the media, buy off criminals and absorb the opposition.
Loyalty, discipline, discretion and silence -- already deeply rooted in society -- became essential to the political system's survival.
Although the "oil and glue" that held the working parts together was based on what Westerners call "corruption," many Mexicans (just like Sicilians) didn't always see it that way. To most of the nation's political leaders, corruption was an aberration of law, but not of society.
According to Alan Riding, author of Distant Neighbors, the system that emerged in the twentieth century merely institutionalized what was already there: a ruling class with absolute authority that rewarded unquestioned loyalty with favors and patronage.
"Many old habits," wrote Riding, "including conflict of interest, nepotism and influence-peddling, were not even considered wrong; and since power rather than law dominated society, honesty itself was seemingly negotiable."
Call it what you will -- paternalism, savior-ism, patronage, protectionism -- many Mexicans came to depend upon the strength and reliability of monopolists.
For ordinary business people who dealt with these companies -- Telmex, Cemex, Televisa, Modelo, Ocesa, Femsa, Pemex, et al. -- the imperatives of order, trust, and what the Sicilians called "our thing" (the knowing wink and sealed lips) made it possible.
Monopolies and monopolists are a deeply-rooted part of Mexico : This truth is close to the hearts of Mexican officials (many of whom grew up in the PRI) involved in several major antitrust claims currently before the Federal Antitrust Commission.
Has the PRI's historic embrace of monopoly -- and its "see no evil" approach to criminality -- really changed?
As The Economist said: "The fear is that the PRI's fundamental instincts remain the same: to shun openness in favor of media manipulation, to conflate public and private interests and to shield corrupt union bosses."
In truth, nobody really knows. Peña's decision to arrest the head of the teacher's union last February sent a powerful (and unexpected) message to anyone planning to block the government's proposed reforms.
Maybe the PRI is serious this time about "asymmetric regulation" and rules that force dominant companies to divest. The PRI realizes as much as anyone that monopolies have become a heavy drag on the nation's economy; a recent OECD study makes this crystal clear.
But maybe not. Many powerful interests are vehemently opposed to cutting off the head of a goose that has laid golden eggs for so long. According to one Mexican journalist: "The PRI and PAN parties are largely responsible for preserving Mexican monopolies, as their owners are both associates and campaign backers".
My own guess is that Peña will attempt to play each monopolist off the other. As the heat turns up, he will try to keep infighting at acceptable levels under the "big tent". And when things boil over, he will use his colmillo and unfailing PRI "finesse" to the party's advantage. As long as Carlos Slim's interests remain counter to those of Televisa and TV Azteca, all the better.
Ultimately, the PRI -- like any true monopolist -- wants to play it both ways. And if Peña succeeds, it will have gone a long way to silencing its critics
Who owns our most powerful print media NEW YORK TIMES? Carlos Slim----the Mexican billionaire who was handed all of Mexico's telecommunications (pay-to-play) for allowing NAFTA to open Mexico to Foreign Economic Zone global corporate campuses and global factory enslavement of Mexican citizens......this is of course why so many Mexican citizens were forced to flee to US---where they are now facing these same conditions as US cities deemed Foreign Economic Zones are installing these same policies.
What's Happening With the Mexican Elections, ExplainedAs a famously corrupt party returns to power, student protests have gained steam and sparked a vote recount.
Ian Gordon and Maddie OatmanJul. 6, 2012 5:00 AM
Thousands marched in Mexico City on July 2 in opposition to newly elected Enrique Peña Nieto.
The basics: On July 1, our neighbors to the south held a presidential election. In a stinging rebuke to the conservative National Action Party (PAN) and President Felipe Calderón—whose six-year term has been marked by an increasingly violent drug war and a lagging economy—Mexicans elected Enrique Peña Nieto, a former governor from the Institutional Revolutionary Party (PRI), which controlled Mexico from 1929 to 2000. Like Calderón in 2006, Peña Nieto received less than 40 percent of the vote but still beat Andrés Manuel López Obrador, an old-school leftist from the Party of the Democratic Revolution (PRD) and former mayor of Mexico City. (Josefina Vázquez Mota, the PAN candidate, finished third.) While the result was long seen as a foregone conclusion (Peña Nieto led in the polls throughout the election), López Obrador closed the gap in the final weeks of the campaign thanks in part to a growing student movement fed up with the Televisa-TV Azteca television duopoly, which runs 95 percent of the country's stations and which a June 7 Guardian report claimed favored PRI candidates over their PRD counterparts.
What's happened since the election:
In Peña Nieto's victory speech, he promised to try to meet the demands of those that voted against him and applauded the election for being an authentic democratic fiesta. López Obrador, who garnered 31 percent of the vote, was quick to write off the election as a sham, alleging that it "was plagued with irregularities before, during, and after the process." Protesters, many of them belonging to the mostly student movement YoSoy132 (see below), took to the streets in Mexico City and across the country the next day in an "anti-fraud" march. Videos of the protests flooded YouTube; in one, marchers' demands in an underpass--México votó, Peña no ganó!--translate to: "Mexico voted, Peña didn't win!"
In the days after the election, during what's now being dubbed "SorianaGate," the arrival of hundreds of shoppers with prepaid gift cards—supposedly handed out by the PRI campaign—at the Soriana grocery chain around Mexico City sparked suspicion that the PRI had bought votes, though Peña Nieto denied his party's involvement, questioning the credibility of online videos of the Soriana shoppers and claiming they were orchestrated. On July 5, Mexico's Federal Electoral Institute (IFE) announced that it planned to recount votes at more than half of the country's polling stations, citing inconsistencies. The final results, including the recount, could be in by this Sunday, but the IFE has until September 6 to declare a winner, and the recount could be long and expensive.
Why are so many people upset about the PRI's return to power? For many Mexicans, the PRI evokes memories of authoritarianism, corruption, and cronyism. (There's a reason, after all, why writer Mario Vargas Llosa called the PRI "the perfect dictatorship" and said Mexico would be "a country of masochists" if it voted the party back to the presidency.) Among other things, the PRI was responsible for the 1968 Tlatelolco massacre, the infamous 1988 election fraud, and a variety of neoliberal economic reforms described by William Finnegan in his recent New Yorker article on the Mexican drug war:
[I]t was the PRI that presided over the privatization of more than a thousand state companies during the nineteen-eighties and nineties. Carlos Salinas, during his sexenio, privatized hundreds of companies, as well as Mexico's banking system, turning a lucky circle of his friends into billionaires. This creation of a new economic elite, with effective monopolies in fields such as transportation, mining, and telecommunications, resembles the creation, around the same time, of the new crony-capitalist oligarchy in Russia. And in Mexico nearly all its beneficiaries owe their fortunes to the PRI, not the PAN.
