by Art Pulaski, California Labor Federation

This week, the U.S. Department of Housing and Development (HUD) and the Big Banks teamed up to propose a multi-state settlement to address the foreclosure crisis. But based on the terms described in numerous media reports, the deal appears to be a settlement for the banks, not a settlement for the middle class. The people of California need real relief, not a quick settlement that lets the banks off the hook.

California is home to nine of the ten cities that were hardest hit by the foreclosure freefall. The two million working families we represent have been at the epicenter of this crisis. Millions have been devastated by the loss of their homes. Many more have watched their home values plummet and now nearly one in three California borrowers are underwater, owing more to the banks than their homes are worth. California has the second highest foreclosure rate in the country, surpassed only by Nevada. For these reasons, our stake in the outcome of the settlement talks is great. Our families, our communities, our government and our economy depend upon a fair outcome.

Taxpayers revived the Big Banks from their self-inflicted crash with a $700 billion bailout in 2009. With the infusion, banks were directed to help homeowners recover from the mortgage crisis they created. Instead, bank executives took the money in big bonuses. The greed boggles one’s mind. Some should go to jail. Instead they again want to pay pennies on the dollars they took while foreclosing on millions of California homes.

On every level, the proposed settlement is inadequate: The total settlement amount is expected to be just $25 billion dollars, while the nation has $750 billion in negative equity. $25 billion would not even cover the loss of home equity to California families, let alone all homeowners across the country. The settlement is expected to help a million homeowners, when more than 10 million are underwater and millions more have been wrongfully foreclosed upon. The settlement needs to be in the range of $200 -$400 billion, not $25 billion.

Even worse, we are concerned that the settlement may not even come from the pockets of those who engaged in the misconduct. If the settlement gives servicers credit for writing down the value of investor-owned mortgage-backed securities without requiring them to write down the mortgages and liens they own, it will be our public pension plans, not the banks, that will take the hit. That means the same working families who have already seen their life savings go up in smoke will now face losses in their retirement funds. Not only is this a great injustice, but it fails to enact any real penalty against the bad actors.

It is difficult to overstate the harm that has been inflicted on our economy by the financial institutions now seeking to pay a relatively small sum and receive broad immunity. Foreclosures destroy families financially and emotionally, and blighted, abandoned properties destroy our communities. Cities, counties, and the state are unable to meet the needs of our most vulnerable, while banks sit on record reserves.

Any settlement must provide meaningful relief to homeowners and to the economy. We urge the Deptartment of Housing and Urban Development to ensure that the rush for quick relief does not overshadow the need for an equitable settlement that provides:

• Widespread principal reduction for California homeowners and fair redress for those who wrongfully lost their homes.
• Reform of lending and servicing practices and penalties on those who broke the law to deter such wrongdoing in the future.
• Real enforcement to ensure compliance.
• Limited liability waivers for only those issues that have been fully investigated.

We stand behind California’s Attorney General, Kamala Harris, who has firmly and vigorously refused a settlement that falls far short of recovery for the state’s homeowners who have been forced into distress by the banks. And she wants to reserve the right to investigate wrongdoing in the mortgage debacle. She’s right. And we should have it no other way.

by Steve Smith, California Labor Federation

Among the big political news this week was the release of the Legislative Peer Review Group’s report on the California high-speed rail project. The report recommends that the state freezes the project “at this time” until further assessment is done on its long-term feasibility. Problem is, the report was completed with minimal consultation with the California High-Speed Rail Authority, and ignored many of the details on feasibility included in the Authority’s recent business plan.

Opponents seized on the erroneous report to further their campaign to derail the project. While it might make good politics for some conservatives to oppose a signature program of the Obama White House, it certainly doesn’t make for good policy. Halting the high-speed rail project at this critical stage would jeopardize the entire project. It would put billions in federal funding at risk, and sap the state of an important engine to create desperately needed jobs.

The debate on high-speed rail – like so many other issues these days — has become overly politicized and isn’t on the merits. A group of conservative Republicans wants to put the issue back on the ballot, even though voters have already approved $9 billion in state bonds for high-speed rail. Even the peer review group, which is balanced and supports the concept of high-speed rail, got many pertinent facts wrong in its report.

With respect to the project, it’s time we got back to basics. Many countries around the world, including China, are showing that high-speed rail is an important component to the future of transportation. It’s clean, environmentally friendly, efficient, convenient and affordable. It alleviates traffic and air congestion while giving passengers an important option to meet their travel needs. In California, the project also offers an enormous opportunity to give our struggling economy a boost, especially in areas hard hit by the recession like the Central Valley. Over the life of the project, as many as 750,000 jobs would be created.

