“It’s something that happens every five to seven years,” Jamie Dimon told his daughter without a breath of sarcasm, writes Bloomberg financial reporter Bob Ivry in his book “The Seven Sins of Wall Street.”
As the United States navigates its way through a post-recession financial environment, our tendency to fall back on old habits makes the term “recovery” questionable at best. While there has been a concerted public effort to address the regulatory discontinuities that brought the global economy to the brink of collapse in 2008, mega-banks continue to use the same financial instruments to gamble with the lives of ordinary citizens. The mortgage-backed securities industry may have been in the spotlight for years, but cousin industries have flourished in its shadows. Here is an example of a new value-creating machine and how it threatens the economy.
Remember how banks were encouraged to sell as many mortgages as humanly possible, no matter what the circumstances? The “junk” or “sub-prime” mortgages, where the borrowers had no chance of making their outlandish payments, were grouped together and sold to investors as bonds. We all saw how well that turned out as soon as homeowners’ mortgage rates adjusted upwards and payments stopped being made; the ripple effect caused people in all corners of the economy to lose money.
Now, in the wake of mass foreclosures, Wall Street has found a new way to make money from the basic human need for shelter. Private equity firms have zoned in on certain housing markets, like in Riverside County, CA, and purchased blocks of foreclosed homes with cash. By doing this, they were able to artificially inflate the price of the housing stock, ensuring that first-time buyers are priced out of the market.
So what will private equity firms do with all of these empty, expensive homes? Rent them out, of course! With the inflated price of housing, however, people are now paying more than 50% of their income on rent in some regions. This leaves fewer dollars for other essentials like food, transport, and health insurance, let alone thousands of other industries that consumers support. With fewer customers, businesses make fewer sales, growth stalls and our nation’s economic output suffers.
But does a weak economy mean reduced profits for Wall Street? Private Equity firms aren’t stupid. There must be something about these foreclosed homes with value-creating capability. Enter “rental-backed securities.” Private equity firms like Blackstone bundle the revenue streams from rental payments into bonds, and then sell them to investors – much like mortgaged-backed securities. Though the first rental-backed securities received a triple A rating by evaluators Moody’s, Morningstar, and Kroll, the question of what will happen if rent payments begin to come up short looms. And with people spending more than half of their paycheck to keep a roof over their heads, it’s more a matter of “when” than “if” this will happen.
While the sale of rental-backed securities is slated to reach $70 billion a year, the wealth created by this industry will be transferred largely from the labor of renters to the far away-landlords on Wall Street. GDP will likely increase, but the purchasing power of thousands of Americans, especially younger, first-time renters, will be significantly diminished.
Rental-backed securities are just one of the ways mega-banks are maintaining their control and oversight of our economy. Despite their omnipresence, there are lots of things you can do to remove your support for practices like these and encourage a shift to a more just and local economy. By moving your accounts from your current mega-bank to a community development bank or credit union, you can be confident that each fee you pay will be pumped back into local causes, and not into the funds of private equity landlords. Green America’s Break Up with your Megabank and Take Charge campaigns offer resources to help you start making the transition to an economy that works for the people and the planet today.
Yesterday the UN’s Intergovernmental Panel on Climate Change released its latest report that builds an ever more sobering case for drastically cutting greenhouse gas emissions and ascertaining how to survive on a warming planet. This latest, authoritative report, with 243 primary authors from 70 countries, discusses (yet again) the dire outcomes we can likely expect over time if we fail to cap carbon pollution.
For anyone needing an additional wake-up call, read this report.
Like me, you may well ask yourself (yet again) – What will it take to slash our climate-warming emissions? How can we allow terrible, climate-induced tragedies to destroy whole communities? What right do we have to cause further species extinction? What kind of world are we bequeathing to our children?
“Nobody on this planet is going to be untouched by the impacts of climate change,” Rajendra K. Pachauri, chairman of the Intergovernmental Panel on Climate Change, said at a news conference.