Students from 35 schools held their first assembly on May 30 to outline initial goals, including rebelling against media manipulation, strengthening the connection between private and public universities, and refusing the imposition of Peña Nieto. In late June, the movement established a more permanent physical presence outside of the Monument to the Revolution in Mexico City, calling itself the #AcampadaRevolución, or Camping Revolution. The day after the election, these protesters published a video announcing they were monitoring the election and helping to report voter impediments. The movement has plans to keep organizing daily in different parts of the country, including for a national convention on July 14 and 15.
Tweeter @Soy132MX calls YoSoy132 "Apolitical, anti-neoliberal, paficist, from a student base, social, political, autonomous, and humanist." The movement has also been praised for uniting those on the left and right, as well as shaking up apathy among youth. In a great overview of the movement, the New York Times's Damien Cave digests how YoSoy132 compares to other recent political groundswells:
Whereas the demands of the Arab Spring were more clear, experts say in Mexico there is nothing limiting the movement more than its multiplicity of demands and adherence to a horizontal management structure that makes everyone and no one a leader, similar to the Occupy movement.
Far-right REAGAN/CLINTON Wall Street global corporate neo-liberals dismantled all Federal agencies tasked with oversight and accountability to allow massive corporate fraud and government corruption to thrive because that is what third world government looks like. Infuse widespread corruption and everyone's hands are dirty----while the global 1% and their 2% walk off with tens of trillions of dollars.
Local media as in Baltimore was told----KEEP NEWS LOCAL-----do not educate on ONE WORLD ONE GOVERNANCE US CITIES AS FOREIGN ECONOMIC ZONES. So, this is what we get locally----always looking for the low-level crime. Yes, we want these bad guys caught but know what? Wall Street Baltimore Development and Baltimore City Hall has been misappropriating Food Stamp funding for decades from the needs of low-income into global corporate campus construction and global Wall Streeet profits-----this in the billions----yet we see the faces of those low-level criminals----like the BLACK GUERILLA GANG.
Afar-right Wall Street global neo-liberal O'Malley running as a Democrat allowed Food Stamp fund misappropriation go wild-----while a Wall Street global Bush neo-con HOGAN running as a Republican comes to office to get tough on fraud and corruption and immediately goes after low-level Food Stamp fraud.
My organization Citizens' Oversight Maryland early on looked at distribution of Federal social services fraud in the city ----I followed a citizen trying to apply for Food Stamps and one has to have the patience of HERCULES----the stamina of SISYPHUS---and the perseverance of ACHILLES----in other words the social services department is geared to frustrate and send away people----I am sure there is nepotism happening here as well. As with all social services the bulk of Federal funding meant to go to citizens in need is redirected to Wall Street Baltimore Development----to the tune of possibly hundreds of millions of dollars over decades----yet---we have this dragnet for $16 million.
Citizens in Baltimore qualifying for these War on Poverty/New Deal programs have lost billions of Federal funding over these few decades through fraud and Baltimore City Hall corruption.
14 Baltimore-area retailers indicted in alleged $16 million food stamp fraud
The Maryland U.S. attorney's office announces indictments against 14 retailers in a $16 million food stamp fraud investigation. (Jessica Anderson/Baltimore Sun video)
Jessica AndersonContact ReporterThe Baltimore Sun
Maryland U.S. attorney's office announces indictment against 14 retailers in $16 million food stamp fraud.Fourteen Baltimore-area retailers from Glen Burnie to Park Heights have been charged with defrauding the U.S. Department of Agriculture of more than $16 million from in a practice known as "food stamp trafficking," federal prosecutors said Tuesday.
The Supplemental Nutrition Assistance Program provides low-income individuals with debit cards that can be used to purchase fruits, vegetables, and other grocery staples. Prosecutors allege that the shop owners would pay customers cash, instead of food, for their SNAP benefits.
A customer might receive $50, while the USDA is charged $100, leaving the shop owner with $50 profit.
"Individuals who are involved in fraud and abuse of SNAP and other USDA programs will be aggressively investigated," said William G. Squires, Jr., special agent in charge of the USDA office of the inspector general for the Northeast Region.
Some 300 law enforcement officers executed 32 search warrants at businesses and other locations and seized 46 bank accounts Tuesday, authorities said. The 14 defendants appeared before a judge in the federal courthouse downtown for initial appearances Tuesday afternoon.
Investigators spoke to confidential informants and used undercover officers and physical surveillance to document the exchanges, authorities said.
At one store, the number of transactions was about 25 times that of similar stores in the area, and the average transaction was more than 10 times larger, U.S. Attorney Rod J. Rosenstein said at a news conference Tuesday.
This is a collection of mug shots released to The Baltimore Sun during the reporting of recent news stories.
Rosenstein said smaller stores, knowing they would catch the attention of the government, would call larger stores to enter in the transactions, splitting the proceeds.
He said some store owners, disqualified from participating in the program, would reopen shops in the same location under new names.
"The Agricultural Department is playing whack-a-mole," he said. "These stores just keep popping up every time they disqualify them, and shut them down."
The USDA has a fraud-monitoring program, regular audits of SNAP data to look for unusual patterns, and the ability to disqualify businesses that don't follow the rules, Rosenstein said, but many businesses continue to benefit in the practice.
One family was accused of operating a Rosedale shop under different names and handing out cash for SNAP benefits.
The business was incorporated by a different person four times since 2009, and applied to participate in the food stamp program four times, authorities said. It was disqualified twice from participating because of food stamp trafficking, they said.
"The government has been unable to shut down that fraud through administrative remedies, but we can stop it by sending the perpetrators to federal prison," Rosenstein said. "That's what we intended to do."
The USDA has authorized more than 4,000 business in Maryland to take SNAP benefits. Eighty-two have been permanently disqualified from participating after investigations.
The majority of businesses nationwide that have been permanently disqualified from participating in the program — 1,517 — are convenience stores. The second-highest category was small grocery stores, with 519.
In 2013, a federal grand jury indicted 10 owners or operators of local businesses for stealing nearly $7 million from food assistance programs by agreeing to debit cash for beneficiaries without selling food. The store operators allowed customers to convert the cards into cash, instead of approved food items. All were convicted.
