Illinois Deserves the Truth

Business as usual in Chicago

By now, we’ve all heard the old song and dance of “tort reformers” in Illinois: that our legal system hurts the local economy.  Of course, this is preposterous (read the CJ&D-IL Facts about the Illinois Economy).

Here's more evidence for the naysayers: Chicago - a favorite target of state “tort reformers” - claimed #8 on the 2008 Global Cities Index, which ranks globalization in cities around the world.  And what, pray tell, was a main criterion for making this list?  Business Activity, including "the number of Fortune Global 500 firms headquartered and the value of capital markets in a city."

See the full rankings in Foreign Policy Magazine.

Faces of Predatory Lending Victims

All you hear about on the economy nowadays is Wall Street and what effect our crisis situation will have on stockholders.  So it’s nice when, every once in a while, reporters turn the lamp to spotlight ordinary consumers.  The Sun-Times did an excellent job of putting a human face on victims of mortgage scams in a recent series of articles/posts (see these links - 1, 2, 3, 4, 5, 6, 7)  Each story profiles a different victim.  You'll notice that Dorothy Davis and the Harris family, from the first two stories, respectively, turned to the civil courts for justice.

County Sheriff Lays Down the Law

Today Cook County Sheriff Tom Dart announced his department would put a freeze on foreclosure evictions.  The decision stems from the fact that too often officers find themselves needing to evict innocent renters, who are unaware their landlords are in any trouble.  He's now asking mortgage companies to provide greater notification to tenants about to be evicted.  From the Tribune,

Dart acknowledged he could be found in contempt of court for ignoring court orders, but said  he was willing to risk that to carry out "justice."

He noted that hundreds of Cook County residents each month are evicted after sheriff's deputies show up at their doors, not knowing that their landlords haven't made their mortgage payments.

"The people we're interacting with are, many times, oblivious to the financial straits their landlord might be in," Dart said. "They are the innocent victims here, and they are the ones all of us must step up for and find some way to protect."

In his release, Dart puts it more succinctly,

"We’re just not going to  evict innocent tenants. It stops today.”

Sifting through some of the commentary posted on media websites, it looks to be an unpopular decision.  If you ask me, we should applaud the sheriff.  He has done what seems unheard of: he's shirked an unjust rule in order to do the right thing.  Isn’t it refreshing to see this kind of morality?  I think we need more Tom Darts.

Countrywide Settlement Means Help for Illinois Homeowners

Over the weekend, IL Attorney General Lisa Madigan and other state AGs announced an $8.8 billion, multi-state lawsuit settlement with Countrywide Financial (now controlled by Bank of America).  I lamented in a post last week that despite the great work of several state AGs, homeowners were still stuck without much help when it came to modifying their loans.  I guess I spoke too soon.  According to the Tribune, the Countrywide deal could help 21,000 Illinoisans keep their homes. 

Bank of America, which is settling the lawsuit, purchased Countrywide earlier this year as Illinois Atty. Gen. Lisa Madigan and other attorneys general were investigating allegations of fraud against the lending giant. Bank of America promised to work out new mortgages at interest rates as low as 2.5 percent and pay cash compensation to people who already have lost their homes.

…

The settlement should help Illinois homeowners reduce their payment obligations by as much as $185 million, said a spokeswoman for Madigan. As part of the settlement, Countrywide has agreed to halt foreclosure sales and not initiate foreclosure proceedings for customers likely to qualify for the program. The program applies to people who received mortgages from Countrywide before Dec. 31, 2007.

This is a much-needed victory for struggling homeowners and further testament to the importance of the offices of state attorneys general.  Read more about their work in this CJ&D white paper.

From Predatory Lenders to Predatory Rescuers

Beware the wolf in sheep's clothing.  IL Attorney General Lisa Madigan filed a suit against Aeroworks, a Pennsylvania company that allegedly ran fraudulent mortgage rescue schemes in Illinois.  The Sun-Times reports,

According to the complaint, the defendants charge consumers up to $1,185 in upfront fees for counseling and mortgage rescue services but rarely produce successful results, a release from Madigan's office said. They also fail to give consumers the right to cancel, the suit claims. The complaint alleges the defendants accepted money from at least 215 consumers in Illinois during 2006 and 2007.

It seems these guys had as much free reign to conduct their shady business as the subprime lenders who came before.  Very discouraging, since this is just the time when rescue plans are most needed.  Case in point: a new report from the State Foreclosure Prevention Working Group, which is made up of bank regulators and state AGs like Madigan.  Their report examined the success of foreclosure prevention efforts and found that lenders aren’t doing enough to help struggling homeowners.

Loan modifications for at-risk homeowners dropped by 28 percent from January to May 2008, which is the lowest rate of modification since late 2007. Overall, the report concluded, lenders have not developed an effective strategy to confront default loans before interest rates rise.

Great... then who can we rely on?  The state AG's office, I suppose.  They may not be able to modify a loan, but at least they are exposing the grifters for us.

AIG: From Bad to Worse?

Cross post from The Pop Tort by Andy Hoffman

Last week, in response to the big AIG bailout, we reminded you that this industry, and especially this company, has a history of mismanagement and greed, the same qualities that trigger liability insurance “crises,” which periodically hit policyholders.  Now it seems we may have understated our case.  Check out this Reuters story that suggests the FBI is now investigating AIG (among others) on suspicion of corporate fraud…   

Heads Up if Want to Fill Up

It’s hard to believe people would try to take advantage of a devastating disaster like Hurricane Ike, but you need look no further than our home state.  Over the weekend, the office of the IL Attorney General announced they were looking into reports of price gouging at gas pumps across the state.  From the Galesburg Register-Mail in central Illinois,

"We saw prices go from $3.79 to $4.30 in eight to 10 hours," Illinois State Police District 8 spokesman Tony Halsey said. "That's just outrageous."

Prices in Galesburg jumped from $3.89 Friday night to $4.29 Saturday night.

Police patrolled central Illinois on the lookout for price spikes. There were reports of some stations charging as much as $5 to $7 a gallon, according to police, although Halsey said any station charging more than $4 a gallon would be reported to the attorney general's office for investigation.

"Everybody is panicking because of Hurricane Ike," Halsey said. "And some gas stations are taking advantage of that."

…

"State law protects consumers from the raising of prices that illegally take advantage of consumers during a natural disaster," [AG spokeswoman Robyn] Ziegler said. "The gas prices could be going up legally because of wholesale market prices, but because there has been a hurricane, we are trying to determine whether or not gouging is happening."

To all of those Naysayers: Chicago Rocks!

I am so tired of all those "tort reformers," who go on and on about businesses not wanting to locate in Chicago, because courts actually hold big business accountable for hurting consumers. (Yeah I am talking about you ATRA and you US Chamber of Commerce, among others.)

Well here is just another example of how they are wrong!

MillerCoors is locating headquarters in Chicago.

The company, a joint venture of Molson Coors Brewing Co. and SABMiller PLC, will employ 300 to 400 people and is still finalizing a location downtown.

"The decision to select Chicago as the location for our corporate headquarters was made to achieve our goal of becoming the best beer company in America by having access to an attractive base of talent, transportation and business resources," MillerCoors President Tom Long says in statements from the state and World Business Chicago, the city’s economic development arm.

Ummm, am I missing something?  Where is all of the hype about courts being unfair to Big Business.  Just as we have been saying -- it just isn't there. 

Check out CJ&D-IL's fact sheet on the Illinois Economy.