Schipske Calls on Council to Examine City’s Investments in Financial Entities That Are Foreclosing on Long Beach Homes and Are Facing Federal and State Investigation – Doesn’t Want Another Lehman Brothers
December 9, 2011 --Councilwoman Gerrie Schipske today called upon her colleagues to support an agenda item she is submitting titled: Developing a Responsible Investment Policy In Connection with City Investments in Bank America, Freddie Mac (Federal Home Loan Mortgage Corporation) and Fannie Mae (Federal National Mortgage Association). The item takes aim at the fact that the City of Long Beach is investing millions in the same financial entities that are foreclosing on the homes of Long Beach residents.
“The City invests an enormous amount of funds with Bank America , the Federal Home Loan Mortgage Corporation and the Federal National Mortgage Association and all of these entities hold mortgages on which they are foreclosing in Long Beach,” explains Schipske. “Additionally, these same entities are facing federal and state investigations and litigation because of their risky dealings – just as what occurred with Lehman Brothers. We don’t need to lose another $22 million.”
Schipske’s proposal would direct the City Manager and City Treasurer to provide a report to the City Council within 30 days that addresses the soundness of the investments and provides a status report on the numerous legal actions being taken against Bank America, Freddie Mac and Fannie Mae, as well as alternative investments available to the City.
“It does not seem logical nor right that the City of Long Beach would be placing cash or investments in financial entities which are putting our residents in severe economic hardship or in entities that are the focus of national and state investigations and litigation,” says Schipske.
The Federal Housing Finance Agency in September 2011, filed suits against Bank America and 16 other banks for selling FHLM and FNMA mortgage backed securities that soured and for which the federal conservator of FHLM and FNMA is seeking repayment.
Last week, the California Attorney General Kamala Harris announced a joint effort with the Attorney General of Nevada in the investigations of wrongdoing in mortgage loan origination, servicing, and securitization. Attorney General Harris is also investigating Bank America and FNMA and FHLM.
“ I am also asking that the Council direct the City Manager to send a letter to these financial entities expressing the sense of the City Council that because of our massive investments that we demand that every effort be taken to prevent the foreclosures of residential properties in Long Beach, including but not limited to loan modification and extension of the foreclosure process; and that we further demand that business loans be made available to businesses on a reasonable basis to enable these small businesses to create additional jobs.”
One in 243 homes in California are facing foreclosure. Freddie Mac and Fannie Mae hold almost 50 percent of all mortgages in the U.S.