Small Business = Durable Economy

The last two "jobless" recoveries... it took 11 months for job growth to turn positive in the wake of...

the 1990/91 recession and an interminable 19 months for payrolls to become positive on net after the 2001 recession.

Small business expansion is being hampered by constrained access to financing. Grants, loans and bailouts are going almost exclusively to the big guys.

The financial houses being bailed out are hoarding the money, rather than lending and spurring growth.

Firms of less than 500 employees account for some 50.2% of total payroll employment.

Pressure on small businesses needs to ease for a more durable economic recovery.

We keep banging this drum... no durable economic recovery until 6 million outsourced jobs are repatriated.

It took 25 years of financial deregulation, globalization and outsourcing to labor at the margin to decimate and emasculate our durable economic base.

This emasculation was bipartisan, and led by an army of lobbyists that our whores on the hill still pander to, witness the latest round of banking bailouts.

We no longer manufacture anything, so we have a non durable service based economy which is comprised of tourism, hospitality, food service and 1/6 health care.

Thats right, 1/6 of our economy is based on health care of which 35% goes to middlemen or health care management firms.

In other words, the sicker the population, and less health care insurance regulation, the greater the profit.

Our non durable economy is dependent on the generosity of foreigners willing to lend us money for our profligate spending habits.

Now is the time for small business and government to swell their employment ranks with durable infrastructure build out projects.

Keep the money local for small business (utilize small local companies) and employees (hire local people at prevailing wage).

In order to save taxpayer money, State, County and City governments need to abandon "at risk" managers and take projects on internally.

Hire managers proven competent in infrastructure buildouts and value engineering. Then staff up with local people and do the work in house.

This will keep local people employed at a decent wage for some time to come.

This is not the time to outsource to outsiders, large companies or foreigners.

Worse yet privatizing vital resources or assets to "for profit" entities would be the Coup de Grace.

Doing so would further cripple the remnants of our durable economic base and make any recovery improbable.

MWH? Bid Rigging? City BK? WTF?

Looks like MWH is at it in Los Osos, CA as well, interesting reading, an excerpt follows...

In 1999, MWH won the engineering contract when the Los Osos sewer was still in the hands of the Los Osos Community Services District and not the county.

By 2006, the district terminated its contract with MWH because of alleged contract violations, over-billing, and conflicts of interest.

Around the same time MWH sued the district for about $1.1 million in unpaid services after the CSD reversed course and canceled the project.

That lawsuit is still pending while the district is in bankruptcy. According to Los Osos residents, MWH helped put the district in bankruptcy.

It wasn’t the first time MWH had problems. In the city of Cape Coral, FL, the contractor was hired to expand the coastal community’s water and sewer system.

The cost of that project quickly rose to just under $1 billion, according to the News-Press.

A 2006 audit found a number of “red flags” in the MWH contract with Cape Coral, including inflating the project cost and bid rigging.

The audit findings were forwarded to the Federal Bureau of Investigation and the United States Department of Justice.

A representative from the DOJ declined to comment on any investigation and the FBI did not return a call before press time.

A livid group of Los Osos residents have recently shifted their focus away from the design of the new sewer system and more toward Public Works Director Paavo Ogren.

They have accused Ogren of having connections to MWH. Ogren was the Los Osos CSD’s interim general manager shortly before MWH was hired in 1999.

Ogren: “I was the contract interim general manager prior to Bruce Buel, but the proposal process for project management services was independent from the work I was doing. … I didn’t have involvement in the hiring of Montgomery Watson back then.”

There is, however, also an MWH connection to the evaluation committee.

The current project engineer, Carollo Engineers, used MWH as a subcontracted consultant for the project in 2006.

The Nattering One muses... this wreaks of the same stench that plagued the Cape in the aborted Kessler Audit.

Sources indicate that FBI & DOJ have both investigated bid rigging allegations. Neither agency will confirm nor deny, whether the investigations are ongoing.

With the city in dire economic straights, could a lawsuit from MWH put the Cape into BK territory?

One can only wonder what other connections exist between MWH and high ranking Cape officials? More to come.

Show Me The Note

The Nattering One muses... the relevance of this topic to the Cape and Lee County, which is ground zero for foreclosures is not lost...

50 to 60 Million loans held by MERS could be effected by multiple court rulings in favor of homeowners.

