Those with a household net worth of $10 million-plus will spend more on jewelry, electronics, villa rentals and yacht charters. One of the hottest items on these shopping lists is "jet cards," which, at $40,000 a pop, entitle recipients to 10 hours of flight time aboard private airplanes.
But this is giving, not giving back. So, the bigger question is: Will the millionaires who run the nation's largest investment banks donate their holiday bonuses to keep some people from losing their homes to foreclosure?
That's what they are being asked to do by a coalition of community groups that want the top-five investment banks -- Goldman Sachs, Merrill Lynch, Morgan Stanley, Lehman Bros. and Bear Stearns -- to pledge this year's bonuses to a national foreclosure-prevention fund.
The activists, including the National Training and Information Center and the National Assn. for the Advancement of Colored People, blame the banks for orchestrating the sub-prime-lending debacle that has led to record-high foreclosure rates.
"The trail of money and greed leads straight to Wall Street," says NTIC board member Inez Killingsworth of Cleveland.
The five banks handed out a record $36 billion in bonuses during the 2006 holiday season, and the community groups expect more big rewards this year. But the activists want some of that money to be directed to a fund that would provide immediate relief to owners in default and in danger of foreclosure.
"Wall Street must do the right thing and forgo their lavish bonuses to help families save their homes," says Killingsworth of the NTIC, which is a network of community organizations in 10 states. "It's time to clean up this mess."
Community activists aren't the only ones who point the finger of blame directly at Wall Street. Milwaukee-based mortgage market analyst Jon Holm says, "Wall Street bandits barged in on the gravy train and robbed all the passengers blind."
For what it's worth, Holm also castigates the "greed and gambling mentality that pervades society" for helping to create the crash of 2007. He maintains that flipping houses or mortgages is the same as playing the lottery.
"This whole process of turning a home into an investment vehicle is what has to stop," the analyst says. "A home is shelter for a family. If you want income from real estate, buy a house or apartment and collect rents. Buying and selling homes as a commodity and using free money to do so has no economic value for society. It's just a bubble."
WaMu focuses on brokers, fine print
Washington Mutual, one of the country's largest lenders, is now requiring evidence that borrowers fully understand terms of their loans and know exactly how much they'll pay loan brokers for their services. Brokers help borrowers with their paperwork and to find a product, but it is lenders who actually fund the loans and, therefore, have the last word.
Under WaMu's new policy with regard to brokers, it now wants proof that, early in the application process, borrowers have been told the key terms of the loans they are requesting. That includes not just the loan amount and length of the mortgage but also whether the interest rate and payments may change and whether the loan calls for a prepayment penalty if it is paid off sometime during its first few years.
Brokers taking their clients to WaMu must disclose the total compensation they will be paid by their clients, including broker points, administrative and processing fees and back-end fees -- charges paid to the broker by the lender at closing for bringing in borrowers who are paying more than the going interest rate.
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source: latimes.com
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