Corporate Corruption of the Political Process

I think it is important to understand a couple of things when addressing the problem of corporate control of the political process:

1. It takes some thought to understand the totality of corporate control over our elective process, made worse by the Supreme Court's "rearranging" of the First Amendment to confer unlimited "free speech," i.e. legalized purchase of elections, on corporations. [See also: www.homeownersoftexas.org/Supreme-Court-rejects-limits-on-corporate-spending-on-political-campaigns.html.]

2. Any notion that honest associations, such as the ACLU, can out-raise and outspend the combined force of corporations, acting through its many front groups, like the U.S. Chamber of Commerce ( $ 144 M last year), is not based on reality. Corporations outspent labor and all its allied associations by a factor of 10-1, according to the last figures I saw.

3. It is hard for small businesses to understand that they are pawns, as are individuals. The frustration of small business people is not caused by "the Government" or "Obama" or "Liberals" – it is caused by the greed and animalistic competition from big business entities. Illustration: How many independently owned gas stations still exist in this country?  Very few, if any. How can a small paint contractor compete with the large homebuilders, using immigrant labor at bargain basement prices? They can't.

4. So where is the logjam in our current "system of government"? By controlling most elections and most re-elections thru vast amount of money, big business blocks most efforts to impose reasonable protections for the citizens. Example: We currently have a $75 M cap on suits against oil companies, imposed as "Tort Reform". The current Attorney General of Texas, Greg Abbott, received over $2M in contribution from the oil industry in the last four years. How much effort will he give us if Texas gets hit by the BP oil disaster?  Houston homebuilder Bob Perry, the largest political contributor in Texas, has given over $21M in the last few years to the Governor, Attorney General, all but 6 Legislators, and all nine Texas Supreme Court justices, successfully preventing the licensing of builders and regulation of homebuilding in Texas.

5. Based upon this scenario, it has become clear that the only way to break the logjam is by Constitutional Amendment. This will be hard because Congress controls the amendment process. To prevail, the public must be educated and aroused; influential groups and leaders must sign off on this effort; as I see it, only a unified movement can effect this change of attitude; this takes time and effort but, it can be done.

The right to equal protection and the right to vote for citizens of color came by amendment to the Constitution, after a Civil War fought over that issue, in 1870; women's right to vote came by amendment only in 1920; the poll tax was repealed by amendment in 1964 and the right of young people to vote at age 18 came only recently, in 1971. As they did before, as to each great issue, the naysayers will say that our proposal to reboot Democracy cannot be done. I for one don't know how long it will take but I say that it can. The alternative is unthinkable.

Guest article by Lou McCreary, attorney, Law Office of Lou McCreary, Austin, TX

 

Keith Obermann on Tort Reform’s influence on corporate behavior, including BP.

The 6/7/10 edition of Countdown with Keith Olbermann (http://www.msnbc.msn.com/id/3036677/#37581966) focused on the effect of Tort Reform on corporate behavior, specifically BP. Keith cited secret company documents that said BP has for years rewarded “dangerous cost cutting” in a regulatory environment that posed little danger to Big Oil because of limits to their legal liability. In addition to greed and relaxed oversight, we can add Tort Reform to the list of how we got here [in an economic recession].

Senator Durban challenged a BP employee who said that without limits to liability they couldn’t afford to drill for oil. “I happen to believe that if you’re engaged in drilling, which carries and can carry this level of damage; it carries with it a responsibility that you accept liability for the damage. If you cannot accept that liability, stage the Hell out of the business." Keith also cited a PBS and Propublica report that said liability caps promoted shortcuts at BP, including neglecting equipment, faking inspections, and punishing those who raised concerns. Cutting corners, the report said, is what got you promoted.

Next on the program was Christopher Jones, a lawyer and brother of one of the men killed by the BP accident. After showing and describing photos of his brother and orphaned nephews, he slammed the BP CEO for saying he was trying hard and “wanted his life back.” Jones tearfully said he wanted his brother’s life back.

