Occupy Activists Buy $15 Million In Debt For $400,000 As Part Of Rolling Jubilee Movement

This is doing God's work:

A group of Occupy Wall Street activists has bought almost $15m of Americans' personal debt over the last year as part of the Rolling Jubilee project to help people pay off their outstanding credit.

Rolling Jubilee, set up by Occupy's Strike Debt group following the street protests that swept the world in 2011, launched on 15 November 2012. The group purchases personal debt cheaply from banks before "abolishing" it, freeing individuals from their bills.

By purchasing the debt at knockdown prices the group has managed to free $14,734,569.87 of personal debt, mainly medical debt, spending only $400,000.

"We thought that the ratio would be about 20 to 1," said Andrew Ross, a member of Strike Debt and professor of social and cultural analysis at New York University. He said the team initially envisaged raising $50,000, which would have enabled it to buy $1m in debt.

"In fact we've been able to buy debt a lot more cheaply than that."

The group is able to buy debt so cheaply due to the nature of the "secondary debt market". If individuals consistently fail to pay bills from credit cards, loans, or medical insurance the bank or lender that issued the funds will eventually cut its losses by selling that debt to a third party. These sales occur for a fraction of the debt’s true values – typically for five cents on the dollar – and debt-buying companies then attempt to recoup the debt from the individual debtor and thus make a profit.

The Rolling Jubilee project was mostly conceived as a "public education project", Ross said.
"We're under no illusions that $15m is just a tiny drop in the secondary debt market. It doesn't make a dent in the amount of debt.

"Our purpose in doing this, aside from helping some people along the way – there's certainly many, many people who are very thankful that their debts are abolished – our primary purpose was to spread information about the workings of this secondary debt market."

I don't often see stories that make me happy.

This was one.

Occupy Debt

People in media and power may think Occupy Wall Street is irrelevant ever since the Mayor of Money released her personal army on them at Zuccotti Park and many other Occupy camps were dispersed by the coordinated efforts of the Obama administration and municipal police departments around the country.

But this effort by Occupy Debt seems quite relevant to me:

If Occupy Wall Street has its way, your next bill from debt collectors might have a zero balance. Occupy is trying to quietly buy up "distressed debts" from lenders at rock-bottom prices, and then forgive them. Yes it’s legal (they’re coordinating with the IRS) and works: "As a trial run, we spent $466 and successfully bought and abolished $14,000 of medical debt," Occupy said in a statement. A "Rolling Jubilee" telethon will be held next week to raise $50,000, which could erase $1 million in personal debt. "This is a simple, powerful way to help folks in need — to free them from heavy debt loads so they can focus on being productive, happy and healthy," organizer David Rees said.

As someone who once ran up a lot of credit card and student loan debt when I was in graduate school, I know the importance of learning the lessons of solvency and prudence.

So I'm not in the camp that thinks every person in debt should have those debts bought up and forgiven.

That kind of thing undercuts the lesson that needs to be learned.

That said, I do think that Occupy Debt buying up medical or loan debt of people hopelessly drowning it can go a long way toward helping people regain their lives.

As one commenter at the story put it:

I'm a retired senior citizen living on a very limited income. If I could find a job or if someone came along offering to pay off my $10,000 debt (which will probably take me 15 years and thousands of dollars of interest) I would be thrilled to death. Perhaps then living wouldn't be so difficult!

That's exactly the kind of person I can see Occupy Debt helping with this effort.

Law School Scams - Enslaving An Entire Generation

Oh, no! What will all those Teach for America missionaries do after their three year stint in a South Bronx middle school ends!

IF there is ever a class in how to remain calm while trapped beneath $250,000 in loans, Michael Wallerstein ought to teach it.

Here he is, sitting one afternoon at a restaurant on the Upper East Side of Manhattan, a tall, sandy-haired, 27-year-old radiating a kind of surfer-dude serenity. His secret, if that’s the right word, is to pretty much ignore all the calls and letters that he receives every day from the dozen or so creditors now hounding him for cash.

“And I don’t open the e-mail alerts with my credit score,” he adds. “I can’t look at my credit score any more.”

