US house prices in freefall

Crikey | Glenn Dyer | 30 April 2008

That great sucking sound you may be hearing is the sound of the US economy and Wall Street tumbling further into the black hole known as the housing slump.

News of the accelerating slide in US housing prices is contained in the latest Standard & Poor's/Case Schiller index.

The index of single-family shows house prices contracted by 13.6% year-on-year in February, the biggest since records began in 1987. That compares to an annual rate for the 10 city index of 11.4% in January.

The broader 20-city index fell 12.7% compared with the year to February, 2007, the biggest drop since the index’s inception in 2001. This index was falling at an annual rate of 10.7% in January, so there has been a significant acceleration in price falls.

It shows that despite confidence that the worst is over with the credit crunch and high expectations for a rebound in the economy later this year; the depression in the American housing market is intensifying, not easing.

It’s no longer a subprime problem, analysts at Barclays investment bank reckon around $US800 billion of debt linked to subprime and higher quality so-called Alt-A mortgages could become problematic this year, putting further pressure on housing prices and mortgage values.

In fact US house prices have now fallen by more over the past year than the US stockmarket: the Standard & Poor's 500, the major index is off around 8% since its peak late last year. US economists say house prices are now falling faster than anyone had previously thought possible and are acting like equity prices in the speed of the decline.


Monthly price declines have accelerated, with repeat sale prices in the 20-city index falling by 2.6% in February, 2.4% in January and 2.1% in December.

It makes unpleasant reading and will worry the members of the US federal reserve board which is meeting in Washington for two days and is expected to produce another interest rate cut early tomorrow, Australian time.

The news will also undermine whatever reading the US Commerce Department issues for first quarter economic growth in the US: the housing slump is getting worse, not slowing.

The worst affected cities are Las Vegas and Miami where home values have respectively fallen 22.8% and 21.7% in the year to February. In San Francisco house prices fell 5% alone between January and February.

Senior S&P executive, David Blitzer said in a statement “There is no sign of a bottom in the numbers.”

"Prices of single family homes continue to drop across the nation. All 20 metro areas were in the red for the February-over-January reading. In addition, 19 of the 20 MSAs are still reporting negative annual returns. The monthly data show that every one of the MSAs has now declined every month since September 2007, marking six consecutive months. On top of that, the declines have with eight of the 20 MSAs and both composites reporting their single largest monthly decline in February."

Robert Shiller, economist and co-founder of the housing index, warned last week that the severity of the decline in residential property values threatened to exceed that of the Great Depression, when house prices dropped 30%. Since its peak in June 2006, the 20-city house price index has already fallen 14.8%.

According to an estimate from Moody's Economy.com almost 9 million US homeowners have negative equity in their homes; meaning they owe the lender more than their house is worth.

Foreclosure filings in the first three months of 2008 rose more than 112% over last year, according to a study released Tuesday.

Meanwhile RealtyTrac reported that nearly 650,000 foreclosure filings were issued in the US in the three months to March, up 23% from the last three months of 2007.

RealtyTrac said foreclosures rose in 46 states and in 90 of the nation's 100 largest metro areas. There were reports of a small improvement in Detroit and parts of Pennsylvania.

The worst hit states are still in the Southwest; Nevada, California and Arizona.

CBA plans $580m IT upgrade

COMMONWEALTH Bank of Australia will spend $580 million over the next four years replacing 45-year-old technology systems to improve efficiency and customer service.

Australia's largest provider of home loans has selected the global business software company SAP to do the job, which will be based on SAP's technology platform NetWeaver.

The bank has appointed another software firm, Accenture, to support the initiative.

"The forecast cost is around $580 million over the next four years," CBA said.

"The project will deliver a better customer service platform and simplicity in IT systems, infrastructure and business services, as well as provide significant operational benefits and cost savings."

CBA's chief executive, Ralph Norris, said the modernisation of the group's core systems was fundamental to the successful future of the bank. The upgrade would make banking simpler and more efficient for customers.

CBA has just completed a separate, two-year information technology upgrade, which it said provided continuing efficiency gains at the bank of more than $200 million a year.

The chief information officer, Michael Harte, said the bank's systems had been in place for more than 45 years and would be removed. CBA would gain a competitive advantage because few big financial institutions had announced plans for changes to their old IT systems.

SMH | 29 April 2008 | AAP

'Maxed Out' Man James Scurlock, Right on the Money

Cruising a second hand book shop, I picked up a copy of James Shurlock's book published early 2007 for $6.95. The book and the documentary was an indictment on the US Financial Industry. This was all just before the tsunami of the Sub Prime hit.

This article was in the Washington Post August 2007, a few months later


When the film "Maxed Out" arrived in theaters in March, it met with a modest reception: James Scurlock's documentary about America's debt crisis featured crisp editing, engaging stories, a poppy music score and an urgent message about Americans' addiction to credit, our alarming level of personal debt, and the financial services industry's cynical attempts to exploit both. The film stayed in town for only three weeks -- who wanted to see a movie about the subtle inner workings of subprime mortgages?

What a difference a few months make. With subprime loans suddenly in the headlines and a looming financial crisis erupting over the summer -- in other words, with the film's Cassandra-like warnings largely coming true -- it seemed an opportune time to catch up with Scurlock, whose "Maxed Out" is now available on DVD and will appear on television early next year .



-- Ann Hornaday


So, are you a genius, or what?

It's funny, it really wasn't that difficult to understand. In some ways, it's just mathematics. Yet there are regulators and analysts and investment bankers who do this day in and day out for years and years, who were saying the opposite of what I was saying. But for someone like me to come in and spend six months snooping around this industry and come to a pretty clear conclusion about where it was headed, it just tells you it wasn't all that difficult. And it's going to get a lot worse, by the way.


What?

What has happened in the mortgage business and in the credit business in this country is very similar to what happened at Enron. . . . People forget that what brought Enron down at the end of the day, the first domino that caused everything to collapse, was a downgrade from a credit agency, and that set in motion a series of events that no one really could have anticipated in their scope, or the precise sequence of events. I think that's exactly what we're looking at now. When the credit agencies have to downgrade a lot of this debt, and they will, and you have hundreds of billions of these adjustable-rate mortgages resetting at higher rates before the end of the year, suddenly all these investment funds have to sell them. And that's a very scary scenario. When everyone's selling and you don't have any buyers, that's when you have a crash.


One of the most memorable subjects in "Maxed Out" was a real estate agent named Beth Naef, who was selling multimillion-dollar spec homes in Las Vegas, often using the same financing that Enron engaged in. She herself was buying a 11,000-square-foot "dream home," which she was planning on "flipping" later. How is she doing?

I don't know, because she's one of the few people from the film who doesn't care to talk to me anymore. And I can understand that. . . . I think you can read between the lines and tell that if she couldn't afford that house two years ago, she can't afford it now. Hopefully she got out, but that means someone else got in.


You show debt collectors in "Maxed Out" in a highly critical light, yet you spoke at one of their conventions earlier this year. How did that go?

You'd think they would be my natural enemies, yet they were a terrific audience. Everybody is really worried about this, even the debt collectors. Because the first thing they look for, the way they make an easy profit, is if someone has access to more credit, so they can pay bad debt with a card or a refinance or a home equity loan.

