JPMorgan, RBS Sued by Federal Agency Over Mortgage Bonds

[Winehole23]

JPMorgan, RBS Sued by Federal Agency Over Mortgage Bonds

June 20, 2011, 4:32 PM EDT

By Steven Church


(Updates with plan for more lawsuits in fifth paragraph.)
June 20 (Bloomberg) -- JPMorgan Chase & Co. and Royal Bank of Scotland Group Plc units were sued by the federal agency that regulates credit unions, seeking to recover money lost on mortgage-backed securities.


The National Credit Union Administration Board, or NCUA, accused the institutions of packaging and selling mortgage bonds with loans that didn’t meet underwriting guidelines. The bonds, sold to federally chartered credit unions, caused more than $800 million in losses, according to the agency.


A material percentage amount of the loans included in the bonds “were all but certain to become delinquent or default shortly after origination,” the regulator said in two complaints filed in federal court in Kansas City, Kansas. It didn’t specify the amount of money sought.


Five so-called wholesale credit unions failed because they purchased mortgage-backed securities that lost about $50 billion, David Small, an NCUA spokesman, said in an interview. After repackaging about $28 billion worth of the bonds and selling $10 billion worth, the final loss to the entire federal credit union system will be between $7 billion and $9 billion, Small said.


The agency plans to sue between five and 10 additional banks related to the mortgage bonds, Small said. Agency officials are in settlement talks with the banks, he said.


Untrue Statements


JPMorgan sold credit unions almost $213 million of mortgage bonds using sale documents that contained untrue statements or lacked important information, according to one complaint. RBS used documents with the same flaws to sell credit unions about $138 million of bonds, the NCUA said in the other complaint.


The NCUA wants the banks to help cover losses caused by the failures of the credit unions, including U.S. Central Federal Credit Union, which was placed into conservatorship in 2009. The agency is liquidating the wholesale credit unions. Wholesale credit unions provide services to retail credit unions, which serve consumers.


The prospectuses for the bond sales contained “untrue statements of material fact or omitted material facts,” in violation of U.S. securities laws, according to the NCUA.


Michael Geller, a spokesman for Edinburgh-based RBS, and Jennifer Zuccarelli, a spokeswoman for New York-based JPMorgan, didn’t immediately return calls for comment today.


The cases are National Credit Union Administration Board v. J.P. Morgan Securities LLC, 11-cv-02341, and National Credit Union Administration Board v. RBS Securities Inc., 11-cv-02340, U.S. District Court, District Of Kansas (Kansas City).
http://www.businessweek.com/news/2011-06-20/jpmorgan-rbs-sued-by-federal-agency-over-mortgage-bonds.html

[boutons_deux]

they'll "settle" for nothing, lawyers win

[FromWayDowntown]

they'll "settle" for nothing, lawyers win

They've been sued by a federal agency, not an individual whose attorneys are taking a percentage of some financial recovery. Whatever an ultimate settlement might be, its benefits run to the government.

I'm not sure how the lawyers will win in this instance.

[boutons_deux]

get back to me when F&F cram back down to the lenders all the shit fraudulent mortgages they were sold.

[Winehole23]

Sure. It adds up over time.

[RandomGuy]

Somehow I doubt the settlement will mean much to the banks they are suing.

Sometime I just wish, that just once, some bank would get bitch slapped so hard that the rest of them would think twice about peddling dishonest bullshit.

[boutons_deux]

"I'm not sure how the lawyers will win in this instance."

the Wall st lawyers will win somehow. Do they ever lose? If they "settle" for some trivial sum vs the possible maximum, I assume they will get "contingency" bonuses.

[Wild Cobra]

Somehow I doubt the settlement will mean much to the banks they are suing.

Sometime I just wish, that just once, some bank would get bitch slapped so hard that the rest of them would think twice about peddling dishonest bullshit.
If we didn't have politicians bailing them out with our money, that might happen.

[Winehole23]

http://www.bloomberg.com/news/2011-06-23/jpmorgan-gets-a-break-where-goldman-got-nailed-jonathan-weil.html

[boutons_deux]

"If we didn't have politicians bailing them out with our money"

Wall Streeters, current/past/future, decided/extorted the bailout. Place the guilt and crime where it belongs. Wall St does the corrupting, not Congress.

[ElNono]

slap that wrist...

[boutons_deux]

Here's another one

Pension Fund Scandal Shows That Corruption Still Pays Well in New York

Forthcoming sentences to be imposed in New York on people involved in corruptly obtaining investment funds from the New York State Pension Fund will demonstrate what costs, if any, will be imposed on corrupters, rather than the public servants they corrupted.

Whether New York is serious about the battle against corruption involving the rich and powerful is very much a question. Evidence will be found in whether Hevesi's principal partners in crime serve real time, or get off with a slap on the wrist that allows them to go on with their lives as if they done nothing very seriously wrong. A man who stole $50,000 would face up to fifteen years in prison.

It is not clear to me that a man who pays bribes of $800,000 or more to obtain $250,000,000 should go free.

http://www.huffingtonpost.com/john-w-moscow/pension-fund-scandal-leniency_b_883003.html?view=print

[boutons_deux]

Bank Of America Nears $8.5B Settlement On Mortgage-Securities Claims

Bank of America Corp is close to a deal to pay $8.5 billion to settle claims from investors that lost money on mortgage-backed securities,

http://www.huffingtonpost.com/2011/06/28/bank-of-america-nears-85b-mortgage-settlement_n_886412.html?view=print

==========

The capitalists get paid off, while BoA continues to steal houses and mortgage payments from people for houses BoA, aided by the corrupt courts, can't show title and/or just by making errors.

[boutons_deux]

Yves Smith with deeper article

Bank of America Likely to Settle Case with NY Fed, Pimco, BlackRock for $8.5 Billion

While most threatened litigation is settled out of court, this case in theory had to overcome procedural hurdles for any suit to be filed, and no group of investors had ever surmounted this impediment. Chris Whalen similarly noted that BofA could simply tell the investors to “pound sand.” However, we had noted that if it moved forward, that this type of case, a representation and warranties case, is always settled because they are too expensive to fight in court.

And representation and warranties cases of this type (which would demand that the servicer make the originator buy back dud loans) requires that the investors not merely prove that the seller lied, but that the lies were THE reason that the losses on specific mortgages took place (as opposed to normal “shit happens” loan losses, meaning due to unemployment or other loss of income, death, and disability). That means even if the judge approves the use of a sample that each side still will argue on the individual cases within that sample. Think how many loans that would involve across what as of the last sighting was reported to be 115 deals. Because these case are so costly to pursue, settlements historically have been 10% to 15% of the value of the loans alleged to have been misrepresented.

http://www.nakedcapitalism.com/2011/06/bank-of-america-likely-to-settle-case-with-ny-fed-pimco-blackrock-for-8-5-billion.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capi talism%29

[Winehole23]

$8.5 billion is a hell of a settlement.

[boutons_deux]

There were $100Bs involved.

[Winehole23]

You minimize.

[boutons_deux]

Guess How Much More Wall St. Spends on Bonuses Than on Penalties for Torpedoing the Economy?

JPM Chase, at the height of the federal bank subsidization program, got nearly $100 BILLION dollars worth of -- help.

Leaving aside the tepid characterization implied by the term "misconduct" instead of say, "racketeering," these fines don't, and won't, change the banking landscape. They won’t halt the manufacturing of potentially toxic securities crafter from the droppings on the dirty floor of banks’ books. They don’t stop banks from legally taking multiple sides of any trade in the name of "market making."

The SEC seems fine with that. The SEC was founded in conjunction with the Glass-Steagall Act that separated banks that dealt with the public's deposit and financing needs, from those that created and traded speculative securities for profit. It would be prudent to suggest a modern equivalent of that act. It might help the SEC do its job of protecting the public before devastation, or at the very least, untangle the web of fraud and debt at the core of these complex giants.

Put that in perspective with the $28 billion in bonuses that JPM Chase scooped up for just 2010, or the $424 billion in total bonuses the top six banks bagged between the crisis book-end years of 2007-2009, or the $128 billion of bonuses Wall Street got last year. Now, consider that not only is the penalty amount a pittance, but the impact of these fines is even smaller.

http://www.alternet.org/module/printversion/151434

[boutons_deux]

Bank of America announced plans on Wednesday to set aside $14 billion to pay investors who bought securities it assembled from mortgages that later soured, an agreement that the company expected would lead to a second-quarter loss of $8.6 billion to $9.1 billion.

http://www.nytimes.com/2011/06/30/business/30mortgage.html?_r=1&partner=rss&emc=rss&pagewanted=print

[boutons_deux]

Now, if the financial sector set aside $1T+ to buy back the toxic shit they sold the Treasury, and bad mortagges they sold to Fannie and Freddie ....

[Winehole23]

That cost got socialized. We set aside $750B to buy even more of that toxic shit.

[RandomGuy]

Guess How Much More Wall St. Spends on Bonuses Than on Penalties for Torpedoing the Economy?

JPM Chase, at the height of the federal bank subsidization program, got nearly $100 BILLION dollars worth of -- help.

Leaving aside the tepid characterization implied by the term "misconduct" instead of say, "racketeering," these fines don't, and won't, change the banking landscape. They won’t halt the manufacturing of potentially toxic securities crafter from the droppings on the dirty floor of banks’ books. They don’t stop banks from legally taking multiple sides of any trade in the name of "market making."

The SEC seems fine with that. The SEC was founded in conjunction with the Glass-Steagall Act that separated banks that dealt with the public's deposit and financing needs, from those that created and traded speculative securities for profit. It would be prudent to suggest a modern equivalent of that act. It might help the SEC do its job of protecting the public before devastation, or at the very least, untangle the web of fraud and debt at the core of these complex giants.

Put that in perspective with the $28 billion in bonuses that JPM Chase scooped up for just 2010, or the $424 billion in total bonuses the top six banks bagged between the crisis book-end years of 2007-2009, or the $128 billion of bonuses Wall Street got last year. Now, consider that not only is the penalty amount a pittance, but the impact of these fines is even smaller.

http://www.alternet.org/module/printversion/151434

Make all the executives give back their bonuses as penalty.

That might get their attention. :pimpslap

Ah, one can fantasize.

[Winehole23]

Clawback? Anti-business!

[boutons_deux]

Why did Bank of America escape prosecution

Charles R. Morris, a former banker and the author of "The Trillion Dollar Meltdown," told Salon on Wednesday that while it is clear that BofA behaved with "no shame," there are numerous reasons why the feds left the bank alone.

For instance, unlike in a case of insider trading, when the guilty party is caught red-handed on the phone, "it's really hard to make these criminal cases stick and if you really want to get the top guy, it will take forever," Morris said.

"You don't have a clean smoking gun," he explained. "It seems to me that Goldman Sachs was pretty much the only competent bank, in that when they took a view, they really took it and managed it up and down the institution." But proving "intent" at the top can be problematic.

Even with a case like Bear Stearns -- where there seems to be ample grounds for a criminal case (email trails that have come up in lawsuits that have reached discovery and Senate investigations show clear instances of fraud) -- criminal charges might not stick, Morris noted.