Mr. Wallerstein, who can’t afford to pay down interest and thus watches the outstanding loan balance grow, is in roughly the same financial hell as people who bought more home than they could afford during the real estate boom. But creditors can’t foreclose on him because he didn’t spend the money on a house.

He spent it on a law degree. And from every angle, this now looks like a catastrophic investment.

Well, every angle except one: the view from law schools. To judge from data that law schools collect, and which is published in the closely parsed U.S. News and World Report annual rankings, the prospects of young doctors of jurisprudence are downright rosy.

In reality, and based on every other source of information, Mr. Wallerstein and a generation of J.D.’s face the grimmest job market in decades. Since 2008, some 15,000 attorney and legal-staff jobs at large firms have vanished, according to a Northwestern Law study. Associates have been laid off, partners nudged out the door and recruitment programs have been scaled back or eliminated.

And with corporations scrutinizing their legal expenses as never before, more entry-level legal work is now outsourced to contract temporary employees, both in the United States and in countries like India. It’s common to hear lawyers fret about the sort of tectonic shift that crushed the domestic steel industry decades ago.

Yeah, I dunno if Mr. Wallerstein is remaining calm among all that expanding debt or just living in some kind of denial. Nonetheless, this is a scary story. But it is one you wouldn't know about if you were just listening to the law schools around the country talk about their statistics:

Improbably enough, law schools have concluded that life for newly minted grads is getting sweeter, at least by one crucial measure. In 1997, when U.S. News first published a statistic called “graduates known to be employed nine months after graduation,” law schools reported an average employment rate of 84 percent. In the most recent U.S. News rankings, 93 percent of grads were working — nearly a 10-point jump.

In the Wonderland of these statistics, a remarkable number of law school grads are not just busy — they are raking it in. Many schools, even those that have failed to break into the U.S. News top 40, state that the median starting salary of graduates in the private sector is $160,000. That seems highly unlikely, given that Harvard and Yale, at the top of the pile, list the exact same figure.

How do law schools depict a feast amid so much famine?

“Enron-type accounting standards have become the norm,” says William Henderson of Indiana University, one of many exasperated law professors who are asking the American Bar Association to overhaul the way law schools assess themselves. “Every time I look at this data, I feel dirty.”

IT is an open secret, Professor Henderson and others say, that schools finesse survey information in dozens of ways. And the survey’s guidelines, which are established not by U.S. News but by the American Bar Association, in conjunction with an organization called the National Association for Law Placement, all but invite trimming.

A law grad, for instance, counts as “employed after nine months” even if he or she has a job that doesn’t require a law degree. Waiting tables at Applebee’s? You’re employed. Stocking aisles at Home Depot? You’re working, too.

Number-fudging games are endemic, professors and deans say, because the fortunes of law schools rise and fall on rankings, with reputations and huge sums of money hanging in the balance. You may think of law schools as training grounds for new lawyers, but that is just part of it.

They are also cash cows.

Tuition at even mediocre law schools can cost up to $43,000 a year. Those huge lecture-hall classes — remember “The Paper Chase”? — keep teaching costs down. There are no labs or expensive equipment to maintain. So much money flows into law schools that law professors are among the highest paid in academia, and law schools that are part of universities often subsidize the money-losing fields of higher education.

“If you’re a law school and you add 25 kids to your class, that’s a million dollars, and you don’t even have to hire another teacher,” says Allen Tanenbaum, a lawyer in Atlanta who led the American Bar Association’s commission on the impact of the economic crisis on the profession and legal needs. “That additional income goes straight to the bottom line.”

There were fewer complaints about fudging and subsidizing when legal jobs were plentiful. But student loans have always been the financial equivalent of chronic illnesses because there is no legal way to shake them. So the glut of diplomas, the dearth of jobs and those candy-coated employment statistics have now yielded a crop of furious young lawyers who say they mortgaged their future under false pretenses. You can sample their rage, and their admonitions, on what are known as law school scam blogs, with names like Shilling Me Softly, Subprime JD and Rose Colored Glasses.