But these refies that were keeping everything going a little longer and masking the big problems are suddenly drying up. The tragedy is that they're drying up just as so many people need them to save themselves from their mortgages resetting and their payments doubling. So it really is kind of a perfect storm right now.


How do you think the crisis is being handled in Washington?


I think it's been exacerbated by people like [Federal Reserve Chairman] Ben Bernanke and [Treasury Secretary] Henry Paulson and others coming out and saying, "Oh, subprime isn't contagious" . . . as if subprime borrowers were like lepers confined to some colony on an island and couldn't swim over and infect the rest of us. . . . Now that it has spread, the party line is "The economy's strong and we'll power through this." But the only way you power through a crisis in our economy is by making sure people keep spending. And the news this week from Wal-Mart and Home Depot is that people are starting to pull back. If you use your common sense, clearly if someone has been using their home equity to pay for their credit card bills, and refinancing and refinancing and refinancing to pay their bills, if they can't refinance anymore, they can't spend anymore. So lo and behold, Home Depot says people won't be remodeling their kitchens. The myth of the house increasing in value every year as some kind of birthright is now being shattered, and people are realizing that maybe a Sub-Zero refrigerator isn't an investment; maybe it's just another expense.


What's next?

I don't claim to predict the future, but if you ask me to hazard a guess, the default rate for mortgages is now higher than the default rate for credit cards by quite a bit. So people are giving up their homes rather than lose their credit cards. It's a really interesting phenomenon, because the assumption was always that people would do anything to save the house. . . . But who do the banks have to blame for that [phenomenon]? All of their marketing now is "Use your credit card to pay for groceries, prescription drugs, taxes and everything else." It's a huge paradigm shift.


Are credit cards the next shoe to drop?

Without question. One of the big problems, maybe the big problem, is that the financial services industry has redefined cash as credit. They have spent billions and billions and billions of dollars teaching people that a credit card is the same as cash, that home equity is the same as cash. And of course, it's not true. . . . And people have used their credit cards as their emergency fund instead of saving. People forget that credit is not something you own. It can be taken away at any time, the terms and conditions can be changed at any time, the costs can be increased at any time. That's what companies like the Countrywide Financials and the American Home Mortgages are learning. But I think consumers are about to learn that lesson as well.


What's your next project?

I'm working on a book about Larry Hillblom, the founder of DHL. He led quite an illustrious life. He disappeared in a plane crash in 1995 and his behavior ended up instigating one of the biggest paternity-slash-estate battles in American history.


Sounds like a movie.

We're in discussions.

Washington Post | Thursday, August 16, 2007

Transformation by Design

An interview with Dee Hock
by Melissa Hoffman

Dee Hock is the founder and former CEO of Visa International, the most successful business venture on Earth. Could this former bank manager with a conscience be evolution's unlikely hero? Visa owes its success, according to Hock, to its structure, which is nothing less than an evocation of nature's "cha-ordic" laws. Hock coined the term chaordic to describe that perfect balance of chaos and order where evolution is most at home. Yes, that's right. A business venture that takes its cues from Mother Evolution, whose "trademark" dynamism, changing change, and explosive originality are forever groping to innovate, prosper, and extend creation's euphoric reach further and further into manifestation.

If you don't think that something as common as the plastic Visa credit card in your wallet could be part of evolution's plan, consider this: Visa International

... espouses no political, economic, social or legal theory, thus transcending language, custom, politics and culture to successfully connect a bewildering variety of more than 21,000 financial institutions,16 million merchants and 800 million people in 300 countries and territories. Annual volume of $1.4 trillion continues to grow in excess of twenty percent compounded annually. A staff of about three thousand people scattered in twenty-one offices in thirteen countries on four continents provides ... around-the-clock operation of two global electronic communication systems with thousands of data centers communicating through nine million miles of fiber-optic cable. Its electronic systems clear more transactions in one week than the Federal Reserve System does in a year.

Hock has chronicled Visa's spectacular emergence along with his philosophical and personal odyssey in a book called Birth of the Chaordic Age. Therein he deftly disassembles assumptions you didn't even know you had; assumptions about how we have come to order, organize, and configure everything, from our desktops to our institutions to the very pattern of our thinking.

WIE: How do you help people understand chaordic principles in relation to the current forms of organization that are so much a part of our lives?

DH: An illustration I use to get people to understand it is this: I'll ask major corporate audiences: Why don't you just take all your traditional beliefs about organizations, and apply them to the neurons in your brain? Organize the neurons in your brain, the most complex, infinitely diverse organ that has ever emerged in evolution, as you would a corporation. The first thing you've got to do is appoint the Chief Executive neuron, right? Then you've got to decide which are going to be the Board of Directors neurons and the Human Resources neurons, and then you have to write an operating manual for it. Now, if you could organize your brain on that model, what would happen? You would instantly be unable to breathe until somebody told you how and where and when and how fast. You wouldn't be able to think or see. What if your immune system were organized on this basis? First you'd have to do some market research to determine what virus, if any, was attacking you, right? Then you'd have to write a business plan for how you were going to deal with it. And you'd have to get it approved by the senior executive neurons in your brain. Then you'd have to have marching orders for all the various aspects of your immune system. Okay. So why in God's world do we think we can use something like the brain, which is organized on this beautiful set of chaordic principles to organize society in a superior manner? That's an exercise in arrogance and ego.

WIE: At the end of your book you emphasize that you hadn't anticipated the power of individuals' resistance to change. You noticed this phenomenon throughout your experience with Visa. Since then, how have you come to understand this resistance to change?

DH: The reason people have so much trouble with change, I think, is a matter of conditioning. It arose many thousands of years ago, but essentially, this mechanistic way of thinking came into dominance about the time of Newton and Descartes, when Newtonian science postulated that the universe and everything in it could only be understood as a clocklike mechanism, a machine, with each part acting on the other part with precise linear laws of cause and effect. So when this way of thinking came into being through science, we began to try to apply it to everything. Starting about four hundred years ago, we tried to organize every aspect of society based on this mechanistic, scientific perspective. The Newtonian way of thinking has marvelous uses. For example, if I go in the hospital for eye surgery, I don't want a chaordic operating room. If you're going to build a perfect silicon chip, you need a totally controlled, very clean, highly organized, almost mechanistic environment. But that doesn't mean it's a good way to run Intel, or a good way to run a health care system.

So for four hundred years we've been trying to build all our organizations as though the Newtonian mechanistic internal model of reality were universally applicable. You know, this person reports to that person who reports to that person. Planning comes from the top and is distributed down. Everything else—money, power—is distributed up. Everything has linear cause and effect, which leads to endless manuals of rules and regulations.

If you think about it, you realize that every institution you have experienced in your lifetime is consciously or unconsciously based on that metaphor and that model. Your school operated that way, and your church, and your community, and your state. Your internal model of reality is the machine. So it doesn't surprise me at all that it's difficult to think otherwise or even to really understand that you are thinking in a mechanistic way. Stress arises out of having this internal model of reality at a subconscious level, literally in your genes, without knowing you've got it, and without asking how you've got it, and why you've got it, and whether it's useful any longer. And it's enormously more difficult, even if you can intellectually understand it, to literally get it in the bone.

So it's just not surprising at all that people should have such difficulty after so many years of conditioning, and given the fact that even if they start thinking in a different way, they are immediately head-to-head with a society in which virtually every institution and situation is operating on the old Newtonian model. That's why it's difficult. I think it will take several or more generations to break completely free of the Newtonian mechanistic mindset.