The desire of the federal government to follow up with criminal charges is relevant, too. When it came to bringing charges against Enron's Jeff Skilling and Ken Lay, the FBI worked very hard indeed, but "they haven't done that here," Morris said. "The federal government was confused over whether they wanted to save or punish the banks. They've decided to save them."

"The settlement is actually pretty modest considering the losses involved," he said. "The Wall Street Journal said the investors held securities originally valued over $100 billion, which I think is a bit steep. But on the Wall Street Journal figures, if they're settling for 8.5 percent of what the investment was originally worth, it's pretty modest."

http://www.salon.com/news/politics/war_room/2011/06/29/bank_of_america_charles_morries_interview/index.html

[boutons_deux]

Yves Smith:

BofA “Settlement”: Not a Done Deal, and Not a Good Deal for Investors

http://www.nakedcapitalism.com/2011/06/bofa-settlement-not-a-done-deal-and-not-a-good-deal-for-investors.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capi talism%29

[boutons_deux]

Lender proves to be a costly buy for Bank of America

Countrywide Financial Corp. turns out to be a huge miscalculation as red ink keeps flowing. The bank added $20.4 billion this week in expected costs to the tally.

E. Scott Reckard, Los Angeles Times

June 30, 2011

When Bank of America Corp. acquired mortgage giant Countrywide Financial Corp. three years ago this week, cementing BofA's position as a consumer banking leader, the purchase price was a measly $2.5 billion in stock.

But the real cost could easily be 10 to 15 times that amount after the home lender incurred huge losses under BofA's ownership and the bank agreed to pay billions of dollars to settle litigation over bad loans made by Countrywide during the housing boom. On Wednesday alone, the bank added $20.4 billion in expected costs to the tally.

The mounting numbers have made the acquisition of Countrywide one of the most misguided takeovers in the history of banking, analysts say.

"The worst by a mile," FBR Capital Markets analyst Paul Miller said — or at least the worst since he began following the industry in 1992.

When the Charlotte, N.C., bank agreed in January 2008 to buy Countrywide, the nationwide mortgage meltdown was well underway in the wake of surging defaults on subprime and other high-risk loans written by the Calabasas company and other lenders.

Shortly after the takeover was completed the following July 1, Kenneth Lewis, BofA's chief executive at the time, acknowledged that Countrywide's losses were running at the high end of what his staff had projected.

But because accountants had aggressively written down the value of Countrywide's assets before transferring them to BofA's books, Lewis predicted the combined home-loan business, consisting mostly of Countrywide's operations, would immediately show a profit — and could see huge earnings growth once the mortgage industry recovered.

Instead, the unit has bled about $16 billion in red ink since the Countrywide takeover — with no real industry recovery in sight.

The $20.4 billion in bad news disclosed Wednesday includes $8.5 billion in payouts to 22 institutional investors to settle demands that Bank of America repurchase bonds backed by Countrywide mortgages. An additional $5.5 billion is to beef up reserves for similar demands by other investors.

The bank also said it would record $6.4 billion in additional mortgage-related charges for the second quarter. That amount includes a $2.6-billion write-off of its Countrywide investment and expenses for revising its mortgage-servicing operations to comply with orders from the Federal Reserve and the Office of the Comptroller of the Currency, which regulates national banks.

The Fed and the comptroller's office were acting in response to revelations that Bank of America and other large mortgage servicers had cut corners in their handling of troubled borrowers, including "robo-signing" documents supporting foreclosures without having the signers actually verify the information.

A coalition of state attorneys general and federal officials are negotiating a separate, broader settlement of the foreclosure fiasco with Bank of America and four other big banks that are major mortgage servicers.

Those authorities, who began their investigation in October, met with the servicers last week but were unable to reach an agreement with the banks on the penalty they must pay, a spokesman for Iowa's attorney general said. Estimates of the total to be paid by the five banks have ranged from $5 billion to $20 billion.

BofA said the newly announced costs meant it would report a net loss of $8.6 billion to $9.1 billion for the second quarter, instead of a profit of $3.2 billion to $3.7 billion. Wall Street seemed to breathe a sigh of relief that things weren't even worse. Bank of America shares ended the day up 32 cents, or 3%, at $11.14.

The new Countrywide-related costs are in addition to these previously announced items, some of which contributed to the operating losses at BofA's mortgage unit since the takeover:

A 2008 settlement with California to cut payments by as much as $8.6 billion on mortgages that state officials said were abusive.

A 2010 accord to forgive as much as $3 billion in principal for severely delinquent Countrywide borrowers in Massachusetts who owed more on their mortgages than their homes were worth.

An agreement last year to pay $600 million to former Countrywide shareholders to settle a securities-fraud lawsuit.

An agreement in April to pay $1.1billion to mortgage insurer Assured Guaranty Ltd. related to losses on Countrywide loans.

More than $6 billion in payments to government-controlled loan buyers Fannie Mae and Freddie Mac to settle demands for buybacks of flawed home loans.

Bank of America can take some consolation, however small, in the fact that it paid for Countrywide entirely with BofA stock.

When it agreed to the deal in January 2008, those shares were valued by the stock market at $4 billion. When the transaction closed, their value had fallen to $2.5 billion as the global financial crisis had intensified. They are now worth about $1.2 billion.

http://www.latimes.com/business/realestate/la-fi-bofa-settlement-20110630,0,1663926,print.story

==========

So it was a bad deal, a bad mgmt decision, so the board punished the mgmt with reduced bonuses? :lol

[boutons_deux]

J.P. Morgan to pay $228 million for bond bid-rigging scheme

US bank JP Morgan Chase was slapped with fines and repayment penalties of $228 million for a bid-rigging scheme that shortchanged issuers of municipal bonds, US authorities announced Thursday.

In a case that has also seen Swiss bank UBS and Bank of America heavily fined, JP Morgan admitted that employees of JP Morgan Securities (JPMS) conspired to manipulate the bidding process for the right to handle the proceeds of billions of dollars in muni bond auctions between 2001 and 2006.

The payout covers penalties, restitution of $51.2 million to the affected borrowers and disgorgement of profits on the deals, according to the Department of Justice and the Securities and Exchange Commission.

In parallel agreements with state and federal authorities, the company avoided being legally prosecuted on the charges while admitting to anticompetitive conduct.

Eighteen former employees of banks and financial service firms have been hit with criminal charges in the scheme, and nine have pleaded guilty, including former JP Morgan executive James Hertz, the Justice Department said in a statement.

JP Morgan's involvement in the ring tied it to at least 93 bids which were fraudulently fixed in 31 states, according to the SEC.

http://www.rawstory.com/rs/2011/07/07/j-p-morgan-to-pay-228-million-for-bond-bid-rigging-scheme/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+TheRawStory+%28The+Raw+Story% 29

=============

Fuckers, ripping off taxpayers for fun and profit and bonuses and stock price rises/dividends to capitalists.

Do these fines come anywhere close to nullifying the ripoffs JPM and friends pocketed?

I always assume that these cases represent only a tiny fraction of what's really going on.

But taxing these kleptocratic assholes is "stealing" --- WC

[boutons_deux]

BofA to take $13 billion more in charges: Bernstein

Bank of America will take another $13 billion in charges related to pending settlement with private label mortgage-backed securities investors, Sanford C Bernstein said.

A group of public pension funds and a group of bondholders have challenged Bank of America Corp's $8.5 billion settlement with holders in soured mortgage-backed securities, which the bank expects will result in $20 billion of charges and a second-quarter loss.

The bank was hit hard by toxic home loans after BofA bought mortgage lender Countrywide Financial in 2008, just as the housing market bubble was bursting, ensuing billions of dollars in losses.

http://www.reuters.com/article/2011/07/07/us-usbanks-bernstein-research-idUSTRE7667AR20110707?feedType=RSS&feedName=topNews&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+reuters%2FtopNews+%28News+%2F +US+%2F+Top+News%29

[boutons_deux]

As Wall St. Polices Itself, Prosecutors Use Softer Approach

As the financial storm brewed in the summer of 2008 and institutions feared for their survival, a bit of good news bubbled through large banks and the law firms that defend them.

Federal prosecutors officially adopted new guidelines about charging corporations with crimes — a softer approach that, longtime white-collar lawyers and former federal prosecutors say, helps explain the dearth of criminal cases despite a raft of inquiries into the financial crisis.

Though little noticed outside legal circles, the guidelines were welcomed by firms representing banks. The Justice Department’s directive, involving a process known as deferred prosecutions, signaled “an important step away from the more aggressive prosecutorial practices seen in some cases under their predecessors,” Sullivan & Cromwell, a prominent Wall Street law firm, told clients in a memo that September.

The guidelines left open a possibility other than guilty or not guilty, giving leniency often if companies investigated and reported their own wrongdoing. In return, the government could enter into agreements to delay or cancel the prosecution if the companies promised to change their behavior.

But this approach, critics maintain, runs the risk of letting companies off too easily.

“If you do not punish crimes, there’s really no reason they won’t happen again,” said Mary Ramirez, a professor at Washburn University School of Law and a former assistant United States attorney. “I worry and so do a lot of economists that we have created no disincentives for committing fraud or white-collar crime, in particular in the financial space.”

While “deferred prosecution agreements” were used before the financial crisis, the Justice Department made them an official alternative in 2008, according to the Sullivan & Cromwell note.

It is among a number of signs, white-collar crime experts say, that the government seems to be taking a gentler approach.

http://www.nytimes.com/2011/07/08/business/in-shift-federal-prosecutors-are-lenient-as-companies-break-the-law.html?_r=2&ref=business&pagewanted=print

========

The kleptocratic plutocracy has dictated to its subsidiary, govts at all levels, to back off and let them rape and pillage at will without serious punishments, if any at all.

[boutons_deux]

JP Morgan Chase Fine: Another Slap on the Wrist for Wall Street

This is one of the best examples we’ve had yet of the profound difference in the style of criminal justice enforcement for the very rich and connected, versus the style of justice for everyone else. This scam that Chase, Bank of America and UBS were involved with was no different in any way, really, from old-school mafia-style bid-rigging scams.

What these banks did is they got together and carved up territory between them, arranging things so that they wouldn’t be bidding against each other in municipal debt auctions. That means the 18 different states involved in these 93-odd deals all got screwed out of the best prices, leaving the taxpayers in those places severely overcharged for their public borrowing.

This is absolutely no different from what mafia groups in New York used to (and probably still do) do for public contracts – the proverbial five families would get together, divide up the boroughs and neighborhoods between them, and each family would individually buy or intimidate their way into the bidding process, corrupting the game so that the public had to overpay for their garbage collection or their construction labor or whatever. The only difference here is that we’re talking about debt, not garbage. But the concept is exactly the same; it’s the same crime.

If Khuzami’s defendants had been a bunch of Italians from Howard Beach, they would be facing RICO charges and would be looking at years in prison, plus seizure of all their ill-gotten gains, in addition to civil suits and penalties.

http://www.rollingstone.com/politics/blogs/taibblog/jp-morgan-chase-fine-another-slap-on-the-wrist-for-wall-street-20110708?print=true

[Winehole23]

Chicago Trading Firm’s Lawsuit Claims Banks Conspired to Manipulate Libor

Q
By David Voreacos - Jul 7, 2011 4:33 PM CT Thu Jul 07 21:33:21 GMT 2011

A Chicago trading firm accused Bank of America Corp. (BAC) (http://www.bloomberg.com/apps/quote?ticker=BAC:US), JPMorgan Chase & Co. (JPM) (http://www.bloomberg.com/apps/quote?ticker=JPM:US), UBS AG (UBSN) (http://www.bloomberg.com/apps/quote?ticker=UBSN:VX) and Citigroup Inc. (C) (http://www.bloomberg.com/apps/quote?ticker=C:US) of conspiring to manipulate the London interbank offered rate.