“Avoid this overpriced sewer pit as if your life depended on it,” writes the anonymous author of the blog Third Tier Reality — a reference to the second-to-bottom tier of the U.S. News rankings — in a typically scatological review. “Unless, of course, you think that you will be better off with $110k-$190k in NON-DISCHARGEABLE debt for a degree that qualifies you to wait tables at the Battery Park Bar and Lounge.”

Ah, yes, our finest universities and halls of academia lying about statistics and data in order to keep raking in the big bucks - why that tradition is as hallowed and American as Apple Pie, Baseball and Wall Street.

Unfortunately many students do not seem to know that the law schools are lying about the job prospects:

But so far, the warnings have been unheeded. Job openings for lawyers have plunged, but law schools are not dialing back enrollment. About 43,000 J.D.’s were handed out in 2009, 11 percent more than a decade earlier, and the number of law schools keeps rising — nine new ones in the last 10 years, and five more seeking approval to open in the future.

Apparently, there is no shortage of 22-year-olds who think that law school is the perfect place to wait out a lousy economy and the gasoline that fuels this system — federally backed student loans — is still widely available. But the legal market has always been obsessed with academic credentials, and today, few students except those with strong grade-point averages at top national and regional schools can expect a come-hither from a deep-pocketed firm. Nearly everyone else is in for a struggle. Which is why many law school professors privately are appalled by what they describe as a huge and continuing transfer of wealth, from students short on cash to richly salaried academics. Or perhaps this is more like a game of three-card monte, with law schools flipping the aces and a long line of eager players, most wagering borrowed cash, in a contest that few of them can win.

And all those losers can remain cash-poor for a long time. “I think the student loans that kids leave law school with are more scandalous than payday loans,” says Andrew Morriss, a law professor at the University of Alabama. “And because it’s so easy to get a student loan, law school tuition has grossly outpaced the rate of inflation for the last 20 years. It’s now astonishingly high.”

Like everything else about the law, however, the full picture here is complicated. Independent surveys find that most law students would enroll even if they knew that only a tiny number of them would wind up with six-figure salaries. Nearly all of them, it seems, are convinced that they’re going to win the ring toss at this carnival and bring home the stuffed bear.

Law schools teach ethics, but do not practice them themselves. If they did, they would be open and honest about job prospects. Right now, they are engaging in the same kinds of practices the GAO was nailing for-profit colleges for over the summer in a Congressional investigation.

Here is how duplicitous these universities can be:

Even students with open eyes, though, will have a hard time sleuthing through the U.S. News rankings. They are based entirely on unaudited surveys conducted by each law school, using questions devised by the American Bar Association and the National Association for Law Placement. Given the stakes and given that the figures are not double-checked by an impartial body, each school faces exactly the sort of potential conflict of interest lawyers are trained to howl about.

The surveys themselves have a built-in bias. As many deans acknowledge, the results are skewed because graduates with high-paying jobs are more likely to respond than people earning $9 an hour at Radio Shack. (Those who don’t respond are basically invisible, aside from reducing the overall response rate of the survey.)

Certain definitions in the surveys seem open to abuse. A person is employed after nine months, for instance, if he or she is working on Feb. 15. This is the most competitive category — it counts for about one-seventh of the U.S. News ranking — and in the upper echelons, it’s not unusual to see claims of 99 percent and, in a handful of cases, 100 percent employment rates at nine months.

A number of law schools hire their own graduates, some in hourly temp jobs that, as it turns out, coincide with the magical date. Last year, for instance, Georgetown Law sent an e-mail to alums who were “still seeking employment.” It announced three newly created jobs in admissions, paying $20 an hour. The jobs just happened to start on Feb. 1 and lasted six weeks.

A spokeswoman for the school said that none of these grads were counted as “employed” as a result of these hourly jobs. In a lengthy exchange of e-mails and calls, several different explanations were offered, the oddest of which came from Gihan Fernando, the assistant dean of career services. He said in an interview that Georgetown Law had “lost track” of two of the three alums, even though they were working at the very institution that was looking for them.

Georgetown Law School - not just a law school, but a Catholic law school. So not just supposed to teach ethics, also supposed to teach morals.

And here they are, caught in dishonest, duplicitous, immoral, and unethical behavior right in the pages of the New York Times.

Isn't that usually the kind of stuff you expect to read about for-profit schools like Kaplan University?