The project is supported by Republicans, Democrats and Independents. On its merits, it makes perfect sense. And the California High-Speed Rail Authority (HSRA), after early missteps, now has its act together and has delivered a detailed and transparent plan to bring the project to fruition. Gov. Brown has infused the HSRA board with seasoned experts, like Dan Richard and Mike Rossi, who bring years of experience in transportation planning and finance.

California Labor Federation Executive Secretary Treasurer Art Pulaski:

With California facing a jobs crisis and an urgency to upgrade our failing transportation infrastructure, further delay in breaking ground on high-speed rail is neither prudent nor responsible. Any project that’s the size and scope of high-speed rail is bound to encounter difficulties along the way. But rather than working to implement the vision of high-speed rail, the peer review panel suggests derailing the project at a critical stage, which is not a viable solution for California. Under new leadership, the California High-Speed Rail Authority is headed in the right direction. The Authority’s business plan addresses the myriad issues facing high-speed rail in a thoughtful and thorough way.

The main hurdle for high-speed rail right now isn’t the project’s feasibility. It’s that the project has been enveloped in politics as usual. That’s why it’s critical that the legislature take all evidence into account, listen to the experts and carefully analyze the Authority’s business plan, which answers many of the questions raised by the peer review group.

One such expert is the new CEO of the California High-Speed Rail Authority Roelof van Ark:

It is unfortunate that the Peer Review Committee has delivered a report to the Legislature that is deeply flawed in its understanding of the Authority’s program and the experience around the world in successfully developing high speed rail.   As someone involved in many of the successful high speed rail programs internationally, I can say that the recommendations of this Committee simply do not reflect a real world view of what it takes to bring such projects to fruition.

That’s not to say that ongoing issues, including long-term funding of the project, shouldn’t be addressed. But bowing to political hype to scuttle the project instead of carefully considering issues and finding solutions to work through them, would be a huge mistake.

The California labor movement supports high-speed rail because it holds more promise to transform our state’s economy, protect our environment and create a better quality of life for our families than any public works project in generations.

California was built by visionaries. It’s a proud tradition and important part of our heritage that we, as Californians, collectively embrace. Despite the challenges facing our state, it isn’t the time to shrink from the vision of high-speed rail. The bullet train can and must be built.

Pulaski:

In the short term, the project will create thousands of desperately needed jobs to help lift our state out of economic morass. In the long term, high-speed rail will deliver a world-class, environmentally friendly transportation system that will transform our state. An investment in high-speed rail is an investment in our state’s future. The Legislature must grant voter-approved bonds so that work can begin on the project this year.

by Angie Wei, California Labor Federation

Bank of America's new $5 monthly debit fee, unveiled Friday, sparked howls of protest from furious bank customers now threatening to walk away to more consumer-friendly banking options. No one knows exactly how many will follow through on the threat, but according to one poll, a $5 monthly fee will drive 66% of debit users towards alternative methods of payment—cash, credit cards, or “other.” Agree or disagree with the 66%, but at least everyone can agree that it’s good consumers can freely decide to spend however they want and bank wherever they choose, right? Wrong.

Thanks to unaffordable fees, credit checks and other obstacles, big banks have shut out about a million California households from access to any banking services whatsoever. These “unbanked” workers, unable to receive direct deposit, have in recent years found employers replacing paper paychecks with mysterious “payroll debit” cards—electronic cards that charge massive fees only a banking lobbyist could love. Employers issue cards directly to workers, wages are loaded onto an account managed by the bank, and every payday, the nickel and diming begins anew.

Workers unable to afford paycard fees don’t get to just take their business elsewhere. Unlike typical bank customers, these workers are simply stuck with whatever bank the employer chooses, and this lack of consumer choice creates a market distortion with a predictable result: sky-high fees that no retail banking consumer would ever accept.

Here’s a quick sample of some actual fees California workers can face under these contracts: $15 per month whether a worker uses their debit card or not. Every point of sale transaction costs an additional $2 and every in-network ATM withdrawal claims another $2. Replacement cards are $35, and if fees wipe out the last of a worker’s wages, the bank can take a $45 “negative balance” penalty. Even balance inquiries are $.50 and calls to a live operator cost $3 each.

For the vast majority of us, charges this unreasonable would be more than enough to propel us into the arms of a credit union or community bank less focused on punitive fines and high fees.  But the 8% without bank accounts live and work without this alternative. These employees choose from the following options: paycard issuers, equally predatory check cashing services, or a strictly cash-based existence. Fortunately, legislation offering a fourth possibility recently passed the legislature and currently awaits action from Governor Brown.

