Two families live in the back house of a Deutsche Bank property in South Los Angeles. Los Angeles prosecutors are accusing Deutsche Bank of allowing hundreds of properties it owns to fall into disrepair. (Francine Orr / Los Angeles Times)
Its leading companies are investing in the U.S. because they can do things here they would never think of doing at home.
By Harold Meyerson May 15, 2011
The newest slumlord in Los Angeles is a pillar of German capitalism. Earlier this month, the city attorney's office filed suit against Deutsche Bank, the world's fourth-largest bank, for letting many of the more than 2,000 L.A. homes it has foreclosed on descend into squalor and decay.
A yearlong city investigation of the properties on which Deutsche Bank foreclosed turned up tenants compelled to live in crumbling apartments the bank would not fix, houses taken over by gangs, faucets from which water either wouldn't flow or wouldn't stop, and the occasional unidentified dead body. Nothing, in other words, that would be allowed to happen to bank holdings in Frankfurt, the neat-as-a-pin German city that is home to Deutsche Bank and much of the rest of German finance.
Deutsche Bank responded to the suit by blaming the loan servicers that were supposed to have maintained the bank's properties. But City Atty. Carmen Trutanich insisted the blame belonged with the owner. "We are not going to allow them to play the shell and nut game," he said.
But slumming in America is fast becoming a business model for some of Europe's leading companies, and they often do things here they would never think of doing at home. These companies — not banks, primarily, but such gold-plated European manufacturers as BMW, Daimler, Volkswagen and Siemens, and retailers such as IKEA [(items linked in) http://investorshub.advfn.com/boards/read_msg.aspx?message_id=61961578 and following] — increasingly come to America (the South particularly) because labor is cheap and workers have no rights. In their eyes, we're becoming the new China. Our labor costs may be a little higher, but we offer stronger intellectual property protections and far fewer strikes than our unruly Chinese comrades.
Don't take my word for it. Check out the study released this month by the Boston Consulting Group, which concludes that when you compare China's soaring wages and still-low levels of productivity with our stagnating wages and rising levels of productivity, the price advantage of manufacturing in China instead of the U.S. will shrink to insignificance by 2015. Investment in the U.S., says the group, "will accelerate as it becomes one of the cheapest locations for manufacturing in the developed world."
Those investments are well underway. The auto companies of Europe and Japan have opened factories in the nonunion South over the last couple of decades. Not one of them has agreed to refrain from waging a union-busting campaign should their workers wish to organize. Their stance could not be more different from their attitude toward workers and unions in their home countries.
As a report released by Human Rights Watch late last year documents, companies that routinely welcome unions, pay middle-class wages and have workers' representatives on their corporate boards in Germany and Scandinavia have threatened their U.S.-based employees with permanent replacement by other workers as the penalty for protesting wage cuts (that was the German manufacturer Robert Bosch), ordered workers to report on fellow workers' pro-union activities (that was T-Mobile, a subsidiary of Deutsche Telekom) and disciplined workers who couldn't show up for unscheduled weekend shifts announced on Friday night (that was IKEA, according to an L.A. Times story).
In Germany, Robert Bosch, according to Human Rights Watch, has never threatened a single worker with losing his job for protesting wage cuts, and Deutsche Telekom repeatedly touts its "social partnership" with its union. In Sweden, IKEA, like the vast majority of Swedish companies, is unionized and affords its workers a range of rights and benefits that are all but unimaginable to American retail workers.
German manufacturing workers, making the world's most sophisticated products and machinery, earn on average $1.50 for every dollar that American manufacturing workers make. (Despite that, because it's German policy to foster high-end manufacturing and highly skilled labor, Germany also has a huge trade surplus, while we have a mammoth trade deficit). In the new global pecking order, the decline of American unions and the steady downward mobility of American workers are making us the destination of choice when European companies want to get the job done on the cheap.
America as the beacon for the workers of the world? No more. If anything, our relationship with Europe has become a latter-day version of the one that characterized the years leading up to the Civil War, when our Southern states provided cheap, slave-produced cotton to the mills of Manchester. (That's why British and French business favored the Confederacy.) Once again, we're where Europe comes to slum — in the low-wage factories of the South and the run-down houses of South Los Angeles.
Harold Meyerson is editor at large of the American Prospect and an op-ed columnist for the Washington Post.
Deutsche Bank Sues Foreclosure Fraud Expert's Son With No Financial Interest In Her Case
Zach Carter First Posted: 05/13/11 07:17 PM ET Updated: 05/16/11 06:20 PM ET
WASHINGTON -- Deutsche Bank appears to have retaliated against a high-profile foreclosure fraud expert, whose years-long battle against her own foreclosure helped reveal a wave of apparent malfeasance, by suing her son.
