Chicago Magazine Asks Why Illinois is So Corrupt — Chicago Magazine has an interesting article on the sore subject of Illinois corruption. Owing to historical factors, Illinois developed a labyrinthine governmental structure that offered fertile ground in which corruption could sprout. The Illinois constitution of 1870, in effect until 1970, limited the amount of debt counties and municipalities could carry and taxes they could levy. When cities needed to fund improvements, they got around those constraints by creating new units of government with the capacity to borrow—a library district, for example, would be created to build and administer a new library. “The 1870 constitution almost forced you into multiple units of government if you were going to deliver services beyond your municipality or modernize your municipality,” says Redfield. Today the state contains almost 7,000 separate governmental fiefs—far more than any other state—ranging from counties, towns, and school and fire districts to water reclamation and mosquito abatement districts. Most have budgets to protect and authority to wield. “It’s very hard to stay on top of it all, and it creates many more opportunities for patronage,” says Cindi Canary. “It creates ways for small islands of graft and corruption to stay hidden.” It appears that Illinois’ luck is running out. According to Forbes, Illinois is number two on the list of states Americans are fleeing behind New York:
Employed But Struggling: Report Finds 1 in 3 Working Families Near Poverty – Almost a third of America’s working families are now considered low-income, earning less than twice the official poverty threshold, according to a report released Tuesday by the Working Poor Families Project. The recession, which has incited layoffs and wage cuts, reversed a period of improvement: Between 2007 and 2009, as the recession set in, the percentage of U.S. working families classified as low-income grew from 28 percent to more than 30 percent.Workers who once focused on career advancement now live paycheck to paycheck. The American middle class, in effect, is eroding."They’re no longer working actively, with a chance to advance and gain more experience and skills," said Brandon Roberts, manager of the Working Poor Families Project and a co-author of the report. "They’re just putting pieces together to stay afloat, to meet basic needs."Last year, 45 million people, including 22 million children, lived in low-income households, according to the report. As breadwinners lost jobs or suffered pay cuts, the report notes, the number of low-income families grew to 10 million last year, an increase of almost a quarter-million from 2008. The problem is worse among minorities: 43 percent of America’s working families with a minority parent are low-income, the report finds, compared to 22 percent of white working families.
One-in-Three Working Families Considered ‘Low Income’ – Nearly one in three working families earned less than 200% of poverty line last year, as a bad economy pushed 250,000 families below that threshold, according to a new analysis of Census Bureau data. The recession’s effects extended beyond the millions who lost jobs, according to a report released Tuesday by the Working Poor Families Project, which researches and advocates for working families. Among those who were working, more than 10 million families earned less than 200% of the poverty level, which the researchers considered “low income.” The low-income threshold for a family of four with two children last year was $43,512. “Working families are taking it hard during the great recession,” “We’ve got a whole lot of middle-income families, middle-class families that have now fallen back into low-income working families.” More than 22 million children were part of low-income families last year, a troubling indication for their future, according to the report. “For many children, poverty persists into adolescence and adulthood, and is associated with higher risks of dropping out of school, teens having children and lower earnings for young adults,” the report states.
Homes at Risk, and No Help From Lawyers – In California, where foreclosures are more abundant than in any other state, homeowners trying to win a loan modification have always had a tough time. Now they face yet another obstacle: hiring a lawyer. Lawyers throughout California say they have no choice but to reject clients like Ms. Bell because of a new state law that sharply restricts how they can be paid. Under the measure, passed overwhelmingly by the State Legislature and backed by the state bar association, lawyers who work on loan modifications cannot receive any money until the work is complete. The bar association says that under the law, clients cannot put retainers in trust accounts.
We had questioned the cheery assumption of the major banks regarding their robo signing abuses, namely, that they could simply resubmit their improper court documents and proceed as if nothing had happened.
Major Servicers Face Possible Suspension of Foreclosures in New Jersey Over Robo Signing –– Yves Smith – Improper affidavits are a fraud on the court, and robo signing is the mass, deliberate production of fraudulent submissions. Some jurisdictions, like New York and Florida, are requiring that attorneys certify the accuracy of documents presented in foreclosure. New Jersey is going one step further by having a Supreme Court justice demand an appearance by six major servicers to explain why their foreclosure operations should not be suspended. I suspect the sort of sanctimonious explanations we’ve seen in Congressional hearings, “We act to correct mistakes as soon as they come to our attention,” would not go over well. From Associated Press: Six lenders who have combined to file nearly 30,000 foreclosure actions in New Jersey this year face the possible suspension of their operations next month under a court order announced Monday by state Supreme Court Chief Justice Stuart Rabner. OneWest and five other lenders were ordered to appear in state Superior Court in Trenton on Jan. 19 to demonstrate why the state shouldn’t suspend their foreclosure actions
The Effect of Falling Home Prices on Small Business Borrowing FRB Cleveland: Small businesses continue to report problems obtaining the financing they need. Because small business owners may rely heavily on the value of their homes to finance their businesses (through mortgages or home equity lines), the fall in housing prices might be one of the causes of their difficulty. We analyze information from a variety of sources and find that homes do constitute an important source of capital for small business owners and that the impact of the recent decline in housing prices is significant enough to be a real constraint on small business finances.A persistent issue throughout the recovery has been the reported inability of small businesses to get the financing that they need. To better understand the sources of any shortfall, the Federal Reserve System undertook a project in 2010 to meet with representatives from banks and small businesses.1 In some of the focus groups…, participating small business owners explained that the reduced value of their homes has made it difficult for them to provide the necessary collateral for small business loans. Other participants said that the reduced value of homes has made home equity borrowing as a source of business capital more difficult to come by, also contributing to the difficulty many small businesses face in obtaining sufficient capital to finance their operations.
Reality Check: Why Truth Will Protect Social Security – It is clear from the comments on our last piece that we might have raised more questions than we answered. Above all, we want to make clear that when we discuss the funding aspects of the Social Security program, we are doing so in a way that is designed to safeguard it, not eliminate it. We believe that fictions are not necessary, because the truth will protect the program better than distortions, however well-intended. Enemies have lied enough; supporters do not need to battle fictions with more fictions. Here we will deal with a dozen issues surrounding the proposed payroll tax holiday, and illustrate why we do not believe that the holiday is a danger to the program — as long as we understand the facts.
European bank stress tests: Third time lucky? – While politicians have hailed the bailouts of Greece and Ireland as necessary and responsible, there are many who feel that burdening taxpayers is grossly unfair. This column argues that Europe’s governments should lead a process of ruthless triage, recapitalisation, and restructuring of the region’s most important banks. It adds that while this will be extremely disruptive, the alternative may threaten the political fabric of the EU.