October 11, 2013 For more information contact: Nick Sifuentes, BerlinRosen (310) 866-1692
Giant Money Managers Pimco & BlackRock at the Center of an Escalating Campaignby Community Groups and Unions Fed Up with Inaction on Troubled Loans
Richmond, CA – The controversy in the City of Richmond over a new strategy to fix troubled loans is spilling over to moneymanagement giants Pimco and BlackRock who have, until now, managed to avoid public ire over the housing crisis. Today, the Mayor of the City of Richmond sent a formal letter to both firms calling on them to come to the table and “be a part of the solution”.
This comes after a protest last Thursday, when a talk by leaders of the two companies, held at the Beverly Hilton Hotel, was disrupted by representatives from the community group ACCE and the labor union SEIU (Service Employees International Union). And early this week, the President of SEIU - the nation’s largest union—issued a public statement calling on the firms to cease legal and lobbying efforts to halt the principal reduction program known as “Richmond CARES.” The two global investment firms had joined the federal lawsuit to block this housing program, which has been dismissed for standing, but is expected to resurface.
Pimco and BlackRock are investors in the underwater loans in Richmond, California that the City and its community allies want to purchase, at fair market value, in order to write-down the mortgage principal and get the homeowners into affordable, sustainable mortgages. The two firms invest billions in assets and are some of the biggest investors in loans – many of them predatory – that were bundled into securitized pools, or Residential Mortgage Backed Securities.
Unlike major banks, which have faced regular protests by groups outraged by the foreclosure crisis, Pimco and BlackRock are seldom the targets of such protests and campaigning. But that is about to change.
The Mayor of Richmond’s formal “shot across the bow,” came in the form of a letter to the CEOs of the two companies (attached), calling on them to come to the table. Mayor Gayle McLaughlin writes in her letter, “Your company has a choice to make - you can use the incredible wealth and influence of your company as a positive force to help people in Richmond, who are being left behind by the "housing recovery", or you can use it to crush their hopes. We hope you choose to be part of the solution, not part of the problem.”
Richmond underwater homeowner and community leader Morris LeGrande states, “The whole point here is that we’d like to work with these bondholders to find a win-win solution that works for all of us – homeowners, the city and investors. But if these bankers and investors won’t even try to negotiate with us, we have no choice but to fight them. We’re not going to let up.”
And the community campaign has begun.
On Thursday, October 3rd representatives of the community group ACCE and the labor union SEIU disrupted a talk given by PIMCOfounder Bill Gross and BlackRock CEO Larry Fink, calling on them to “negotiate, not litigate.” The event was sponsored by the UCLA Anderson School of Business at the Beverly Hilton Hotel in Beverly Hills, CA. This action was covered by Lauren Windsor, reporter with Undercurrent and the Young Turks Network, who produced this video: http://www.youtube.com/watch?v=qnDsrntqNBk
On Wednesday, October 9th Mary Kay Henry, President of SEIU (Service Employees International Union), the nation’s largest union, called on Pimco and BlackRock to end the campaign of threats and litigation against the City of Richmond (attached). The companies have stated that their actions are on behalf of their clients, including pension funds, and yet SEIU denies this. “SEIU is clearly stating that it has not asked Pimco and BlackRock to sue the City of Richmond, CA and is calling on them to drop their lawsuit and work with the City of Richmond, our members in Richmond and our community allies to find a solution that keeps hardworking families in their homes," Henry said.
In the coming weeks, community groups and their allies will be confronting Pimco and BlackRock across the country, calling on them to play a constructive role in resolving the Richmond debate over a proposed solution to the housing crisis.