WIE: In light of the enormity of this conditioning and our reluctance to let it go, what do you think actually provokes the leap out of the old system? You were incredibly motivated to do this. What do you think it's going to take for individuals to be willing to endure the discomforts of leaving the old model behind?

DH: Well, first of all, you really need to open your mind to try to understand what your existing internal model of reality is and how it functions. And then you need to familiarize yourself with it. Emerson had a wonderful line. He said, "Everywhere you go you take your giant with you." So you have this giant unconscious thing, this internal model of reality, against which you judge and measure everything. You're never going to get rid of it, so you might as well turn around, introduce yourself to it, and say, "We're going to be together the rest of our lives, but I'm not going to let you drive my thinking any more. You have to live with my ability to think in a different way." You just confront it. I often tell audiences, "Lord, I was raised to command and control. I'm a sort of command-and-control-a-holic." I may never get it out of my system. But unless I understand it, I can't begin to deal with it.

PURPOSE AND PRINCIPLES

WIE: How can a group of people learn to think in a different way on a collective level?

DH: Well, you really have to go deep. I spent months and months asking myself, "What is an organization?" If I'm talking about institutional and organizational change, what am I really talking about? What is an organization in the deepest sense? It surely isn't just a set of bylaws, because I can write a set of bylaws and shove it in a desk drawer, and it just becomes an old moldering piece of paper. And if you really think deeply about it, you discover that every organization and every institution, without exception, has no reality save in your mind. It's not its buildings. Those are manifestations of it. It's not its name, it's not its logo, and it's not some fictional piece of paper called a stock certificate. It's not money. It is a mental concept around which people and resources gather in pursuit of common purpose.

Now let's follow this just a little further. If that institution has no reality save in your mind and the minds of all your associates and the people who deal with it, then what is its real nature? What's its real strength? And that led me to believe that the heart and soul of every organization, at least every healthy organization, is purpose and principles. What is the purpose that brought you together and what is your system of beliefs about how you intend to conduct yourself in pursuit of that purpose? If your beliefs are based on the old model of top-down command and control, specialization, special privilege, and nothing but profit, your organization will, in time, turn toxic. It will become antithetical to the human spirit and destructive of the biosphere. The evidence is everywhere around us.

Your organization needs to be absolutely clear about purpose and principles and must be very careful to know what a purpose and a principle is—you know, a purpose is not an objective, it's not a mission statement—a purpose is an unambiguous expression of that which people jointly wish to become. And a principle is not a platitude—it is a fundamental belief about how you intend to conduct yourself in pursuit of that purpose. You have to get very precise about these things. If the purpose and principles are constructive and healthy, then your organization will take a very different form than anything that you ever imagined. It will release the human spirit and will be constructive of the biosphere. Natural capital and human capital will be released in abundance and monetary capital will become relatively unimportant. To put it another way, I believe that purpose and principle, clearly understood and articulated, and commonly shared, are the genetic code of any healthy organization. To the degree that you hold purpose and principles in common among you, you can dispense with command and control. People will know how to behave in accordance with them, and they'll do it in thousands of unimaginable, creative ways. The organization will become a vital, living set of beliefs.

I've found that it's very difficult to lead people through enough metaphors and enough thinking about this—you can only think about it so much and your circuit breakers just go out. You have to rest, reset them, and come back to it. And you go over and over it. But what I find is that once you get a group of people who really begin to understand this, then energy, excitement, and enthusiasm literally explode out of them—they know what to do. You know, it's just in their nature. You can't stop it.

So to go back to the question of change—you can see that because of these four hundred years of intense conditioning, we've been taught to fear change. If you're in a rigid, mechanistic, cause-and-effect society and/or organization, then any change becomes a crisis in self-esteem. It destroys our identity, our sense of being, our sense of time and place. And we're never sure we're going to be of any value in the new order of things. We falsely see this as terrifying. But my God, this might be the greatest, most exciting adventure for the species that ever occurred.

WIE: You're describing quite a high level of individual commitment, the kind that has the power to create sweeping change.

DH: At one time I got interested in trying to understand how great leaders created enormous social change—take Christ, take Muhammad, Gandhi, Mother Teresa, Joan of Arc, Martin Luther King, Jr. When you look back at their history, almost without exception they were nobodies. Nobody! Gandhi was just a mediocre attorney who got thrown off a train into the dust by the British because he was Indian. Mother Teresa—just an ordinary nun. And so I studied—what made their ideas so compelling? Their ideas weren't that unique. In fact, they were often pretty traditional. Why, then, did their articulation of their beliefs have such profound effect? What I discovered was something that I think is almost universally true. They really examined what was happening around them, and examined all the existing institutions, and saw with clearer vision. They didn't delude themselves about it. Furthermore, they had the capacity to project themselves into the future and deal with the four aspects that I think are essential to understanding anything: how things were (history), how they are today, how they might become or where they're heading, and how they ought to be. They had the capacity to take that larger question of "how things ought to be" into the future and decide how they ought to be.

Now, the interesting thing is that almost without exception, they didn't start by preaching it. They started by living as though it were already true. They profoundly changed their way of living and said, "I don't have to live the way I am now." Mother Teresa said, "I can pick up a beggar in the street and tell him God loves him and help him die with respect and dignity. That I can do." Right? So once they began to live as though what ought to be was true, they had an authenticity that was just compelling. Complexity theory would call it a strange attractor, a legitimacy, an authenticity. And then they talked about it. They never wavered, no matter what the obstacle, or what the condemnation. And many of them died because they couldn't live any other way. Some of them were killed. I don't think they were unique. I think that capacity is in every single living human being. We just have to get in touch with it. And begin.






Link to the full article

Dee Hock (born 1929) is the founder and former CEO of the VISA credit card association. In 1968 Hock convinced Bank of America to give up ownership and control of their BankAmericard credit card program. The new company, called National BankAmerica, was a non-stock membership corporation equally owned by its member banks. The name was changed to VISA in 1976. (wikipedia)

Beating unlawful bank fees:

Gerard Brody, director of policy and campaigns at the Consumer Action Law Centre, writes: Re. "How I beat the bank, with a little help from VCAT" (yesterday, item 4). Well done Adam Schwab for beating the banks on penalty fees! All consumers who have been hit by these unfair, unlawful fees can claim them back with the assistance of Consumer Action and CHOICE’s Fair Fees campaign. Consumers can download a template letter seeking a refund from www.fairfees.com.au. There is also information about taking the matter further, such as Adam Schwab has done.

The Senate’s Economics Committee is also undertaking an inquiry on a bill that will allow the financial services regulator, ASIC, to be able to determine certain penalty fees to be unfair and unlawful. While submissions have closed this week, people could still contact the Senators on the Committee to tell them it is time do something about unfair penalty fees.

crikey newsletter 24 april 08

How I beat the bank, with a little help from VCAT

Crikey - Adam Schwab writes:

In what could be a legal first in Australia (a UK judge is currently deciding a test case on a similar issue and is expected to deliver his judgment in the coming days), the Victorian Civil and Administrative Tribunal has held that a $40.00 late payment fee imposed was an illegal penalty and therefore unenforceable.