BP said today that it would create a Wildlife Fund from the revenues it receives from the oil it has recovered so far. That’s the moral equivalent of pledging that the after-tax profits from a string of armed robberies would be used to compensate the victims of those robberies.

MSNBC political analyst Richard Wolffe spoke about the need for President Obama to make some sort of address to the nation but not in a typically pristine White House fashion. He said Republicans blame a regulatory failure that allowed BP to drill in the first place, but at the same time they want less regulation. [How can you have it both ways?] Less regulation is an ideology that Republicans have promoted for two decades as a way to free up business freedom and risk taking. He acknowledged that there’s a direct connection with that deregulation philosophy and ideology and BP’s behaviors.

TDI Sunset Review Hearings

It was clear that most of the legislators on the Texas Sunset Commission viewed TDI’s primary function as “protecting the solvency of insurance companies” rather than controlling insurance rates.

The following information was provided by Insurance Commissioner Mike Geeslin at Texas Sunset Advisory Commission hearings last week: 

Insurance is a huge $100 Billion industry in Texas, with a market size that puts our state among the top 10 or 11 National markets worldwide. The Texas Department of Insurance (TDI) has 1,493 employees and an annual budget of $104 Million.

Contrast that $104M budget to the meager $1 million budget of the Office of Public Insurance Counsel (OPIC), which represents consumer interests instead of the insurance company interests. OPIC is funded by assessments on insurance policies totaling $3.2 Million annually, of which $2.2 Million is returned to the General Revenue Fund of the State of Texas. 

The Austin American Statesman recently ran an article about TDI and the insurance issues in the upcoming elections that stated that there are currently 121 registered lobbyists representing the insurance industry. That’s almost 1 insurance lobbyist for every legislator since there are 181 legislators.

Commissioner Geeslin testified about how tough the last two years have been for the insurance industry in Texas for homeowners insurance. He said the industry loss ratio was 171% in 2008 and 102% in 2009, including all overhead and expenses. He failed to say that the industry had just come off of 5 years in a row of record and excessive profits.

The Dallas Morning News (4/13/10, Page 3A) reported the loss ratios for years 2003 through 2007 without expenses added in. Since the typical cost of overhead and expenses is about  30% to the “claims paid” loss ratio, you can add 30% to each of these numbers, subtract that figure from 100%, and determine profit levels, which don’t include investment income: 

YEAR              LOSS RATIO             PROFIT

2007                39%                             31%

2006                38%                             32%

2005                59%                             11%

2004                25%                             45%

2003                57%                             13%

Texas Builders & Realtors tout $500 million mortgage loan program

Does this make sense while other agencies are tightening budgets to address a $18 Billion deficit and teacher, fire and police jobs are cut?

Half a Billion dollars!!! – “It’s the single-largest financing initiative for state homebuyer funds in the 27-year history of the program and serves as the state’s response to the recent expiration of the federal homebuyer tax credit,” said Gordon Anderson, a spokesman for the Texas Department of Housing and Community Affairs (TDHCA).

TDHCA announced that the State will make available the first $50 million under an “unprecedented $500 million in new mortgage revenue bond authority” (Bond 77). The timing and sheer magnitude of this program is suspicious, and we wonder who the real beneficiaries are. Is it the low to medium income Texan home buyer seeking the American Dream, or is the program more for the builders, realtors and mortgage lenders?

See Why the Housing Stimulus and FHA, Fannie Mae and Freddie Mac loan guarantees put Taxpayers (and the economy) at Risk for our point of view. Some builders have advertised their own equivalent of the federal homebuyer tax credit. Think of it as a sales price or rebate offer.

Promoted as helping families overcome the biggest obstacle to buying a home, the Bond 77 funds will be used for low-interest loans and down payment and closing cost assistance. That means borrowers will have less skin in the game and are at greater risk of foreclosure if they have financial problems and must sell, but inflated property values have fallen. It also is promoting the American Dream to more.