The banks drove down Libor to generate billions of dollars in profits from swaps, loans, interest rate derivatives and other financial instruments whose value depended on the rate, Eldorado Trading Group LLC said in a complaint filed July 5 in federal court in Newark, New Jersey.



The civil lawsuit is one of several filed in response to probes by the U.S. Justice Department, Securities and Exchange Commission and Commodity Futures Trading Commission related to whether there were improper attempts to manipulate Libor. The rate, at which banks borrow from one another in the London interbank market, is a short-term, international benchmark.



The banks “had a substantial incentive to manipulate, and in fact did manipulate, Libor downward, in order to increase the income from its interest rate derivatives and similar instruments,” according to Eldorado’s complaint. “This manipulation resulted in billions of dollars in revenue.”



Eldorado owned futures and options contracts based on Eurodollar deposits traded on the Chicago Mercantile Exchange from August 2007 to December 2009, according to the complaint. It seeks to represent similar owners of contracts traded on the Chicago exchange.



U.S. Probes



Karina Byrne (http://topics.bloomberg.com/karina-byrne/), a UBS spokeswoman, said the Zurich-based bank is cooperating with the U.S. probes, and has also gotten requests for information from the Japan Financial Services Agency and the U.K. Financial Services Authority.
“We believe this suit is without merit,” Danielle Romero- Apsilos, a spokeswoman for New York-based Citigroup, said in an e-mail.



Lawrence Grayson, a spokesman for Charlotte, North Carolina-based Bank of America, declined to comment. Jennifer Zuccarelli, a spokeswoman for New York-based JPMorgan, declined to comment.



The case is Eldorado Trading Group LLC v. Bank of America Corp., 11-cv-3847, U.S. District Court, District of New Jersey (Newark).

[boutons_deux]

Let's not tax the wealthy just because they work so hard and are so honest. They deserve every penny they steal.

[Winehole23]

hehe

[boutons_deux]

Florida Foreclosure Fraud Investigators Allege Attorney General Fired Them For Aggressively Pursuing Banks

http://thinkprogress.org/wp-content/uploads/2011/07/bondiffraud0713.jpg

Former Assistant Attorney General Theresa Edwards and colleague June Clarkson had been investigating the state’s so-called “foreclosure mills,” uncovering evidence of legal malpractice that also implicated banks and loan servLuck_The_Fakers_icers. Despite positive performance evaluations, Edwards said the two were told during a meeting with their supervisor in late May to give up their jobs voluntarily or be let go. Edwards said no reason was given for the move.

“It all happened very abruptly,” said Edwards, who had worked in the attorney general’s office for about three years. The foreclosure investigations were launched under former Attorney General Bill McCollum, but Edwards said she sensed changes were coming under Gov. Rick Scott and Attorney General Pam Bondi. “I think they wanted to put people in there that were more in line with their thinking,” Edwards said.

According to data collected from the National Institute On Money In State Politics, Bondi received $57,500 from the securities and investment industries and $150,925 from the real estate industry during her last election campaign.

http://thinkprogress.org/economy/2011/07/14/268776/florida-foreclosure-fraud-investigators-allege-attorney-general-fired-them-for-aggressively-pursuing-banks/

========

the financial/realestate sectors own the pretty bitch

[boutons_deux]

California AG Considering Joining New York, Delaware in Broad Probe of Mortgage Abuses

We’d said the 50 state attorneys general settlement was wobblier than the press cheerleading would lead you to believe. We’ve also said the California AG, Kamala Harris, was likely to be among the defectors. The odds of that increased today as she met with New York AG Eric Schneiderman to discuss joining the probe that he and Delaware AG Beau Biden have launched, which is the most extensive investigation undertaken to date.

It isn’t hard to see why the settlement talks are fracturing. Many AGs are unhappy with Tom Miller’s failure to keep them in the loop, the lack of meaningful investigations, and the high odds that the banks will get a broad waiver, which is tantamount to a big “get out of liability free card”. If you have any doubts whose interests are served by these negotiations, Jamie Dimon, in an investor conference call Wednesday, said he “would do anything to get it done today.” And no wonder why. He also said, per Bloomberg:

There have been so many flaws in mortgages that it’s been an unmitigated disaster…We just really need to clean it up for the sake of everybody. And everybody is going to sue everybody else, and it’s going to go on for a long time.

Given that California was one of the states worst hit by the mortgage meltdown, its abstention from a settlement deal would have a disproportionate impact. Politically, the fact that the states that have exited and appear likely to exit have Democratic AGs is also more of a blow to the Administration, which has been involved in the negotiations that Republican defections would be.

From the Los Angeles Times (hat tip Lisa Epstein):

California Atty. Gen. Kamala Harris met with New York Atty. Gen. Eric Schneiderman on Thursday in San Francisco to discuss cooperating on the investigation, which is already one of the broadest to probe how banks encouraged the financial crisis through the creation of risky financial instruments backed by mortgages.

New York and Delaware have more than a dozen attorneys working full time on the effort and have subpoenaed or requested information from 13 financial firms, including Goldman Sachs and JPMorgan Chase & Co., according to people familiar with the investigation. The people spoke on condition of anonymity because of the sensitivity of the investigation…

Biden and Schneiderman have separate but parallel investigations into the matter and have signed an agreement to share information, people familiar with the cases said.

We’d said the 50 state attorneys general settlement was wobblier than the press cheerleading would lead you to believe. We’ve also said the California AG, Kamala Harris, was likely to be among the defectors. The odds of that increased today as she met with New York AG Eric Schneiderman to discuss joining the probe that he and Delaware AG Beau Biden have launched, which is the most extensive investigation undertaken to date.

It isn’t hard to see why the settlement talks are fracturing. Many AGs are unhappy with Tom Miller’s failure to keep them in the loop, the lack of meaningful investigations, and the high odds that the banks will get a broad waiver, which is tantamount to a big “get out of liability free card”. If you have any doubts whose interests are served by these negotiations, Jamie Dimon, in an investor conference call Wednesday, said he “would do anything to get it done today.” And no wonder why. He also said, per Bloomberg:

There have been so many flaws in mortgages that it’s been an unmitigated disaster…We just really need to clean it up for the sake of everybody. And everybody is going to sue everybody else, and it’s going to go on for a long time.

Given that California was one of the states worst hit by the mortgage meltdown, its abstention from a settlement deal would have a disproportionate impact. Politically, the fact that the states that have exited and appear likely to exit have Democratic AGs is also more of a blow to the Administration, which has been involved in the negotiations that Republican defections would be.

From the Los Angeles Times (hat tip Lisa Epstein):

California Atty. Gen. Kamala Harris met with New York Atty. Gen. Eric Schneiderman on Thursday in San Francisco to discuss cooperating on the investigation, which is already one of the broadest to probe how banks encouraged the financial crisis through the creation of risky financial instruments backed by mortgages.

New York and Delaware have more than a dozen attorneys working full time on the effort and have subpoenaed or requested information from 13 financial firms, including Goldman Sachs and JPMorgan Chase & Co., according to people familiar with the investigation. The people spoke on condition of anonymity because of the sensitivity of the investigation…

Biden and Schneiderman have separate but parallel investigations into the matter and have signed an agreement to share information, people familiar with the cases said.

http://www.nakedcapitalism.com/2011/07/california-ag-considering-joining-new-york-delaware-in-broad-probe-of-mortgage-abuses.html

[boutons_deux]

Quelle Surprise! The Banks Lied and Robosigning Lives!

14 major servicers then swore in consent orders earlier this year that they’d stop doing all that bad stuff. But with compliance weak (the banks get to hire the overseers!), they appear to have decided they don’t need to change their ways all that much. Indeed, the record of consent orders is underwhelming; for instance, both Nevada and Arizona are suing Countrywide for violations of past agreements.

Two stories were published yesterday, one a long form Reuters investigation (hat tip April Charney), the other a shorter report by AP (hat tip Lisa Epstein and Daniel Pennell). First from Reuters:

Reuters has found that some of the biggest U.S. banks and other “loan servicers” continue to file questionable foreclosure documents with courts and county clerks. They are using tactics that late last year triggered an outcry, multiple investigations and temporary moratoriums on foreclosures.

In recent months, servicers have filed thousands of documents that appear to have been fabricated or improperly altered, or have sworn to false facts.

Reuters also identified at least six “robosigners,” individuals who in recent months have each signed thousands of mortgage assignments — legal documents which pinpoint ownership of a property. These same individuals have been identified — in depositions, court testimony or court rulings — as previously having signed vast numbers of foreclosure documents that they never read or checked.

So…the banks have perjured themselves, made commitment to regulators that they are brazenly violating. The Reuters investigation determined that at least 5 of the 14 servicers that signed consent decrees in April are not complying with their requirements: OneWest, Bank of America, HSBC, Bank USA, Wells Fargo and GMAC Mortgage. Note that three of them (Bank of America, Wells, and GMAC, now Ally) are among the five biggest servicers, so the impact is greater than the number of derelicts suggests. And one is the annoyingly pious Wells, which keeps maintaining, contrary to all evidence, that it is better than the other servicers. In addition, another six servicers that did not sign the consent orders were also found by the Reuters exam to have engaged in abusive practices.

The AP report found that servicers were continuing to generate documents signed by well-known robosigners, including the notorious Lisa Greene. This seems to be asking to be caught out.

http://www.nakedcapitalism.com/2011/07/quelle-surprise-the-banks-lied-and-robosigning-lives.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capi talism%29

[boutons_deux]

Mortgage 'Robo-Signing' Goes On

Mortgage industry employees are still signing documents they haven't read and using fake signatures more than eight months after big banks and mortgage companies promised to stop the illegal practices that led to a nationwide halt of home foreclosures.

County officials in at least three states say they have received thousands of mortgage documents with questionable signatures since last fall, suggesting that the practices, known collectively as "robo-signing," remain widespread in the industry.

The documents have come from several companies that process mortgage paperwork, and have been filed on behalf of several major banks. One name, "Linda Green," was signed almost two dozen different ways.

Lenders say they are working with regulators to fix the problem but cannot explain why it has persisted. :lol :lol :lol :lol

http://finance.yahoo.com/news/AP-Exclusive-Mortgage-apf-3239330433.html

=======

It has "persisted" because all y'all fucking criminal bankers are raping due process of property law, the fundamental law of society, "because you can", and no govt has the interest or policing power to tackle such a huge, widespread crime.

When are the tea baggers gonna jump on the banks? And why haven't they jumped on the banks? Maybe because the tea baggers aren't legit protesters but astro-turf assholes organized and financed by the wealthy to harass the banks' only potential countervailing power?