The Tribunal also agreed with my submission that the fee amounted to a breach of the Victorian Fair Trading Act. (It should be noted that Citigroup, the respondent to the action, did not attend the Hearing and make any submissions. Citigroup did however pay the claim in full prior to the Hearing).

Your correspondent submitted an application to VCAT in late 2007 year seeking a declaration that a late payment fee (of $40.00) which had been directly debited by Citibank was unenforceable. The application can be viewed here. While the legal reasoning is too lengthy for this article (and was largely based upon Victorian Consumer Law Centre solicitor, Nicole Rich’s, excellent Report Into Penalty Fees) it essentially stated that:

* Any fee charged by a financial institution must be a fair reflection of the loss suffered as a result of the customer’s breach;
* A fee of $40.00 for failing to pay an outstanding credit card balance (as well as interest charges approaching 20%) is not a fair estimate of the financial institution’s loss – rather, the fee is a profit generator for the institution; and
* The relative bargaining positions of the parties is grossly uneven, with the institution able to directly charge any fee it sees fit without any course of appeal or mitigation by the customer.

The application sought damages of $135.00 for the "illegal" penalty fee plus associated costs. As noted above, Citigroup paid the damages in full prior to the hearing by directly depositing the money in the my credit card account but did not seek to defend the matter in VCAT. While VCAT decisions don’t set precedents in the same way as the Supreme or High Court decision does, the fact that a full-time VCAT member provided a judgment noting that the bank-fee charged was unenforceable and amounted to an unfair term in the contract is an indictment on the conduct of a financial institution. While Citigroup did not defend the matter, the VCAT member would have been within his rights to dismiss the application if he was of the opinion that it was without merit.

Based on the Tribunal’s finding, and Citigroup’s willingness to settle the claim, it is possible that any bank customer who receives a bank fee above a nominal amount could adopt the legal reasoning above and seek an immediate refund of the fee imposed, plus any associated costs relating to the application. If financial institutions have to refund a significant percentage of fees imposed they may even stop charging fees at all.

Citigroup can appeal VCAT’s decision in the Supreme Court of Victoria. However, in doing so, it would run the grave risk of setting a formal precedent should the Supreme Court uphold the finding of VCAT.

Henry Ford and the source of our fear

Henry Ford left us much more than cars and the highway system we built for them. He changed the world’s expectations for work. While Ford gets credit for “inventing the assembly line,” his great insight was that he understood the power of productivity.

Ford was a pioneer in highly leveraged, repetitive work, done by relatively untrained workers. A farmer, with little training, could walk into Ford’s factory and become extraordinarily productive in a day or two.

This is the cornerstone of our way of life. The backbone of our economy is not brain surgeons and master violinists. It’s in fairly average people doing fairly average work.

The focus on productivity wouldn’t be relevant to this discussion except for the second thing Ford did. He decided to pay his workers based on productivity, not replacement value. This was an astonishing breakthrough. When Ford announced the $5 day (more than double the typical salary paid for this level of skill), more than 10,000 people applied for work at Ford the very next day.

Instead of paying people the lowest amount he’d need to find enough competent workers to fill the plant, he paid them more than he needed to because his systems made them so productive. He challenged his workers to be more productive so that they’d get paid more.

It meant that nearly every factory worker at Ford was dramatically overpaid! When there’s a line out the door of people waiting to take your job, weird things happen to your head. The combination of repetitive factory work plus high pay for standardized performance led to a very obedient factory floor. People were conditioned to do as they were told, and traded autonomy and craftsmanship for high pay and stability.

All of a sudden, we got used to being paid based on our output . We came, over time, to expect to get paid more and more, regardless of how long the line of people eager to take our job was. If productivity went up, profits went up. And the productive workers expected (and got) higher pay, even if there were plenty of replacement workers, eager to work for less.

This is the central conceit of our economy. People in productive industries get paid a lot even though they could likely be replaced by someone else working for less money.

This is why we’re insecure.

Obedience works fine on the well-organized, standardized factory floor. But what happens when we start using our heads, not our hands, when our collars change from blue to white?

(Excerpted from Free Prize Inside)

Reprinted frim Seth Godins blog

Confusion over vendor bids

It was back in 2002 when your columnist, disguised as the Sunday Age Spy, caught auctioneer James "Jimmy the Gun" Tostevin using his dear papa as a dummy bidder. Boy, did the doo-doo hit the wind machine after that one but, happily, things have been ironed out in real estate since. Under the squeaky-clean new rules of engagement, today's house-hunter knows exactly where he stands on bidding and quoting, right?

Well, maybe not. Let's visit an auction in Gower Street, Kensington, last Saturday afternoon. Biggin and Scott were selling No. 48 and quoting a price range of $100,000 - "between $630,000 and $730,000".

Auctioneer David Thiessen (pictured) bounced out and called for bids. Nothing. Called again for bids. Nothing. So he put in a vendor bid of $650,000. Darn it, still nothing. Thiessen checked with the owner, reappeared and upped his own bid by $20,000. The bid without a bidder was now $670,000. A ripple of amused disbelief went through the crowd. Not surprisingly, the folk who didn't want to bid at 650 still didn't want to put up a hand at 670.

Property passed in. Result appeared on Monday but it said the reserve was $720,000. Question: if the owner did not want to sell under $720,000 why put in a bid for him at $650,000?

B&S's Joe Ferrara told Diary the bid was just to get a "sort of a roll going". Auctioneer Thiessen told us: "The vendor wouldn't give us a reserve price until after the auction. I usually put in one vendor bid only but on this occasion he wanted us to move closer to $700,000."

So now the price for potential buyers is $90,000 more than the estimated low - without one person making a bid. Yep, the system's working beautifully.

Author: By Lawrence Money
Date: April 16, 2008
Publication: The Age - Domain

Stephen Fry & the Gutenburg Press

A wonderful documentary video from the BBC. Stephen Fry travels to France and Germany on the trail of Johannes Gutenberg, and sets about reconstructing a replica of Gutenburg’s first press. This is a must-see program. Its not just the churches that can be thankful, us lawyers owe homage to Guttenburg.

2020

A complete overhaul of the federal system

THE 2020 Summit has called for a republic, a complete overhaul of the federal system, an inquiry into taxation and the creation of a seamless national economy.

After some 1000 participants produced hundreds of ideas, ranging from a comprehensive climate change agenda to a bionic eye, Prime Minister Kevin Rudd declared the summit a success and promised action.

He said community discussion would continue all year on a website, and indicated that some specific proposals, including reform of the federal system, would be early priorities.

The Prime Minister welcomed as "very good" the call for a seamless national market, knocking out as much interstate regulation as possible.

The idea of such a market, whether in electricity, energy, labour, carbon or water, was an ambition that "we haven't been presented with" before.

"That's certainly worth having a look at," he said. "It's a big agenda."

One idea that particularly attracted the Prime Minister was to reduce the HECS debt of people who undertook community service.

"We need more volunteers in the community," he said.

A controversial proposal for a bill of rights received majority support in the governance group, but also ran into strong resistance.

The flawed nature of Australia's federal system was a strong, recurring theme across the groups.

The economy group called for a federation commission to undertake a "clean sheet of paper" review of the roles and responsibilities of federal, state and local governments in areas of major economic activity.

The governance group urged a constitutional convention on the issue.