Indeed it is.

But the higher education system, like the K-12 system, is fast becoming nothing more than one big corporate scam.

In the case of higher education, they're fleecing gullible young people out of their money and enslaving them with unmanageable debt for life.

In the case of the K-12 corporatization of education, they're educating a generation of students unable to critical think and see through the corporate scams.

The sense of denial many students have - Sure, they're aren't many high paying jobs out there, but I'll get one - aids the higher education crooks in scamming people out of their money.

But the schools themselves - and the crooks running them - are most at fault for this mess.

Until people rise up in mass and say "Enough bullshit!", none of this will change.

In fact, it will get worse.

Ireland To Receive $137 Billion Dollar Bailout

The Celtic Tiger has officially died:

EL AVIV (MarketWatch) — After weeks of insisting that it needed no bailout, Ireland conceded Sunday that it will need a financial rescue package from the European Union and International Monetary Fund, according to media reports.

Ireland’s finance minister, Brian Lenihan, declined to specify a figure except to say that it would be less than 100 billion euros ($136.7 billion), the reports say.

The Sunday Times of London had reported earlier that Ireland would seek a package valued at as much as 120 billion euros.

Lenihan said Ireland was running a deficit of $26 billion and could not finance that amount at current market rates, the reports say.

Lenihan also said Irish officials also were seeking backing for Ireland’s debt-burdened banks.

As a result of this bailout package, Ireland has agreed to raise property taxes on every household in Ireland by 500 euros a year and to slash government programs

But guess what won't go up?

Corporate taxes.

Ireland has one of the lowest corporate tax rates in Europe - 12.5%.

But they refuse to raise taxes on corporations.

They say it will hurt the economy.

I'm not kidding.

That's what they say.

So the corporate tax rate will stay the same but everybody else will undergo the "austerity measures."

We really do live in feudal times once again - only this time the lords of the manor are the corporations.

Next up on the bailout docket are Portugal and Spain.

It's good to know all the financial geniuses and business wizards who brought us the Tech Bubble, the Housing Bubble, securitization, the credit crisis and the financial collapse of '08 are paying for their misdeeds.

Oh, wait - they're not.

Cuomo To Hire Outside Debt Collectors For State Business

Ah, yes - here's the reform Little Andy Cuomo was talking about:

In these hard times, New York’s future governor, Andrew M. Cuomo, has made a point of standing alongside consumers who are down on their luck. As attorney general, he conducted a statewide crackdown on debt collectors who ran afoul of consumer protection laws, and his office encouraged consumers with their own tales of woe to contact it.

“Too often consumers find themselves in over their heads,” reads one section of the attorney general’s Web site. “If you are one of those consumers, you may be feeling overwhelmed trying to make ends meet while paying off your bills. You may be experiencing calls from people demanding that you pay a certain debt.”

So, it may come as a jolt to learn that the office of the attorney general, consisting of the state’s chief lawyers, also does a brisk business collecting debts from consumers who owe money to many state agencies and authorities — returning about $100 million a year to the state’s coffers.

And it may come as an even bigger jolt to learn that New York State is seriously looking at handing over responsibility for some collection activity to outside bill collectors who, like many of those prosecuted by Mr. Cuomo over the last four years, would be chasing profits above and beyond the return of taxpayer money.

The outreach to private debt collection companies began last May, according to the New York State Division of the Budget’s Web site, and the division could award a contract any day.

New York State “did terrific work in going after debt collectors, and now they’re going to hire these same people and have no control over what they’re going to do?” said Johnson Tyler, a lawyer who works with the indigent for South Brooklyn Legal Services.

...

The industry, though, has regularly found itself a target of investigation. Spying an opportunity midway through his term as attorney general to burnish his credentials as the consumer’s champion, Mr. Cuomo directed his staff to take on the bad actors in the private collection business aggressively.

At last count, 14 debt collection enterprises had been put out of business by Mr. Cuomo’s office, including one whose chief official was a gun-toting felon and another who singled out servicemen, threatening their families and calling their commanders. The office also helped obtain criminal convictions against a dozen or so of the worst offenders, people who intimidated consumers by posing as law enforcement officers and even one man who continued to run his debt collection business from inside a federal prison.

