De Blasio Has Private Consulting Group Partly Funded By Bloomberg Running His Transition Team

This is just another example of why Bill de Blasio needs to be watched very, very carefully by his "progressive" base (from an excellent piece at Capital NY by Dana Rubenstein):

Bill de Blasio has two transition teams.

There's the public one, announced in late November. It's a diverse, 60-person assortment of nonprofit leaders, political types, educators, rabbis, Cynthia Nixon. More than half of its members are de Blasio donors.

Then there's another team, a nonprofit group whose participation in the process has never been announced, but which has been playing a substantial role in organizing the transition.

According to a source involved with the transition, this involved entity—Civic Consulting USA—has "embedded" into the process a team drawn from the "creme de la creme of the big New York consultants." This group has shaped the process by organizing the original transition team into a number of topic-specific committees and then bringing in an even greater number of other people onto those committees to participate in the search for future administration members.

The involvement of those new people, like the role of the consultants, was never announced.

In response to an inquiry by Capital, de Blasio spokeswoman Lis Smith confirmed the group's involvement, but described it in a strictly supporting role.

"Transition co-chairs Carl Weisbrod and Jennifer Jones Austin, along with Transition Executive Director Laura Santucci and Deputy Executive Director Ursulina Ramirez are running the transition," she said. "The core committee is providing the transition with important advice and counsel. Civic Consulting USA is also helping the transition on a pro-bono basis. They are one piece of the great team we’ve put together to build the next administration and recruit great talent to serve the people of New York City."

Smith declined to go into more specifics about the group's participation, and declined to comment on the existence of the newly formed subcommittees.

And just who suggested de Blasio put this secret "non-profit" group into positions of power within his transition team?

Why, Rahm Emanuel - of course!

According to the transition source, Civic Consulting USA was suggested to de Blasio's aides during a November meeting between de Blasio and Chicago mayor Rahm Emanuel. Emanuel's staff suggested that de Blasio's transition team enlist the help of the group, whose mission is to pair government clients with partners in the private and nonprofit sector.

Civic Consulting USA president Michael Hickey told Capital the group was "inspired by the pioneering work done by the Civic Consulting Alliance in Chicago."

For its part, the Civic Consulting Alliance in Chicago paired management consultants from companies like Deloitte, Bain & Company, Accenture and McKinsey & Company with Emanuel to help guide his own transition into office.

The transition cannot accept corporate contributions, so Civic Consulting is working for the transition team via an agreement with the city, according to Smith.

And just what does this "non-profit" get from "loaning" out its talent to the government to work in secret?

"Loaned professionals return energized with a renewed commitment to their companies" and they develop new skills. Also, "positive PR."

Sure - and the policies they wanted implemented because their own people do the implementing or contracts from the city:

Emanuel's relationship with the Civic Consulting Alliance generated significant attention in Chicago, not all of it positive.

"The alliance was a key player in Emanuel's 2011 transition to office," reported the Chicago Tribune last December. "As part of its role, the group brought in Accenture, one of the world's largest financial consulting firms, to provide free advice to the new administration. The company subsequently received a no-bid contract from the Emanuel administration that pays it a percentage of every dollar saved on other City Hall contracts."

A spokesman for Emanuel had no comment.

Bloomberg, btw, has just put together his own non-profit consulting group to "help" municipalities around the country and the world with governance issues.

Also, Bloomberg Philanthropies is a part funder of the "non-profit" consulting group de Blasio is using:

Outgoing mayor Michael Bloomberg has routinely talked of the benefits that non-bureaucrats can bring to city governance, and in fact Civic Consulting USA lists Bloomberg Philanthropies as one of its funders.

And, in Bloombergian fashion,  its website touts the benefits that non-governmental expertise can bring to "government clients": "We bring together teams who are better coordinated, longer term, and more talented than they could afford, attract, or manage otherwise—at no cost to the taxpayer."

With de Blaiso using for his transition team the same "non-profit" Rahm Emanuel used in Chicago, one that is partly funded by Bloomberg, I'm starting to think that the Official Song of the De Blasio Administration should be The Who's "Won't Get Fooled Again."

Meet the new boss, same as the old boss.

Goldman Sachs, Dirty Money and the Harlem Children's Zone

Goldman Sachs gave a $20 million grant to the Harlem Children's Zone through it's charity wing, Goldman Sachs Gives.

According to Geoffrey Canada, founder of the HCZ, that money will enable the organization to build a new school, among other things.

Isn't that wonderful!

But how much of that money Canada and the HCZ is receiving from Goldman Sachs was made from human misery and/or criminal activity?

In April, Goldman Sachs was charged by the S.E.C. with fraud in the structuring and marketing of a CDO (collateralized debt obligation) tied to subprime mortgages.

Goldman settled that case in July, agreeing to pay $550 million dollars in the settlement. Goldman did not admit wrongdoing, but did agree to pay the fine for "marketing materials for Abacus 2007-AC1 that contained 'incomplete information.'"