Key themes in the report include the following excerpts from the Summary for Policymakers:
- Based on many studies covering a wide range of regions and crops, negative impacts of climate change on crop yields have been more common than positive impacts.
- People who are socially, economically, culturally, politically, institutionally, or otherwise marginalized are especially vulnerable to climate change and also to some adaptation and mitigation responses.
- Impacts from recent climate-related extremes, such as heat waves, droughts, floods, cyclones, and wildfires, reveal significant vulnerability and exposure of some ecosystems and many human systems to current climate variability.
- Climate-related hazards exacerbate other stressors , often with negative outcomes for livelihoods , especially for people living in poverty.
- Adaptation and mitigation choices in the near -term will affect the risks of climate change throughout the 21st century.
- Increasing magnitudes of warming increase the likelihood of severe, pervasive, and irreversible impacts.
- A large fraction of both terrestrial and freshwater species faces increased extinction risk under projected climate change during and beyond the 21st century, especially as climate change interacts with other stressors, such as habitat modification, over -exploitation, pollution, and invasive species.
- All aspects of food security are potentially affected by climate change, including food access, utilization, and price stability.
- Climate change can indirectly increase risks of violent conflicts in the form of civil war and inter-group violence by amplifying well-documented drivers of these conflicts such as poverty and economics.
- Transformations in economic, social, technological, and political decisions and actions can enable climate-resilient pathways.
There are many actions we can take to pressure elected officials for policies that cut carbon pollution and that promote renewable energy and energy efficiency. Green America’s current action in support of regulating carbon pollution from new power plants is a start. If we take action today, and every day, there is hope.
A reality of the plugged-in world in which we live is that there is an ever-growing demand for smartphones and cellphones. According to the World Bank, an estimated 75% of the world’s population now has a cell phone. As global demand for phones increases, its important that the means of producing these phones do not cause harm for the people or communities making them.
Our campaign is focused on Apple because Apple is the Corporate Social Responsibility (CSR) leader in the consumer electronics industry. Apple has led the way in reducing its carbon footprint and shifting to renewable energy at its data centers and headquarters. Apple was also the first smartphone manufacturer to eliminate the use of tantalum from conflict regions in its products. Because Apple has taken these steps, we know that with enough consumer pressure Apple will also lead in protecting the workers in its supply chain from dangerous chemicals.
If you are an iPhone user it’s important to call Apple and encourage them to sell phones that do not endanger the workers who make them.
However, other smartphone manufacturers also need to take big steps to protect their workers from toxic chemicals. They too need to hear from their consumers.
If you use a smartphone by any of the following manufacturers, its important they hear from you. Companies read and record all consumer concerns, so the more they hear from us the sooner they will take action. You can call and leave a message with a customer service representative, or visit the company support sites below where you can “live chat” your concerns to a support representative or send an email.
Maker of the Galaxy S and Galaxy Note smartphones
Hours: Mon – Fri: 8am – 3am (EST), Sat – Sun: 10am – 11pm (EST)
Maker of the Optimus, Google Nexus, and G smartphone lines
Maker of the Lumia line of smartphones
Hours: Mon – Fri: 10:00am – 8:00 pm (EST)
Maker of the Xperia line of Smartphones
Hours: Mon-Fri 9:00am-8:00pm ET
BlackBerry (Research in Motion) makes the Z10 and Q10 smartphones
Hours: 24 hours a day, 7 days a week
Despite Apple’s supplier code of conduct and its well-polished corporate social responsibility (CSR) reports, the most recent of which was released in February 2014, labor abuses persist in the factories where Apple products are made.
In a report released today by the Economic Policy Institute, Apple’s own data, as well as independent investigations, depict working conditions that still routinely and systematically fail to meet Apple’s own standards, and can be fairly characterized as deplorable. In Assessing the Reforms Portrayed by Apple’s Supplier Responsibility Report, Scott Nova, executive director of the Worker Rights Consortium, and Isaac Shapiro, EPI research associate, provide a detailed analysis of the latest annual report by Apple summarizing its audits of, and developments in, its supply chain.
