Note to banks accused of misleading investors: hypocritical defenses will not fly.
Bank of America told its investors that it would not pay bonuses to Merrill Lynch executives as part of the merger. At the same time, BOA authorized Merrill Lynch to pay up to $5.8 billion in discretionary year-end bonuses; $3.6 billion in bonuses were actually paid.
When the economy goes sour, big businesses get all the attention and government money. But I am far more concerned with keep my favorite coffee shop and restaurant open, and making sure my handyman stays in business. I could care less whether Bank of America goes bankrupt.
So I have made an effort to support those businesses during the economic downturn. Like most Americans, my family has cut back on spending, but we cut back less at the local businesses we love. You should, too. Wal-Mart and the Home Depot will be fine. Your favorite bar or bookstore may not.
According to The 3/50 Project, for every $100 you spend at independently-owned businesses, $68 stays in the community. If you spend that at a national chain like Wal-Mart or Target, only $43 stays home. If you spend it online, none of it does.
You should always support your favorite local, independently-owned businesses, but they need it now, especially.
Citibank, U.S. Bank, Bank of America, Wells Fargo, and Pacific Capital Bancorp have been called out by the Congressional Oversight Panel for using taxpayer money to turn around and rip off taxpayers.
Essentially, taxpayers end up paying twice: once to the government, once to the banks.
The Senate has approved an addition to the economic stimulus package that would give a $15,000 tax credit to anyone who buys a home within two years of the bill’s passage. The credit only applies to a principal residence, and would have to be repaid if the buyer sells the home within two years..
On the one hand, a bill that makes it easier for people to afford homes is a great idea. On the other hand, giving home buyers more money to buy a home means home sellers can keep prices artificially higher. I am not sure a continuation of artificially-inflated home values is what the economy needs right now.
Unlike Dean Baker’s alarmist comments at The Huffington Post suggest, the amendment to the stimulus package does not seem like it will ignite a flipping frenzy, but it does seem like it will cost far more than Senator Isakson’s (R-Ga.) estimate of $19 billion.
Senators Go Wild!, Approve House Flipping Subsidy, Media Doesn’t Notice | The Huffington Post (thanks to MajorKong for the clever title)
Isakson amendment gives $15K tax credit to homebuyers | Atlanta Business Chronicle
(photo: Wikimedia Commons)
Yesterday I linked to a video of Ohio congresswoman Marcy Kaptur telling her constituents to become squatters in their foreclosed homes. In Miami, activists at Take Back the Land are moving the homeless into empty, bank-owned properties and government buildings.
Hey, why not? Those banks are getting billions in taxpayer money so they can float those homes. Take Back the Land director Max Rameau says “[h]omes should go to people, not kept empty so banks can cash in.”
The group carefully screens out applicants with drug addiction and mental illness, and encourages them to be open and honest in their occupation. So far, they say it is working pretty well.
Squatters | Miami New Times