"Fraud and corruption pose a fundamental threat to our national security and our way of life," said Kevin Perkins, Special Agent in Charge of the FBI Baltimore office. "It takes a significant toll and the public's pocketbooks, siphoning away money that could be used for a lot better things."
The defendants either could not be reached for comment or declined to comment. They were identified as:
— Walayat Khan, 36, of Reisterstown and Barbara Ann Duke, 50, of Owings Mills allegedly obtained more than $1,486,118 in payments for food sales that never occurred at Maria's Market Place, 307 S. Broadway in Fells Point and Royals Food Market, 921 E. Patapsco Avenue in Brooklyn, between October 2013 and June 2016.
— Shaheen Tasewar Hussain, 60, of Ellicott City allegedly obtained more than $778,183 in payments for food sales that never occurred at the Shop & Save, 301 Crain Highway South in Glen Burnie, between July 2014 and October 2015.
— Kelym Novas Perez, 34 and Jose Remedio Gonzalez Reyes, 50, both of Baltimore, allegedly obtained more than $879,500 in payments for food sales that never occurred at the Kelym Grocery, 2734 Pennsylvania Avenue in Penn North, between August 2013 and March 2016.
— Mulazam Hussain, 54, of Windsor Mill allegedly obtained more than $1,242,745 in payments for food sales that never occurred at the Monroe Food Mart and Y&J Grocery in Baltimore between March 2013 and July 2016.
— Mohammad Shafiq, 50, of Gwynn Oak and his daughter, Alia Shaheen, 24, of Baltimore allegedly obtained more than $3,712,353 in payments for food sales that never occurred or were substantially inflated at the Quick Stop Convenience Store, 237 N. Patterson Park Avenue in Baltimore; the New York Food Mart, 1201 N. Patterson Park Avenue in Broadway East; the Barclay Food Mart, 2454 Barclay Street in Barclay, and the Shafiq Corporation, 6929 Holabird Avenue in Dundalk between October 2010 and July 2016.
— Mohammad Irfan, 59, and Muhammad Sarmad, 40, both of Nottingham, allegedly obtained more than $3,550,662 in payments for food sales that never occurred at the New Sherwood Market, 6324 Sherwood Road in Northwood; the Martin Mart, 1504 Martin Boulevard in Middle River; the Rosedale Mart, 6326 Kenwood Avenue in Rosedale; and the M&A Mart 7400-A Belair Road in Baltimore, between October 2010 and August 2016.
— Mahmood Hussain Shah, 57, of Catonsville and Muhammad Rafiq, 58, of Reisterstown allegedly obtained more than $1,610,556 in payments for food sales that never occurred at the Corner Groceries, 1242 Darley Avenue in Baltimore, between October 2010 and August 2016.
— Rizwan Pervez, 38, of Essex, allegedly obtained more than $1,689,511 in payments for food sales that never occurred at the M&N Mini Mart, 1846 W. North Avenue in Mondawmin and Mega Mart1,1522 Ellamont Street in Rosemont, between April 2014 and July 2016.
— Kassem Mohammad Hafeed, also known as Kassam Mohammad Hafeed, 51, of Baltimore, allegedly obtained more than $1,532,642 in payments for food sales that never occurred at the Yemen Grocery, 1400 W. Lombard Street in Union Square, between October 2010 and August 2016.
Each defendant faces up to 20 years in prison for each count of wire fraud; up to five years in prison for conspiracy to commit food stamp fraud and wire fraud; and up to five years in prison for food stamp fraud.
If you read Republican policy think tank stances on social services from New Deal for example they will be quick to remind folks that the southern states refused to sign New Deal unless it excluded DOMESTICS and IMMIGRANTS from receiving any benefit---we are hearing these same comments today. So, who is the largest recipient of Federal social service funding INCLUDING FOOD STAMPS? The Republican southern states. You are committing fraud if you say you want to exclude and then receive those very Federal funds just to re-appropriate them for other uses. If a state does not want to allow DOMESTICS AND IMMIGRANTS to have social service funding then don't include those figures in the receipt of funding. This fraud has gone on for several decades getting worse CLINTON/BUSH/OBAMA----and this is why Food Stamp funding soared---not that low-income citizens were receiving these benefits.
Now that these few decades of Robber Baron pols sending all US wealth to the global rich are over with this coming economic crash from US Treasury and state municipal bond fraud-----the 5% to the 1% are now not needing these funds and refusing them. The goal now is to get rid of low-income from US cities deemed Foreign Economic Zones because Wall Street Baltimore Development no longer needs to feed off of Federal social services fraud.
Mind you----this food insecurity and malnutrition has occurred at the same time Food Stamps received record Federal funding----the funding simply didn't get to social services during CLINTON/BUSH/OBAMA.
Food Stamp Rolls Drop as States Decline Federally Funded Benefit
August 16, 2016 — 5:00 AM EDT
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- Seven states this year opt not to seek U.S. waivers on work
- Enrollment is down 9 percent from 2012 record food-stamp use
Food-stamp enrollment in the U.S. is declining from record levels, in part because some states are ending benefits earlier than they have to.
Seven states, all led by Republicans, have decided this year to end waivers for some able-bodied recipients that were made available in the 2009 federal stimulus bill -- even though the benefits are federally funded.
Enrollment in what’s formally known as the Supplemental Nutrition Assistance Program is still nearly twice the level it was before the recession. But the most recent data, for May, showed 43.5 million people were receiving food stamps, down 9 percent from a 2012 peak and the fewest since 2010.
Much of the drop comes from an improving economy, but efforts to reduce enrollments among able-bodied adults are also accelerating the decline.
Under federal law, food stamp benefits are cut off after three months for adults under the age of 50 who don’t have dependents unless they find work or engage in a volunteer or job-training activity. The stimulus bill permitted states to waive that provision in areas with high unemployment.
Many states did, and the waivers pushed the percentage of so-called “ABAWDs” -- for "Able-Bodied Adults Without Dependents” -- to 10.3 percent of all food-stamp recipients in 2014 from 6.7 percent in 2007, according to the U.S. Department of Agriculture, which runs the program. Ending them could push as many as a million people off aid nationwide, according the Center for Budget and Policy Priorities, a pro-food-stamp group in Washington.
