Groups mount pressure on Congress to pass 2012 Farm Bill

Agri-Pulse interviewed House Agriculture Committee Chairman Frank Lucas (R-Oklahoma) this week on the prospects of Congress passing a new farm bill before the current bill expires at the end of September. Lucas seems relatively optimistic about the possibility of passing the farm bill. When asked if it will happen this year, his response was that even if he had from “midnight to sunrise” he’d try to get it done.

In the meantime, groups have coalesced to put pressure on Congress to move forward. Farm Bill Now is a coalition of agriculture groups who have come together– despite “strong and varied policy priorities”– to pass the farm bill this year. The over 50 organizations that have signed on range from individual commodity associations, conservation groups, cooperatives, and even financing and cooperative groups. On Tuesday, Farm Bill Now held a press conference in Boone, Iowa at the Farm Progress Show, where representatives of the coalition spoke to the needs of farmers and the impact of the drought, but also connecting the Farm Bill to the broader economy:

“According to the USDA, one in every twelve jobs is directly tied back to the farm…. This figure provides us with the reality of the broad scope of this legislation and how it impacts every single American.”

Also this week, the National Sustainable Agriculture Coalition, along with 43 organisations in the Campaign for a Renewed Rural Development, sent a letter urging Congress to keep rural development as a priority in the 2012 Farm Bill. If the current bill expires and the 2008 bill is extended, funding for rural development, renewable energy, and beginning farmer and rancher programs would be discontinued.

Inaction on the Farm Bill is causing uncertainty for agriculture industry, rural development, and for the economy and consumers as a whole. Ultimately, it is a matter of politics and process. As Chairman Lucas said in the Agri-Pulse interview, what is needed is an “open, straightforward process.” However, with only 8 days in September to act, Chairman Lucas and his colleagues in Congress will have to make a concerted effort to overcome the politics of this issue to pass a new bill.

 

 

Mortgage settlement relief too slow for many homeowners

Earlier this year, Bank of America, Wells Fargo, JPMorgan Chase, Citigroup, and Ally Financial (formerly GMAC) settled with 49 state attorneys general over allegations of improper foreclosures based on robo-signing and seizures made without the proper paperwork. The banks agreed to a settlement package worth approximately $25 billion. This settlement was to be spread across the signing 49 states over three years, with North Carolina receiving $338 million in assistance.  North Carolina’s share breaks down as follows (full details here):

• $63.7 million for housing counselors, legal help, financial fraud detection and prosecution, general economic reparation for the state.  Some of this includes fines and penalties, which will go towards the fund supporting public schools.
• $33.57 million for NC foreclosure victims.
• $179.51 million in principal reductions, short sale agreements, and other assistance over three years for homeowners at risk of default.
• $61.52 million in principal reductions to help homeowners who are not at risk of default, but who currently owe more than their houses are worth.

That was back in February. Today’s Charlotte Observer reports that since then, some of these banks have been slow to provide relief. In North Carolina, less than 2,000 homeowners have received any aid.  Bank of America, which was slated to pay the most of the five banks, is the last to act.

Mortgage firm sued over racial descrimination

Back in April, the U.S. Department of Justice and the U.S. Attorney’s Office for the Southern District of New York filed a lawsuit against GFI Mortgage Bankers Inc, one of the country’s largest mortgage firms operating in seven states, primarily in New York, New Jersey, and Florida. The complaint was that GFI was racially discriminating against borrowers, charging African American and Hispanic borrowers higher fees and interest rates on mortgage loans, compared to comparable white borrowers. GFI has now agreed to pay $3.56 million to settle the lawsuit and has agreed to revise its policies.

An analysis of the loans made by GFI from 2005 to 2009 showed that the interest rates were 19 to 41 basis points higher for African American borrowers and 20 to 23 basis points higher for Hispanic borrowers, as compared to white borrowers (one basis point is 0.01 percentage point). Here’s how the Department of Justice describes it:

For example, an African-American borrower who took out a home mortgage loan in 2007 paid on average approximately $7,500 more over the first four years of the loan than a similarly-situated white borrower.  For a Hispanic borrower, the difference was approximately $5,600 more over the first four years of the loan than a similarly-situated white borrower.  The disparities, based on race or national origin, are statistically significant, and are unrelated to credit risk or loan characteristic.

