From Reuters column: “Banco Espirito Santo and bail-ins” by James Saft:
The resolution of BES, should it prove necessary, might bring other benefits. Guntram Wolff, a director at European think tank Breugel, argues that it might ultimately lead to ‘de-zombification‘ in Portugal. Zombie banks are those impaired enough that their energies are used in keeping themselves upright rather than in playing their role within the economy.
National authorities, notably Japan in the past, often abet zombie banks as the easier course, but doing so can leave the rest of the economy without the credit it needs to recover.
Given the euro zone’s dependence on bank financing rather than capital markets, this is no small issue. If zombie banks are allowed to fail, ultimately credit flows improve, perhaps both in volume and impact.
Note incidentally, last week in The Desert Sun: “Is U.S. in Danger of Replicating Japan’s Zombie Economy?” by Morris Beschloss.
Saft’s reference to Guntram Wolff was yesterday published in Bruegel: “Three questions on the Banco Espírito Santo case for banking union“:
how much will the BES case affect economic growth of Portugal? Hopes are it will be an instance of de-zombification, which improves growth prospects, but negative market reactions and spreading contagion could undermine growth instead, at least in the short run.
Wolff’s article hyperlinks the word “de-zombification” to another Bruegel article about “zombie banks” from last month: “The ECB’s bank review: Kill the Zombies and heal the wounded” by Ajai Chopra and Nicolas Véron.
See also ZombieLaw links to more Reuters zombies.
Last week, July 8th, this Order was issued by Senior District Judge Stephen M. McNamee, of the United States District Court, for the District of Arizona, in the case of:
On January 27, 2014, Plaintiff Michael Knaubert, who is confined in the Arizona State Prison Complex-Eyman, filed a pro se civil rights Complaint pursuant to 42 U.S.C. § 1983
In his five-count First Amended Complaint, Plaintiff names the following Defendants: Mertz, a mental health psych associate at SMU-1 and Eyman Complex-Cook; and John Does 1 through 9, all listed as “pychrist (sic) mental health” or “mental health psychrist (sic)” at SMU-1. Plaintiff seeks damages.
In Count One, Plaintiff asserts a claim of retaliation and alleges the following facts: Defendant Mertz knew Plaintiff “was there for admin p[u]rpose and not for mental health.” Mertz was apparently caught falsifying paperwork and was “removed from his case load.” Mertz said, “I will put you in for forced medication” and refused to say on what grounds. Mertz was almost fired and given a second chance before “putting in for forced medication meds turned [Plaintiff] into a zombie.” Plaintiff was “there” until housing could be found for him. Plaintiff’s injuries consist of a delay of his filings in state courts, he was “put into binds,” and costs of over $100.00.
In Count Three, Plaintiff asserts a medical care claim and alleges the following: Plaintiff was given medication “for a problem that does not exist.” It turned Plaintiff into a zombie and he could barely think for himself.
Responding to Count One, Judge McNamee writes:
The only mention of Mertz is in Count One, which Plaintiff designates as a retaliation claim. However, it is unclear how Mertz or anyone else retaliated against Plaintiff. Plaintiff alleges that Mertz knew Plaintiff “was there for admin p[u]rpose and not for mental health,” but Plaintiff does not explain what this means. Plaintiff alleges that Mertz was “caught for false paperwork lying had him removed from his case load,” but these vague allegations are also unclear. Finally, Plaintiff alleges that Mertz said, “I will put you in for forced medication” and that Mertz was almost fired and given a second chance before “putting in for forced medication meds turned [Plaintiff] into a zombie.”
It appears that Plaintiff may be asserting that he reported Mertz for some alleged misconduct and that Mertz retaliated by recommending that Plaintiff receive medications by force, but none of that is clear from the allegations. As noted, conclusory and vague allegations will not support a cause of action. Ivey, 673 F.2d at 268. Nor will the Court supply essential elements of the claim that were not initially pled. Id. Accordingly, Defendant Mertz and Count One will be dismissed.
Because Plaintiff has failed to connect a properly named Defendant with any alleged violation of his constitutional rights, his First Amended Complaint will be dismissed.