High enrollments rankle Republicans, including presidential nominee Donald Trump, who cited that “43 million Americans are on food stamps” as a sign of economic failure in his acceptance address at the Republican National Convention last month. Democrats pledged to protect aid at their party gathering.
“It’s a knee-jerk reaction to say that someone who’s getting a couple hundred bucks a month is lazy, so let’s throw them off,” said Tim Smeeding, a professor at the University of Wisconsin who studies poverty.
In the seven states -- Arkansas, Florida, Missouri, Mississippi, North Carolina, South Carolina and New Jersey -- aid is ending sooner than the government requires. They join eight other states that had discontinued waivers in prior years because of economic conditions or state action: Delaware, Iowa, Kansas, Maine, Oklahoma, Indiana, Wisconsin and Texas. Other states are ending waivers only for certain regions
In Wisconsin, reviving work requirements “is part of Governor Walker’s effort to move people from government dependence to true independence,” said Tom Evenson, a spokesman for Wisconsin Governor Scott Walker, in an e-mail.
People struggling to find jobs have job-training programs to turn to that allow them to continue benefits, and that “has helped thousands of able-bodied adults gain employment,” he said.
Other states said the actual transition won’t be disruptive. South Carolina had its own work requirements even while the federal waiver was in effect, Karen Wingo, a spokeswoman with the state’s social services department, said in an e-mail.
A build up of its job-training programs and growth in jobs means South Carolina doesn’t need the waiver, its governor, Nikki Haley, said in an April news conference announcing the move.
"We are in a position where we don’t want that waiver anymore,” Haley said. "We see this as an opportunity to give more people work."
Some recipients who have had aid cut off say the disruption is significant.
Anthony Bradford, 29, stopped receiving benefits last year, when Wisconsin ended its waiver. His income comes from side jobs in carpentry and home improvements, but work is difficult to find because he has a criminal record. He’s been out of prison since 2011, but prospective employers “don’t want to hear any story. Once you’re a felon, you’re a felon,” he said.
He’s been getting food from soup kitchens and food shelves while living with his brother in Wisconsin, which cuts costs. “I need a job,” said Bradford, who says he continues applying and feels that “something out there is going to come to me.”
In the meantime, he and others in the job market struggle, he said. “People gotta survive,” he said. “It’s easy to judge, but there are a lot of people, they need these food stamps. I’m trying hard to get employed, but right now if my brother wants me to go pick something up at the store, I can’t even do that. We need these food stamps.”
Food stamp participation and spending both more than doubled from 2007 to 2012, as the combination of double-digit unemployment and increased federal efforts to get eligible recipients in the program boosted rolls. The program cost a record $76.1 billion in 2013.
Enrollments are dropping now due both to the improving economy and the end of the work-waivers for able-bodied adults, said Kevin Concannon, the USDA undersecretary who heads the program.
Dropping recipients from rolls comes with the responsibility of having job-training and placement programs available to reintegrate long-term recipients into the workforce, he said.
KNOW WHAT? PEOPLE ARE NOT GETTING HIRED WITH JOB TRAINING JUST AS WELFARE TO WORK NEVER LED TO EMPLOYMENT.
“A lot of jobs programs were also cut when unemployment was high, so some states have done a better job than others,” he said.
Cutbacks in food-stamp eligibility are likely to persist as long as public suspicion of perceived spending on undeserving poor people persists, Smeeding said.
In an uneven economic recovery, that will create hardships for some, he said. “True, you see some people abuse it,” he said. “But this is food, this is America. You can help people eat.”
We have known southern RED STATES were the biggest welfare queens for decades and we have known through poverty and hunger figures citizens were not receiving this aid. These few decades of Clinton taking control of northern US cities with neo-liberalism brought these same conditions to all US cities.
The point is this: We had a social program from New Deal to War on Poverty that made US citizens the healthiest, most safe from food scarcity in the world and then watched as CLINTON/BUSH/OBAMA ---far-right 1% Wall Street pols----dismantled and filled these programs with fraud. Common knowledge but national and local media focus only on low-level FOOD STAMP fraud.
WE THE PEOPLE must WAKE UP----these global 1% could care less if any social programs exist and the thought that charity or NGOs are going to handle the loss of safety net programs has proven over thousands of year NOT TO HAPPEN.
The economic crash coming will push from 50% to 70% of Americans into these weakened states. It will be another decade to install global corporate campuses and factories where Americans made desperate for housing and food will be told----
BE LUCKY WE ARE PAYING YOU $3-6 A DAY AND GIVING YOU A BED AND FOOD FOR THE PLEASURE.
What has been massive frauds of our Federal agencies is now going to turn to extreme austerity as a first world Democracy is pushed to a third world authoritarian, militaristic, far-right dictatorship by the global 1% and their 2%
Which States Are Givers and Which Are Takers?
And is that even the correct way to frame the question?
- John Tierney
- May 5, 2014
Maps showing regional differences among Americans are all the rage these days, such as this depiction of the contours of baseball fandom, or this one of the beers we're alleged to favor, or this showing the places in America where none of us lives, or this creative video/map showing where Americans use different words for common things such as soda.
For my money, one of the more interesting maps appearing recently came from the personal-finance website Wallet Hub. Analysts there set out to determine how states compare in terms of their reliance on federal funding. The states deemed "most dependent" by the analysis are bright red on the map, those "least dependent" are bright green. You can move your cursor around on the map to see how each state ranks. (There were some ties.)
The Wallet Hub analysts essentially asked how much each state receives back as a return on its federal income-tax investment.
They compared the 50 states and the District of Columbia on three metrics:
1) federal spending per capita compared with every dollar paid in federal income taxes;
2) the percentage of a state’s annual revenue that comes from federal funding; and
3) the number of federal employees per capita. The third measure received only half the weight of each of the others in the calculation.
What the resulting map shows is that the most “dependent states,” as measured by the composite score, are Mississippi and New Mexico, each of which gets back about $3 in federal spending for every dollar they send to the federal treasury in taxes. Alabama and Louisiana are close behind.
If you look only at the first measure—how much the federal government spends per person in each state compared with the amount its citizens pay in federal income taxes—other states stand out, particularly South Carolina: The Palmetto State receives $7.87 back from Washington for every $1 its citizens pay in federal tax. This bar chart, made from Wallet Hub's data, reveals the sharp discrepancies among states on that measure.
On the other side of this group, folks in 14 states, including Delaware, Minnesota, Illinois, Nebraska, and Ohio, get back less than $1 for each $1 they spend in taxes.
