As some of you may know, I testified before the joint hearings of the NYS Senate Committee on Investigations and Government Oversight and the NYS Senate Committee on Corporations, Authorities and Commissions on February 27^th. Some clips from that hearing will appear below. After the hearing I had a 3+ hour drive back from Albany which gave me time to reflect on what I had seen and heard. Some things jumped out at me:

1)      The Moreland Commission evidently already knows that the private entity that buys the LIPA electric Transmission & Delivery (T&D) system stands to make $100s of millions a year in profits.

2)      The primary basis for claiming that privatization could be economically feasible, even though not a single study has ever concluded that—not even the Lazard Study cherry picked it because it  did not specifically conclude privatization is a non starter like all the others did– is that it creates “new synergies between the new private owner and its existing nearby facilities.

3)      However, there are no “new synergies.”  National Grid already has a presence in the North East and has a related gas business on Long Island itself, whatever synergies which might be possible are already being enjoyed. There are no “new synergies”. I pointed this out to the NYS Legislators.

4)      Further, a letter submitted by the NYS Comptroller’s Office cast doubt on the existence of new synergies saying it was “difficult to quantify” the savings from synergies that the Moreland Commission was projecting. See, Newsday 3/7/13, “New doubts on privatizing LIPA”, by Mark Harrington [online title varies from print edition]. That same letter “notes the benefits of public ownership in getting federal reimbursement for storm costs” and notes that a private entity will have much higher financing costs. Id.

5)      A study commissioned by LIPA and conducted by the Navigant Group in 2010 assessed the value of LIPA’s T&D system at $5.4 billion. LIPA has debt of approximately $7 Billion, so a sale for $5.4 would leave taxpayers or ratepayers on the hook for approximately $1.6 Billion. See, Newsday 2/27/13, “LIPA study: Rates up if privatized”, by Mark Harrington.

6)      However, the Moreland Commission assumed a value of only $3.5 Billion, leaving $3.5 Billion in orphan debt. Id. Further, it seems that the studies currently being conducted by Lazard and NYPA, which I discussed yesterday , is using a valuation of only $3.5Billion.

7)      Perhaps the discount in value is the result of National Grid’s performance reports consistently putting its customer service performance at the bottom of national rankings? Supra, “New doubts on privatizing LIPA”, link at para. 4 above. Everyone you can name, including the Moreland Commission, the Governor, and both houses of the NYS legislature and local government of every stripe have denounced the poor management of National Grid over the T&D system.

Read the rest of this entry →

Currently there are three investigations going on into the future of Long Island Power Authority (LIPA). The first is the Moreland Commission investigation, which caused quite a bit of controversy when it recommended selling all of LIPA’s assets, the electrical transmission, and in how public bond debt would be paid for, or how a privately held utility could afford cost of capital if it had to borrow at 10.7% instead of the 5% that LIPA’s bonds currently enjoyed.  Crain.s New York Business and Bloomberg Newsweek predicted that this would lead to a 20% hike in costs to customers.

The Moreland Commission has held few public meetings, but also claims to have conducted depositions and to have subpoenaed many documents. None of this other investigative work is posted on their website, or at least I couldn’t find it.

The interim Moreland Commission Report compared the current, moot, contract between LIPA and National Grid to privatization.  This is a false comparison. The National Grid contract expires at the end of this year. LIPA engaged in a multiyear, multi-consultant, series of management reviews and crafted a new contract which will begin January 1, 2014. This contract is a dramatic departure from the expiring contract and works on a new collaborative model that will allow for a transition to a fully municipalized LIPA, as the LIPA in-house team gains experience and expertise in directly running the T&D (transmission and delivery) system. The new business model is called ServCo, and its financial incentives align the new operator with the ratepayer’s interests.

LIPA then put that ServCo contract out for competitive bid via an RFP (request for protocol) process.  Ninety electric companies bid. The winner was PSEG, which is currently ranked second in the Eastern United Sates for customer satisfaction from J. D. Powers & Assoc.  PSEG is also in the second year of a two year transition contract that terminates January 1, 2014, when PSEG is slated to take over operation of the system.

You would think that if Moreland were investigating the future of LIPA, they would be comparing the soon-to-begin new contract against all other possible alternatives, wouldn’t you? Yet when asked about the specifics of the new contract in a recent New York State Senate hearing, the Executive Director of the Mooreland Commission could not answer the question and deferred to a representative of the New York State Power Authority (NYPA).

