By Kaia Sand, Contributing Writer
At the end of October, with little fanfare, Oregon Attorney General John Kroger joined a class action lawsuit against Bear Stearns, now owned by one of the world’s largest banking institutions, J.P. Morgan Chase.
Several weeks before Kroger joined the Bear Stearns lawsuit, he also teamed up with all other state attorney generals for a 50-state review of foreclosure improprieties.
The lawsuit and investigation are two efforts to chip away at the foreclosure behemoth that continues to rock the economic and social stability of Oregon and the nation.
Banks deemed too-big-to-fail might seem too-big-to-challenge. But attorney generals are now flexing their collective muscle.
“An individual attorney general on his or her own has little leverage,” explained Peter Letsou, Associate Dean of the Willamette School of Law. “They are much more effective as a force when they group together.”
Tony Green, Communications and Policy Director for the Oregon Department of Justice, declined comment on his subject matter because his office does not comment on pending lawsuits or investigations.
The two actions highlight how the foreclosure crisis pervades all aspects of the economy. The lawsuit focuses on recovering public funds while the investigation scrutinizes foreclosures that are forcing both homeowners and renters out of homes at record levels. The rate of foreclosure in Oregon has increased more than 500 percent since 2006, according to the Center for Responsible Lending.
Houses are an emblem of this recession, or more precisely, foreclosed houses are—shells of shelter gaping in our landscape. But the reckless speculation on housing did more than result in foreclosures, and more than plummet investments for public funds. Our entire economic foundation is changed.
Such a crisis lowers employment, said Lewis and Clark economics professor Eric Tymoigne, and the crisis lowers tax revenue and increases spending in the form of unemployment insurance and other costs of increased poverty.
A wide view of the problem includes the gutted state and local budgets. The Oregon state budget is $3.5 billion short of needed funds to preserve the current level of state services.
Meanwhile, the federal government’s anti-foreclsure Home Affordable Modification Program, passed last March, is having little impact. It was intended to prevent 3 million to 4 million foreclosures. But a report released in December by the Congressional Oversight Panel shows that it is only expected to prevent 700,000 foreclosures, less than one-fourth of those intended. The promised lower mortgage payments have yet to be granted.
Attorney General John Kroger’s efforts represent a fight back at the profiteers that are mostly unscathed: JP Morgan Chase reported a net income of $4.4 billion for the third-quarter of 2010. Continue reading →