Mr Rudd said it was clear that the federation needed to be fixed. "The overwhelming chorus of complaint from this summit was the federation is not working to help people, whether it's on the business side or the delivery of social services," he said. "It underlines the Government's resolve to get this right."

The economy group co-chair, former Westpac boss David Morgan, said a unifying theme had been the need to move to a "truly national, seamless economy" and get away from duplication in the state and federal government functions.

The economy group said the tax review should look at simplifying tax, reducing inefficient taxes, harmonising, ensuring a progressive system and tackling negative interaction with the welfare system.

It would be the first such review in nearly a quarter of a century.

The summit proposed a two-stage process to get to a republic.

It also urged a plebiscite to indicate whether people wanted it, followed by a referendum to change the constitution.

Mr Rudd said: "The republic has always been a question of when the country and the community would come with us.

"You need to have consensus behind you. The fact that this summit was saying thumbs up to a republic is a big step forward."

The summit endorsed Mr Rudd's idea of one-stop parent and child centres. But parliamentary secretary Maxine McKew, co-convenor of the governance group, could not get support from that group for her proposal to ban all private funding of political parties.

The governance group said indigenous Australians' custodianship of land and water should be recognised in the constitution's preamble.

Other ideas from the meeting include the free movement of labour from the Asia-Pacific region into Australia; "lifetime participation accounts" for every Australian into which the government and others can make payments for education, training, parental leave and superannuation; and a "golden guru" program with retired people mentoring in workplaces and schools.

Among climate change proposals were that all new buildings after 2020 should be carbon-neutral, and that people should be given the tools to manage their individual carbon footprints.

Mr Rudd described the summit as "a very Australian gathering" which was energising for democracy.

"I don't want to wake up one morning in the year 2020 with the regret of not having acted when I had the chance," he said. "That's why it's important to plan ahead."

Victorian Premier John Brumby said it had been a fantastic process. "I think the republic is a good recommendation," he said. He also welcomed the idea of a tax review, saying it would be the first since the Hawke-Keating years.

Shadow attorney-general George Brandis had mixed feelings. "It wasn't a particularly representative group," he said. Ninety-nine per cent in the governance group had been in favour of republic, while less than half favoured the republic in the community, according to opinion polling.

Opposition Leader Brendan Nelson said the priorities among the ideas were those on taxation, getting the federation to work effectively, drought-proofing and food security.

He said there seemed to be a disproportionate number of people who already had prominence in public life.

"I did find it hard to find people with a car loan and a mortgage and three kinds that had to find child care to get here," he said.

He said he had heard many of the ideas before, but: "There are some general themes there, and messages … for all of us."

The Age | 21 April 2008

Call for states to be abolished

The states and territories should be abolished and replaced with regional governments, the 2020 summit has heard.

One of the smaller groups of ten people within the summit's rural stream has put forward the proposal.

A map of mainland Australia published by the ALP in 1920 which showed 30 regions and no states was the group's inspiration.

The group has called for a referendum to be "brought forward to abolish the states and create a regional system of governments with a federal parliament adjusted in size accordingly".

The group has now broken for lunch along with the rest of the summit and will reconvene at 1.30pm (AEST).

The summit involves 1,002 delegates who have been asked to come up with ideas to help the nation meet the expected challenges of the year 2020.

AAP - the age

Taxes on Property Soar

Information released by the Australian Bureau of Statistics this week on tax revenue during 2006-07 confirms that taxes on property have continued to soar. The rate of growth for taxes on property at the state level was almost 10% higher than the national average rate of growth for total tax revenue collected.

Overall the total taxation revenue collected in Australia for 2006-07 rose $22,039million or 7.4% in comparison with the total tax revenue collected for 2005-06. This increase was largely driven by proportional increases in revenue collected from income tax (7.5%) and GST (5.3%) at the Commonwealth Government level.

The sole source of taxation revenue for Local Governments is taxes on property, usually in the form of municipal rates. Local Government revenue increased 7.8% in this period, a rate
very similar to the national average.

The tax revenue collected at State Government level increased 10.6% over the same period. The ACT recorded the highest percentage increase in total taxation revenue of 18.8% in 2006-07, due mainly to increases in taxation revenue from stamp duties on conveyances.

Total taxation revenue in the Northern Territory decreased by 2.4% due to a fall in the revenue received from stamp duties.

Taxes on property at the State Government level rose 17.3% due largely to a 19% rise in stamp duties on conveyances and a 20.7% increase in land taxes received. The largest percentage
increase occurred in Queensland at 30.4%, followed by NSW at 28.7%.

There were significant increases in revenue collected from taxes on property in all states except for the Northern Territory

Source REIA newsletter

The worrisome figures are stamp duty and land tax rises by state government.

When your sister-in-law has a stay over

How much mess can one person make in the morning and then walk out on it

muliple containers with red pink goo in it, ditto glasses and straws, multiple bowls with unfinished muesli; multiple saucepans used to burn pocorn, multiple over pots and pans to use as heat covers, every table and bench with grot all over it. Burn mark on second bench from some hot utensil put on it. Broke the stove off and on switch. I am trying how to figure out if it is off or not, And yours truly left to clean up with the kids saying well we didn't do it. Bit over the top, dont you think
pop

A National Property Register

The merger of six states registries into one.

In a recent newspaper report which hardly raised a headline, the Commonwealth and State Governments announced they were close to agreement on the creation of a National Property Register, a single national electronic conveyancing system and abolition of stamp duty on property transfers. The only two hold out states were Victoria and Queensland.

Victorian Minister Garrick Jennings is quoted as saying "Victoria wholeheartedly supports the principles of a National Property Register for the whole of Australia to replace the six state-based land registers. It makes sense and would better serve Australia's national interest".

The Federal Attorney General said the stumbling block was the quantum of the compensation for the loss of future revenues to the States. Victoria and Queensland is holding out despite the promise of $20 billion compensation payable over 5 years.

"The Australian financial industry has long recognised the merger of the six state registries to form the National Property Register is important for Australia's economic success." The past head of the Australian Bankers Association then went on to say, "this will put an end to decades of petty interstate rivalry and squabbling, and determinism not to have a single Property Act and regulation ... they are anxious to preserve their power in that area and are anxious to preserve the resources they have committed to it - their public servants, bureaucrats, etc ..." The finance industry advocate stated and re-stated the irrelevance of state boundaries to property and mortgage transactions in Australia today.

Addressing an audience at Monash University, the new Federal Treasurer Wayne Swan** said he did not believe that it could be seriously argued the property and mortgage regulation was not a Commonwealth responsibility:

When the present government took office, it essentially had three options ... it could have elected to do nothing and allow the current system to continue [with] total responsibility at a state and territorial level. Such an attitude would have meant that the Commonwealth in effect is saying that despite the national character of the property and mortgage markets its impact on the national economy and its significance to capital markets and taxation across the nation, the activities, structure and performance of such a market was of no direct concern or relevance to the Commonwealth government.


I cannot accept such a proposition. I do not believe it can any longer be seriously argued that if the community has the expectation of government regulation of the activities of the property and credit markets such regulation is more appropriately done at a state rather than Commonwealth level. The second option available ... is that of legislative confrontation. Essentially this was the course adopted by the Whitlam government ... the Commonwealth without seeking the approval and co-operation of the states legislate to cover the entire area of real property regulation and taxation of property & property transactions and await the outcome of inevitable High Court challenges to such actions in order that the constitutional position might hopefully be settled and the full extent of the Commonwealth constitutional power established .