The expert, Lynn Szymoniak, an attorney who specializes in white-collar crime, is widely considered on Capitol Hill to be one of the nation's top experts on foreclosure law. When Deutsche Bank attempted to jack up the interest rate on the mortgage for her Palm Beach Gardens, Fla., home in May 2008, she contested the move, setting off an investigation which unveiled mountains of forged signatures and fraudulent bank paperwork associated with the foreclosure process.
Szymoniak alerted other attorneys, neighborhood advocates, lawmakers and the media about the apparent rampant fraud. She appeared on "60 Minutes" in April to discuss the broader foreclosure scandal [video appended below].
Her own home has been in foreclosure since June 2008. A month earlier, she had been notified that the interest rate on her adjustable-rate mortgage was being raised, increasing her monthly payments by about $1,000. But the terms of her mortgage only allowed interest-rate hikes at certain dates.
In an interview with The Huffington Post, Szymoniak noted that Deutsche Bank was not acting within the allowed timeframe.
"They missed my adjustment date, and then when they figured it out, they just slapped that higher payment on anyway," she said. "I paid one payment at the higher rate and then I said, 'This is ridiculous.' And I stopped paying and then they sued me in June '08."
Both Deutsche Bank and their legal counsel, Akerman Sentertfitt LLP, declined to comment for this report.
After she'd been sued, Szymoniak said, she began investigating the documentation on Florida foreclosures, uncovering alarming irregularities, including signatures that were apparently forged. If so, those signatures allowed banks to push foreclosures through overly quickly, charge improper fees and assert improperly inflated borrower debts.
Shortly after appearing on "60 Minutes" Szymoniak won a major victory in her own foreclosure case. The court found that Deutsche Bank was unable to demonstrate ownership of her mortgage, which had originally been issued by the defunct subprime mortgage lender Option One, and threw the case out.
Deutsche Bank was permitted to refile their case if the bank could obtain proper documentation, however. And on Friday, May 6, Szymoniak received a notification from the bank's lawyers that she was again being sued for foreclosure.
But Deutsche Bank wasn't just going after her. The bank was also attempting to sue her son, Mark Cullen, who is currently pursuing a graduate degree in poetry at the New School in New York. Cullen hasn't lived in Szymoniak's house for seven years and is not a party to any aspect of her mortgage -- he has no interest in either the property or the loan, and never has had any such interest, according to Szymoniak.
"It is just absolute harassment," Szymoniak said. "He doesn't own anything, for god's sake! He's getting a masters in poetry. He not only doesn't have any money, he's never going to have any money."
And other Florida foreclosure experts say it's difficult to interpret Deutsche Bank's move as anything other than retaliation for Szymoniak's media presence. If it is not, in fact, retaliation, they argue, then Deutsche Bank's lawyers have demonstrated rank incompetence.
"It sounds crazy," said Margery Golant, a principal with the foreclosure defense law firm of Golant & Golant PA in Florida. "I can think of no legitimate reason, if he doesn't have some connection to the property or to the mortgage, to include him in an action to foreclosure."
"It's an intimidation tool," said Matt Englett, a partner at the Florida law firm Kaufman Englett Lynd PLLC. "Most people, they get scared and they get nervous and I think that's the effect that they're trying to have on him and his mother."
"If he's not an owner of the house, it's pretty clearly just vindictive," said Joshua Rosner, the managing director of Graham Fisher & Co., a mortgage investment firm. "If they're doing it intentionally, that's one hell of a statement. If they're doing it randomly, that's still pretty incredible."
The experts said the lawsuit against Szymoniak's son could also have negative implications for him beyond the immediate costs of fighting the foreclosure case, even though he has no financial interest in anything related to it.
"He's going to have a lawsuit out there against him," Englett said, "so if someone were to do some kind of background check against him, that would come up."
Deutsche Bank maintains that it is not to blame, and notes that while it is legally listed as the plaintiff in the Szymoniak foreclosure case, another company directs the actual legal maneuvering.
"Pursuant to the aforementioned contracts for securitization trusts, loan servicers, and not the trustee, are responsible for foreclosure-related legal proceedings. The attorneys and law firms who oversee foreclosure proceedings on behalf of the trusts are engaged by loan servicers rather than the trustee. Loan servicers are obligated to adhere to all legal requirements, and Deutsche Bank, as trustee, has consistently informed servicers that they are required to execute these actions in a proper and timely manner," said Deutsche Bank spokesman John Gallagher.
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