[boutons_deux]

If you're forgetting who gave us the Banksters' Great Depression, here's some of the criminals:

Wells Fargo Fined $85 Million By Fed Over Its Subprime Mortgage Lending Practices

In its largest consumer protection enforcement action ever, the Federal Reserve today slapped an $85 million penalty on Wells Fargo, a bank scrutinized for pushing subprime loans on borrowers who qualified for lower prime lending rates. According to the official press release, Wells Fargo received the order both for its strong-arming of borrowers into subprime loans and for falsifying income information on mortgage forms. In addition to the civil fine, the Federal Reserve mandated that the mega-bank compensate those borrowers who were adversely affected, estimated to number “between 3,700 and possibly more than 10,000.” Wells Fargo received $25 billion in the taxpayer-funded bailout.

http://thinkprogress.org/economy/2011/07/20/274460/wells-fargo-fined-lending/

http://www.federalreserve.gov/newsevents/press/enforcement/20110720a.htm

======

And still, not a peep out the tea baggers against the financial sector. :lol

$85M? How much did Wells-Fargo pocket from these 1000s of screwed customers?

[Winehole23]

A pittance for a crime like that. Men should hang lest others take encouragement.

[boutons_deux]

Audit: Fed gave $16 trillion in emergency loans

The U.S. Federal Reserve gave out $16.1 trillion in emergency loans to U.S. and foreign financial institutions between Dec. 1, 2007 and July 21, 2010, according to figures produced by the government's first-ever audit of the central bank.

Last year, the gross domestic product of the entire U.S. economy was $14.5 trillion.

Of the $16.1 trillion loaned out, $3.08 trillion went to financial institutions in the U.K., Germany, Switzerland, France and Belgium, the Government Accountability Office's (GAO) analysis shows.

Additionally, asset swap arrangements were opened with banks in the U.K., Canada, Brazil, Japan, South Korea, Norway, Mexico, Singapore and Switzerland. Twelve of those arrangements are still ongoing, having been extended through August 2012.

Out of all borrowers, Citigroup received the most financial assistance from the Fed, at $2.5 trillion. Morgan Stanley came in second with $2.04 trillion, followed by Merill Lynch at $1.9 trillion and Bank of America at $1.3 trillion.

The audit also found that the Fed mostly outsourced its lending operations to the very financial institutions which sparked the crisis to begin with, and that they delegated contracts largely on a no-bid basis. The GAO report recommends new policies that would eliminate such conflicts of interest, and suggests that in the future the Fed should keep better records of their emergency decision-making process.

http://www.rawstory.com/rs/2011/07/21/audit-fed-gave-16-trillion-in-emergency-loans/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+TheRawStory+%28The+Raw+Story% 29

[boutons_deux]

Is Bank of America At Risk of a Death Spiral?

First, the bank has been overly optimistic. It refused to write down $4.4 billion of goodwill from Countrywide until late last year, and maintained it would only suffer $4.4 billion [yes, the same number] in mortgage-related losses, then wrote off $19.2 billion more last quarter. Second, the bank appears to be in denial:

The crucial question today is whether Bank of America needs fresh capital to strengthen its balance sheet. Moynihan emphatically says it doesn’t, pointing to regulatory-capital measures that would have us believe it’s doing fine. The market is screaming otherwise, judging by the mammoth discount to book value. Then again, for all we know, the equity markets might not be receptive to a massive offering of new shares anyway, even if the bank’s executives were inclined to try for one.

Weil correctly depicts BofA as a systemic risk. And this confirms a point made by critics of so-called financial reforms, including yours truly, that the banks were not dealt harshly enough in the crisis

And let us tell you a dirty secret: while Bank of America, thanks to Countrywide, is patient zero of the housing mess, Wells is next in line. Residential real estate is proportionately even bigger relative to the bank’s earnings and balance sheet, its accounting has been somewhere between aggressive and misleading, and despite its pious claims otherwise, it is no better than any of the other big banks

http://www.nakedcapitalism.com/2011/07/is-bank-of-america-at-risk-of-a-death-spiral.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capi talism%29

[boutons_deux]

Moot point, because Wall St and Repugs have completely gutted CPFB and Wall St nixed Warren, and will probably nix the nominee, and will gut it further, with the Repugs totally underfunding/defunding it.



New Poll: Americans Overwhelmingly Support Consumer Financial Protection Bureau

Likely voters, including majorities of Independents, Democrats, and Republicans, favor the 2010 Dodd-Frank Wall Street Reform law by a 5 to 1 margin (71% vs. 14%).

Presented with information about challenges in Congress to the law, almost two-thirds (63%) believe that policymakers should allow the law to be fully implemented.

Three-quarters (74%) of voters support the existence of a single entity with the mission of protecting consumers from deceptive practices.


http://www.alternet.org/newsandviews/article/637363/new_poll%3A_americans_overwhelmingly_support_consu mer_financial_protection_bureau/

[Winehole23]

And let us tell you a dirty secret: while Bank of America, thanks to Countrywide, is patient zero of the housing messHardly a secret by now.

[boutons_deux]

SEC Denied Rule Making It Easier For Shareholders To Exercise Control Over Corporate Boards

- A U.S. appeals court has rejected a new Securities and Exchange Commission rule intended to make it easier for shareholders to nominate directors to corporate boards.

In a major blow to the SEC, the U.S. Court of Appeals for the District of Columbia Circuit said the SEC's rule was "arbitrary and capricious" and that the agency had failed to properly weigh the economic consequences.

Friday's ruling marks the first successful legal challenge to a provision in last year's Dodd-Frank financial overhaul law which was intended to curb Wall Street excesses leading up to the global financial crisis.

The SEC rule, which had been put on hold pending the outcome of this case, would have required companies to include a shareholder candidate on corporate ballots known as proxies -- provided that the nominating shareholders held at least 3 percent of the voting power in the corporate stock for three years.

http://www.huffingtonpost.com/2011/07/22/sec-rule-is-denied-by-court-failed-dodd-frank_n_907254.html?view=print&comm_ref=false

[boutons_deux]

Banks Increasingly Use Payday Loans Despite Crackdown On Predatory Lending

Two years after the recession officially ended and one year after the creation of a landmark financial law meant to prevent another financial crisis, predatory lending practices remain a part of mainstream American banking, a new report from the Center for Responsible Lending shows.

On Thursday, the CRL, a nonprofit research organization, published a report saying that some mainstream banks are offering payday loans -- short-term, high-interest loans that can take customers months to pay off.

Payday loans have long been offered by non-banking establishments, such as shops that cash checks and money orders. But in recent years, well-known banks have started offering them too.

Here’s how a payday loan works: You, the customer, borrow money from the bank. The bank lends it to you at a high APR, or annual interest rate.

When your next paycheck comes, the bank repays itself out of your direct deposit -- taking the loan, plus whatever interest the bank charges. It doesn’t matter if you don’t have enough money in your account; the bank goes ahead and repays itself anyway, even if this triggers overdraft fees. Often customers end up having to take out another loan to get by until the next paycheck -- and so the cycle continues.

The CRL report isn't the first indication that mainstream banks have adopted this practice, which is sometimes called a “direct deposit advance” or a “checking account advance.”

In 2010, Bloomberg reported that banks including Wells Fargo, U.S. Bancorp and Fifth Third Bancorp were offering services called “checking advance products” -- which functioned very similarly to payday loans -- as a way to recoup billions in lost revenue after new overdraft-fee regulations were passed.

http://www.huffingtonpost.com/2011/07/22/payday-loans-banks_n_906765.html?view=print&comm_ref=false

[boutons_deux]

Should You Get Only $7000 if Wells Stole Your House?

If you are a too big to fail bank like Wells Fargo, the wages of crime look awfully good. RIp off as many as 10,000 people to the point where they lose their homes and your good friend the Fed will let you off the hook for somewhere between $1000 and $20,000 per house.

all the loss of your home is worth according to the Fed is your moving costs and maybe a month or two of rent.

http://www.nakedcapitalism.com/2011/07/should-you-get-only-7000-if-a-bank-steals-your-house.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capi talism%29

Fed to Wells: $7000 for Wrongful Foreclosure

http://www.creditslips.org/creditslips/2011/07/fed-to-wells-7000-for-wrongful-foreclosure.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+creditslips%2Ffeed+%28Credit+ Slips%29

==========

All the right-wing assholes on this board were spewing the VRWC lie that the housing mess was the entire fault of F&F, CRA, Acorn, and lying borrowers.

[boutons_deux]

cc lenders are the same predatory mofos everywhere.

Rise of Consumer Credit in Chile and Brazil Leads to Big Debts and Lender Abuses

Ms. Silva was among 418,000 clients in Chile who fell behind on their payments and had their debts repackaged by the retailer La Polar, which raised interest rates and extended loan terms without their knowledge. In early June, it came to light that executives at La Polar had been unilaterally renegotiating clients’ debts for more than six years. The news stunned Chileans and has become one of the biggest financial scandals of Chile’s 20-year economic boom.

“I share blame in this, but this company should have been more honorable and transparent,” said Ms. Silva, 30. “They were targeting people with more modest means. This became a vicious cycle that was never going to end.”

The scandal has underscored how South American countries — including Chile and Brazil, two of the region’s healthiest economies — are going through growing pains as the use of credit grows. The credit-fueled spending has driven extensive economic growth. But it has also opened the door to abuses, as credit issuers have used predatory techniques to lure customers, particularly young and less affluent ones, in countries where regulation is scant, annual interest charges can top 220 percent and consumers cannot seek bankruptcy protection, economists and consumer defense groups say.

The cases reveal troubling undercurrents in the South American economic boom: indiscriminate lending, lax regulation and ballooning over-indebtedness of large parts of the population, especially those with lower incomes.

http://www.nytimes.com/2011/07/24/business/global/abuses-by-credit-issuers-in-chile-and-brazil-snare-consumers.html?partner=rss&emc=rss&pagewanted=print

=============

It takes two to tango, but these cc corps know exactly and much better their criminal game than do their poor, naive individual prey.

[boutons_deux]

QE3 coming up, and this. If the Repugs want it, you know it's good for Wall St and bad for H-As

More Shades of TARP: Latest Deficit Ceiling Plan to Establish Extra-Constitutional Legislative Process

Debt ceiling negotiators think they’ve hit on a solution to address the debt ceiling impasse and the public’s unwillingness to let go of benefits such as Medicare and Social Security that have been earned over a lifetime of work: Create a new Congress.

This “Super Congress,” composed of members of both chambers and both parties, isn’t mentioned anywhere in the Constitution, but would be granted extraordinary new powers. Under a plan put forth by Senate Minority Leader Mitch McConnell (R-Ky.) and his counterpart Majority Leader Harry Reid (D-Nev.), legislation to lift the debt ceiling would be accompanied by the creation of a 12-member panel made up of 12 lawmakers — six from each chamber and six from each party.

Legislation approved by the Super Congress — which some on Capitol Hill are calling the “super committee” — would then be fast-tracked through both chambers, where it couldn’t be amended by simple, regular lawmakers, who’d have the ability only to cast an up or down vote. With the weight of both leaderships behind it, a product originated by the Super Congress would have a strong chance of moving through the little Congress and quickly becoming law. A Super Congress would be less accountable than the system that exists today, and would find it easier to strip the public of popular benefits. Negotiators are currently considering cutting the mortgage deduction and tax credits for retirement savings, for instance, extremely popular policies that would be difficult to slice up using the traditional legislative process.