Persistent violations include working hours that are greater than legal limits and a significant number of supplier factories that are not in compliance with juvenile worker protection, occupational injury protection, and environmental health and safety standards. The new report indicates there has been little progress in these areas since 2009.
“Two years after promising fundamental changes for workers in its supply chain, what Apple has delivered is more business-as-usual than sweeping reform,” said Shapiro. “Sadly, this means labor rights abuses in Apple’s supply chain are ongoing and commonplace.”
“While Apple has made progress in some areas, the claims made by Apple in its report are often misleadingly rosy, presumably designed to distract from the serious labor rights violations that even its own data suggest remain common—and which independent reports continue to find with dismaying consistency,” said Nova. “Apple also appears to be walking away from the fundamental reforms promised as part of the Fair Labor Association process that it fully embraced two years ago. It is discouraging, if not surprising, that promises made under the pressure of intense media scrutiny were quietly jettisoned when that scrutiny abated.”
China Labor Watch also put together a film in July 2013 that details some of the ongoing labor violations in Apple’s supplier factories. Watch and learn more >>
Fair Trade Campaigns will host a Midwest and Mid-Atlantic one-day gathering for all fair trade town and university campaigners and anyone interested in joining the movement. These workshops are free and you are invited!
Green America has served on the steering committee of Fair Trade Towns for four years and we are excited to take part in the Philadelphia workshop. At these events you can meet other Fair Trade advocates in your region, explore community organizing, and learn about Fair Trade.
Midwest Event Details
Date: Saturday, April 5th
Time: 10:00 am-4:00 pm
Location: Cardinal Stritch University in Milwaukee, WI
Mid-Atlantic Event Details
Date: Saturday, April 5th
Time: 9:30 am-3:30 pm
Location: Friends Center in Philadelphia, PA
On the Agenda:
- Fair Trade 101 – Refresh with the Basics
- Event Best Practices and Brainstorming
- Social Media Training
- Plenty of time to network and meet other Fair Trade advocates!
Who is Fair Trade Campaigns?
Fair Trade Campaigns is a powerful grassroots movement mobilizing thousands of conscious consumers and Fair Trade advocates on campuses and communities across the USA. Fair Trade Campaigns is part of a global effort to normalize Fair Trade as an institutional practice and consumer preference across 24 countries and on six continents.
Fair Trade Campaigns recognizes towns, colleges, universities, schools and congregations in the US for embedding Fair Trade practices and principles into policy, as well as the social and intellectual foundations of their communities.
Fair Trade Campaigns provide tools, resources and support events to launch and grow local Fair Trade Campaigns in your town, university, school or congregation.
Check out Fair Trade Campaigns website to find a campaign near you or discover how you can start one today!
This week, Linda Tirelli, a lawyer representing a client in a foreclosure case with Wells Fargo came across a very disturbing piece of evidence: a company manual instructing the bank’s staff in how to forge documents to proceed with foreclosures. The manual instructs employees how to process [mortgage] notes without endorsements and obtaining endorsements and allonges. In essence, if employees lacked the documents needed for foreclosure, they were instructed to make them up. As Tirelli stated to the Washington Post:
“This is a blueprint for fraud,” said Tirelli, who attached a copy of the manual as evidence in the lawsuit filed in U.S. District Court in White Plains, N.Y. “The idea that this bank is instructing people how to produce these documents is appalling.”
The disclosure of the manual has been duly reported in the business sections of major media, but has not made a huge splash. It’s shocking that the media and the public are this numb to the latest revelations of fraudulent behavior by megabanks. Two years ago, several banks paid a settlement of $25 billion for their fraudulent conduct in robo-signing mortgages (although much of that money never actually benefited the people who lost their homes). Apparently, the money paid by Wells Fargo for its portion of the settlement was not enough to deter ongoing wrongdoing. The bank is so emboldened by the failure of the US government to truly crackdown on bank fraud that it was actually willing to create a manual for engaging in fraud.