The problem of discrimination in mortgage lending is well documented. A report that we had previously blogged about from Reinvestment Partners and several other advocacy organizations illustrated the patterns of racial discrimination when it came to federally-backed loans.  Earlier this year, Bank of America also settled a lawsuit against its subsidiary, Countrywide, that had discriminated against people of color in its mortgage lending.

In a comment on the Bank of America case, the Economic Policy Institute makes the good point that the consequences of these unfair mortgage practices are far-reaching and far from resolved. Any compensation that these large firms can offer the people who were affected will only scratch the surface of the deep, systemic problems caused by their discriminatory practices:

Exploitative mortgage lending has led to an epidemic of foreclosures among African American and Hispanic homeowners, exacerbating racial segregation as displaced families relocate to more racially isolated neighborhoods or suffer homelessness. The $335 million that Bank of America will spend to compensate victims is insufficient to restore their access to homeownership markets and to middle-class neighborhoods. In consequence, it will also do little to address the comparatively poor educational outcomes of children who are now more likely to grow up in racially segregated communities, or the damage to learning that results when schooling has been disrupted by an unstable housing situation.

Southern Environmental Law Center to sue over Garden Parkway development

In the ongoing battle of the state’s most controversial highway proposals, the Southern Environmental Law Center in Chapel Hill is getting ready to sue the state to stop the construction of the Garden Parkway, an almost 22-mile toll road that is slated for Gaston County. Our previous blog posts have discussed the controversy surrounding this project, from the disputed job creation estimates to the potential threat of litigation over the environmental impacts.

Now that the Southern Environmental Law Center has won a case over another project, the Monroe Connector/Bypass in Union County, it is gearing up for a lawsuit against the state’s Turnpike Authority over what they see as a defective environmental assessment. For these projects, the federal government requires “build vs no build” studies, which examine the impacts if the proposed project is built and if it is not built. In the case of the Monroe Connector/Bypass, it was ruled that the build vs no build study was done incorrectly, thus delaying the project indefinitely. The Law Center says that the study done for the Garden Parkway was even worse.

Supporters say that this will help jump-start the local economy by providing a connector over the Catawba River. But opponents say that the $1 billion Parkway will only cause sprawl, environmental degradation, and a loss of jobs due to companies moving to South Carolina. In light of all this controversy, delaying the project would not be a bad thing. As we’ve said before, at a time when state and federal resources are limited, economic development projects need to have clear benefits to justify the cost.

NCUA dual exams and the burden on small credit unions

The News & Observer issued an article discussing the ongoing dispute between the National Credit Union Administration (NCUA) and the North Carolina Credit Union Division (NCCUD) over the release of state-issued ratings for one of the largest credit unions, State Employees’ Credit Union (SECU). (We have mentioned this issue previously here and here.) At the heart of the dispute is whether or not SECU was legally allowed to issue the CAMEL rating– the rating used to determine the safety and soundness of credit unions– that the NCCUD had issued. While the federally-issued CAMEL ratings are not allowed to be disclosed, the state regulator had given SECU permission to release their rating in the name of transparency. NCUA did not respond well.

Since then, NCUA has conducted examinations of all of the state-chartered credit unions in North Carolina. Previously, state-chartered credit unions were examined by the NCCUD and NCUA would only conduct its own examinations if it was deemed necessary on a case by case  basis. Now, credit unions– large and small– are facing two sets of examinations. The article includes a very good description of how this burdens small credit unions:

On the face of it, one more financial review might seem like a good thing to the credit unions’ members. But for the smaller credit unions – more than half average just six employees – it has been a drain. The reviews, conducted in January and February, often lasted six to 10 days and chewed up more than 40 hours of staff time, with follow-ups on the agency’s findings still being resolved in some cases. It’s akin to an individual being audited twice by the IRS in a single year – by two different IRS agents.

Most importantly, the state’s credit unions were already in good standing, and would not have triggered the NCUA exam to begin with. For small credit unions, the burden of dealing with these additional exams and follow up is significant. Their staff time and resources are being diverted away from member services.

History and politics aside, the consequences for state-chartered credit unions and their members need to be addressed. Are the dual exams an effective or beneficial use of NCUA or the credit unions’ resources? The costs here, particularly given the safety and soundness of the state’s credit unions, seem to outweigh the benefits. Questions about policy and regulation should certainly be investigated and answered– but not at the expense of the state’s credit unions.