House Speaker John Boehner (R-Ohio) has made a Super Congress a central part of his last-minute proposal.

The Tea Partiers make a fetish of invoking the Constitution when it suits them but will happily run roughshod over it when it conflicts with their pet wishes. Not that they are singularly guilty in this conspiracy against the public-at-large, but their faux holier-than-thou/populist pretense while aligning themselves with an elite power grab is particularly nausea-inducing.

I hate using the word “fascism” because overuse has weakened its bite, but trumped-up threat by trumped up threat, our government is moving relentlessly in that direction.

http://www.nakedcapitalism.com/2011/07/more-shades-of-tarp-latest-deficit-ceiling-plan-to-establish-extra-constitutional-legislative-process.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capi talism%29

[boutons_deux]

Wall Street Donated Heavily To Boehner As The GOP Blocked Funding For Dodd-Frank

House Republicans, including Speaker of the House John Boehner (R-OH), were calling for repeal of the Dodd-Frank financial reform law even before it had passed. Once they achieved a majority, House Republicans worked to undermine the law by cutting the budgets of financial market regulators and trying to slow down the implementation of several of the law’s provision.

And Wall Street evidently appreciates the effort, donating heavily to Boehner over the first half of this year. As Bloomberg News reported, “three of the five biggest sources of Boehner’s campaign cash this year are employees of three Wall Street investment houses, a shift from the 2010 election cycle when such contributors weren’t ranked among his top 10 donors”:

Employees at the New York hedge fund Paulson & Co. contributed $61,050 to Boehner’s campaign account, more than any other company. New York-based Moore Capital Management LLP employees gave $53,000, while those at Cantor Fitzgerald LP donated $45,000.

No one from any of those companies donated to Boehner for his 2010 re-election campaign, according to the Center for Responsive Politics, a Washington-based research group that tracks political money. [...]

Boehner received most of the donations from Paulson & Co., Moore Capital and Cantor Fitzgerald in June, the same month the House voted along party lines to cut the budget of the Commodity Futures Trading Commission, which is writing most of the new derivatives rules, and the House Appropriations Committee voted to limit funding for the new consumer protection bureau.

http://thinkprogress.org/economy/2011/07/25/277699/wall-street-donations-boehner/

[boutons_deux]

JP Morgan Tells Investors Why Middle Class Americans Are Screwed

In a recent report in a JP Morgan memo to their investors from Michael Cembalest, the chief investment officer he says, “US labor compensation is now at a 50-year low relative to both company sales and US GDP.” Cembalest continues to explain why corporate profits are so strong while the rest of the working class are feeling the pinch, “reductions in wages and benefits explain the majority of the net improvement in margins.” 75% of the increase in profit margins directly correlate with the reduction in workers’ wages.

http://www.politicususa.com/en/jp-morgan-middle-class?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+politicususa%2FfJAl+%28Politi cus+USA+%29

[boutons_deux]

Massachusetts Attorney General Signals Likelihood of Nixing “50 State” Mortgage Settlement

The banks in settlement talks with state and federal officials are seeking broad releases to protect them from legal claims. Massachusetts Attorney General Martha Coakley said yesterday she won’t support an agreement that includes releases for securitization of mortgages and conduct related to a database of mortgages known as MERS.

“Massachusetts will not sign on to any global agreement with the banks if it includes a comprehensive liability release regarding securitization and the MERS conduct,” Coakley wrote to the Norfolk County register of deeds in Dedham, Massachusetts. “These investigations must continue.” The registry keeps real estate records.

http://www.nakedcapitalism.com/2011/07/massachusetts-attorney-general-signals-likelihood-of-nixing-50-state-mortgage-settlement.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capi talism%29

[boutons_deux]

This Is Considered Punishment?

surprising news that the Federal Reserve has issued a cease-and-desist order against a Too-Big-to-Fail bank. The bank was Wells Fargo, which was also fined $85 million and ordered to compensate customers it had unfairly — indeed, illegally — taken advantage of during the subprime bubble.

What made the news surprising, of course, was that the Federal Reserve has rarely, if ever, taken action against a bank for making predatory loans. Alan Greenspan, the former Fed chairman, didn’t believe in regulation and turned a blind eye to subprime abuses. His successor, Ben Bernanke, is not the ideologue that Greenspan is, but, as an institution, the Fed prefers to coddle banks rather than punish them. That the Fed would crack down on Wells Fargo would seem to suggest a long-overdue awakening.

Yet, for anyone still hoping for justice in the wake of the financial crisis, the news was hardly encouraging. First, the Fed did not force Wells Fargo to admit guilt — and even let the company issue a press release blaming its wrongdoing on a “relatively small group.” The $85 million fine was a joke; in just the last quarter, Wells Fargo’s revenues exceeded $20 billion. And compensating borrowers isn’t going to hurt much either. By my calculation, it won’t top $20 million.

Most upsetting of all, the settlement raises the question that just won’t go away: Why can’t the federal government prosecute financial wrongdoers?

I realize that the Federal Reserve can’t bring a criminal case (and, to be fair, there are statutory limits on how big a fine it can levy). But the Justice Department certainly can. Yet ever since it lost an early case against two Bear Stearns fund managers in 2009, it has gone after only the smallest of small fry: individual borrowers, brokers and appraisers who lack the means to do much more than plead guilty.

http://www.nytimes.com/2011/07/26/opinion/26nocera.html?_r=1&ref=opinion&pagewanted=print

[boutons_deux]

Wells Fargo Target Of Justice Department Probe; Agency Alleges Discriminatory Lending

The Department of Justice is preparing a lawsuit against Wells Fargo, the nation's largest home mortgage lender, for allegedly preying upon African American borrowers during the housing bubble and steering them into high-cost subprime loans, according to three people with direct knowledge of the probe.

The company, the fourth-largest U.S. bank by assets, is currently embroiled in pre-lawsuit negotiations with the Justice Department in hopes it will settle the accusations and avoid a public lawsuit

http://www.huffingtonpost.com/2011/07/26/wells-fargo-justice-department-probe_n_910425.html?view=print&comm_ref=false

==========

This is a REGULATED bank

Right-wingers, tell us again how CRA, F&F were the overwhelming, only?, causes of the housing bubble?

A W-F is regulated, the vast number of subprime mortgages were initiated by non-bank lenders and non-regulated subsidiaries of regulated banks, created specifically get into the non-prime market.

CRA? F & F? G M A F B, you Wall St shills.

[Winehole23]

CRAF&F?GMAFB

[boutons_deux]

Internal Doc Reveals GMAC Filed False Document in Bid to Foreclose


GMAC, one of the nation's largest mortgage servicers, faced a quandary last summer. It wanted to foreclose on a New York City homeowner but lacked the crucial paperwork needed to seize the property.

GMAC has a standard solution to such problems, which arise frequently in the post-bubble economy. Its employees secure permission to create and sign documents in the name of companies that made the original loans. But this case was trickier because the lender, a notorious subprime company named Ameriquest, had gone out of business in 2007.

And so GMAC, which was bailed out by taxpayers in 2008, began looking for a way to craft a document that would pass legal muster, internal records obtained by ProPublica show.

"The problem is we do not have signing authority—are there any other options?" Jeffrey Stephan, the head of GMAC's "Document Execution" team, wrote to another employee and the law firm pursuing the foreclosure action. No solutions were offered.

Three months later, GMAC had an answer. It filed a document with New York City authorities that said the delinquent Ameriquest loan had been assigned to it "effective of" August 2005. The document was dated July 7, 2010, three years after Ameriquest had ceased to exist and was signed by Stephan, who was identified as a "Limited Signing Officer" for Ameriquest Mortgage Company. Soon after, GMAC filed for foreclosure.

=========

Yep, CRA, F&F was right there with GMAC every fraudulent step of the way. :lol

Will GMAC "settle"?

[Wild Cobra]

CRAF&F?GMAFB
Does it matter? Looks who's saying it.

[boutons_deux]

Cra

f&f

gmafb

gfy, wc, wh

[TeyshaBlue]

Cra

f&f

gmafb

gfy, wc, wh

lol @ babytalk.:lol

[coyotes_geek]

lol @ babytalk.:lol

Uh-oh. Syntax errors. Looks like the boutons-bot needs a reboot. :)

[boutons_deux]

community reinvestmeant act

fanny and freddy

go fuck yourself

[Wild Cobra]

I have little respect for people who still try to save texting space when unnecessary.

I didn't know we have a 160 character limitation...

With few exceptions, I say we should all use full words. To do otherwise is being lazy.

[ElNono]

I have little respect for people who still try to save texting space when unnecessary.

I didn't know we have a 160 character limitation...

With few exceptions, I say we should all use full words. To do otherwise is being lazy.

I dnt tnk nebody givs a sht tbh

[boutons_deux]

State Accuses Bank of America Unit of Thousands of Illegal Foreclosures

State Attorney General Rob McKenna has accused a Bank of America unit of conducting thousands of illegal foreclosures in Washington, in which he said the company had confused homeowners, made it nearly impossible to save their homes, and failed to act as a neutral third party.

McKenna sued ReconTrust, a California-based foreclosure trustee, in King County Superior Court Thursday.

The lawsuit alleges that the Bank of America subsidiary has violated state laws in "each and every foreclosure" in Washington. Since 2008, ReconTrust, which forecloses statewide, has done 9,900 foreclosures in King, Pierce and Snohomish counties alone.

"ReconTrust ignored our warnings, repeatedly broke the law and refused to provide information requested during our investigation," McKenna said in a statement Friday.

"ReconTrust's illegal practices make it difficult, if not impossible, for borrowers who might have a shot at saving their homes to stop those foreclosures."

http://www.seattlepi.com/local/article/State-accuses-Bank-of-America-unit-of-thousands-1743800.php#ixzz1URKtWfqw

[boutons_deux]

Federal probes of mortgage lenders fizzle

Federal criminal investigations into failed mortgage lenders IndyMac Bancorp and New Century Financial Corp have stalled, the Wall Street Journal reported on Saturday.

A third probe, into Washington Mutual Inc (WaMu), has ended with no charges being filed, the Department of Justice said.

Topics
Chicago Mortgages
Mortgages
Finance
See more topics »

Both the IndyMac and Century Financial investigations were essentially dormant, the newspaper said, citing people familiar with the situation. Both probes could still gain new momentum if fresh evidence surfaced, the newspaper said.

The three investigations were among the first to weigh criminal charges against the companies and executives at the heart of the housing crisis, which was in part caused by offering so-called sub-prime loans to people who may not have otherwise qualified for credit.

Investigators have struggled to prove intentional wrongdoing, which is required to secure a conviction, particularly in relation to decisions signed off by in-house lawyers, the newspaper said, citing its sources.

http://www.chicagotribune.com/business/sns-rt-us-mortgage-probestre7751s0-20110806,0,3126175.story

============

Excellent templates for criminals to follow in the future.