Such a unilateral course ignores fundamental realities of the Australian federation. It discounts 108 years of state experience in property regulation. It ignores the very real apprehension felt by many sections of the business community in Australia that total concentration of power of property regulation in Australia in the hands of one government has inherent dangers.


Accordingly the government decided upon the third option ... in exchange for the States transferring the responsibility to administer property registrations and the related taxation powers the Commonwealth will pay the States an appropriate lump sum compensation"



Not every lawyer I spoke to agrees with a national approach. The senior partner of Dodson & Fogg seriously felt "we as a profession have spent the last 150 years getting used to the legislative framework of our respective state property laws, why change? It was bad enough in '83 when they introduced vendor disclosure."

Still for others, reform cannot come soon enough. The current paper system is on the verge of breaking down. In many cases it does. Horror stories abound about settlements cant be booked in, banks losing track of files, conveyancers being put on hold for an hour, banks losing titles and failing to register transfers.

However, for banks it is challenging enough to deal with 6 state based paper systems; the prospect of states introducing their own form of electronic financial settlements and e-lodgement would be too much to bear thinking about. Because that's where the current thinking is leading us, 8 paper based systems and 8 electronic systems, side by side. It's not going to happen. A single national conveyancing system is the only option.

Speaking to an advocate for all things digital, Barack Hayton backs the transition to a single property register, uniform property regulation and abolition of stamp duty. Such initiatives would clearly better serve Australia's interest. However, lets be realistic. To quote a Deputy Registrar of Titles, Land Victoria. "it will never happen."

At the present the problems are not government. Much of the problems are actually industry problems. The banks, law firms and the like are still paper factories, horribly inefficient and hostile to change.

The major banks are the root cause for many of the industry problems. A recent survey, supported by the Law Institute Victoria, identified the problems that are commonly inflicted upon their clients and clients' representatives -

* kept on hold for longer than 20 minutes
* having to fax the same thing more than twice
* mortgage / loan documents had to be redone
* not in a position to book settlement 48 hours prior
* lost / misplaced Titles
* settlement delayed through a bank stuff up


Link to Survey results and Breakdown of Complaints

It is imperative these issues are addressed and fixed. Its costing the industry millions annually in lost productivity. Worse than that, it is the impact on staff and recruitment. These are not isolated incidents. These are incidents that occur over and over again. The boards of the major banks and the heads of the mortgage sections are responsible for the problems and responsible for seeing the problems are addressed and fixed. Not just paying lip service or in-house band-aid solutions. We are talking industry led solutions. What options are there? hire more staff; rationalise procedures; or in this day and age the technical option. It is clear the first two options are not going to reform the industry.

Usually the best solutions are the simplest and often missed because they are too obvious. We are not talking about solving complex problems, on the contrary. The brief and the vision is fix the settlement problems. Settlements are about effective communications. Industry representatives from the major banks need to be summoned and locked up until agreement is reached to form an industry wide solution.

This is the year to do it - the 150th anniversary of the Torrens Title System. A National Property Register, however, still unfortunately remains just a pipe-dream.

The Argus | 01 April 2008

** I have borrowed from an actual speech given by John Howard, Treasurer in the Fraser Government, August 1976 on securities regulation. Apologies for all other (mis)quotes.

COAG Backs Single National System For Electronic Conveyancing

We have reported in NECSpress before on the growing interest of the Commonwealth Government in the development of the National Electronic Conveyancing System (NECS). The involvement of the Standing Committee of Attorneys-General (SCAG) was mentioned in the November 2006 issue. In December 2007 we welcomed the Commonwealth Government as a member of the Steering Committee and reported on the support for NECS expressed by the Federal Attorney-General, Robert McClelland. Being a significant micro economic reform of national importance, NECS has now attracted the interest and support of the Council of Australian Governments (COAG).

COAG is the peak intergovernmental forum in Australia. It was established in 1992 with the mission to “initiate, develop, and monitor the implementation of policy reforms that are of national significance and which require cooperative action by Australian governments.” It consists of the Prime Minister, State Premiers, Territory Chief Ministers, and the President of the Australian Local Government Association.

At the COAG meeting on 26 March 2008, the Business Regulation & Competition Working Group (BRCWG), chaired by Hon Lindsay Tanner MP and Hon Dr Craig Emerson MP delivered its Commonwealth-State Implementation Plan and Forward Work Program. The aim of this COAG working group is to achieve best practice regulatory reform process and competition reforms.

The BRCWG recommended that electronic conveyancing should be added to COAG’s regular work program. COAG supported the development of a “single electronic conveyancing system for completing real property transactions and lodging land title dealings for registration in Australia”. It agreed to consider advice on appropriate governance arrangements and system implementation processes by June 2008. Please click here to view COAG communiqué.

In addition to COAG, there are a number of Ministerial Councils consisting of Ministers of Australian States and Territories and the Commonwealth that meet to discuss matters of mutual interest. SCAG is one such Ministerial Council. Its members are the Australian Attorney-General and the Minister for Home Affairs, the State and Territory Attorneys-General and the New Zealand Attorney-General. Norfolk Island has observer status at SCAG meetings.

SCAG gives Attorneys-General an opportunity to discuss matters of common interest and seeks harmonised action within the portfolio responsibilities of its members. A matter is appropriate to bring to SCAG if:

• It requires joint action from the Australian, State and Territory Governments
• Involves the development of model or uniform model legislation, or
• Is of relevance to Attorneys-General.

At the SCAG meeting on 27 March Federal Attorney-General Robert McClelland secured the commitment of all jurisdictions to the concept of a single national electronic conveyancing system which, as mentioned above, had also received support from the Council of Australian Governments. Mr McClelland noted that the new system would “eliminate the confusion and complexities of dealing with eight separate systems. State and Territory Attorneys-General also agreed to assist in developing model legislation to underpin a national system” and to work to develop “an appropriate corporate structure for moving a national electronic conveyancing system forward.” You can find more details in the Attorney-General’s news release and the SCAG communiqué.

The public support for NECS at the highest levels of government in Australia is a great development. It ensures a truly national electronic conveyancing system for the whole of Australia.

The implications of the COAG and SCAG decisions will be discussed at the next National Steering Committee on 18 April.

Source NECS circular 14 April 2008

Who answers the phone?

The new rules mean that the most valuable marketing event is almost always an inbound phone call.

An inbound phone call is the ultimate in short-term permission. The customer or prospect is taking the time to call you. She's focused, interested, paying attention and willing to trust you.

Think for a minute about how much you spend (and how high up in the organization the discussions go) when it's time for a new logo or a new Super Bowl ad.

And yet, even though the rules have changed, the lowest-paid, least-respected, highest-turnover jobs in the organization now do the most important marketing work.

Scharffen-Berger Chocolate (which I've featured in some of my books) was bought by Hershey three years ago. They bought it because of me (and people like me). People who will go out of their way to find high quality dark chocolate and then pay a huge premium to buy it.

I've been really disappointed with the quality of their product for a few months. It seems to me that in order to ramp up production, they've smoothed out some edges and the product is becoming boring. Fewer high notes, less interesting. So, I called.

The operator, who couldn't have been nicer, offered me a coupon for a free replacement bar.