It’s not just that some states are getting way more in return for their federal tax dollars, but the disproportionate amount of federal aid that some states receive allows them to keep their own taxes artificially low. That's the argument Wallet Hub analysts make in their 2014 Report on Best & Worst States to be a Taxpayer.
Part of the explanation for why southern states dominate the “most dependent” category is historical. During the many decades in the 20th century when the South was solidly Democratic, its congressional representatives in both the House and the Senate, enjoying great seniority, came to hold leadership positions on powerful committees, which they used to send federal dollars back to their home states in the form of contracts, projects, installations.
Another part of the explanation is easier to discern. The reddest states on that map at the top—Mississippi, Alabama, Louisiana, New Mexico, Maine—have exceptionally high poverty rates and thus receive disproportionately large shares of federal dollars. Through a variety of social programs, the federal government disburses hundreds of billions of dollars each year to maintain a “safety net” intended to help the neediest among us. Consider, for example, the percentage of each state’s residents who get “food stamps” through the federal government’s SNAP program. This chart tells the story.
Another way of getting at the same point is to map the percentage of families in 2012 with incomes below the federal poverty level (according to the Census Bureau’s ACS five-year estimate). This map, made through Social Explorer, shows the data at the county level: the darker the shading, the higher the percentage of impoverished residents.
You can go here to see an interactive version of this map that enables you to scroll your cursor over counties and get pop-up information showing the percentages for any specific county. You can also change the map view, showing the data at different levels, ranging from states all the way down to individual census block groups. (To see the mapped data at sub-county levels, you have to zoom way in to particular areas.)
There are various ways of thinking about what Wallet Hub's "state dependency" map tells us. One approach is to shine light on the red-states-as takers paradox: Dominated by Republican voters who profess their distaste for the federal government and its social programs, these are the very states that rank highest on the dependency index.
That, for example, is how Business Insider handled the story:
As it turns out, it is red states that are overwhelmingly the Welfare Queen States. Yes, that's right. Red States — the ones governed by folks who think government is too big and spending needs to be cut — are a net drain on the economy, taking in more federal spending than they pay out in federal taxes. They talk a good game, but stick Blue States with the bill.
Fair enough. That's a catchy perspective. And there are few things more fun than exposing hypocrisy.
Alternatively, we could use the "state dependency" map as an opportunity to reflect on a different paradox—the longstanding role of the far-away federal government as an agent of community. Because of federal programs, people in places like South Carolina and Mississippi are getting a helping hand not from their neighbors a few blocks away or in the next county over, but from residents of Delaware, Minnesota, Illinois, and Nebraska. Whether you like that idea depends, in part, on how you personally reconcile the tension between two long-cherished, core American values—our passion for individualism and our regard for community—and whether you see "community" as encompassing the whole country.
That's a far more interesting thing to think about (though perhaps less viscerally satisfying) than which states are moochers or freeloaders and which are getting fleeced.
If we notice the US cities deemed Foreign Economic Zones are as well the ones receiving the most Food Stamps----and yet, as in Baltimore the emphasis has been these few decades on building NGOs more and more to handle food scarcity
15 Cities With Huge Populations Living On Food Stamps
- Ujala Sehgal
- Oct. 19, 2010, 1:04 PM
The number of Americans receiving food stamps rose to a record high of 41.8 million in July after a 20-month climb, according to data released by the U.S. Department of Agriculture earlier this month.
By 2010, over a quarter of the total population in 239 counties was receiving food stamps. Most of these are small rural counties, but they also include major urban areas like Philadelphia and New York.
County by county, food stamp use does not always correlate to poverty. While food stamps reach about two-thirds of those eligible nationwide, this ranges widely between states, from California enrolling just 50% of those eligible to Missouri enrolling 98% of those eligible.
#15 Salem, Ore. Population of Marion County: 319,177
People on food stamps: 20%
Children on food stamps: 37%
Change '07 - '09: +40%
#14 Kansas City, Mo.Population of Jackson County: 670,843
People on food stamps: 21%
Children on food stamps: 40%
Change '07 - '09: +28%
#13 Springfield, Mass.whitewall buick Population of Hampden County: 461,051
People on food stamps: 22%
Children on food stamps: 39%
Change '07 - '09: +31%
#12 Brooklyn, N.Y.Brooklyn, New York FromTheNorth via Flickr Population of Kings County: 2,574,109
People on food stamps: 22%
Children on food stamps: 35%
Change '07 - '09: +33%
#11 New Orleans, La.Population of Orleans County: 337,549
People on food stamps: 22%
Children on food stamps: 49%
Change '07 - '09: +54%
Source: state agencies, U.S. Department of Agriculture and Census Bureau, via NYT
Change '07 - '09: +23%
#10 El Paso, TexasEl Paso, Texas Wikimedia Population of El Paso County: 754,355
People on food stamps: 22%
Children on food stamps: 38%
Change '07 - '09: +10%
#9 Detroit, Mich.Detroit, Michigan Population of Wayne County: 1,918,712
People on food stamps: 22%
Children on food stamps: 38%
Change '07 - '09: +17%
#8 Flint, Mich.Flint, Michigan Population of Genesee County: 423,616
People on food stamps: 23%
Children on food stamps: 39%
Change '07 - '09: +19%
#7 Baltimore, Md.Baltimore City, MD Population of Baltimore City County: 633,704
People on food stamps: 24%
Children on food stamps: 42%
Change '07 - '09: +36%
#6 Memphis, Tenn.Memphis, Tennessee Population of Shelby County: 904,594
People on food stamps: 25%
Children on food stamps: 44%
Change '07 - '09: +23%
#5 Philadelphia, Penn.Philadelphia, Pennsylvania Population of Philadelphia County: 1,446,160
People on food stamps: 26%
Children on food stamps: 43%
Change '07 - '09: +14%
#4 Brownsville, Texasap Population of Cameron County: 400,726
People on food stamps: 27%
Children on food stamps: 47%
Change '07 - '09: +8%
#3 Bronx, N.Y.Bronx, New York City Population of Bronx County: 1,398,717
People on food stamps: 29%
Children on food stamps: 46%
Change '07 - '09: +33%
#2 McAllen, Texaswikimedia commons Population of Hidalgo County: 748,363
People on food stamps: 29%
Children on food stamps: 49%
Change '07 - '09: +11%
#1 St. Louis, Mo.St. Louis, Missouri Population of St. Louis City County: 353,064
People on food stamps: 36%
Children on food stamps: 63%
Change '07 - '09: +19%
Nigeria is simply one of those overseas Foreign Economic Zones with which global Wall Street 1% and their 2% are tied bringing many Nigerian rich and immigrants to US cities deemed Foreign Economic Zones. When our US government is filled with the same caliber pols as Nigeria---as with CLINTON/BUSH/OBAMA ----we can look to these developing nations to see where our US governance has been going. Here will see any US Congressional, Maryland Assembly, or Baltimore City Hall pol-------in this case we see a nation told by World Bank to create structures for social benefit like Food Stamps and then watch as all those funds are looted. This is global CLINTON neo-liberalism ---accumulating extreme wealth any way one can.