In other words, they lied to the people they were selling their financial product to. They made believe the product had some value when they knew that it was essentially worthless (full of mortgages that were in danger of default.) In fact, Goldman even made side bets AGAINST Abacus 2007-AC1.

Here is how Bloomberg News described the transactions:

April 17 (Bloomberg) -- From July 2004 through April 2007, as credit markets boomed, Goldman Sachs Group Inc. created 23 financial transactions called Abacus, the word for a relatively crude counting tool involving the shuffling of beads.

Yesterday, the Securities and Exchange Commission sued the bank for securities fraud in what would be the penultimate offering in the series, according to Bloomberg data.

The bank used the deals to off-load the risk of mostly subprime home loans and commercial mortgages to investors, either as hedges for similar positions or to bet against securities itself. While the data show New York-based Goldman Sachs issued at least $7.8 billion of Abacus notes, the risk passed to investors was multiples higher.

The Abacus transactions are so-called synthetic collateralized debt obligations, which marry two financial innovations that contributed to the worst collapse in financial markets since the Great Depression.

The financial tools, often called technologies, are credit- default swaps, used to transfer the risk of losses on debt, and securitization, used to slice the risk in a pool of assets into various new securities.

Abacus deals were filled with default swaps that offered payouts to Goldman Sachs if certain mortgage bonds didn’t pay as promised, in return for regular premiums from the bank.

Some of the cash needed for the potential payouts to Goldman Sachs would be raised upfront, and essentially placed in escrow, from sales of Abacus CDO notes with varying ratings. The grades were tied to how many of the underlying securities needed to default before the CDO classes would.

Such securitization enabled debt with the lowest investment-grade ratings to be transformed, in part, into AAA securities that turned out to not be as safe as that ranking suggested. At least $5 billion of Abacus slices now carry junk ratings, below BBB-, from Standard & Poor’s, or have defaulted, Bloomberg data show.

The SEC said that Goldman Sachs created and sold Abacus 2007-AC1 without disclosing that hedge fund Paulson & Co. helped pick the underlying securities and also bet the CDO would default. Paulson was proved correct, and his hedge fund eventually turned a $1 billion profit and CDO investors lost a similar amount, according to the SEC.

So Goldman made money both coming and going - they sold a worthless financial product that was guaranteed to go belly up to their customers without telling them it was worthless, then made MORE money by betting against that very product themselves.

Ingenious - no wonder they call these guys Masters of the Universe!

But that's not the only fraudulent way Goldman Sachs makes money.

Goldman Sachs also owns Litton Loan Servicing - a company that has been sued numerous times for all kinds of fraudulent business practices.

Back in 2005, customers of Litton Loan charged the company with fraud in a class action lawsuit:

The Nationwide Class alleged claims based on violations of the Real Estate Settlement Procedures Act ("RESPA") relating to Litton's improper actions in imposing late fees or treating payments as late during the 60-day grace period following the effective date of loan transfer if a borrower sends a payment to his or her old servicer on time. The California Subclass alleged claims based on violations of California law relating to Litton's unfair business acts and practices with respect to the servicing of loans.

Litton Loan settled that case in 2009, but since the court found that the plaintiffs had not "established the elements needed to determine predominance or superiority on their claim for actual damages," statutory damages were capped at $500,000 for the entire Class.

This class action lawsuit was far from the only complaints against Litton Loan Servicing. Here is a whole host of complaints at Consumercomplaints.com (66 pages of them!) against Litton.

Here is one complaint about Litton from that site:

PATRICIA of CHICAGO, IL September 20, 2009

In December 2005/January 2006, without our knowledge or consent, our mortgage was sold to Litton Loan. Before we knew what hit us, our home was foreclosed. In January 2007, we read in the daily newspaper that our house was being "sold" and actually went to the "foreclosure sale." We were directed to the offices of Pierce & Associates -- the equally atrocious bulldogs who are rubber-stamping case-after-case amassing exorbitant attorney fees and court costs in the Foreclosure Court on behalf of Litton Loan. Finally, an agent of Litton sent a fax through Pierce with a Forbearance Agreement; and DESPERATE to keep our home, we made lump sum and monthly payments over the next 10 months in excess of 47,000.00 (I have copies of the cashiers checks). During this time, we attempted to contact Litton Loan hundreds (maybe even thousands) of times. Either the voicemail box was full and we couldn't leave a message, or the voicemail indicated the agent was helping another customer and would return our call in 72 HOURS. On occasion, we were fortunate enough to connect to a "live" person, they were clueless as to our situation, some became rude and condescending, and more often they said we needed to speak to a supervisor because according to their records, our home was foreclosed. EVERY TIME IT WAS A DIFFERENT AGENT, WITH THE NAME OF A "NEW" SUPERVISOR. Guaranteed they have a HUGE EMPLOYEE TURNAROUND!