[boutons_deux]

More Bank of America Deathwatch: AIG to Seek $10+ Billion for Dud Mortgages

As you may recall, in the previous quarter, Bank of America announced its $8.5 billion mortgage settlement, which is now looking pretty wobbly, since a variety of unhappy parties, the latest being New York attorney general Eric Schneiderman, have taken aim at it. And Delaware attorney general Beau Biden is reported to be joining the pile on this week. This means either no deal, or a very different deal (almost certainly with bigger numbers attached) after a long slugfest, um, negotiations. The Charlotte bank had said it would increase loss reserves in the second quarter by $20 billion (which included this $8.5 billion) and claimed this would put its mortgage woes behind them. Yours truly was skeptical, and the market reacted badly when it saw the revelation in their 10-Q filing just released, that the bank was going to take more losses on Fannie and Freddie putbacks than previously expected.

The latest revelation, that AIG is expected to file a suit that will seek more than $10 billion in damages against Bank of America on Monday, comes from Louise Story and Gretchen Morgenson of the New York Times:

The American International Group is planning to sue Bank of America over hundreds of mortgage-backed securities, adding to the surge of investors seeking compensation for the troubled mortgages that led to the financial crisis.

The suit seeks to recover more than $10 billion in losses on $28 billion of investments, in possibly the largest mortgage-security-related action filed by a single investor.

It claims that Bank of America and its Merrill Lynch and Countrywide Financial units misrepresented the quality of the mortgages placed in securities and sold to investors.

Note that this is yet another representation and warranty suit, the very same type of liability that BofA was trying to extinguish in its $8.5 billion settlement. Clearly BofA thinks that the amount of the settlement, which looks to be 3.5% of the estimated liability, is a little light(some of the aggrieved parties say the liability across all of the 530 pools included in the settlement is $242 billion). MBS rep and warranty cases have never gone to trial, since they are too costly to perfect (they wind up being fought on a loan by loan basis, even if sampling is done, since the plaintiff must not only establish that the loans were worse than promised, but also that they went bad because they were substandard, not because the borrower lost his job or suffered a medical emergency or had some other “shit happens” normal underwriting loss).

http://www.nakedcapitalism.com/2011/08/more-bank-of-america-deathwatch-aig-to-seeks-10-billion-for-dud-mortgages.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capi talism%29

[boutons_deux]

Why Are the Big Banks Getting Off Scot-Free?

For most citizens, one of the mysteries of life after the crisis is why such a massive act of looting has gone unpunished. We’ve had hearings, investigations, and numerous journalistic and academic post mortems. We’ve also had promises to put people in jail by prosecutors like Iowa’s attorney general Tom Miller walked back virtually as soon as they were made.

Yet there is undeniable evidence of institutionalized fraud, such as widespread document fabrication in foreclosures (mentioned in the motion filed by New York state attorney general Eric Schneiderman opposing the $8.5 billion Bank of America settlement with investors) and the embedding of impermissible charges (known as junk fees and pyramiding fees) in servicing software, so that someone who misses a mortgage payment or two is almost certain to see it escalate into a foreclosure. And these come on top of a long list of runup-to-the-crisis abuses, including mortgage bonds having more dodgy loans in them than they were supposed to, banks selling synthetic or largely synthetic collateralized debt obligations as being just the same as ones made of real bonds when the synthetics were created for the purpose of making bets against the subprime market and selling BBB risk at largely AAA prices, and of course, phony accounting at the banks themselves.

http://www.nakedcapitalism.com/2011/08/why-are-the-big-banks-getting-off-scot-free.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capi talism%29

http://www.salon.com/news/opinion/glenn_greenwald/2011/08/08/sec_fraud/index.html

[boutons_deux]

15 former investors sue over Countrywide lending practices


Bank of America Corp. was sued by 15 former Countrywide Financial Corp institutional investors who said they lost money after being misled about the mortgage lender's financial condition and lending practices.

BlackRock Inc., the California Public Employees' Retirement System (CalPERS), T Rowe Price Group Inc., TIAA-CREF and the other plaintiffs, including some in Europe, sued in Los Angeles federal court, after deciding not to join a $624 million settlement that won court approval in February.

These plaintiffs believed they could recover more by suing on their own over the "massive and pervasive" fraud at Countrywide, which Bank of America bought July 1, 2008.

Thursday's lawsuit deepens the legal problems for Bank of America over Countrywide, for which it paid $2.5 billion. Analysts have estimated that its ultimate cost, including legal bills and loan losses, could exceed 10 times that sum.

Last month, the Charlotte, N.C.-based bank entered an $8.5 billion agreement to end most litigation by investors who bought securities backed by risky Countrywide home loans. Some of those investors have complained this agreement too may be unfair.

According to the 425-page complaint by the 15 plaintiffs, Countrywide and officials such as former Chief Executive Angelo Mozilo abandoned prudent lending, reserved too little for bad loans and inflated earnings, in a drive to triple market share to 30 percent and enrich themselves.


http://www.chicagotribune.com/business/breaking/chi-15-former-investors-sue-over-countrywide-lending-practices-20110729,0,7652641.story

[Winehole23]

(whiff)

[boutons_deux]

Blackrock, Calpers are heavy hitters. Their legal beagles must have told them that they had a case (or maybe the legal beagles are also screwing them with fraudulent legal products).

But as always, any "settlement" will be against a Corporate-American, while human criminals will go "scot-free" with the pockets stuff full.

[Winehole23]

Highlighting (http://www.nakedcapitalism.com/2011/08/delaware-attorney-general-joins-in-dropping-bombs-on-bank-of-america-settlement-and-bank-of-new-york.html) the actions of Delaware AG Beau Biden.

[boutons_deux]

Bank Of America Has Activist Arrested For Telling It About Dangerous Vacant Homes It Owns

http://thinkprogress.org/wp-content/uploads/2011/08/goddard.jpg

Two weeks ago, the Chicago city council passed a new statute that “will make lenders liable for the upkeep of vacant homes even when the borrower still holds the title.” The law was passed unanimously and will take effect in September. The importance of this new law came into focus last week when two firefighters were injured battling a fire that sprung up in a vacant home in the Englewood neighborhood on the south side of Chicago.

As Aaron Krager notes, this outraged activists from Action Now, a local community group. Marsha Goddard, who is a board member of the organization, led a group of five people to a local branch of Bank of America, which owned the vacant property, to inform the bank about code violations that it would be liable for when the law goes into effect.

The megabank responded by having Goddard arrested.


http://thinkprogress.org/economy/2011/08/10/292676/bank-of-america-activist/

[boutons_deux]

Highlighting (http://www.nakedcapitalism.com/2011/08/delaware-attorney-general-joins-in-dropping-bombs-on-bank-of-america-settlement-and-bank-of-new-york.html) the actions of Delaware AG Beau Biden.

hot dam! Another blue state kickin ass.

Any bubba red states gonna join in?

Or will the Repug states let their bubbas asses get terminally kicked by the Banksters?

Repugs, governing for ALL Americans ..... who are wealthy. :lol

[101A]

"If we didn't have politicians bailing them out with our money"

Wall Streeters, current/past/future, decided/extorted the bailout. Place the guilt and crime where it belongs. Wall St does the corrupting, not Congress.

To be a Corrupter one need a Corruptee. If Congress were even slightly incorruptible, wouldn't matter who was doing the corrupting. Further, if Congress/US Govt. didn't have such vast powers - if they were even a little bit restricted on what they could do with our money - their corruption would be much less relevant. Finally, there is nothing you or I can about the greedy people on Wal Street; we can, however, recognize the power we have by changing Washington. If we keep getting distracted by bogeymen we can do nothing about; they win.

[boutons_deux]

"If Congress were even slightly incorruptible"

GMAFB.

Even if a naive, virgin Congress person (who can be innocent and naive after getting through the cesspool of winning an election?), the SYSTEM IS CORRUPTED beyond remediation.

"the power we have by changing Washington"

GMAFB. Human-Americans have NO POWER in DC, they are totally disenfranchised. UCA and capitalists pay those pipers, and UCA and capitalists call the tunes.

The top 5% have amassed such wealth, and the self-enriching/protecting power that flows from that wealth, have compromised/bought the only countervailing power (government), that there is no way short of violent revolution to Take Back That Power.

People with such power never yield it, and ALWAYS abuse it.

[101A]

People with such power never yield it, and ALWAYS abuse it.

Which is why limited government is essential.

[boutons_deux]

"limited government is essential."

ok, just to humor you along, what incredible, country-destroying limits, specifically, do you want on govt.

(we already know most conservatives don't consider the military, their MIC of a Golden Goose, to be part of govt, so we're gonna blow $7T+ on military over the next 10 years, the MIC-financed hawks are already screaming about the automatic cuts military included when the triggers are tripped)

[xrayzebra]

"limited government is essential."

ok, just to humor you along, what incredible, country-destroying limits, specifically, do you want on govt.

(we already know most conservatives don't consider the military, their MIC of a Golden Goose, to be part of govt, so we're gonna blow $7T+ on military over the next 10 years, the MIC-financed hawks are already screaming about the automatic cuts military included when the triggers are tripped)

:lol

He Mr. Socialist, what's your take on the great socialist society of England
right now. They have no military to speak of, most of their industry is
socialized and you can draw unemployment forever. And their great
social medicine leaves people to die.

So you tell us how to cure all the ills of the world.

Oh, I forgot, the EU is lining up for loans and to get bailed out. Germany
is going to try, but they just don't got that much money, no one does.

Your are an ignorant twerp!

[ElNono]

:lol

Contrast with conservative america, where trillions we don't have are spent on building the mightiest army in the world, yet can barely handle a shithole whose major tech is probably an RPG. The great capitalist medicine where the government ends up paying more per capita than those wasteful 'social medicine' states, and is directly associated with almost half the bankruptcies in the country. And their industry which is being outsourced at an alarming rate since they simply can't compete with the rest of the world.

So you tell us how to cure all the ills of the world.

Oh, I forgot, the US credit rating is even worse than some of those EU countries. Maybe the US needs to ask France to bail it out!

You are an ignorant twerp!

[Winehole23]

If only being American made us immune, I might laugh too.

[ElNono]

If only being American made us immune, I might laugh too.

Mismanagement isn't an exclusive attribute of the left or right or a certain country.

[Winehole23]

Nor arrogance, neither.

[xrayzebra]

:lol

Contrast with conservative america, where trillions we don't have are spent on building the mightiest army in the world, yet can barely handle a shithole whose major tech is probably an RPG. The great capitalist medicine where the government ends up paying more per capita than those wasteful 'social medicine' states, and is directly associated with almost half the bankruptcies in the country. And their industry which is being outsourced at an alarming rate since they simply can't compete with the rest of the world.

So you tell us how to cure all the ills of the world.

Oh, I forgot, the US credit rating is even worse than some of those EU countries. Maybe the US needs to ask France to bail it out!

You are an ignorant twerp!

So much for our educational system. The products of this system
can't recognize up from down.

Outsourced, we can't compete, credit rating. You idiot, what brought us to this point. It damn sure wasn't free enterprise. It was idiots like you
Socialist. Noooooooooo, don't read history it might just tell you what
made this country.

Bye the way, would you like to tell me which social programs made a
country great? I can point you to several that took them down. Of
course, you may not read alot or watch any news other than MSNBC
and other like them.

Yeah, I am so damn ignorant that I survived for 78 years in this world
without you damn help. How is that hope and change working for you
twerp?