This brings me to the other two non-transparent investigations.

Over the years, LIPA has hired a number of consulting firms to come in and diagnose what was going wrong with its management of the various private companies that were operating the T&D system for LIPA and to suggest alternative business models that might be an improvement. All but one of those consultants rejected privatization out of hand as too costly to the consumer. One consultant, Lazard, did not reject any model, they merely stated that they did not have enough information to make a recommendation.  See, Lazard Report, Section 5 “Recommendations” page 71, et seq (page 87 et seq in the pdf).

So, as you may have guessed, New York has now given Lazard a contract to find out if any private entity wants to buy LIPA’s T&D system and to evaluate the cost and benefits of that. This process has been entirely out of public view. I have no clue what they are looking at, or what they might be willfully ignoring.

This brings us to the third non-transparent investigation. According to the testimony of its CEO, NYPA is also doing a crosscheck investigation of the Lazard investigation.

Read the rest of this entry →

LIPA Storm Costs Budgets, the chart on page 3. (click to embiggen)

In his State of  the State speech, Governor Andrew Cuomo advocated taking Long Island Power Authority (LIPA) private. This is fascinating since LIPA was created to bailout private LILCO. LIPA owns most of LILCO’s former assets and has issued debt in the form of government bonds to the tune of over $6 billion. You can read more about it in Part I of this series.

Over the years LIPA has spent a fair amount of money ordering up management reports from a variety of consulting firms. In 2005, there was a Strategic Review performed by FTI Consulting in conjunction with Bear Stearns and three white shoe law firms. The consultants looked at three operational options: 1) continuing as a public private hybrid, 2) full municipalization, a public run utility, and 3) privatization.

The study concluded that privatization would result in an immediate and dramatic increase in electric rates. It also concluded that there would be problems with adding so many workers to the public payroll and pension system. The contract with Key Span was up for renewal and FTI thought that LIPA could extract concessions that would make it possible to improve performance and pay down the Shoreham debt. Instead, in the renewal negotiations, LIPA gave away something VERY important. LIPA changed the contract to allow Key Span to pass through its storm damage costs instead of budgeting for and absorbing them. A report by the NYS Comptroller shows how storm damage costs skyrocketed once Key Span/National Grid lost any incentive to control them. The chart on page 3 will knock your eyeballs out.

In February 2010, Lazard put out another Strategic Review of LIPA and explored the same three operational options as well as variations involving acquiring one or more generators and an enhanced status quo version that included an aggressive “green” initiative as well as smart grid technology. Lazard concluded that there was not enough data available to make a determination about whether continuing the public/private structure, privatization or full municipalization is best, and urges data gathering saying it should not be left until the current contract with National Grid expires until 2013.

In May 2010, Navigant Consulting did just that and concluded that full municipal would be the best deal for ratepayers.

In August 2011, there was another Strategic Review, this time by The Brattle Group. Brattle was tasked with providing the cost data comparisons that the Lazard Report requested. Brattle found that privatization would immediately increase rates by 10-20% but that the rate impact of both the Serv-Co option and full municipal options would be comparable to current rates and within inches of each other. The Serv-Co option was a new option to improve upon the existing public/private hybrid. It is a sort of training wheels approach for LIPA to allow its employees time to develop expertise and institutional memory necessary to be able to one day run the utility outright. If you click on the link above there is a more detailed explanation of the ServCo option. The conclusion of the Brattle Group was that privatizing would cost a fortune and immediate full municipalization might result in LIPA personnel not being able to manage the system. The training wheels Serv-Co won out by default.

In October 2011, LIPA began a public Strategic Review process that included hearings and input from the public to explore the Serv-Co option. On October 27, 2011, the LIPA Board of Trustees voted to adopt the Serv-Co option and the public process was to decide the details of how it would be done. I went to a number of the meetings, and followed the accounts of the others. There were a lot of good ides offered, including from the unions about how to manage the workforce and how to deal with the pension issue if the utility went full municipal. In fact, the electrician’s union had an elegantly simple idea which was for LIPA to contract directly with the union and the union is a contract labor provider and the workers stay in the union pension plan. There may be legal issues with that, but I thought it showed cooperative brainstorming by those involved.

LIPA put together and RFP based on the ServCo model that came out of this public process and bid out the new contract. PSE&G was the successful bidder and the contract was entered into in December 2011.