Nigeria urgently needs help to avert a famine
Returning the ill-gotten gains of corrupt officials would be a start
FT View Financial Times
Not since the 1960s, when images of starving children drew attention to the plight of ethnic Igbos living under siege in the separatist enclave of Biafra, has Africa’s most populous nation faced a humanitarian crisis on this scale. Not since the famine in Somalia six years ago, when a quarter of million people succumbed to hunger and disease, has the international response been so lethally inadequate.
Boko Haram, the jihadist group that has waged a campaign of terror across northeastern Nigeria since 2009, is on the retreat. As Nigeria’s military has recaptured territory once controlled by the group, the depredations it has inflicted have become all too apparent.
Unlike in Somalia in 2011, there is no immediate threat of drought. But normally resilient farming communities, hardened to life on the fringes of the desert, have been driven from their land, and tens of thousands of children are separated from their parents.
As many as 120,000 people will be at risk of death from starvation in the coming year, according to the UN, which this week belatedly launches a campaign to raise $1bn towards relief efforts.
The prevalence of severe malnutrition in children is several times the levels considered an emergency by the World Food Programme. An estimated 7m people overall are in need of aid.
There has been a failure to mobilise sufficient resources in response. Struggling with an economic crisis brought on by the collapse in the price of oil, the Nigerian government has been far too slow to recognise that it needs help.
Meanwhile, the attention of many aid agencies has been focused on the more visible crises in Syria, Iraq and Yemen at Nigeria’s expense.
Britain’s Department for International Development is right to single out the UN for criticism. The UN is expected to take the lead in providing early warnings in emergencies of this kind. Not only has it failed in that respect but its operations, according to experts on the ground, remain chaotic and poorly staffed.
But Britain too could be more imaginative in its response. Like a number of European countries, the UK is sitting on tens of millions of dollars in public funds misappropriated by corrupt former Nigerian officials.
More than $1bn looted by the former dictator Sani Abacha remains tied up in forfeiture proceedings in European and US jurisdictions 18 years after his death. A substantial proportion of this, in Switzerland, Luxembourg. Liechtenstein and the Channel Islands, could be released immediately, according to legal experts.
Muhammadu Buhari, the former military ruler who was swept back to power in elections last year pledging to wage war against corruption, has sought to freeze billions more misappropriated under recent governments.
He could agree to the creation of a trust fund — jointly managed by Nigerian and donor officials — to facilitate the speedy return and deployment in the north-east of some of these funds.
Two moral imperatives would be served. One, the need to scale up rapidly the medical and food aid required to avert a famine.
Two, to ensure money that is rightfully Nigeria’s is returned without further ado.
There could be no better way to use it than to save lives and begin a process of recovery that will require extraordinary resources for many years to come.
No one knew better than the Federal government how cyber crimes and hacking were going to fill the online business industries. THEY KNEW THAT. So, when the Federal governmet went to EBT sending funds electronically under the guise of saving money-----who are the biggest hackers around the world? FOREIGN NATIONAL GOVERNMENTS. So, these few decades of CLINTON/BUSH/OBAMA we have lost trillions of dollars from all Federal programs through organized crime including FOOD STAMPS. It was all too simple before----the amount saved by going electronic is dwarfed by the trillions of dollars in losses to fraud.
Below we see what is true------the focus is on the fraud and not on the low-income folks having more and more and more trouble getting and keeping their food safety net funds.
'For EBT cardholders, the problem is that the public is often far more interested in welfare fraud committed by the poor than crimes perpetrated against them, advocates for low-income families say'.
Know who laundered all that Wall Street subprime mortgage fraud under Bush and all that US Treasury subpriming of our bond market under Obama? Those global 1% and their 2% tied to foreign national governance.
U.S. Suspects Hackers in China Breached About 4 Million People's...
Jun 5, 2015 ... U.S. officials suspect that hackers in China stole the personal records ... At a Chinese Foreign Ministry briefing on Friday, ministry ... accusing Chinese government military officers of sustained hacking of ... up on the digital black market, where criminals buy and sell credit- card and Social Security numbers.
STATES LOBBIED TO EXEMPT EBT CARD HOLDERS FROM LAWS THAT HELP VICTIMS OF THEFT OR FRAUD
'In the late 1990s, when the federal government began to encourage states to provide food stamps and cash welfare assistance on EBT cards, states lobbied federal banking regulators to exempt EBT cards from laws that help debit and credit card holders who become victims of theft or fraud. The move to distribute public benefits electronically has created a multi-million dollar business opportunity for banks and other companies that secure contracts to provide EBT cards and ATM networks where the cards can be used'
Chinese 1% and their 2% are bound to global Wall Street frauds against WE THE PEOPLE----so in reversing these losses to our government coffers we must reverse this mindset of ALL OF GOVERNMENT ONLINE ----
For Families On Welfare, Few Protections From Theft And Fraud
12/13/2011 05:49 pm ET | Updated Dec 14, 2011
Janell Ross Reporter - Politics, Business, Latino Voices, Black Voices On a fall day in October 2009, Evelyn Carpio’s wallet never left her side.
Yet criminals somehow managed to steal $720 from the card Carpio’s family uses to obtain cash welfare assistance from California.
This kind of remote financial crime — a practice known as financial information “skimming” — is a real problem in the United States, according to federal officials. In 2009 alone, criminals stole $443 million though a combination of skimming, identity theft, and other types of financial crime investigated by federal officials. But for victims like Carpio, whose money was stolen from an electronic benefits transfer card (EBT) rather than a credit or debit card, getting that money back has also proved difficult. In Carpio’s case, nearly two years passed before the state returned her stolen welfare benefits.