[ElNono]

Outsourced, we can't compete, credit rating. You idiot, what brought us to this point. It damn sure wasn't free enterprise. It was idiots like you Socialist. Noooooooooo, don't read history it might just tell you what made this country.

This isn't the past, ray. There's not going to be another industrial revolution.
You won't be owning slaves anytime soon again.
We're only separated a decade from the last full conservative government.
What did they do for your glorious free enterprise? Medicare Part D?

How about your icon, Ronnie? Run up the debt, jacked up taxes.
That's what brought us to this point too, you know?


Bye the way, would you like to tell me which social programs made a country great? I can point you to several that took them down. Of course, you may not read alot or watch any news other than MSNBC and other like them.

Social programs help people with real needs every day. There's absolutely no doubt there's abuses in them, like in everything else. That doesn't mean they're useless, or that they brought any country 'down'.


Yeah, I am so damn ignorant that I survived for 78 years in this world
without you damn help. How is that hope and change working for you
twerp?

It's time to take your meds old man. That selective memory is certainly acting up again. Hope and Change is not working for me, because there was no Hope and Change. This guy is Bush Jr Jr.

[boutons_deux]

So much for our educational system. The products of this system can't recognize up from down.

Obviously, you've got a great educational career before you went military, since we know many highly educated, successful people join the military.


Outsourced, we can't compete, credit rating. You idiot, what brought us to this point. It damn sure wasn't free enterprise. It was idiots like you Socialist. Noooooooooo, don't read history it might just tell you what
made this country.

unregulated capitalism, not socialism, killed the US jobs market.


Bye the way, would you like to tell me which social programs made a
country great?


UK, France, Germany, the Scandanavian countries, Switzerland, are all "social democracies), on average have very comfortable lives, strong safety nets, better/cheaper health care systems, strong unions that work with mgmt not against it so both sides win. And they are very pissed at how their bankers in collusion with/lead by US bankers have fucked up the world's economy. The socialists didn't fuck it up.

Yeah, I am so damn ignorant that I survived for 78 years in this world
without you damn help. How is that hope and change working for you
twerp?

you've been on taxpayer funded "socialized medicine" since you were 65, and probably on taxpayer/socialized retirement/VA-medical care for probably 20+ years before that. right?

Have you noted how the Repugs want to fuck over the military retirees to pay for the unregulated/ultra-capitalistic Banksters' Great Depression?

btw, the military has done fuck all for me, or America, in VN, Kuwait, Iraq, or Afghanistan.

[boutons_deux]

Bank of America ‘much better’ now: CEO

Bank of America is in a better position now than during the financial crisis, chief executive Brian Moynihan said Wednesday, trying to reassure investors after sharp losses in the share price.

"The fundamentals are so much better in our country and in our company and in our industry than they were four years ago," he said in a conference call with analysts.

Amid rising concerns about the growing number of lawsuits facing the country's biggest bank by deposits, Moynihan insisted that "we continue to clean up the mortgage issues" related to the acquisition of Countrywide Financial in 2008.

On Monday shares plunged more than 20 percent after US insurer AIG sued Bank of America for $10.5 billion, accusing it of "massive fraud" over dodgy mortgage-based securities AIG bought from Countrywide Financial, the former mortgage giant that the bank took over in 2008.

After partially rebounding Tuesday, the bank's shares sank another 10.9 percent to $6.77 Wednesday, leaving them down 29 percent from a week ago.

In June, the bank announced an $8.5 billion settlement with a group of more than 20 major investors over losses on mortgage-backed securities, which AIG has also raised questions about.

Moynihan was not CEO when Bank of America bought the company, but said there were not many days when he thinks "positively about Countrywide."

http://www.rawstory.com/rs/2011/08/10/bank-of-america-much-better-now-ceo/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+TheRawStory+%28The+Raw+Story% 29

==========

Finally, We Get The Truthiness About BoA! :lol

So now BoA can buy back all the toxic shit sold to Geithner? :lol

[boutons_deux]

Bank Of America Death Watch Update!

Bank of America continues slouching toward destruction, with its stock price tanking (down nearly 50% since the start o the year), credit default swaps (basically, wagers on its default) up, layoffs coming, and theoretically under the Dodd-Frank financial reform law, no bailout in sight.

Buried yesterday in a Bloomberg piece was the seeming throwaway line that "Bank of America’s bond-insurance prices last week surged to a rate of $342,040 a year for coverage on $10 million of debt, above where Lehman Brothers Holdings Inc. (LEHMQ)’s bond insurance was priced at the start of the week before the firm collapsed."

http://www.alternet.org/module/printversion/newsandviews/654654

[boutons_deux]

Corrupt Obama Administration Pressuring New York Attorney General to Support Mortgage Whitewash

The Administration has now taken to pressuring parties that are not part of the machinery reporting to the President to fall in and do his bidding. We’ve gotten so used to the US attorney general being conveniently missing in action that we have forgotten that regulators and the AG are supposed to be independent. As one correspondent noted by e-mail, “When officials allegiances are to El Supremo rather than the Constitution, you walk the path to fascism.”

Team Obama bears all the hallmarks of being so close to banks and big corporations that it has lost all contact with and understanding of mainstream America.

The latest example is its heavy-handed campaign to convert New York state attorney general Eric Schneiderman to a card carrying member of the “be nice to our lords and masters the banksters” club. Schneiderman was the first to take issue with the sham of the so-called 50 state attorney general mortgage settlement. As far as the Administration is concerned, its goal is to give banks a talking point and prove to them that Team Obama is protecting their backs in a way that the chump public hopefully won’t notice.

The Administration joined this effort to hurry it forward and assure it resulted in a suitably financier-friendly outcome. And it has done so despite recent HUD inspector general’s audits finding that the five biggest servicers were defrauding taxpayers. We’ve heard not a peep of follow up on that front; instead, the Administration keeps leaking its tired “A settlement is just around the corner” story.

Schneiderman is far from the only person to see what a sellout this “settlement” is. The basic premise of a settlement is to obtain some sort of restitution to induce a prosecutor/plaintiff to drop a current or likely lawsuit. For the aggrieved party to get a good settlement, it needs to have a credible case, as in facts (a smoking gun or two) and a legal theory as to why those facts mean the perp is in hot water.

http://www.nakedcapitalism.com/2011/08/corrupt-obama-administration-pressuring-new-york-attorney-general-to-support-mortgage-whitewash.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capi talism%29

[boutons_deux]

Lender Processing Services Law Firm Targeting April Charney, Foreclosure Defense Pioneer

You know the powers that be are pretty desperate when they feel compelled to go after a Legal Aid attorney.

Admittedly, April Charney is no ordinary Legal Aid attorney. She was one of the first lawyers to focus on the question of whether party showing up in court really was the right party and whether it could demonstrate that it had the right to foreclose. Most judges (as in the non-captured-by-corporations kind) regard these as threshold issues. If someone shows up in court claiming that you owe them money and they want the judge to garnish your wages, I’m sure you’d want the judge to listen if the person who wanted your money couldn’t prove he had gotten your IOU from the chap who had made a loan to you years ago.

Charney has helped lawyers in Florida and around the US with these types of arguments, and has also been active in the group of lawyers working with Max Gardiner in North Carolina. She’s a diligent researcher and keeps on top of the rulings in her arena.

In some ways I’m surprised this hasn’t happened sooner, but pro bank members of the Florida bar are apparently orchestrating an effort to get Charney fired from Legal Services of Jacksonville, which on its face is absurd. If you want to help April, 4ClosureFraud has provided names and contact information of the JALA (I assume Jacksonville Area Legal Aid) board members. I hope you tell them (nicely) that getting rid of Charney, given her track record, would raise a lot of questions and likely very unfavorable press for JALA.

By way of background, Lender Processing Services, a firm that provides various software platforms and other services to mortgage servicers, is in a great deal of hot water. Its stock is down over 50% despite buybacks to prop it up, largely as a result of litigation taking aim at its dubious business model (see here and here for background).

On August 3, Holland & Knight attorneys Buddy Schulz and Dominic MacKenzie and Duval County Circuit Court Judge Hugh Carithers hosted an informal lunch at the law offices with 10 members of the board of Jacksonville Area Legal Aid and JALA board president Hugh Cotney. A painting of a pod of sharks that hangs in the lobby of Holland & Knight offices set the tone.

It was kind of a covert friendly little conversation over lunch,” she said, “but it felt like a mutiny.”

http://www.nakedcapitalism.com/2011/08/lender-processing-services-law-firm-targeting-april-charney-foreclosure-defense-pioneer.html

[boutons_deux]

Bank of (the country) America after nationalization?

It's Time For A New Kind Of Bank Of America Solution—The Right Kind


Bank of America's stock is tanking because Bank of America's investors don't believe its assets are worth what Bank of America says they are worth.

http://www.businessinsider.com/all-right-its-time-for-a-new-kind-of-bank-of-america-solution-the-right-kind-2011-8

[SnakeBoy]

Bank of (the country) America after nationalization?

It's Time For A New Kind Of Bank Of America Solution—The Right Kind


Bank of America's stock is tanking because Bank of America's investors don't believe its assets are worth what Bank of America says they are worth.

http://www.businessinsider.com/all-right-its-time-for-a-new-kind-of-bank-of-america-solution-the-right-kind-2011-8

That's essentially what some of us thought should have happened to all the tbtf's in '08.

[ElNono]

That's essentially what some of us thought should have happened to all the tbtf's in '08.

Don't know specifically about you, but when that was done with GM, a bunch of people here cried Socialism! :cry :cry :cry

[boutons_deux]

I'm sure the hypocritical tea baggers would scream like hell about nationalizing all the bankrupt TBTF banks as socialism, communism, Sharia, terrorism.

Let us know when the tea baggers target the financial sector as the real culprits screwing up the planet, rather the govts.

[boutons_deux]

Bank Of America Forecloses On Man Two Days After Approving His Mortgage Modification

falo on Aug 24, 2011 at 9:40 am

America’s biggest banks have produced a litany of foreclosure horror stories recently, from Chase bank selling a off a soldier’s home on the very same day that he returned from Iraq to a women losing her home to foreclosure even after scrounging together $50,000 in back mortgage-payments that the bank said she owed. Wells Fargo foreclosed on one borrower for missing a few payments…after Wells Fargo specifically the borrower to miss a few payments.

Bank of America also has a deep list of mortgage misdeeds, from improperly foreclosing on a family and stealing its pet parrot to blatantly violating its contract with Treasury after joining one of the administration’s anti-foreclosure programs. And BofA has been arguably the least capable bank when it comes to getting borrowers into sustainable mortgage modifications, due to its inability to keep paperwork straight or review cases in a timely manner.

He finished the application process [for a mortgage modification] and continued making his payments, knowing lenders were backed up with modification requests. [...] Finally, on April 10, a letter. But not the one he was expecting. “According to our records, payment for your home loan is past due,” it said. Conca finally called a lawyer for help, and the lawyer corresponded with the lender, but got nowhere.

Then on July 19, Conca received a letter saying he was approved for a rate reduction on a modified mortgage and he’d receive the paperwork in 10 days.

Relief, but it was only temporary.