Another program that puts buyers at greater risk is, in our opinion, the USDA Home Loan Program. It offers zero-down loans to low and very-low income families needing affordable housing, but we worry that the program actually suckers people into buying homes built on rich farmland. This is some of the most expansive clay soil in the country – soil that’s great for farming but terrible for home building. It shrinks when dry and expands up to 30% when wet, which is why it tends to crack foundations and cause all sorts of structural problems in homes unless builders spend thousands of dollars extra to properly engineer the foundations. Too often they don’t, especially with the starter homes that the USDA Home Loan Program targets.

The American Dream of homeownership is a goal that sounds nice, but didn’t this cause the housing bubble and global collapse in the first place? See Texas Homebuilding and the Global Financial Collapse.

So who really benefits from artificial market stimulus? Is it really the buyers, or are they presented with a false “perception” of value created by tax credits, rebates and fire sales? The housing industry can use these tricks to inflate appraisals of neighboring homes. Appraisers must compare actual sale prices instead of list prices, but they don’t factor in promotional offers such as lower interest rates or down payment and closing cost assistance.

And finally, how can Governor Rick Perry justify this TDHCA stimulus at this time? It seems like a massive gift to his builder friends in the Texas Association of Home Builders?

Relying on mess-makers to fix mess

Of top hats, top kills and bottom feeders [HOT shows similarities with Texas homebuilding.]

By Maureen Dowd, New York Times, 05/26/2010
http://www.dallasnews.com/sharedcontent/dws/dn/opinion/viewpoints/stories/DN-dowd_27edi.State.Edition1.6f4e14e.html

It's unnerving, disorienting. A particularly noxious blend of helplessness, fear and fury that washes over you when you realize the country has again been dragged into a costly and scary maelstrom revolving around acronyms you've never heard of.

Our economy went in the ditch while traders got rich peddling CDOs and CDSs. Even many bankers – much less average Americans who lost their shirts – were gobsmacked by the acronyms and scrambled to figure out how collateralized debt obligations and credit default swaps worked.

And now a gazillion gallons of oil have poisoned the Gulf of Mexico, thanks in part to unethical employees at a once-obscure agency known as MMS – the Interior Department's Minerals Management Service. MMS is charged with collecting royalties from Big Oil even as it regulates it – an absurd conflict right there. So MMS has had the same sort of conflicts of interest as ratings agencies like Moody's and Standard & Poor's had with Wall Street. [and the TRCC with Texas homebuilders]

Consorting with the industry intensified once two oilmen took over the White House. Dick Cheney, Duke of Halliburton – responsible for the cementing of the calamitous well, now under investigation – had his aides conspire with BP America and other oil companies to draw up an energy policy.

As when derivatives experts had to help unravel the derivatives debacle, now the White House is dependent on BP to find a solution to the horror it created. The financial crisis and the oil spill are both man-made disasters brought on by hubris and avarice. [The housing bubble was also a man-made brought on by an unregulated homebuilding industry with vertically integrated builders who owned their own mortgage companies and taught banks and mortgage companies the art of predatory lending.]

With poignant scenes of oil-soaked birds and out-of-work fishermen on TV, the White House is still scrambling to get on top of this latest catastrophe. The laconic president is once more giving too much deference and trust to rapacious corporate scoundrels and failing to swiftly grasp and articulate the alarm of Americans.

One West Wing official admits that, even with all the crises they were juggling, they should have acted more urgently to re-examine the dark legacy of Cheney in the Energy and Interior departments.

Monitoring the plume of doom – a symbol of national impotence – we're learning another whole new vocabulary, from "top hat" to "top kill." We are trapped in a science-fiction nightmare we can't wake up from, possibly because of a dead battery in the control pod connected to a dead man's switch for the blowout preventer, whatever that means.

We're glued to a House energy subcommittee's "spillcam" website and Google Earth pictures of the spreading slick, nauseated by the news that once more, government officials charged with protecting us were instead enabling greedy corporations.

In a report released Tuesday, Mary Kendall, acting inspector general of the Department of the Interior, described an agency that followed Cheney's lead in letting the oil industry write the rules. [That's just like Texas letting the homebuilders write legislation setting up the TRCC. In both examples, Foxes designed the henhouse. See http://www.homeownersoftexas.org/TRCC-Eulogy.html for a looping set of cartoon images about this issue.]