Bottom line, years of study and effort have gone into figuring out what form LIPA should take going forward. The only thing that all the consultants seemed to agree on was that privatization was too expensive. Lazard wrote the only report that held any prayer for privatization, sooooooo guess who has a new contract to go find a private company to buy LIPA? You guessed it, Lazard.

Then, the Mooreland Commission comes out with this privatization recommendation. They don’t explain how privatizing will do anything about the causes of LIPA’s failures during Sandy or other storms. They don’t explain how it will be possible to finance LIPA’s billions of dollars in debt at commercial rates; they don’t explain why any private entity would want to take on all that debt. Nope, they just have some vague gut feeling that a private entity will be more “accountable”.  Never mind decades of study and analysis. Crain’s is reporting that the idea of privatizing will amount to a bailout of Long Island by the rest of the state.

But analysts believe that persuading a private company to buy the much-maligned utility would require the state to assume at least $4 billion of LIPA’s $7 billion in debt. A sale would then trigger nearly $1 billion in additional costs: early-termination fees paid to bondholders, as well as penalties for the derivatives contracts that would suddenly become void, according to people who have studied a privatization.
.               .               .               .               .               .

Any private buyer would seek to raise rates so it could pay down debt, cover the costs of stormproofing LIPA’s infrastructure—and generate a decent shareholder return. But higher rates are a nonstarter. Mr. Cuomo earlier this month demanded they be frozen as part of any privatization. The only way out of this box, analysts say, is for the state to assume a portion of LIPA’s debt so a buyer gains some financial flexibility.

New York State just struggled to close $1Billion budget gap. Where in hell is it going to get another $4-5 billion to bail out LIPA?

People in New York and New Jersey are huddled in the cold and dark and apparently the US Congress cannot manage to vote for Superstorm Sandy relief before they go on their vacations.

Nothing I am about to say should in anyway suggest that I take what happened in New Orleans less seriously, but there is one major difference between the (unacceptably) slow-moving reconstruction aid in Louisiana vs. the Northeast in autumn and winter:  the weather.

Today in New Orleans, it’s mid 50’s sweater weather.  Nobody’s going to freeze to death there in homes that are without power. In the NYC metro area, it’s 24 derees at the hour I am writing this. People can die from exposure in that kind of cold.

John Boehner is so captive to the likes of Eric Cantor and Paul Ryan that he is refusing to allow the Sandy aid vote to come to the floor. Even GOP lawmakers from the Northeast are taken aback by this willingness to let fellow Americans freeze to death for the sake of politics. The New York Post quoted Rep. Michael Grimm protesting House Speaker John Boehner’s decision not to allow the vote for Sandy relief:

For the first time, I’m not proud of the decision my team has made. I’m going to be respectful and ask that the speaker reconsider his decision. It’s not about politics, it’s about human lives and human dignity and I pray that he understands that.

We just celebrated the 150th anniversary of the Emancipation Proclamation, an Executive Order that had no precedent. The most recent President Bush started two wars and spent gazillions of dollars on them without getting prior Congressional approval.

If Congress REFUSES TO DO THEIR JOB AND EVEN VOTE ON TIME CRITICAL LEGISLATION, then the President has ample reason to step in with emergency Executive Orders giving Sandy relief in a timely fashion. Congress has forced this on him by their own inaction. Further, he can force them to stay in session until they do their jobs and vote on a Sandy package.

How dare they vacation while their fellow Americans are freezing.

Because of redistricting, today is the last day that Pete King is my Congressman. It is also the first day that I am proud to have him speak for me.  This is what he had to say on FOX:

No one even told us, the Speaker walked off the floor, told an aide to the Majority Leader that the Congress was finished. There were no votes and they come back and told us. Listen, I’m not taking this as personal offense. I’m talking about the thousands of people in my district, hundreds of thousands of people throughout the New York-New Jersey area. Within 10 days after Katrina, $60 billion was appropriated. Nine weeks after Sandy, not one penny has been appropriated. And let me just make this one point. These Republicans have no problem finding New York when they’re out raising millions of dollars. They’re in New York all the time filling pockets with money from New Yorkers. I’m saying anyone from New York and New Jersey who contributes one penny to Congressional Republicans is out of their mind. Because what they did last night was put a knife in the back of New Yorkers and New Jerseyans, it was an absolute disgrace.