At least six more debt collection companies signed agreements promising to mend their ways. Along the way, the attorney general’s SWAT team also shut down or sued affiliated law firms, process servers and debt consolidators whose services turned out to be shams.

“At a time when New York families are already struggling with unprecedented levels of debt, unscrupulous collection agencies add salt to an open wound,” Mr. Cuomo said in May 2009, after taking on the debt collectors.

What gives, Little Andy?

First you go after these crooks as attorney general, now you hire these same crooks to collect money when you're governor?

You must want that money for the state pretty badly!

Heck, if you want the state money that much, why not go all the way and skip right past the unscrupulous private debt collectors and just hire Gambino and Genevose crime family associates to get the money for you?

I can see it all now.

"Hey, tax deadbeat - give us Cuomo's money or we'll break your legs..."

Debtors' Prisons

They still exist in the United States:

As a sheriff's deputy dumped the contents of Joy Uhlmeyer's purse into a sealed bag, she begged to know why she had just been arrested while driving home to Richfield after an Easter visit with her elderly mother.

No one had an answer. Uhlmeyer spent a sleepless night in a frigid Anoka County holding cell, her hands tucked under her armpits for warmth. Then, handcuffed in a squad car, she was taken to downtown Minneapolis for booking. Finally, after 16 hours in limbo, jail officials fingerprinted Uhlmeyer and explained her offense -- missing a court hearing over an unpaid debt. "They have no right to do this to me," said the 57-year-old patient care advocate, her voice as soft as a whisper. "Not for a stupid credit card."

It's not a crime to owe money, and debtors' prisons were abolished in the United States in the 19th century. But people are routinely being thrown in jail for failing to pay debts. In Minnesota, which has some of the most creditor-friendly laws in the country, the use of arrest warrants against debtors has jumped 60 percent over the past four years, with 845 cases in 2009, a Star Tribune analysis of state court data has found.

Not every warrant results in an arrest, but in Minnesota many debtors spend up to 48 hours in cells with criminals. Consumer attorneys say such arrests are increasing in many states, including Arkansas, Arizona and Washington, driven by a bad economy, high consumer debt and a growing industry that buys bad debts and employs every means available to collect.

Wow.

Not saying people shouldn't pay their debts or miss court hearings over unpaid debts.

But seriously, prison?

Meanwhile bankrupt corporations gets bailed out by the United States taxpayer or just get to file Chapter 11 bankruptcy:

Federal bankruptcy laws govern how companies go out of business or recover from crippling debt. A bankrupt company, the "debtor," might use Chapter 11 of the Bankruptcy Code to "reorganize" its business and try to become profitable again. Management continues to run the day-to-day business operations but all significant business decisions must be approved by a bankruptcy court.

Under Chapter 7, the company stops all operations and goes completely out of business. A trustee is appointed to "liquidate" (sell) the company's assets and the money is used to pay off the debt, which may include debts to creditors and investors.

...

Most publicly-held companies will file under Chapter 11 rather than Chapter 7 because they can still run their business and control the bankruptcy process. Chapter 11 provides a process for rehabilitating the company's faltering business. Sometimes the company successfully works out a plan to return to profitability; sometimes, in the end, it liquidates. Under a Chapter 11 reorganization, a company usually keeps doing business and its stock and bonds may continue to trade in our securities markets. Since they still trade, the company must continue to file SEC reports with information about significant developments.

Gee - Chapter 11 bankruptcy sounds terrible.

So does the government bailout.

No jail time for the assholes who ran the company into the ground.

No financial losses for self same assholes.

Instead they sell stock for a billion dollars.

And the Christmas bonus money continues to be doled out to executives - only post-bailout, they use American taxpayer money instead of money stolen from stockholders.

And let's not forget how the executive staff gets to go to a swanky Arizona resort for meetings just a week or so after the government bailout.

Stockholders can take a bath of course, especially if reorganization doesn't return the business to profitability.

But no baths for the CEO and other top staff.

Meanwhile citizen debtors find themselves in prison when they miss a court hearing.

Ah, as that unfunny Russian comedian used to say in the 80's, "What a country!!!"