Investment Banks Challenged to Donate Their Holiday Bonuses to Prevent Foreclosures Across America
On Wednesday November 28th 2007, the National Training and Information Center, NAACP and homeowners and community groups from around the country, will ask the biggest U.S. investment banks to take part in the effort to prevent a catastrophic wave of foreclosures across America by donating their holiday bonuses to a foreclosure prevention fund.
A report released today by the National Training and Information Center, the Northwest Bronx Community and Clergy Coalition and People United for Sustainable Housing- Buffalo reveals how the top U.S. investment banks wielded extraordinary power in the subprime mortgage market, pushed it to unsustainable levels and reaped tremendous revenues and bonuses as a result. While cities around the country are experiencing record-high foreclosure rates, investment banks are looking to reap another round of huge bonuses this year. In 2006, the top five investment banks in the U.S. gave out a record 36 billion dollars in holiday bonuses.
“The trail of money and greed leads straight to Wall Street. The big investment firms plan to cash in on big holiday bonuses while our neighborhoods are destroyed by foreclosures. Wall Street must do the right thing and forego their lavish bonuses to help families stay in their homes. It’s time they clean up their mess.” states Inez Killingsworth, NTIC board member and Cleveland resident.
As part of the Save the American Dream campaign, groups from around the country are demanding that the major investment banks pledge this year’s bonuses to a national foreclosure prevention fund that will provide immediate relief to homeowners in danger of foreclosure. Details of the foreclosure prevention fund will be finalized by homeowners, grassroots community groups, national community advocates, and participating investment banks at a stakeholder summit convened by the National Training and Information Center.
“A little money can mean the difference in preventing a foreclosure. In addition to this fund helping families stay in their homes, preventing foreclosures will ultimately help the bottom line of these investment banks by continuing the cash flow to their investors” states Ms. Killingsworth. An example of such a rescue fund can be found in Cuyahoga County where as little as $2500 can assist a family in restructuring their loan to meet long term affordability.
Michelle Haygood, a homeowner in Cuyahoga County working with an affiliate of NTIC, was facing foreclosure and in reaching out to her lender was offered a loan modification that required a $2500 down payment. These down payments are usually required by servicers and investors in an effort to show a financial commitment to the proposed workout. Due to her hardship, Ms. Haygood did not have the lump sum of $2500, but she could sustain the new mortgage payments. Cuyahoga County’s rescue funds were able to assist Ms. Haygood by providing her with the $2500 required by her servicer and she now has a fixed rate loan that she can afford.
The Save the American Dream campaign is sending letters this week to the top five U.S. investment banks: Goldman Sachs, Merrill Lynch, Morgan Stanley, Lehman Brothers and Bear Stearns. The Coalition is offering the giant investment banks the opportunity to make a real difference this holiday season by using their bonuses to help keep families in their homes.
The Save the American Dream campaign (www.savetheamericandream.org) is an aggressive foreclosure prevention campaign of the National Training and Information Center to curb the wide-spread effects of foreclosure on individuals, neighborhoods and the economy. NTIC is a 35 year-old network of community organizations that is dedicated to community organizing as a means of creating a more just and equitable society. NTIC is made up of 22 affiliate organizations in 10 states and works with 50 additional allied organizations from across the country. -
The report “Wall Street and the Making of the Subprime Disaster” was made possible by the generous support of the North Star Fund.