How is it possible that 5 years out from the financial crash, the steps taken by the federal and state governments to address widespread fraud and abuse in the financial sector are sorely lacking? In a letter to the Justice Department sent on the same day that the Wells Fargo fraud manual was disclosed, three members of Congress – Elizabeth Warren, Elijah Cummings, and Maxine Waters – asked Eric Holder why the Justice Department was not prosecuting mortgage fraud more aggressively. The letter calls out the fact that even though $200 million was appropriated to the FBI to investigate mortgage fraud between 2009-11, the FBI ranks investigating mortgage fraud as its lowest priority. When nearly five million families have lost their homes due to the financial crash brought about by Wall Street, and when many of these homeowners lost their homes through suspect foreclosure proceedings, it is an outrage that the Justice Department is failing to take mortgage fraud more seriously.
What can we do as individuals? One important step to take is stop banking with megabanks. If you have a bank account with Wells Fargo, go to our Break Up With Your Megabank site to find community development banks and credit Unions that support people and communities instead. If you have a credit card with Wells Fargo, use our Take Charge of Your Card site to get a card with a responsible bank or credit union instead.
Since the launch of our Bad Apple: End Smartphone Sweatshops campaign last week we’ve received a huge response from consumers and media outlets all around the world!
In the first twenty-four hours, more than twelve thousand consumers signed our petition and sent a message to Apple’s CEO Tim Cook, asking him to protect workers in Chinese electronics factories by removing the most harmful chemicals from the production processes.
The campaign was also covered in more than 300 news stories on the radio, TV, the internet and in print. The world is watching to see what Apple does next, so we are now asking: Tim Cook, are you listening?
In the statement Apple shared with media last week the company pointed out how it has led the industry in the past in removing other toxic chemicals from its products. Our campaign is calling on Apple to once again lead the industry and remove harmful chemicals from not only its products, but also the manufacturing processes, to ensure workers are not endangered while making iPhones.
Even if you have already signed you can send another message and add “Are You Listening?” to the subject field of the petition.
Here are just a few articles in which the Bad Apple campaign was featured:
- The Guardian: Apple urged to stop using harmful chemicals in its factories
- Huffington Post: Factory Workers May Be Getting Sick From Chemicals Used To Make Your iPhone
- Salon: Apple urged to stop using toxic chemicals in its factories, Tim Cook’s chance to prove that he wants to make the world a better place
- The Telegraph UK: Cancer and nerve damage: is this the human cost of an iPhone?
Filmmaker Heather White also authored a great piece in the Huffington Post! Her film, Who Pays the Price?, is a powerful ten-minute expose on the lives of the young workers working in electronics factories.
Over the next few weeks we’ll be keeping the pressure on Apple. Please join us by following us on Facebook and sharing our updates and actions with your friends.
Green America’s Take Charge Program urges consumers to support smaller, local financial institutions in lieu of megabanks. Here are a few reasons why local banks and credit unions benefit smaller communities across the country.
Since the early 20th Century, The United States has relied heavily on its centralized banking system. Represented by the Federal Reserve and top-tier financial institutions, (such as Citi and Bank of America), a centralized system is one in which a single entity regulates a state’s currency, money supply, and interest rates. The Federal Reserve has many responsibilities, including regulating and supervising private banks, protecting the credit rights of consumers, and issuing the nation’s currency.
The role of large, wealthy private banks is important in understanding how the central banking system works. The Fed is not controlled by the government, but rather by a group of governing board members who are often employees of private megabanks. Private banks give the board information related to their particular economic situation, and Federal Reserve policy is based on their suggestions. In turn, Federal Reserve policy largely influences to whom, and by how much banks should lend their money.