Why does the Republican party have this bias against New York, this bias against New Jersey, this bias against the Northeast. They wonder why they’re becoming minority party. Why the they will be a party in permanent minority. What they did last night was so immoral, so disgraceful, so irresponsible. They’re supposed to be the party of family values. And you have families that are starving, families that are suffering, families that are spread all over living in substandard housing.

This was a disgrace. They are inexcusable.

I can’t believe I’m saying this, but — what Pete said!

Were they hiding this news behind the turkey?

Yesterday, Lorraine Brown, the founder of DocX/LPS, was scheduled to plead guilty to conspiracy to commit mail and wire fraud at 1 PM EST. I found out about it around 2 PM from the wonderful Lynn Szymoniak who has nagged and noodled the US Attorney’s Office about this case 4-evah (she really is the unsung hero of this development, but Lanny Bruer managed to leave her out of his self congratulatory press release).

So, I start making calls to the press liaison at United States Attorney’s Office Middle District of Florida and the Office of Public Affairs at Main Justice. No one would confirm that she had in fact completed her guilty plea and that the judge had accepted it. What most of the non-lawyer press does not realize is that a plea agreement is only a contract of intent between the USAO and defendant, it is not binding until the defendant actually goes into a courtroom and pleads guilty in front of a judge – and the judge makes a ruling that the allocution (confession of the specifics of the crime) is legally sufficient to support the guilty plea, that it seems credible, and that it is not coerced or the result of some physical or mental impairment (such as being stoned).

So she could have changed her mind at the last minute, I’ve seen it happen. Or the judge could have found fault with the plea allocution, I’ve seen that happen, too. Then you have to reschedule and have a do-over on another day.

So you can understand that despite having read the Plea Agreement and Criminal Information, as well as the written version of The Facts she would be giving in her allocution, I was loath to hit “publish” on my backstage draft until I had confirmed that it had actually completed.

So I called, and I called back and I called back some more. Oh, “OPA is working on a press release.” “ No, I can’t confirm that her court appearance has concluded.” “No, I can’t confirm that her court appearance even initiated.” “Don’t worry, press release will be emailed to you any minute.” This went on for hours until that magic moment at 5:01 PM EST when the press release arrived and there was not one word on it that could not have been written in advance of the plea appearance with “send” hit once the judge banged the gavel.

Soooo, why would it take so long to get out this simple plain vanilla press release? Let me put on my tinfoil hat for a minute. You know how they dump news that is bad for the stock markets late on a Friday afternoon, so there is time to digest the news and not cause a sell off panic? What’s even a deader time to do that? Right before Thanksgiving. A lot of newspapers have a 5 PM deadline for getting a story into the next morning’s print edition. Yes, if you have a story in draft and are just waiting for some last little detail, they will let you file late, but if you first learn about a thing after 5 PM, it’s doubtful you can get it in unless it’s so momentous at to rate a “stop the presses” moment.

Most reporters have filed their pieces for the day and are closing up, heading out. Many will not see that press release until they get to work this morning, which means they will write their stories to file by 5 PM today, after the markets close at noon for the holiday. Holders of big bank stock who desire to engage in a panic sell off will need to do so via foreign exchanges. Of course most won’t even know about it in time to panic because Thanksgiving is hardly a day for reading the newspapers, especially the financial news. So, maybe I’m reading too much into the timing of this press release, but I do know that the DOJ press operation is more than sophisticated enough to understand story deadlines and timing of news releases, so it sure looks to me as if they were afraid the news would spark a panic selloff of bank stock and were trying to avoid that. Read the rest of this entry →

Now any bank offering these as evidence is committing a fraud on the court and homeowner

Yesterday, I dashed off a post about the guilty plea taken by Lorraine Brown, the founder of DocX/LPS in which she admits that it was the custom and practice of her company to employ people to forge the signatures of others and to falsely notarize those signatures creating assignments, allonges and affidavits that were both forgeries and perjuries. In short, fraud.

At the end, I said that this could be a game changer. In the comments, folks thought that was a reference to the fact that for once we have a criminal case which involves a top tier executive. That is a big deal no doubt, but not the reason this could possibly change everything.