A replacement of what? More of the same mediocre product I was calling to complain about?

Of course, she was just doing her job, but who's fault is that? Who decided to give her nothing but a script, who decided not to take the inbound calls seriously, who decided that it made sense to put up a wall instead of opening a door? I guess the short version is, "why isn't the brand manager answering the phone?"

"Your call is very important to us,"

does not jibe with,

"Due to unusually heavy call volume."

And the phrase, "I'm sorry, I'm just doing my job," does not match up with the marketing event of a person taking the time to call (or to email).

No, of course Sumner Redstone can't answer every single letter sent to Viacom. But...

Shouldn't every single inbound call be answered in one ring? Shouldn't there be as much spent on self-service customer support as is spent on the design of the selling part of your website? Shouldn't you be tracking in the finest detail what people have to say when they call in? Shouldn't you be rewarding call center operators by how long they keep people on the phone, not how many calls they can handle a minute? Shouldn't there be an easy, fast and happy way for an operator to instantly upgrade a call to management (not a supervisor, I hate supervisors) who can actually learn something from the caller, not just make them go away?

And I guess that's my biggest point: the goal of every single interaction should be to upgrade the brand's value in the eye of the caller and to learn something about how to do better, not to get the caller to just go away.

Seth Godin's blog

I guess the major Australian banks know all about this sort of stuff.

National plan for trading property

THE federal Government is considering taking a direct equity stake in a new company that will own and control the proposed national electronic conveyancing network.

The plan is understood to have been triggered by fears that e-conveyancing is at risk of degenerating into a network of state-based systems.

The big banks have warned that unless e-conveyancing is established as a seamless national system, major savings in the cost of property transactions will be atrisk.

The proposal for the commonwealth to take an equity position is one of a series of options for e-conveyancing that are believed to be under consideration.

A direct equity stake will give the commonwealth a way of ensuring that the interests of individual states are not allowed to skew plans for a national e-conveyancing network.

If the proposal goes ahead, the future e-conveyancing system will be run by an unlisted public company wholly owned by the federal Government and all state and territory governments.

This is believed to be in line with government hopes that the efficiency gains from a streamlined e-conveyancing system will be passed on to home buyers.

All state and territory governments endorsed a national e-conveyancing system last month at the Council of Australian Governments meeting and the Standing Committee of Attorneys-General.

But the Victorian Government is still pushing ahead with plans for a network of state-based e-conveyancing systems modelled on that of Victoria.

The Victorian Government has spent about $40 million building its system, known as ECV, but it has failed to win the support of the main business users - solicitors and the big banks.

The Law Institute of Victoria is concerned about extra potential liability for solicitors associated with ECV while the banks have declined to use ECV until there is substantial progress towards establishing a national system.

Victoria's Department of Sustainability & Development this week distributed a document to officials in other states that said Victoria had been holding talks with Queensland about adopting a version of ECV.

Victoria and the federal and all other state governments are members of a national organisation known as the national electronic conveyancing steering committee, which is committed to building a national system in co-operation with the banks, conveyancers and solicitors.

But the document from the Victorian Department of Sustainability & Development describes a national system as a "long-term objective".

It says a Queensland deployment of ECV will be "a transitionary arrangement".

The Victorian Department of Sustainability & Development is also seeking to convene a meeting of interstate officials at which Victoria plans to unveil an alternative model for electronic conveyancing.

Department official Fiona Delahunt wrote to her interstate counterparts last Friday outlining details of an agreement she said had been reached with officials from other states.

She wrote that it had been agreed in Melbourne over two days early last month that Victoria would prepare the details of an alternative model for electronic conveyancing.

The commonwealth and the business users of conveyancing were not present at that meeting.

According to Ms Delahunt's letter, it had been agreed that Victoria would prepare a draft shareholders' agreement to establish a "national entity" that would be vested with the intellectual property in ECV.

It had also been agreed that Victoria would prepare draft governance arrangements.

However, one of the most senior officials in the NSW Department of Lands, Des Mooney, has raised doubts about the standing of the Melbourne meeting.

Mr Mooney, who is deputy director of the department, has told his interstate counterparts that NSW officials left the Melbourne meeting early.

"NSW considers nothing can be taken as binding in any form arising from the views expressed by the participants who remained," he wrote.

Chris Merritt, | Legal Affairs editor | April 11, 2008 | The Australian

E-government can't even provide a free school lunch

Of all the bonkers ambitions held by British governments, surely none was as daft as the solemn undertaking to make all public services available electronically. Give or take a little fudge, the ambition was achieved two years ago. Since then, though, bits have been dropping off the government's e-programme like plasma TVs off the back of a dodgy lorry.

Prominent casualties include passport applications and reporting crimes electronically. Back in 2000, passport executives were talking enthusiastically about the web doing away with inefficient 20th century traditions like paying personal visits to the office. For obvious reasons, that little ambition went out of the window shortly afterwards. Today, personal interviews for first-time applicants are one of the passport service's main weapons against identity theft. Biometrics will make face-to-face appointments mandatory.

Meanwhile, electronic crime-reporting fizzled out for a whole set of reasons. For a start, it was an orphan service, offered by "police.gov.uk", an organisation that does not exist. It also lacked political leadership: the one certain outcome of making crimes easier to report is that the number of reported crimes will soar. Try selling that to any home secretary. A retreat from e-government is also becoming apparent in programmes under development. Last December, the Land Registry of England and Wales scaled back plans for electronic conveyancing. The Treasury's fear, apparently, was that a crooked solicitor with access to the system might pull the modern equivalent of selling Trafalgar Square to a tourist.

Over the next couple of years, I think we'll see more retreats as contracts for underused e-services come up for renewal and policy makers get more discerning about choosing at precisely which bits of the government machine computer power should be thrown. Occasionally, this involves thinking the unthinkable - instead of computerising a complex process, why not simplify it, or abolish it altogether?

The classic case is income tax declaration. One reason Britain lags behind Denmark and Sweden in the percentage of taxpayers who file returns online is that we chose to "e-enable" our complex self-assessment process. The Nordic countries' "one-touch" system, where all the citizen has to do is accept the state's calculation, lends itself far more to electronic approval, even by text message, so far more people use it.

Of course this implies close cooperation between policy makers and IT people, but we can always dream. Another policy area where some lateral thinking may be useful is in free school meals. At the moment, a considerable amount of effort is going into local initiatives to join up social security benefits systems with school meal registers so that parents who qualify for free meals for their children don't have to apply separately. The aim is worthy, so free school meals has become the standard bearer for joined-up government.

What seems to be missing is any connection between these heroic efforts and the wider debate over whether to extend free meals to all comers. Free meals are already being piloted in Scotland and North Tyneside; the argument is that the benefits for social inclusion outweigh extra costs.

Of course, there's a slippery slope to this argument: do we abolish all means tests and even identity checks just because they are costly to administer? I doubt it very much. But an honourable retreat from IT should definitely be on the agenda in any grown-up debate about the future of public services.

The Guardian | Michael Gross | April 08

National Complaints Register – Bank Settlements

National Complaints Register – Bank Settlements

A survey has been undertaken which records lawyers’ and conveyancers’ comments in respect of the performance of the major banks in settlements. View the survey results.