The centralization of banking benefits wealth concentration and increases risks
Research suggests that “high-ability entrepreneurs” tend to gravitate towards a central banking system. Essentially, wealthy individuals and institutions enjoy the connectedness that a centralized system offers. Pooling together the resources of powerful entrepreneurs, however, increases the risk of losing all of that money by making poor lending decisions. Large, wealthy banks are able to spend more on screening potential borrowers so that they have the lowest chance of losing a large amount of money. Even so, due to their sheer volume of lending, a megabank’s ability to evaluate the underlying credit-worthiness of their borrowers is compromised at such a large scale. Despite their best efforts, risk is always present.
On the other hand, as a part of a decentralized system, banks face lower screening costs. Community investment banks and credit unions focus primarily on the specific regions they serve. Local banks spend less on the evaluation of potential small-scale borrowers, in part because of the modest needs of their customers and in part because they have less to lose by lending in the first place. As such, local banks can consider factors other than the bottom line, like a project’s potential benefit to or impact on the surrounding community or environment.
The difference in risk management costs leads to what researchers call a spatial bias. Think of New York City, where some of the largest banks in the nation are headquartered. Communities surrounding the central banks benefit from their proximity to the hub. After all, it’s much riskier to lend money to someone across the country than it is to lend to a neighbor. But what about the communities that are nowhere near a banking center? Credit-worthy businesses and consumers in these areas often have a hard time obtaining financing from megabanks, which prevents smaller communities from growing.
The higher risk faced by lending megabanks also steers their preference toward larger borrowers. It is less costly to screen one large entity seeking a loan than many small individual requests for risk. The problem is, large borrowers often need financing for some of the most damaging activities, like dirty energy and sub-prime mortgages (which helped trigger the economic malaise of the past 5 years). In addition to making those involved quite wealthy, these activities can have serious societal consequences – consequences that small, regional, low-impact borrowers would not likely cause.
Local Banks support what Megabanks Don’t
Areas with limited access to capital are best served by community investment banks and credit unions to finance homes and build infrastructure. These communities have relatively little to offer towards the megabanks’ record-breaking profits, and they frequently emerge as losers against investment opportunities considered to be “safe bets” by large banks.
What is particularly troubling about the influence megabanks have on our central system is that there is ample room for abuse – we have seen countless examples of megabank misconduct, and we know that the forces at play can be damaging to both the environment and communities. For example, many large banks were recently fined billions of dollars for their role in the mortgage fraud that precipitated the Great Recession and are currently being sued by the FDIC for their role in manipulating LIBOR (an international interest rate).
Given this misconduct, we, as everyday consumers of financial services like modest lines of credit and checking/savings accounts, should support community investment banks and credit unions outside of the centralized sphere. Instead of supporting coal mining or questionable mortgage-lending practices, the fees paid for your bank’s services could go directly back into your own world, supporting community development and environmental protection projects. Unless your megabank can offer you something your local financial institution cannot, the decision to Take Charge should be a no-brainer.
Yesterday in partnership with Students and Scholars Against Corporate Misbehaviour and the activism arm of the Nation, Green America and China Labor Watch launched a petition to Apple to improve worker health and safety in the factories that make Apple products.
First, we are calling for the elimination of the most dangerous chemicals used to make Apple products. Two dangerous chemicals known to be used by Apple include benzene and n-hexane, but there are more. Thousands of chemicals can be involved in making one electronic device, many of which are newly developed and not sufficiently tested. Apple does not disclose the list of chemicals used at its supplier factories. Transparency will be the first step in eliminating the most dangerous chemicals, removing them is next.
Apple pointed out it has led the industry in removing other dangerous chemicals from its products, but its statement did not include benzene or n-hexane. Nor did it indicate that Apple had removed toxic chemicals from the processes of making the parts–simply the final products themselves.