Homeowners who are being foreclosed upon based on a document chain that includes documents prepared by DocX/LPS have a built-in defense, and actually a counterclaim against Ms. Brown’s company. The defense is that the bank offering these documents as evidence no longer has any right to rely on them as proof of anything, and any bank offering a DocX or LPS document as evidence after yesterday knows or should know that they are committing a fraud on the court and on the homeowner.

Secondly, it would mean that the bank would be unable in many instances to prove an essential factual element of its case, that the mortgage and/or note was transferred to the foreclosing entity, and the matter would be ripe for a Summary Judgment motion by the defendant homeowner. This ONLY applies if there are DocX or LPS documents in your chain of transfer (just like the various MERS defenses only applied if your mortgage was put into the MERS system). Also, there may be other facts or circumstance in individual cases that would moot this point.

How can you tell if you have a DocX or LPS document in your case file? Well, many of the DocX papers I have seen helpfully have a DocX legend in the upper left hand corner. Also, look for documents executed in Alpharettta, Georgia and for LPS, in Florida.

About that counterclaim: In her plea agreement Ms. Brown agrees to make restitution to unspecified “victims” of her forgery scheme. Now, don’t get too happy thinking you are going to ever collect a judgment from her. She also agreed to forfeit millions of dollars, so I don’t expect she will have much left to pay any of you. However, if your counterclaim against Ms. Brown and DocX/LPS, they become parties to your lawsuit and you get to take discovery from them without the bother and expense of hiring private detectives to track down each individual robo signer whose name may appear in the bank’s papers.

While you will still need a process server to do the more expensive out-of-state service to implead her and her company, once that’s done, in many states you can do the rest by mail, up to the in-person deposition. Some states, like NYS, allow for deposition by written question, which can be done in the mail for the price of stamp.

As always, nothing above should be construed as giving you legal advice, this is NEWS and analysis. You should consult your own lawyer and the strategic impact of the above will vary depending on the unique facts of each individual case and the laws of the applicable jurisdiction.

So, while there is some tiny bit of satisfaction to think that maybe, just maybe, some MOTU who blew up the housing market is having just the smallest cold shiver down the spine hearing about actual criminal accountability for even one aspect of the incredibly reckless binge mail-and-wire fraud these mortgage originators and TBTF banks engaged in during the aughts, it’s not what really wows me about this development. I don’t care about the banksters nearly as much as I care about the millions of homeowners who saw their life savings, in the form of home equity destroyed. I care about the millions of other people who were victims of predatory lending and who relied on the bank to not give them a mortgage that they could not afford. After all who ever heard of a lender giving money to someone they knew could not pay it back?

I care that these victims of predatory lending now have a weapon. It will still take work and effort to wield it, it’s not going to be easy; but a profound weapon that if used skillfully can turn the tables in a foreclosure.

Want banks to make meaningful mortgage modifications with principal write downs? Well the specter of losing outright in court makes that kind of settlement much more tenable to the banks.

This could be the beginning of a revolution in foreclosure defenses, that’s the gamechanger.

Photo by FeatheredTar under Creative Commons license

Breaking news:

At 5:01 PM EST, DOJ issued confirmation that :

The Founder of DocX, which later changed its name to LPS, has pleaded GUILTY in US District Court for the Middle District of Florida. In the “Factual Basis” document attached to her Plea Agreement, Lorraine Brown, the founder of DocX, LLC, admits that the documents produced by these companies from the period 2003-2009 were forgeries.

 Beginning in or about 2003 and continuing through November 2009, employees of DocX at the direction of Brown and others, began forging and falsifying signatures on mortgage-related documents that they had been hired to prepare and file with property recorder’s offices throughout the United States. Unbeknownst to clients, the Authorized Signers were instructed or authorized by Brown to allow other DocX employees, who were not authorized signers, to sign and notarize the mortgage-related documents as if the [sic] actually by the Authorized Signer.

Later down:

Thus, even through [sic] clients were told that a senior DocX manager would be preparing and signing the client documents, there was never any intention to do so.

More

 After these documents were falsely signed and fraudulently notarized, Brown authorized DocX employees to send them through the mails or by electronic means for recording with local county property records offices across the nation. Many of these documents – particularly mortgage assignments, lost note affidavits, and lost assignment affidavits – were later relied upon in court proceedings, including property foreclosures and federal bankruptcy actions. Brown understood that these property recorders, courts, title insurers and homeowners, relied upon the documents as genuine.