SB 931 (Evans) would authorize payroll cards, but only when the cardholder agreements meet certain conditions. For example, the card contracts couldn’t charge fees to load a payroll card or participate in the program. Card contracts will also no longer be allowed to charge workers for access to online account information and transaction histories. SB 931 guarantees an employee’s free choice between a paper check, direct deposit, or payroll card, and establishes the right of a payroll card-compensated worker to withdraw all wages once with no fees. Workers under SB 931 are also allowed four free in-network withdrawals, one free out-of-network withdrawal, and two free point of sale transactions. Modest protections, to be sure, but even these minimal standards would mean major help for minimum wage and low-wage workers.

Though millions of California workers need SB 931’s protection, the issue’s prominence and this bill’s reach extend far beyond California. Nationwide, all eyes are on our state to watch whether responsible regulation and a pro-worker Governor can beat back lies and threats from dozens of banking industry lobbyists. A victory here would mean renewed efforts elsewhere to protect the wages and living standards of America’s most vulnerable workers.  

The Governor here faces a clear choice—unlike workers paid on payroll cards. On one side is an industry that’s essentially declared war on the middle class, on the other is what’s left of a middle class ravaged by years of that industry’s greed. On one side are the world’s richest banks and their empty threats to abandon the gigantic California payroll card market, on the other are very real workers facing very real threats of bankruptcy, foreclosure, or worse, ironically from the hands of those very banks. Governor Brown, we’re counting on you to stand up to bankers bleeding hard earned wages from the workers on which our economic recovery will depend. We’re counting on you to sign SB 931.

Click here to send a message to the Governor in support of SB 931.

by Mitch Seaman, California Labor Federation

Forbes magazine as gutsy consumer advocate? Well, not really, but even the favored rag of corporate shills everywhere seemed stunned by Bank of America’s $5 debit fee announcement on Friday, accusing the banking behemoth of committing

a common mistake large corporations make: taking the customer for granted, holding the belief that whatever products or services they offer are unique and indispensible, so their customers will always be there.

While we agree that Bank of America’s incompetence runs rampant throughout the banking industry, by several measures of greed and arrogance, this troubled corporation stands alone. Allow us to present Bank of America with the following uniquely dubious titles:

Greediest TARP recipient: Bank of America took tens of billions of taxpayer dollars from the Troubled Asset Relief Program (TARP) in 2008. This bailout was supposed to help shore up the entire US financial system—as banks can be too big to fail but never too big to take free taxpayer money. Anyway, the terms of these loans required recipient banks to individually maintain sufficient cash to ward off a broader Wall Street meltdown. However, as last week’s Special Investigator General (SIGTARP) report confirms, Bank of America lobbied heavily to escape the program before they’d achieved the required financial reserves. Why? According to the report, Bank of America cited “…concerns including market perception and restrictions established by the Special Master for TARP Executive Compensation.” In other words, a shaky Bank of America weaseled out early to polish its image and pay executives more—jeopardizing the fiscal health of their company and the stability of our country.

Downsizer of the year: This one wasn’t even close. On September 12th, Bank of America CEO Brian Moynihan announced 30,000 layoffs—that’s more than twice the number of layoffs (13,000) declared by 2011’s second-place downsizer, pharmaceutical titan Merck & Co. Bank of America’s bombshell dropped just one month after Moynihan informed investors that “our capital levels are among the highest they’ve ever been in this institution’s history.” Maybe he’s confusing “our” capital levels with his capital levels: last year, Moynihan collected $2 million of his $10 million 2010 total compensation package. Other executives, in some cases, collected even more. Thomas Montag, head of investment banking and capital markets, will rake in $16 million for his work in 2010. Not bad for tanking one of the biggest banks the world has ever seen, though we have to wonder, how many jobs could be saved by firing these two alone?

#1 Tax Cheat: If you paid any federal income taxes at all last year, you paid more than Bank of America. In fact, unless you got a refund check bigger than $1 billion, you paid more taxes than Bank of America. It gets worse: these freeloaders paid no taxes last year and likely won’t for a long time. Chew on that next time pro-banker legislators demand we balance the budget through Social Security and Medicare cuts from middle class families.

First in Fees: All of which leads up to the latest Bank of America gaffe: the unprecedented $5 monthly debit fee slapped on any customer guilty of using his or her debit card for its intended purpose of buying things. This charge comes courtesy of a bank that for years encouraged frequent use of and zealous devotion to debit cards—mainly to help the bank rack up sky-high “interchange” fees from merchants on every card swipe. The company changed their tune, however, following federal legislation requiring that fees be “reasonable and proportional to the cost incurred by the issuer with respect to the transaction.” Apparently, despite final federal rulemaking that more than doubled the fee limit set by Congress, reasonable and proportional profits just aren’t enough for this champion profiteer—hence the shocking new fee.