In cases where workers are still exposed to dangerous chemicals, workers must be provided with proper training and protective gear. In China, the legal minimum requirement for health and safety training is 24 hours. Apple’s new EHS training program provides no evidence that trainings will be enforced for workers at supplier factories, only that management will be trained. Additionally, China Labor Watch has issued reports revealing that at one of Apple’s main assembly factories, safety trainings were sometimes only 10 minutes long.
Secondly, we are calling on Apple to ensure that all workers who have been injured are receiving appropriate care. At present, Apple has no mechanism to track worker health and safety at its supplier factories, and therefore has no idea of the pervasiveness of occupational illnesses. Tracking will be the first step, but to be a leader, Apple should ensure that any worker who has become ill making iPhones is receiving proper diagnosis, can access appropriate care, and can afford the care he or she needs. The current process for workers to receive occupational diagnosis and access treatment is bureaucratic, time-consuming, and the care is not sufficient. Apple needs to step in to expedite this process. For workers that have already become ill, sometimes gravely, time is of the essence.
It’s true that Apple has led in its industry, which is why Apple can and should be the first tech company to take this next step for workers.
Additional reforms Apple should take to protect the workers making its products include:
- Disclose the chemicals used in products and to make products at supplier and assembly factories, and a mitigation plan for all chemicals considered to be dangerous
- Disclose incidences of worker injuries and illness
- Require all supplier and assembly factories to conduct pre-hire and post-resignation health exams, while at the same time ensuring that workers are not tested for pregnancy or discriminated against for other diseases like hepatitis B or HIV.
- Disclose all manager safety trainings (including the training content), audit results, inspection results, and steps it took to resolve problems. (Including locations of inspections.)
- Disclose inspection/audit findings to the public
Until this information is public, it’s difficult for consumers to trust what Apple says it is doing. Greater transparency is the first step towards worker safety, and it must be followed by action.
Our new campaign, Bad Apple: End Smartphone Sweatshops, is working to bring light to the issue of unjust labor conditions in electronics factories in China, particularly regarding chemical use and worker health and safety.
Roughly 75% of the world’s population now has a cell phone, and demand for newer, smarter, and cheaper gadgets is on the rise. Smartphones, like many electronics, are made in factories where workers regularly do not have adequate protective gear or training for handling toxic substances. Exposure to dangerous chemicals can lead to cancer, leukemia, nerve damage, liver and kidney failure, and reproductive health issues, depending on the chemical and level of exposure.
There are thousands of chemicals that could be used in electronics manufacturing process—some are known carcinogens and others are largely untested. Protective gear and rigorous trainings on safe handling are needed but rarely enforced, and often problems of exposure are not detected until workers are already sick. In the case of benzene, there are suitable and safer alternatives that are only slightly more expensive. Chemicals known to be harmful to human health should be banned and for chemicals with unknown toxicity, more testing is required.
Despite Apple’s Code of Conduct that prohibits the handling of dangerous chemicals without training or protective gear, extensive problems persist. Recent cases in Apple supplier factories have occurred in which workers have contracted leukemia due to benzene exposure, nerve-damage due to n-hexane exposure, and skin conditions due to handling acidic chemicals without protection.
Apple is the pioneers in the smartphone industry, and is the self-proclaimed leader on corporate social responsibility. As a massive global company, Apple has the power to improve working conditions throughout the electronics-manufacturing sector by influencing both its suppliers and its competitors. There are safer alternatives to the most dangerous chemicals available and Apple can take the lead in using them until it becomes an industry norm to use chemicals that are not endangering workers.
Apple is also highly profitable, earning $37 billion in profits in 2013 in one year. On average, Apple’s profit margins on iPhones are close to 40 percent, higher than any of Apple’s competitors. Industry experts have estimated that Apple could remove dangerous chemicals from its supply chain for less than $1 per phone.
Eliminating benzene and other chemicals known to be harmful to human health from Apple’s supply chain would help prevent more workers from losing their lives or livelihoods themselves because of occupational illnesses from making iPhones.