The Court dismissed the rest for failing to state a claim but granted leave to amend. If it’s not corrected it could count as a strike against him for future pleadings:
if Plaintiff fails to file a second amended complaint correcting the deficiencies identified in this Order, the dismissal may count as a “strike” under the “3-strikes” provision of 28 U.S.C. § 1915(g).
Herald-Tribune: “Turning ‘zombies’ into homes” By Adam Tebrugge:
we are in the midst of an ongoing humanitarian crisis that affects us all. We cannot continue to allow our citizens to sleep in the streets when there are numerous vacant properties throughout the area.
I would like to applaud Josh Salman for his outstanding article, “Is that a zombie on my block?” The financial meltdown was tragic, but it is appalling that the problem continues to plague us years later. The national banking conglomerates that created the financial meltdown still are not taking effective action to clean up the disaster they created.
Meanwhile in HousingWire: “A response to zombie properties” by Robert Klein blames the court process:
I think that common sense would tell us that the first step should be developing a way to expedite the foreclosure process for homes that have been abandoned.
Ok, but that “common sense” could also do a lot of harm to people who might need the protection of the courts. The assumption that all zombie foreclosures are vacant properties and causing blight is WRONG. This is the RealtyTrac rhetoric incorporated by AG Scheidernman and others but it’s only partially true. Vacant homes are a problem for the neighbors and the community but we could get the owners back in the homes if the banks would negotiate at terms reasonable to the fact that the recession hurt everybody. They got government bailouts and years of low interest rate money. It’s time to help the homeowners, not speed foreclosures. Unless the homeowners are ready to give it up, then quit claims, the banks shouldn’t be allowed to stall, but can’t blame the courts there either.
A similar use of “zombie foreclosure” in Fresno Bee “Real Estate Blog: Few zombie foreclosures in Fresno” by BoNhia Lee also accepts the RealtyTrac definition of zombies as only the vacant properties but note the numbers:
California only had 4,243 vacant houses out of the 50,567 foreclosures statewide.
At the beginning of the foreclosure crisis, homeowners were quick to leave their homes, but many now stay to work with banks on loan modifications
Ok so more are staying but are the banks just delaying? Are they negotiating in good faith or letting the defaulted mortgage debts keep rising as phantom debt that they sell around to unsuspecting buyers. Probably they continue to sell these notes between banks and as bundles of packaged securities with hopes that one day the laws will change and they can actually enforce these junk securities. All of these properties should be considered “zombie foreclosures” and the government should force banks to give these homeowners reductions on principal and interest rate and force the banks to make these defunct mortgages into performing loans at the current market.
Florida accounted for more than one-third of all zombie foreclosures nationwide with 48,630 vacated homes out of its 195,183 foreclosures. New York, New Jersey, Illinois and Ohio rund out the top five.
Even 25% is not the bulk of the foreclosure crisis, and are they all really vacant? Doesn’t everyone leave Florida in the summer? Are some of these second-homes and even so, shouldn’t we want to get homeowners back into them? And also what of all the defaulted debt not now in foreclosure action but with banks lying in wait? We need a registry and some laws that force quit claims and bank responsibility?
Lohud: “Zombie homes continue to gather weeds and community ire” by Barbara Livingston Nackman:
the proposed Abandoned Property Neighborhood Relief Act didn’t make it to discusion in Albany. It will have to wait until January when a new legislative session begins, officials said.
“We are not going to tolerate these ‘zombie‘ properties in our neighborhoods any longer,” added Sen. David Carlucci, D-Clarkstown, who is particularly pleased that the proposal includes a $1,000-a-day fine to lenders who do not comply with clean-up.
At the Daily News Online: “Editorial: The ‘zombie’ law“:
When the state Legislature reconvenes this fall, one bill it should make sure it acts upon is the so-called “zombie” law. Attorney General Eric T. Schneiderman’s proposed law would give municipalities needed tools for dealing with abandoned properties that create problems in neighborhoods across the state.
Mr. Schneiderman’s “zombie” legislation would require lenders to care for the property throughout the foreclosure process. It would create a statewide registry of abandoned properties so local officials have that information, and would also create a toll-free hotline so residents can report suspected vacant properties. Further, it would require that homeowners be notified that they are legally entitled to remain in their homes until ordered to leave by a court.