To date, we have no evidence that our OVER 47,000.00 was ever applied to our mortgage loan. In January 2007, we retained a foreclosure firm who called off the dogs and ATTEMPTED but FAILED to negotiate with any one Litton officer. They would come to terms, and Litton was penalized on more than one occasion, but then the Litton player would change, and we were right back to square one. Well, the Sheriff's Officers came to the door with battering rams to evict us. They gave us ten (10) days. A week later, a Notice of Eviction was served on THE WRONG PARTY! They didn't even have our names on the complaint. We looked like fools in the eviction court, and refused to be under the jurisdiction of the Court. Simultaneous, we hired an attorney to file a complaint in the Foreclosure Court, and on October 14, 2008, the Circuit Court of Cook County, Illinois ordered: This cause coming to be heard on Defendant's Motion to Quash Service of Summons, upon due notice, and the Court being fully advised: It Is Hereby Ordered: That the Defendants having met their burden of proof, the Motion to Quash Service of Summons is granted, and all orders and the issued deed are void ab initio.

THEREAFTER, WE CONTACTED LITTON A HUNDRED MORE TIMES, EACH TIME WE WERE TOLD OUR HOME WAS SOLD! WE TRIED TO SECURE A MORTGAGE FROM SEVERAL OTHER LENDERS, BUT WERE TOLD OUR CREDIT HAD THE FORECLOSURE AND THEY EITHER COULD NOT NEGOTIATE WITH LITTON BECAUSE THEY WERE NO LONGER THE LENDER, OR LITTON DID NOT RETURN THEIR CALLS. Last month, the attorney that handled the motion to quash service sent a letter stating that ONE WEEK following the hearing, Litton claims to have served us with foreclosure papers; and the house was again foreclosed! LITTON NEVER GAVE US A CHANCE TO SECURE A MORTGAGE FROM THEM OR ANY OTHER LENDER AFTER WE PREVAILED IN THE FORECLOSURE COURT. The attorney wants another 3,600.00 to go through the same process in Court and reverse the foreclosure. WE WERE NEVER SERVED ON OCT 27 2008. Not only do we want to sue the process server, LITTON LOAN, and their agents, but more importantly we WANT TO SECURE A REVERSE MORTGAGE FROM A LENDER!!! PLEASE HELP US!

There are lots of other outrageous complaints against Litton there, many as heartbreaking as the one above. Litton Loan Servicing is creating lots of misery in the world, much of it because they just don't seem to care about details, circumstances, ethics or even the law when it comes to dealing with their customers.

And unfortunately the way Wall Street works these days, you can become a Litton Loan customer without intending to if your original mortgage company sells your mortgage to them, as has happened to hundreds of thousands of people.

Also as we can see from this NY Times article on October 13, 2010, Litton Loan Servicing isn't exactly hiring "professionals" to do its business either:

At Litton Loan Servicing, an arm of Goldman Sachs, employees processed foreclosure documents so quickly that they barely had time to see what they were signing.

“I don’t know the ins and outs of the loan,” a Litton employee said in a deposition last year. “I’m not a loan officer.”

And yet this employee was doing loan officer work.

So Litton is using amateurs to process its foreclosures, throwing tons of people out of there homes without cause, charging fees they shouldn't be charging for loan payments that weren't actually late, and claiming people are in default on their mortgages even when they aren't.

And they're getting away with this, as is the company that owns them, Goldman Sachs.

Goldman also owns a substantial part of for-profit education company Art Institute which according to Bloomberg News peddles degrees for up to $100,000 that students later find are "worthless."

So here is this company that has sold toxic financial products that it knew was worthless to customers without telling them while shorting those very same products, owns a loan servicer that is scamming hundreds of thousands of people all across this country and owns a 38% stake in a for-profit education company that offers worthless degrees for as much as six figures that leave students in debt up to their eyeballs but without gainful employment.

Let me ask the question again, how much of the $20 million that Geoffrey Canada and the Harlem Children's Zone received from Goldman Sachs was made from human misery and/or criminal activity?

How much of that money came from somebody who fraudulently lost their house to Litton Loan or had to pay late fees for mortgage payments that weren't actually late?

How much of that money came from students who paid for a worthless degree from Art Institute and are working as strippers or grocery clerks to pay off their loans?

How much of that money came from investors who bought into a Goldman financial product that Goldman knew was worthless and who lost their shirts in the Housing Bubble collapse?

And what does it say about both Geoffrey Canada and the Harlem Children's Zone that they're happy to take the money made from shady foreclosures, fraudulent mortgage fees, garbage college degrees at diploma mill universities, and worthless collateralized debt obligations that were hawked to naive investors as something of value?

The old saying goes that you are what you eat.

The same can be said for non-profit organizations that claim to be doing good in the world.

They are where they raise their funds from.

Given how Goldman Sachs makes its money, Geoffrey Canada and the Harlem Children's Zone ought to be ashamed that they have taken even one cent from Goldman and should give back the entire grant.

Sure Canada can build a new school with that money.

But how many people have had their lives destroyed by Goldman Sachs, lost their homes or their savings to these crooks, in order for Mr. Canada and the HCZ to build that school?