Larry Williamson, the MMS Lake Charles, La., district manager, told investigators: "Obviously, we're all oil industry. We're all from the same part of the country. Almost all of our inspectors have worked for oil companies out on these same platforms. They grew up in the same towns. Some of these people, they've been friends with all their life," hunting, fishing and skeet-shooting together. [This is like the "revolving door" between legislators, regulators, and industry lobbyists. It's a corrupting influence that's especially strong in Texas under Governor Rick Perry.]

The tragedy is that MMS eerily presaged the disaster in the draft of a May 2000 environmental analysis of deep-water drilling in the gulf. The agency noted that "the oil industry's experience base in deepwater well control is limited" and that given the prodigious production rates, "a deepwater blowout of this magnitude in the U.S. Gulf of Mexico could easily turn out to be a potential showstopper" for the Outer Continental Shelf program.

But MMS got rid of those caveats in the final report, just as they deemed a remote-controlled shut-off switch an unnecessary expense for drilling companies several years ago.

As we watch a self-inflicted contamination that has no end in sight, consider this chilling arithmetic: One oil industry reporter reckoned that the 5,000 barrels a day (a conservative estimate) spewing 5,000 feet down in the gulf counts for only two minutes of oil consumption in the state of Texas. 

County Rule Making? – Nope, thanks to the Builder’s Lobby

You bought land out in the country outside of the city limits and built your dream home there, calling it Green Acres. Or you bought into a subdivision just minutes away from the city where land prices made homes more affordable. Then, after spending the money and settling in, you find out that the land next to you was sold and will now become a trash dump, hog farm, chicken ranch, gravel dump, or concrete plant. What can you do? 

Not much; you’re unfortunately out of luck. You can complain to the city planning office, but it’s out of their jurisdiction, so there’s nothing they can do. And the county has no ordinance-making authority to enforce building codes or adopt zoning regulations. 

Nearly 25% of Texans live in unincorporated areas that lack any real power to prevent undesirable businesses from being located near homes and neighborhoods. 

So why don’t Texas counties have ordinance-making authority? It’s quite simple. Over the years, in consecutive legislative sessions, the Texas Association of Builders and their allies, such as Bob Perry, have blocked proposals to grant counties such authority. Homebuilders like having little regulation when building in Texas and even less in the counties. They want to keep it that way.

Homeowners are the real losers when counties have no authority to determine what’s built within their jurisdictions. Just as homebuilders can develop entire subdivisions with no oversight or environmental controls in unincorporated areas, gravel and concrete plants can be built adjacent to existing neighborhoods, creating imminent threats to health and safety. 

There's an ongoing controversy in eastern Travis County where Texas Industries wants to build a concrete plant directly across the street from a relatively new subdivision. The homeowners are distraught because their property values will plummet if the concrete plant is built, and in addition to the pollution and noise from the plant, they must contend with over 40 concrete trucks a day driving past their neighborhood. The Travis County Commissioners don’t want the plant to be built, but the last we heard, they felt they were powerless to stop it. 

As we recall, similar problems exist in Williamson County, where the location of a landfill caused residents a lot of grief. Counties with rapid growth, such as Williamson County, will likely suffer the most serious consequences from the lack of ordinance making authority thanks to the Texas homebuilders lobby.

Hats off to Texas housing market?

The Real Estate Center at Texas A&M University is promoting a new study that says Texas homeowners and renters enjoy significantly lower housing costs than the national average. But if the study examined the NEW home market, it would find that Texas has become the nation’s magnet for bad builders. Even good builders are forced to adopt bad practices to compete with unscrupulous ones who cut corners and hide behind laws put in place to protect them from lawsuits and accountability. That’s because Texas has cheap land and labor, does not license or regulate builders, and provides no statewide enforcement of building codes. Anyone can be a builder in Texas with no proof of competency and financial responsibility.

Powerful builder lobbyists have created a business and legal environment where most Texas homeowners simply can’t recover legitimate damages. That’s why we recommend buying USED homes built before 2003 rather than new ones and are working to change the laws.