When it comes to stolen credit or debit cards, the rules are straightforward: Federal law requires banks to rapidly return, refund or remove all but $50 of any unauthorized or fraudulent activity on any card reported lost or stolen. If fraudulent charges are made on a debit card that was never lost or physically stolen, banks cannot hold the customer responsible for a single dollar. No such protections exist for EBT card users, even as government agencies across the country are moving to distribute a growing share of public assistance on EBT and other cards.
That lack of security places many of the country’s poorest families at serious risk of financial upheaval.
Last week, Carpio filed suit against the California Department of Social Services in state court. She is not seeking compensation. Instead, Carpio aims to make the state replace welfare benefits stolen from an EBT card within five days of filing a police report and other required documents. Right now, California law requires DSS to replace lost or stolen welfare checks within five days if victims file a police report and meet other requirements. But cash welfare assistance is no longer distributed by check to the vast majority of poor families. They are instead issued via EBT card or direct deposit. So the law either needs an update or a new interpretation that includes EBT cards, advocates and Carpio’s lawyers say.
“I realize now that I was really naive. I thought that once I proved what happened, brought them all the proof they asked for, DSS would just replace what was stolen,” said Carpio, 34, a single working mother of five. “But that’s not what happened at all.”
Michael Weston, a spokesperson for the California Department of Social Services, declined to comment on Carpio’s suit or the issues it raises.
Skimmers usually tamper with devices such as ATMs by installing cameras, software and other devices that record account information, PIN numbers or card data, according to the Secret Service. The agency is best known for protecting the President but also investigates certain types of large-scale financial crime.
In the late 1990s, when the federal government began to encourage states to provide food stamps and cash welfare assistance on EBT cards, states lobbied federal banking regulators to exempt EBT cards from laws that help debit and credit card holders who become victims of theft or fraud. The move to distribute public benefits electronically has created a multi-million dollar business opportunity for banks and other companies that secure contracts to provide EBT cards and ATM networks where the cards can be used.
The cards have also been regarded as a fiscally-responsible decision for states. State agencies have saved millions on check mailing and printing costs and, public officials say, the cards help to prevent fraud.
For EBT cardholders, the problem is that the public is often far more interested in welfare fraud committed by the poor than crimes perpetrated against them, advocates for low-income families say.
“What we have is a situation where cards used by the poorest people — people for whom the loss of a couple of hundred dollars can have very, very serious consequences — have zero protection,” said Lauren Saunders, managing attorney for the National Consumer Law Center.
This week, Congress is expected to pass some version of a bill that will limit the places where EBT cards can be used, a direct response to concerns expressed by politicians such as Florida Governor Rick Scott and presidential candidate Newt Gingrich that welfare recipients frequently use public benefits on salacious non-necessities, luxury items, gambling and lifestyles where work isn’t valued.
The federal bill, part of the unemployment benefits extension package, will require states to prevent EBT cards from functioning inside strip clubs, casinos and liquor stores. States that do not comply face federal penalties. Some states, including California, have already put such restrictions in place.
Last year, California restricted EBT card use in these locations after The Los Angles Times revealed that welfare recipients in California had pulled $4.8 million off of EBT cards in casinos over the course of nearly three and a half years. In that same period, low-income California residents pulled roughly $12,000 out of ATMs stationed at strip clubs. But half of these transactions took place in rural areas where access to ATMs is often limited, according to a data analysis by The Western Center on Law and Poverty.
“If we are going to implement regulation to say where people can’t use their benefits, at the very least we should also make sure that those benefits are protected from theft,” said Jessica Bartholow, a legislative advocate at the Western Center on Law and Poverty, a California organization that advocates for low-income families and researches policy matters related to poverty.
The U.S. Department of Health and Human Services does not track or measure EBT card-related theft nor does it direct or monitor the way that states react when money is reported stolen from these cards. Welfare programs are administered by the states so, they decide how thefts are handled, said Kenneth Wolfe, a spokesperson for the agency.
Anyone using an ATM or point of sale device at a store register should exercise extreme caution, said Max Milien, a spokesperson for the Secret Service. That means covering the keypad while using it, avoiding any device that appears to have been compromised, and canceling transactions at terminals that ask for a pin number more than once, Milien said. Account statements and balances should be checked regularly and ATMs with unusual signage should be avoided, said Milien.
The Secret Service also does not track the number of EBT cards that have been compromised by skimmers, but the cards are subject to many of the same risks as other types of cards, Milien said.
Vanessa Lee, a lawyer with Neighborhood Legal Services, a California nonprofit agency that represents low-income families in a variety of cases, filed the suit on Carpio’s behalf to try to force California to apply the existing state law governing lost or stolen checks to thefts involving EBT cards.
“We’re simply asking that the law be consistently interpreted within the context that welfare benefits are actually paid,” said Lee. “In this case, the state didn’t even replace her card, even though it had clearly been compromised, until it stopped working months later because it was accidentally demagnetized.”
In 2009 after Carpio discovered that money was missing from her benefits card, she filed a police report. County-level welfare officials also asked her to file an affidavit. In it, she swore that she had nothing to do with the crime and did not know the people who took her benefits. Welfare office staff even asked Carpio to obtain photos of the criminals using her account information at a bank ATM about 20 miles from her Van Nuys, Calif home. She did so with the help of the police, but her request to have her stolen benefits replaced was still denied.
After several appeals, California replaced Carpio’s benefits in May. But in the interim, Carpio had to borrow money from her sister to pay her utilities, cover her rent and other basic needs. Carpio had to pay back her sister as soon as her own tax return arrived. Carpio’s sister also needed the money.
“It wasn’t an easy thing to just manage,” said Carpio. “It was really a struggle.”
Obama and Congressional Clinton Wall Street global corporate neo-liberals created the mirror of subprime mortgage fraud that Bush era did------they used the same fraudulent Wall Street banks----the same Federal housing agencies using the same subpriming techniques----and as last economic crash when $600 trillion dollars in derivatives leverage came falling down we found much of that fraud and leverage was done overseas with partnerships involving foreign national investment firms. This is now happening with our US Treasury bond fraud-----and we can be assured our Federal agencies like our Food Stamps having lost a trillion these few decades to organized hacking of EBT cards etc-----coming again often from foreign nationals----is part of the grander scheme of global Wall Street banking.
Same $600 trillion dollar leverage much from financial investment firms in nations around the globe. Who are those foreign nationals hacking our FOOD STAMPS for billions these few decades---no doubt the same as are laundering these global Wall Street frauds.