First of all, let me gloat. I have been saying for how many years that there were easy plain vanilla mail fraud and wire fraud cases to be made (I’m in a rush to get this posted before I go to coach my HS Mock Trial Team, I’ll come back later to put in the links).

Secondly, elsewhere in the plea agreement—don’t’ worry there will be follow-up posts as I dig into these documents better—she agrees to give restitution to the “victims”. It will be hard for those victims to collect since she is apparently forfeiting most of her money. But bear with me, if foreclosure defendants were to bring a 3^rd party action against Lorraine Brown and DocX/LPS (assuming there are DocX/LPS documents being used against them), they could simply Notice the Depositions of Brown and the relevant robo-signers to obtain testimony to refute the validity of those documents, and then move for Summary Judgment against the bank trying to foreclose.

Unless I am giddy with excitement and totally misreading this, this plea could be a game changer.

I won’t be here for the thread, but will come back to read it when I get out of Mock Trial practice.

Update: 5:07 PM EST

She also pleaded guilty in state criminal court in Missouri (h/t Peterr)

4:47 PM EST.

I just got off the phone with DOJ public affairs, although there are copies of a plea deal floating around for the founder of Docx/LPS, until she completes her allocution adn until the judge accepts it, she can back out.

DOJ will NOT confirm that plea has been accepted yet, but hopes to be able to do so shortly. hang on kiddies, this could be a game changer.

We Got This (Occupy Sandy) from Alex Mallis on Vimeo.

Mayor Mike has a lot of egg on his face, so does Ray Kelly. Despite being derided, kettled, pepper sprayed, and generally treated like subhumans by the NYC government, Occupy Wall Street continues to rise above the pettiness that  characterizes the behavior and assumptions of “various serious people.”

Continuing to think outside the box, OWS has two new initiatives: Occupy Sandy and Rolling Debt Jubilee.

Occupy Sandy

I live on the North Shore of Long Island, walking distance from the beach, in an area full of very old tall trees and very old overhead wires. Oh, and spotty cellphone coverage. I have been virtually incommunicado for the past couple weeks. No electricity, no internet, no landline phones, no TV, no voice over cellphone and very limited texting over cellphone.

What little information I had access to, came from the car radio, and it told a tale of stranded victims on Staten Island and the Long Island South Shore and Brooklyn, left unaided by the City. No police doing door-to-door searches for the trapped and stranded elderly or infirm, no social service agencies coming to their homes to make sure they had a meal, nadda.

So, OWS called upon its stupendous logistical skills and filled the void left by Ray Kelly and Michael Bloomberg.  Bloomberg holds daily press conferences, but for people with no access to mass communication, he was  a tree falling in the forest with no one to hear. Did it really take him 2 weeks to figure out that squad cars have speaker systems on them and could be deployed like sound trucks?

BTW, Con Ed, LIPA and PSE&G:  Would it have killed you to hire some sound trucks to make announcements, since people without power or internet cannot use your hopeless websites?

I digress.  OWS did what they do best, rallied compassionate people, started cooking meals and gave them away, just like at Liberty Plaza (it’s hard to get me to call it Zuccotti Park). They organized blankets and flashlights and charging stations (including the Green Peace solar truck and those cool Gilligan’s Island bicycle generators), just as they did at Liberty Plaza. They knocked on doors to ask the stranded residents what they needed. They sent out tweets for “needs of the occupiers” and supporters from all over the world sent supplies, just like at Liberty Plaza. They even improved on that with an Occupy Sandy “wedding registry” on Amazon that helps doors to ship supplies quickly and easily. Genius!

So complete is their logistical competence that they are now holding training for the National Guard troops who have been sent in to help and…wait for it…for the Mayor’s Office representatives. Considering how poorly they have been treated by this administration, they could have refused to aid the government efforts and played tit-for-tat, but their goal is to help by any means.

The press has always had trouble covering OWS because it doesn’t play into their preconceived notions and because there is no self promoting “face” of OWS. So, the story of this movement has been consistently misreported and under reported. OWS transcended the typical media narrative and has left the press behind, left the government behind, and focused on just getting the job done on the ground.

They transformed the political dialogue in a presidential election year and without a single Super PAC ad, probably contributed more to the defeat of  Mitt Romney than any deep-pocketed donor. Now they have are demonstrating the power of horizontal organizing to fill the void left by the City government, FEMA and the utterly underwhelming Red Cross. Another aside, a celebrity-studded telethon to raise money for the Red Cross did not result in the Red Cross being effective. I don’t know what they are doing with that money, but it is not being spent on Long Island, I can tell you that. Next telethon should direct donors to make purchases on the Sandy wedding registry.