As a follow up to the survey, a Register has been created, where lawyers and conveyancers can record complaints against banks on individual files. This Register will tally problems incurred on a day to day basis and record the nature and details of the complaint and the cost in time and lost productivity to the firm or company. Lawyers and conveyancers are encouraged to provide feedback regarding the banks’ settlement processes by recording a complaint on the Register. This process is aimed at identifying significant issues and facilitating a national solution to those issues with key stakeholders such as the Law Council of Australia, the Australian Bankers’ Association and the major banks.

Record a Complaint

Published on the LIV Property Law Section

Robert R. Torrens : 1858 - 2008

The
South Australian System of Conveyancing by

REGISTRATION OF TITLE,


WITH
INSTRUCTIONS FOR THE GUIDANCE OF PARTIES DEALING,
ILLUSTRATED BY COPIES OF THE BOOKS AND FORMS IN USE IN THE
LAND TITLES OFFICE

BY
ROBERT R. TORRENS

TO WHICH IS ADDED, THE

SOUTH AUSTRALIAN REAL PROPERTY ACT

____

1859

LINK TO THE PUBLICATION; PREFACE, INTRODUCTION &
CHAPTERS I, II & III

Why we love banks

Click the image to enlarge



And remember all this comes at a cost, time, money and sanity




Banks - dont you just love 'em

The Valley of Lagoons

My father was not a hunting man. The town's only solicitor, his business was with wills and inheritance, with land contracts, boundary lines between neighbours, and the quarrels, sometimes fierce, that gave rise to marriage break-ups, divorce, custody battles and, every two or three years, the odd case of criminal assault or murder that will arise in the quietest community. He knew more of the history of the shire, including its secret history, its unrecorded and unspoken connections and disconnections, than any other man, and more than his clients themselves did of how this or that parcel of their eighty- or hundred-acre holdings had been taken up out of what, less than a hundred years ago, had been unchartered wilderness, and how, in covert deals with the bank or in deathbed codicils, out of spite or through long years of plotting, this or that paddock, or canebrake, or spinney, had passed from one neighbour or one first or second cousin to another.


Extract | Every Move You Make | David Malouf

Property correction risk in Australia 'high'

The risk of a correction in Australian house prices is high by international standards, the International Monetary Fund says.

The IMF, which says Australian property is among the most overvalued in the developed world, has warned that about 25% of the increase in house prices between 1997 and 2007 cannot be explained by fundamental economic factors such as population growth and income, The Australian Financial Review reports today.

The fund ranks Australian residential property fourth among developed nations, behind Ireland, the Netherlands and Britain in terms of vulnerability to a drop in value.

The warning comes as pressure mounts on the federal government to spark competition in the home-loan market and assist non-bank lenders affected by the global credit crunch to secure funding.

Concerns about the financial pressures on households and a deterioration in competition in the mortgage market are likely to be raised when the Reserve Bank of Australia Governor Glenn Stevens appears before a parliamentary committee in Sydney today

AAP | The Age | 4 April 08

Home owners held hostage by exit fees

HOME buyers trying to escape their loans early are being hit with extortionate fees of up to $7500, Australia's corporate watchdog has revealed.

Amid widespread anger over interest rate rises exceeding those imposed by the Reserve Bank, a report by the Australian Securities and Investments Commission reveals that Australian home buyers face some of the highest "early mortgage termination" fees in the world — as well as a complex array of other fees and charges.

Early termination fees have been blamed for dampening competition in the banking sector by making it prohibitively expensive for disgruntled home owners to switch to cheaper loans.

Confirming that banks and their smaller rivals are reaping profits from the practice, the report found that early mortgage termination fees now account for 42% of total fees raised by the sector — more than double the 19% share in 1995.

Some of the worst offenders are the small, non-bank lenders. A home buyer prematurely ending a $250,000 basic mortgage after three years from these lenders could be hit with an exit fee of $7580, or $2665 on average, the report found.

After adding other fees and charges, such as account-keeping fees and establishment fees paid over the three-year period, some home buyers with loans from the non-bank sector are paying as much as $9000 — equivalent to $250 a month.

Elissa Freeman, senior policy officer with consumer group Choice, said the report confirmed that lenders had been creaming off a huge — and growing — contribution from early termination fees, often locking consumers into bad loans.

"It's pretty clear that lenders have been benefiting from early termination fees at the expense of consumers," she said. "They either lock consumers into a poor product or consumers end up being ransacked to get out of a loan that is no longer good on the market."

Treasurer Wayne Swan said the report, to be released today, would "underpin future efforts to ensure full disclosure of fees and boost competition in the banking sector" — highlighting a dramatic variation in fees and charges.

"We understand there is widespread concern in the community about various aspects of the mortgage industry — including the conduct of mortgage brokers and the level of fees charged on mortgages," Mr Swan said.

Mr Swan has introduced voluntary "bank switching" measures, including a service requiring banks to provide information on all direct debits and credits to a customer's new bank. But the Government is threatening banks with tough mandatory regulations if they fail to clean up their act.

The Sunday Age believes Treasury is examining a host of new laws, including standardising types of fees and setting limits on fees and charges.

Among the major banks, the maximum exit fee charged over three years was $3750 for St George's "no deposit home loan", with an average of $1081.

Customers holding loans with smaller banks such as HSBC, Citibank, ING and Macquarie, paid a maximum of $1500 (for BankWest's "mortgage shredder") or $703 on average.

But when other fees and charges are added — including start-up fees, ongoing account keeping fees, ATM fees and redraw fees — costs jump dramatically. One non-bank lender, AIMS Home Loans, imposed fees and charges equivalent to more than $9000 for a basic loan exited after three years.

The Australian Bankers Association has argued there are "no significant switching problems" in the home lending market, pointing to high rates of home loan refinancing as evidence.

The ASIC report found Australians switching early pay nearly five times more than buyers in the US and Britain.

The Age | Josh Gordon | 6 April 2008

The US Property Market

Crikey - the inflation bogey

The RBA:

Brett Hayton writes: Re. "RBA will wait and see what the Budget holds" (yesterday, item 19). So the RBA forestalled from whacking borrowers with another interest rate rise, ruminating about the inflation bogey, petrol, food and rents this time round being the culprits. This year they can’t blame bananas. Well it’s just a load of doublespeak and hypocrisy. The worst offenders for price rises are government, at every level. Every year without fail, federal, state and local governments raise their own fees and charges by at least CPI, never less. Crikey, we need a government price index to measure government price increases. Also, a call for government price freezes for the term of each government, i.e. three years. It's utter hypocrisy. Governments are just good old fashioned monopolists, employing spin doctors at every turn.

published by Crikey 03 April 2008

Rick's Notebook: Wells Fargo goes with DocuSign eSig solution

Rick's Notebook: Wells Fargo goes with DocuSign eSig solution

DocuSign reports that Wells Fargo Funding is accepting disclosure documents signed with its electronic signature offering and suggests that it is a sign of growing adoption in the space. DocuSign is now on the bank's approved electronic signature vendor list.

While adding a vendor to a list may not really indicate growing acceptance, I do believe that electronic signatures are going to be more important to lenders and servicers this year as they work to trim more expense out of the transaction. The MBA, in association with Encomia, has already shown that electronic signatures will reduce hard expenses related to printing, mailing and sorting documents.

DocuSign has been a strong player in this area for some time. There are a number of other vendors that have been offering electronic disclosures for quite some time now.