Homeowners of Texas is a nonprofit consumer advocacy working on legislative reforms that protect homeowners and provide a level playing field for dealing with contractors, insurance companies, lenders and service providers. The current lack of rules and enforcement led to market failures in a Free Market society where sociopathic corporate “bullies” (builders, banks, etc.) can’t lose but everyone else does. (http://www.homeownersoftexas.org/Licensing.html)

Obama picks Solicitor General Elena Kagan for Supreme Court

HOT endorses President Obama’s nomination and sees many traits that will make Elena Kagen an excellent Supreme Court Justice for homeowners and ordinary citizens, since she knows that Equal Justice should apply to All Americans regardless of background or social stature. Obama said that “rather than accept a comfortable life as an attorney in a corporate law office, Elena chose a life of service to the law and all those whose life it shapes.” He described lessons she learned from her parents who stressed service, charter and integrity. How refreshing! We can only think of the recent Supreme Court decision about unlimited corporate campaign contributions and wonder if the outcome would have been different with Kagen there.

From the MSNBC News story and video below, Obama described Kagen as “one of the nation’s foremost legal minds” and cited her “openness to a broad array of viewpoints” and her “fair mindedness.” She has a reputation for bringing together people of competing views and earning their respect.

Visit msnbc.com for breaking news, world news, and news about the economy

HOT Concerns with Centex plans for Hills of Rivermist retaining wall repairs

According to your 4/27 press release, Centex says that it has installed new inclinometers and that its engineering plans have undergone peer review, but we are concerned that people hired by Centex are beholden to them and expected to support them. We must question the neutrality of such a “peer” review since, to our knowledge, no one has yet addressed several of the issues we have raised, including:

·         Dr. Dave Petley’s 2/04/2010 analysis includes photos showing Toe Heave and Lateral Scarp that have yet to be explained by Centex or the City of San Antonio. Petley is a landslide expert and geography professor at Durham University in England. The “water balloon” theory mentioned below seems to explain Petley’s analysis.

·         A Western North Carolina Landslides blog complains about the “Fraudulent Concealment of Hazardous-Soil Conditions” in Texas and elsewhere outside of North Carolina, and how local governments are often complicit in that.

·         State representative David Leibowitz has continued to voice public concerns "with the construction practices at Rivermist going back to 2007." Even before the first collapse of the Rivermist retaining wall, Leibowitz asked the city about the quality of the fill material.

·         In Little Rivermists are everywhere in San Antonio, TREC inspector Mark Eberwine questioned the Centex wall design, saying, “If you stack tons and tons of unconsolidated earth on top of undisturbed soils, behind a 'retaining wall' and you fill the earth with millions of gallons of water (it's call rain), this water held by the dam is a 'lake'. What licensed engineer or homebuilder doesn't understand this?”

·         My own analysis of USDA Web Soil Survey data shows that the Hills of Rivermist subdivision was built on expansive soil that is known to be unsuitable for building (“very limited” in their words). That was “before” the retaining wall was built and tons of fill dirt added. Was the dirt that was added as fill on top of expansive soil also mostly expansive clay soil?

·         In The Hills of Rivermist Water Balloon Fight, I explained the characteristics of expansive clay soil and suggested that such soil could render the new Centex wall ineffective. Using the same “water balloon” theory, I am concerned that the newly installed inclinometers may give the City and Rivermist residents a false sense of security since very wet clay soil could easily “ooze” out around the pilings and underneath the wall itself.

·         In Texas Builder at center of San Antonio Crime Scene, I raised unanswered questions about why Centex was allowed to remove physical evidence (i.e. tons of fill dirt) from a potential crime scene, why City police and a private security firm prevented independent inspectors from accessing the site until after the fill dirt was hauled away, and why the Texas Attorney General never got involved in this case. We may now never know the answers or how expansive or contaminated that soil was.

Gov Rick Perry Official Theme Song: Macho Macho Man!

This video reminded me of Texas politics, where the pigs are the cronies and represent government corruption, or at least the appearance of it. It was too funny not to post.