While we applaud the furor over the monthly debit charge, be sure to consider this fee just the latest of many anti-consumer and anti-worker moves from the king of both. We’ll go to another surprising Forbes magazine masterpiece for the final word: “Banks aren’t our friends.” From one friend to another, we couldn’t agree more.

by Angie Wei, California Labor Federation

Over 2.1 million workers are currently unemployed in California. That’s not counting the underemployed, the part-timers who would like to be working full-time, the temporary workers, and those who are so discouraged that they’ve given up on work. One-third of the unemployed have been jobless for over a year;  25% have been out of work for more than two years.

This Great Recession is leaving millions of workers behind. Workers in especially hard-hit sectors like construction are facing unemployment rates as high as 40-50%. Workers have lost their jobs, their homes, their marriages and their community roots in the wake of this recession. Women and men who spent decades in the construction industry may never return to the same work. We’ve got to re-invest in these workers — to train and arm them with new skills so they can embark upon new career paths. 

California spends nearly $500 million in federal Workforce Investment Act (WIA) funds every year. 85% of these funds are distributed to the state’s 49 Local Workforce Investment Boards (LWIBs). LWIBs offer two types of services with these federal funds – (1) core and intensive services, like resume and interview preparation and job search and (2) training programs.

A May 2011 Senate Office of Research study documented that, on average, the 49 LWIBs spend just 20% of their federal funds on training services. A third of the boards reported spending less than 15% on job training. Sixteen LWIBs, including Imperial, Los Angeles City and County, Tulare, and Fresno among others, spent more on administrative and operating costs combined than on job training.

Our statewide workforce system has morphed into a low-wage labor market where workers leave as they came, with no new marketable skills to land them a better job and a career path to self-sufficiency. Low-wage employers pay low wages for different reasons – but a major one is because they believe the job is low-skilled. Academics agree that job training leads to higher wages, longer retention and better outcomes for workers and employers.

That’s why the California Labor Federation, the State Building and Construction Trades Council and the California Manufacturers and Technology Association, along with our community training partners, Jewish Vocational Services and Chicana Services Action Center, co-sponsored SB 734 (DeSaulnier), a bill to establish a minimum training requirement for LWIBs.

This bill requires LWIBs to invest at least 25% of their public funds on quality job training programs, and starting in 2016, this minimum standard would increase to 30%. Simply stated, over the next five years, one in three public WIA dollars will be dedicated to job training programs.

Sounds simple, right? Well, the California Workforce Association and its 40 local WIB members are beside themselves in opposing the bill. They are arguing about “local control,” claiming that they should be able to set their own rules. But for the past 13 years, “local control” has delivered 20% in training funds. And that is simply not good enough, especially during this recession. 

It wasn’t good enough for other states, like Florida, Illinois, Michigan, Minnesota, Pennsylvania, and Wisconsin, who have all adopted policies similar to SB 734 and drive more public funds into quality job training. California is behind the curve in doing so. We must catch up. Quality job training is good for workers, good for employers and good for California. The Governor should sign this bill into law.

By Cindy Singer, SEIU 721

The public library is an American institution – but right now, it’s under threat of being transformed from a public service to a for-profit venture. AB 438 is a result of a year-long effort by community residents, local organizations, librarians and labor organizations to save public libraries from widespread privatization efforts.  Recently, the city of Santa Clarita privatized their library services and instead of saving money (as the private stated) it will cost the local taxpayers $12 million, and AB 438 addresses these types of hidden costs.

Currently, Library Systems and Services (LSSI) is the only private company that offers turnkey private library management in the United States and is often the only company in line to take over a local library system. LSSI has taken over libraries in Oregon, Florida, Tennessee, Texas, Kansas and California, and has diminished services and staff while relying on more volunteers to make a profit. Privatization threatens America’s public libraries and library services and community residents are upset that they do no not have a voice in the matter. Read the New York Times article about the struggle in Santa Clarita.

SEIU launched the www.privatizationbeast.org campaign earlier this year to support and coordinate local community efforts to preserve quality public library services, and now there is legislation — AB 438 (Williams) waiting on Governor Brown’s desk — that will establish standards for transparency and provide protections for taxpayers through audits and accountability. There will also be safeguards protecting quality jobs and that communities will also have the opportunity to express their concerns.

As a public librarian, I believe that library services should be available to everyone, and this can best be done through a strong public library system. The residents of Santa Clarita did not have a choice or a voice in their City Council’s decision to privatize their libraries and how their tax dollars are spent but AB 438 will change that for other communities. With the help of CREDO and change.org more than 71,000 Californians signed petitions in support of AB 438 and librarians along with public library supporters across the country joined them.  

Click here to send an email and ask Governor Brown to sign AB 438.