Almost all of these several years of subprime mortgage frauds under Obama are now INSURED BY FEDERAL FUNDS-----NOT PRIVATELY-------ADD THAT TO THE $20 TRILLION NATIONAL DEBT.
It is breath-taking to watch how openly they are now defrauding the American people----absolutely no regard to US Rule of Law or fear from a functioning US Justice or Maryland State Attorney General FROSH office stopping it or offering any justice.
'The NY Fed’s chart below shows the plunge in privately-insured subprime mortgages (red line) during the housing bust, and how the government (blue line) piled into this business':
NY Fed Warns about Booming Subprime Mortgages, now Insured by the Government
by Wolf Richter • June 21, 2016
“Astronomical” default rates and losses.
The New York Fed just warned about the ticking mortgage subprime time bombs once again being amassed, and what happens to them when home prices decline. But unlike during the last housing bust, a large portion of these time bombs are now guaranteed by the government.
Subprime mortgages are what everyone still remembers about the Financial Crisis. They blew up as home prices fell. Folks who thought they were “owners with equity” found out that they were just “renters with debt.”
And they dealt with it the best they could: forget the debt and the rent and stay until kicked out. Cumulative default rates on subprime mortgages spiked to 25% in 2007, according to the report. Banks ended up with the properties and collapsed. Mortgage backed securities based on these subprime mortgages imploded. Bond funds that held them imploded. All kinds of fireworks began. While subprime mortgages didn’t cause the Financial Crisis by themselves, they were an essential cog in a crazy machinery.
Now, the machinery is even crazier, subprime mortgages are even bigger, and mortgage-backed securities, chock-full with subprime, are hotter than ever. Only this time, the taxpayer is on the hook.
During the prior housing boom, from 2000 through 2005, government mortgage insurance programs covered less than 3% of all subprime mortgage originations, while private mortgage insurers covered over 20%.
But during the housing bust, private insurance of subprime mortgages dropped to essentially zero. And the government – through various programs by the Federal Housing Administration (FHA), the Department of Veterans Affairs (VA), and the USDA’s Rural Housing Service (RHS) – stepped in to pick up the baton, plus some, insuring subprime mortgages with a vengeance. By 2009, the government insured nearly 35% of new subprime mortgages. More recently, it still insured about 22% of new subprime mortgages.
The NY Fed’s chart below shows the plunge in privately-insured subprime mortgages (red line) during the housing bust, and how the government (blue line) piled into this business:
The thing is, according to the report:
Virtually all of these government-insured mortgages are securitized by Ginnie Mae, a government agency that guarantees the timely payment of principal and interest of these loans to investors that purchase the securities. That is, the U.S. taxpayers assume the credit risk on these mortgages.
That spike in subprime guarantees by the government in 2007 through 2009, at a time when home prices were falling, “quickly placed many of these borrowers in positions of deep negative equity.”
Many lost their jobs. Default rates and loss rates soared for these government-insured mortgages, which ultimately resulted in the FHA’s Mutual Mortgage Insurance Fund getting bailed out by the taxpayer in 2013.
By then, Housing Bubble 2 had already commenced. The good times were back. Home prices were re-soaring, and further damage to the taxpayer was put on hold. The NY Fed:
These loans are typically characterized by significant leverage, and borrowers often have checkered credit histories as evidenced by very low credit scores. For example, the FHA program allows for mortgages with an original loan-to-value (LTV) ratio of up to 96.5%; and such loans are also subject to an upfront mortgage insurance premium that is typically rolled into the loan balance, which further raises the initial LTV.
The lack of upfront equity implies that FHA mortgage borrowers are at greater risk of default than conventional mortgage borrowers.
These highly leveraged government-insured loans are also typically issued to borrowers with weak to poor credit histories, further increasing the risk of default and foreclosure. Borrowers with poor credit histories are more likely to face adverse income shocks; and the combination of negative equity and a high risk of adverse income shocks implies that these mortgages are at high risk of default.
So these subprime mortgages defaulted at an “astronomical rate during the housing bust,” and they’re going to do that again during the next housing bust.
Before the housing bust began in earnest in 2007, the median LTV for these subprime mortgages was around 98% and the median credit score was below 650. In the years since the government has taken over insuring these loans, more than 10% of government-insured loans had LTVs of over 101% and “one-quarter were made to borrowers with FICO scores in the low 600s and below.”
This combo of very high leverage and low credit score is toxic. It leads to “extremely high default rates” and extremely high loss rates.
The five-year cumulative default rate (CDR) for these subprime mortgages that were originated in 2001, the best year this millennium, was 5%. For subprime mortgages originated in 2007, it was over 25%, and for borrowers with FICO scores below 600, it was over 40%!
To put these numbers into perspective, the five-year CDRs associated with loans insured by Fannie Mae and Freddie Mac (the housing government-sponsored enterprises, or GSEs) are typically an order of magnitude lower. According to our calculations, the 2002 and 2009 vintages of GSE loans had five-year CDRs of approximately 2%, while Ginnie Mae’s same vintages had five-year CDRs of almost 10% and 13%, respectively.
Even subprime mortgages originated in 2010 have a five-year (into 2015) CDR of 8.4% despite the booming housing market over the period.
But “to make matters worse,” there’s a little bit of government hocus-pocus: these default rates “understate the share of borrowers who default, since loans that are refinanced within FHA are treated as a successful payoff, even if the refinanced loan that replaces it subsequently defaults.”
And these truly “astronomical” default rates and loss rates are very costly for the government programs that insure these mortgages.
But so far, so good, if Housing Bubble 2 continues forevermore – as it is widely expected to do, according to the housing industry, which has already totally forgotten the prior housing bust and what caused it. In that case, default rates and loss rates will be relatively small. Forever-soaring home prices assure that subprime mortgages with sky-high LTVs to borrowers with very low FICO scores don’t lead to sky-high losses.
The problem arises when home prices stall and begin to decline. That’s what the NY Fed is fretting about when it uses code words, like the “sustainability” of homeownership, in proposing some limits on this scheme. Clearly, they’re worried that Housing Bubble 2 will turn into Housing Bust 2.
This time, it’s the government and taxpayers that guarantee a big chunk of the subprime mortgages so that institutional investors that have gobbled up the subprime-based highly-rated mortgage-backed securities don’t have to take the inevitable losses.