For all those who have or might be losing their home to a foreclosure. As we learned long ago in the REO and reconveyance departments...

the Deed and Note must stay together. Otherwise, these is nothing to foreclose on.

Op-Ed: 60 Million Mortgages May Have Fatal Flaws
Commentary by George W. Mantor

RISMEDIA, September 29, 2009—The latest chapter in the mortgage meltdown is being written in court, as one by one, judges are putting a halt to foreclosures.

The latest was a recent Kansas Supreme Court case. In Landmark National Bank v. Kesler, the court held that a nominee company called MERS had no standing to bring a foreclosure action.

Nor was Kansas the first. In August 2008, Federal Judge for the U.S. Bankruptcy Court for the District of Nevada ruled MERS had no standing.

”Indeed, the evidence is to the contrary, the Note has been sold, and the named nominee no longer has any interest in the Note.”

In September of 2008, A California Judge ruling against MERS concluded, “There is no evidence before the court as to who is the present owner of the Note. The holder of the Note must join in the motion.”

On March 19, 2009, the Supreme Court of Arkansas determined that MERS was not the true beneficiary because the Note had been sold. Alabama and Florida have made similar rulings.

In each case, the reason stems from a fundamental misstep in the handling of Notes and Trust Deeds that runs contrary to established court policies which require that the real parties identify themselves to the court.

Each of these cases involved MERS and, in each case, the courts’ rationales were almost identical.

First, a little background. Over the last 40 years, mortgage lending has evolved from a bank holding the mortgage to the mortgage being bundled and sold as part of an investment pool, usually in the form of a bond.

As a registered security, the Note is a negotiable instrument, like money or a cashier’s check, and under securities law that Note must be given to the investor.

In this case, mortgage backed securities, (MBS) were bundled together in a pool and shipped to…well, we don’t really know.

One of the impediments to an MBS is the need to file assignments for the beneficiaries in each county each time the mortgage is resold. And apparently, no one holds them for very long because most have been passed around several times.

In order to avoid the logistical nightmare of trying to maintain a public chain of title, the biggest lenders joined MERS, Mortgage Electronic Registration Systems, Inc.

MERS was created with the sole intent of evading the recording fees due to the county in which the security is located.

In so doing, in my opinion, they also destroyed the age-old practice of making a public record of information concerning real property in general, and legal interest specifically.

The chain of title is a vital record produced to resolve many a dispute. Now, that’s gone.

I believe, erased simply so they themselves, MERS, could siphon off the recording fees for themselves. They sold their business model to lenders as a better way to track mortgages that were being sold and resold all over the world.

But, as there often is with a BIG IDEA, there were also unintended consequences. Only now are they coming to light. Until MERS was challenged in a foreclosure proceeding, no one had taken a look at the law.

The law, according to a Nevada Judge, is that for purposes of foreclosure, both the Note and the Deed of Trust must be assigned. When the Note is split from the Deed of Trust, the Note becomes unsecured.

A person holding only a Note lacks the power to foreclose because it lacks the security. MERS lost track of the Notes. In some cases, according to my research, they deliberately destroyed them.

Every thing was fine until the economy contracted. MERS began foreclosing on delinquent home loans and then one day; someone said “show me the Note.”

In reviewing the judge’s rulings in the above matters, several key points have been determined:

• MERS is not the beneficiary of the Notes and has no skin in the game. It did not lend any money, collect any payments or do anything more than track the sale of the securities.

• Judicial procedure requires that parties identify themselves and prove their standing.

• Splitting the Note and Trust Deed leaves no party with standing to foreclose. The true holder of the Note, the security, paid the lender so the lender is covered. The true holder of the Note was insured by AIG so they are covered. AIG and the banks were bailed out by taxpayers.

So, unless the American tax payer can produce a “blue-ink” original Note, no one has standing to foreclose.

• Allowing a foreclosure to proceed without the original Note places the homeowner in double jeopardy. If the original Note were to surface, the holder of the Note would be entitled to payment, but from whom? The borrower is still on the hook.

MERS currently holds 50 to 60 million loans so this is no small matter. And, just because they have lost repeatedly doesn’t mean they will give up. They will keep right on foreclosing in hopes that the homeowner won’t fight back and, in most cases, they won’t be stopped.