Rolling Debt Jubilee

In another episode of thinking outside the box, OWS has discovered that an industry exists to buy distressed debt at pennies on the dollar. The companies that buy this debt then try to collect it and when successful, make their money on the spread.  OWS has set up a fund to create capital to buy the debt, but intends to forgive it rather than collect it. There is going to be a telethon on Novemeber 15^th at 8 PM.

Some have hollered that it creates a taxable event. However, if OWS is even more clever, they will contact the debtors, and stipulate to “settle” a pre-litigation case over the debt and the debtor will waive counterclaims and defenses in exchange for cancelling the debt. Since value is given, no taxable windfall. Since the most deeply discounted distressed debt has already passed through the hands of prior debt collection agencies, who no doubt have engaged in sketchy debt collection practices, it will not be a farce to say the debtors have counter-claims and defenses. This idea came from Masaccio.

OWS did a test run of this concept and was able to buy $14,000 of debt for only $500. This model should be used by the federal government to force the modification of mortgages, instead of bailing out the big banks, TARP money should have (and still could be) used to buy up the mortgages directly, reset the principle balance to reflect the current market value of the homes, and then reset the payments to fit the homeowners’ current incomes. Does that mean some homeowners, even with principle reduction, will end up with VERY long debt repayment terms? Yes, but it also means they can now sell those houses and get out from under if they choose, or they can pay for a long time and slowly rebuild equity.

The Triumph of Doing Over Talking

Over and over the MSM has whined that OWS doesn’t have a platform, it doesn’t have stated goals, it doesn’t have a message. Well, first of all, that tripe just demonstrates how lazy the MSM is. OWS has devoted many pixels to creating websites and online commercials explaining the programs and goals. The MSM is just too damn lazy to Google. OWS has devoted many pieces of cardboard and many yards of banners full of signs carried up major roadways full of slogans and demands. MSM couldn’t be bothered to show up and watch.

Nonetheless, OWS spends less time on messaging than any arm of government or any traditional interest group or charity.  OWS doesn’t spend their donations hiring the “right” consultants who spoon feed puff pieces to reporters over meals at fancy restaurants.  They don’t do ad buys for commercials with patriotic sounding music.

I’ve seen a ton of Red Cross commercials since my TV came back on, but not one Red Cross truck. OWS doesn’t play the game. Unlike the Red Cross, they don’t spend their time talking about what they would like to do or could do or did once before, they just go do it. It doesn’t matter if the “it” is changing the political dialogue to talk about the 1% vs. the 99%, or feeding a hungry person, or buying up student loan or medical debt.  They spend much less effort talking about doing it and more effort getting it done.

The wind last night was hypnotic. It sounded like waves breaking on the shoreline. I dreamt I was tanning on a beach. The really good news was that I did not hear the sound of trees creaking and groaning. During Irene trees in my neighborhood snapped off above the root line from the wind and you  could hear the wood cracking.

Photo: Charlie Walker / Flickr

AT 8:30 AM when I turned on the local news they reported that between 7 AM when they had 1,200 power outages and 8:30 it had surged to 6K. We are now up to 10K without power. Obviously, I still have power. It’s probably the-wash-your-car-to-make-it-rain effect, I am so super stocked up on batteries, firewood, oil lamps and candles, that I may have reverse jinxed my house.

The NYC news stations are reporting Battery Park still increasing flooding an hour after high tide. Port Jefferson is expecting it’s entire downtown to flood. They are also reporting flooded roads south of Montauk Parkway.

Update: 11.50

Sorry I’ve went AWOL, but right after this post went up, my power went out. Amazingly I was able to speak to live human person at LIPA, and she was able to promise me I would have power back no later than 12:30PM, they beat that estimate by 45 minutes.

Thank you Andy Cuomo for appointing a monitor to keep LIPA’s feet to the fire. This is the first time in 12 years of living here that LIPA has been this well staffed at the call in number.

Update 12:05PM

Local news announcing 21K power outages on LI

Update 12:50PM

The rain has started. It does not fall, it’s more like bullets being shot out of a gun. They are largest drops and it sounds like schrapel hitting the roof.