MERRILL LYNCH DUMPS THEIR CEO—WAS BIG BUSH BACKER

Merrill’s Stan O’Neal wasn’t ready for subprime time, but he was a record-setting fundraiser for Bush

By Ward Harkavy writes in the Village Voice

Merrill Lynch’s ouster of CEO E. Stanley O’Neal is good timing for the financial behemoth, but it comes a few years too late for America and for thousands of Merrill employees.

He’s being driven out for his reckless bundling of subprime mortgages into shaky securities that Merrill aggressively peddled and that are now shaking Wall Street’s foundations. Yes, these big financial institutions play funny money with your monthly payments, making millions while you don’t see a dime from their monopoly tactics.

Not that this is anything new. The explosion in subprime mortgages is caused in large part by predatory lending practices, which are particularly aimed at black people (O’Neal used to be one of those) and other minorities.

MEDIA MISSES LENDER MALPRACTICE

Over on Lenderama, columnist Gina Gardner says that if borrowers feel abused by lenders they have significant opportunities to obtain relief.

“If lenders misrepresent a product,” says Garner, “the borrowers have recourse already. And they’d be exercising it if they were in fact defrauded.”

Let’s see: If you check Google for the term medical malpractice you get 1,970,000 hits.

The expression legal malpractice gets you 1,920,000 hits.

And lender malpractice? That will get you a whopping 23 hits.

If a lender overcharges for a product — if a lender sells a subprime loan to a borrower who qualifies for a lower-cost FHA mortgage — that’s perfectly legal. That is not lender malpractice.

Lenders do not have a fiduciary obligation to get the best possible rates and terms for borrowers. You can’t blame a lender for not doing a good job when, in fact, he or she is not your agent.

Wayne Harkavy who writes above in the Voice on the ouster of a fallen Wall Street Big wrote abot the way predatory Lending was dealt with way back in 200l. This is fascinating:

From the Subprime to the Ridiculous
Mayoral Candidates Huff and Puff on Predatory Lending
by Ward Harkavy
April 18 - 24, 2001

A guerrilla war that has dealt serious defeats to predatory lenders has spread from states like North Carolina and Massachusetts to big cities like Chicago and Philadelphia, which recently passed ordinances aimed at ending unfair banking practices. So why hasn’t the fight against what some have called “financial apartheid” spread to the biggest city of all?

State regulators in Albany adopted new restrictions on finance companies late last year, but activists say the victims of those profiteers still lack meaningful protection—help that could come from city officials. In New York, Mayor Giuliani has taken no action against predatory lending, say community organizers, and the City Council has done practically nothing.

But the big banks are worried about Giuliani’s potential successors. Citigroup has already laid big cash on the campaign coffers of prominent Democrats, including city comptroller Alan Hevesi.

Sarah Ludwig, director of the Neighborhood Economic Development Advocacy Project, foresees nothing but very tough going when the battle hits the boroughs. “We’re in the right,” she says, “but they’re in the money.”