The New York State Conference of Mayors has come out in support of the legislation.
Long Island Exchange: “Rep. McCarthy and Mayors of Newburgh and Utica Endorse Eric Schneiderman for Re-Election“… obviously…
But let’s see how next legislative session goes before we don him as the next democratic gubernatorial candidate after Hillary taps Andy for veep or secretary something… this Abandoned Property bill (A9341) sounds great in sound bite but will it have enough bite to get banks actually negotiating with the named homeowners or will this only address a small percentage of vacated homes? How can we get the homeowners back in their homes at a rate reasonable to the reality of the recession that everyone faced together? In some cases the banks induced the owners to default with promises of negotiation but still never fairly negotiated. Speeding court processes will not help to guarantee those homeowners protections.
Also from Batavia Daily News: “ State ‘Zombie Law’ on council’s agenda Monday” By Joanne Beck:
The relief act — nicknamed the Zombie Law — would especially help to assign responsibility to lending institutions for such properties. Up to now, those businesses have not been accountable until a lengthy, several month process is complete.
We can hope, but is that really what it does? Have any of the councilmembers read the bill? Even if they have, do they really know what it means? Does anyone? With legislators on hiatus it’s easy to advocate last year’s bill with a fun “zombie” name, but is this a real potential law or political horseshit? Baby steps are good, but how about we spend the summer advocating for a bill with actual teeth?
And see KRIStv: “‘Zombie Homes’ Invading the Coastal Bend?“:
They’re called zombie homes, because they’re in limbo, between the bank and the new owner.
Foreclosures are supposed to take 3 months, but when the banks won’t break even on a sale, they sometimes sit in limbo. The homes are then not for sale and not occupied. The result; they sit empty for months. Montalvo specializes in the foreclosure market. “The government doesn’t want to just release all these houses and depress the market,” he explained.
because of the rats, but also the potential for vagrants.
It’s the banks, it’s the government, it’s the vagrants, blame everybody! Hint: it’s the banks.
InsuranceNewsNet: “‘Zombie Foreclosures’ haunt housing market” by Greg Stiles:
As neighbors go, “Mr. Bank” isn’t a good one, failing to maintain his yard, ignoring a mangled garage door and allowing junk to pile up outside his house. When he does answer the phone, he’s none too talkative.
Over the past 12 months, Poulos has painstakingly compiled documents and telephoned a litany of loan and property servicers, as well as the police, and finally City Hall. Poulos has delayed selling his home because he fears the eyesore next door will scare potential buyers away. He hopes other people with similar issues will take a look at his blog (http://myneighborchasebank.blogspot.com).
In conclusion, banks need to clean up the vacant properties but they also need to negotiate with the rest of the zombies and never let this happen again. Remember this whole crisis was caused by greedy bank fraud and we must never forget that. The banks robosigned exuberance lost sight of real people. Homes are not investment opportunities, they are people’s living spaces. Bring these properties back to life even at the risk of killing more banks. Mark to market today! Turn over all the bad debt; free the zombies!
Based on the TrapX report: “Anatomy of the Attack: Zombie Zero“
Forbes: “How a Scanner Infected Corporate Systems and Stole Data: Beware Trojan Peripherals” by Kurt Macko:
the so-called Zombie Zero worm invaded corporate data centers through a back door.
Infosecurity Magazine: “Malware Siphons the ‘Brains’ of Shipping Companies in Sophisticated Supply Chain Attack“:
Likely Chinese in origin, Zombie Zero malware arrives via trojanized peripherals and exfiltrates full situational data.
EpochTimes: “China Spies on Global Shipping Using Pre-Infected Hardware” by Joshua Philipp:
the breach was done through products infected at the manufacturing level—before they were even sold
a Chinese university that was involved: the Lanxiang Vocational School, which has a history in China’s state-sponsored cyberattacks.
CSOonline: “Shipping companies’ computers compromised by malware-infected Chinese scanners” by Antone Gonsalves:
a three-stage attack dubbed Zombie Zero that compromised business software and sent data back to facilities linked to the Chinese military.
TrapX has found variants of the Zombie Zero malware in two manufacturers’ industrial control systems