Two days later he received a different kind of letter from Bank of America: a notice of intention to foreclose.

http://thinkprogress.org/economy/2011/08/24/302356/bofa-forecloses-two-day/

[boutons_deux]

Schneiderman has refused to accept the whitewash and token "settlement", plus bank immunity from other prosecutions, so the White (Wall St) House kicks him out:

New York Attorney General Kicked Off Government Group Leading Foreclosure Probe

WASHINGTON -- New York Attorney General Eric Schneiderman on Tuesday was kicked off the committee leading the 50-state task force charged with probing foreclosure abuses and negotiating a possible settlement agreement with the nation's five largest mortgage firms, according to an email reviewed by The Huffington Post.

Schneiderman was one of roughly a dozen state attorneys general leading the talks with the five companies, alongside representatives of the U.S. Department of Justice, the Department of Housing and Urban Development and other federal agencies. The government launched the negotiations in the spring after widespread reports of foreclosure irregularities, such as so-called "robo-signing" and illegal home seizures, emerged.

But state prosecutors and federal officials are pressing to complete a proposed settlement with the five companies even though they've initiated only a limited investigation that hasn't examined the full extent of the alleged wrongdoing, The Huffington Post reported last month. Elizabeth Warren, who until recently was a senior adviser to President Barack Obama and Treasury Secretary Timothy Geithner, told a congressional panel last month that government agencies may not have sufficiently investigated claims that borrowers' homes were illegally seized.

Schneiderman, a Democrat who's in his first term as New York's top law enforcer, has been among a group of state legal officers who has also questioned the desire for a speedy resolution. He's leading his own investigation into mortgage improprieties, subpoenaing documents from the nation's largest financial institutions and reviewing court records for possible illegal home repossessions.

http://www.huffingtonpost.com/2011/08/23/new-york-attorney-general-eric-schneiderman_n_934517.html?utm_source=DailyBrief&utm_campaign=082411&utm_medium=email&utm_content=NewsEntry&utm_term=Daily%20Brief

[boutons_deux]

Obama's Deal for the Bankers: Amnesty for the Indefensible

They will get away with it, at least in this life. “They” are the Wall Street usurers, people of a sort condemned in Scripture, who have brought more misery to this nation than we have known since the Great Depression. “They” will not suffer for their crimes because they have a majority ownership position in our political system. That is the meaning of the banking plea bargain that the Obama administration is pressuring state attorneys general to negotiate with the titans of the financial world.

It is a sellout deal that, in return for a pittance of compensation by banks to ripped-off mortgage holders, would grant the banks blanket immunity from any prosecution. That is intended to short-circuit investigations by a score of aggressive state officials, inquiries that offer the public a last best hope to get to the bottom of the housing scandal that has cost U.S. homeowners $6.6 trillion in home equity in the past five years and left 14.6 million Americans owing more than their homes are worth.

The $20 billion or so that the banks would pony up is chump change to them compared with the trillions that the Fed and other public agencies spent to bail them out. The banks were given direct cash subsidies, virtually zero-interest loans, and the Fed took $2 trillion in bad paper off their hands while the banks exacerbated the banking crisis they had created through additional shady practices, including fraudulent mortgage foreclosures.

Yet the administration has rushed to the aid of the banks once again and is attempting to intimidate the few state attorneys general who have the gumption to protect the public interest they are sworn to serve. As Gretchen Morgenson of The New York Times reported:

“Eric T. Schneiderman, the attorney general of New York, has come under increasing pressure from the Obama administration to drop his opposition to a wide-ranging state settlement with banks over dubious foreclosure practices. …

“In recent weeks, Shaun Donovan, the secretary of Housing and Urban Development, and high-level Justice Department officials have been waging an intensifying campaign to try to persuade the attorney general to support the settlement. …”

Donovan has good reason not to want an exploration of the origins of the housing meltdown: He has been a big-time player in the housing racket for decades. Back in the Clinton administration, when government-supported housing became a fig leaf for bundling suspect mortgages into what turned out to be toxic securities, Donovan was a deputy assistant secretary at HUD and acting Federal Housing Administration commissioner. He was up to his eyeballs in this business when the Clinton administration pushed through legislation banning any regulation of the market in derivatives based on home mortgages.

Armed with his insider connections, Donovan then went to work for the Prudential conglomerate (no surprise there), working deals with the same government housing agencies that he had helped run. As The New York Times reported in 2008 after President Barack Obama picked him to be secretary of HUD, “Mr. Donovan was a managing director at Prudential Mortgage Capital Co., in charge of its portfolio of investments in affordable housing loans, including Fannie Mae and the Federal Housing Administration debt.”

http://www.thenation.com/print/article/162930/obamas-deal-bankers-amnesty-indefensible

==========

iow, the capitalists have quite obviously violated fundamental property title law in the $100Bs or $Ts, a crime too numerous and Too Big To Prosecute.

Note how it's the red-state Repug AGs pushing to let the capitalists escape free and clear.

Right-wingers, tell us again how ACORN, F&F, CRA, and stupid mortgage owners (allowed by predatory, corrupt lenders to go) in over their heads caused the Banksters' Great Depression.

[Winehole23]

Note how it's the red-state Repug AGs pushing to let the capitalists escape free and clear.Obama holds the whip hand, according to your source.

[coyotes_geek]

Note how it's the red-state Repug AGs pushing to let the capitalists escape free and clear.


Note how your article contains exactly zero references to red state republican AG's.

lol boutons.

[boutons_deux]

Note how your article contains exactly zero references to red state republican AG's.

lol boutons.

"The email announcing Schneiderman's dismissal from the states' executive committee was sent just after noon to more than 50 people by Patrick Madigan, a top lawyer in the Iowa Attorney General's Office. It read: "Effective immediately, the New York Attorney General’s Office has been removed from the Executive Committee of the Robosigning multistate."

''Kanner said Schneiderman was removed at Iowa Attorney General Tom Miller's "prerogative.""

New York has actively worked to undermine the very same multistate group that it had spent the previous nine months working very closely with," Miller continued. "While we certainly respect the right of any state to choose to no longer participate in a multistate and to pursue another path, working to actively undermine a multistate while still a member of the Executive Committee simply doesn’t make sense, is unprecedented and is unacceptable. Accordingly, today I informed New York that it is no longer a member of the Executive Committee."

=========

IOWA is deeply, weirdly RED.

[boutons_deux]

Judge Suspends All Federal Court Foreclosures In Rhode Island

The backbone of American real estate law is a network of state-run registries, which track who owns what properties and whether the property is subject to any encumberances such as a mortgage. In the 1990s, however, the banking industry created MERS as an alternative, privatized registry that would allow banks to transfer mortgages more quickly in order to facilitate the creation of the kind of mortgage-backed securities that were a centerpiece of the recent economic crisis.

MERS’ attorneys essentially argue that it should be above legal scrutiny because it is too big to enjoin.

it will be interesting to see whether the banking industry attempts to discredit last week’s decision by noting that it was handed down by newly-confirmed Judge John McConnell. The Chamber of Commerce led a blistering campaign of obstruction against McConnell’s nomination because he committed the unforgivable sin of trying to hold lead paint companies and the tobacco industry accountable to their consumers.

http://thinkprogress.org/justice/2011/08/24/303081/judge-suspends-all-federal-court-foreclosures-in-rhode-island/

==========

Yet another capitalists escape clause:

MERS Is Too Big To Enjoin.

aka, above the law, as MERS and its motherfucker bankers rip off real wealth from Human-Americans.

[CosmicCowboy]

Some of these mortgage companies are UNBELIEVABLY incompetent. One of my sisters died of breast cancer in April 2010. I am the executor of the estate. Long story, but after her cancer returned and metastasized she basically said fuck it and quit paying taxes (she was single, no heirs, and self employed). Consequently she ended up with 130K of tax liens and penalties on her condo in Dallas, putting her massively upside down in it. Immediately after her death I moved everything out, cleaned it up, and called GMAC Mortgage and said "hey guys, sorry, but here's the scoop...I'm offering to give you n immediate voluntarily foreclosure...we don't want the condo and don't have to pay for it and aren't gonna pay for it. Lets make this quick and easy and you just send me the papers you want signed."

That was 16 months ago. They have done NOTHING. I've send them notarized releases from all the potential heirs (parents and siblings) releasing any claim to the condo. I am STILL getting calls weekly from random call centers wanting to know if I'm SURE I really don't want that condo...

What the fuck? do they just not want to book the repo? I've told them a hundred times if I've told them once...verbal and in letter form that the condo is theirs...there is no telling how fucked up that place is now after sitting 16 months with the utilities off...

[boutons_deux]

"do they just not want to book the repo"

If they take possession, they owe insurance, maintenance, and taxes. I guess they figure they can't flip it quickly, so they don't want the REO liability.

[coyotes_geek]

"The email announcing Schneiderman's dismissal from the states' executive committee was sent just after noon to more than 50 people by Patrick Madigan, a top lawyer in the Iowa Attorney General's Office. It read: "Effective immediately, the New York Attorney General’s Office has been removed from the Executive Committee of the Robosigning multistate."

''Kanner said Schneiderman was removed at Iowa Attorney General Tom Miller's "prerogative.""

New York has actively worked to undermine the very same multistate group that it had spent the previous nine months working very closely with," Miller continued. "While we certainly respect the right of any state to choose to no longer participate in a multistate and to pursue another path, working to actively undermine a multistate while still a member of the Executive Committee simply doesn’t make sense, is unprecedented and is unacceptable. Accordingly, today I informed New York that it is no longer a member of the Executive Committee."

=========

IOWA is deeply, weirdly RED.

:lol

You fail.

Thomas John Miller (born August 11, 1944, in Dubuque, Iowa) is the current Democratic Attorney General of Iowa

http://ballotpedia.org/wiki/index.php/Tom_Miller

BTW, Iowa has gone democrat in 5 out of the last 6 presidential elections.

lol boutons.

[boutons_deux]

Iowa is RED STATE

[coyotes_geek]

Iowa is RED STATE

Just keep telling yourself that you dumbfuck.

lol boutons.

[TeyshaBlue]

lol @ the self-pawning bot.:lmao:lmao

[coyotes_geek]

That's our boutons. :)

Fucking Dukakis won Iowa, but no, they're as red a state as they come accorinding to the boutons-bot. :rollin

[Wild Cobra]

Iowa is RED STATE
But... But... But...

If it's not a blue state, what's this hype about president Bush stealing it?

Why did Obama win 53.93% to 44.39%?

[boutons_deux]

Bombshell Admission of Failed Securitization Process in American Home Mortgage Servicing/LPS Lawsuit

Did you get it? They said that these procedures were standard between the two companies, which was to “..to memorialize the transfer of ownership lender to the securitization trust” right before initiating foreclosure. If you are a regular reader of this blog, you know that is impermissibly late. The note and mortgage had to get to the trust by a clearly specified date, usually 90 days after closing. As we’ve written numerous times, in the overwhelming majority of cases, the securitization entity was a New York trust, and New York trusts are like computer code, they can only operate exactly as stipulated. The exception was trusts by Chase and WaMu, which did allow for the originator to serve as custodian for the trust.

So AHMSI has just admitted that all of its foreclosures done with LPS were completed by the wrong party. In Alabama, wrongful foreclosures are subject to statutory damages of three times the value of the house, and recent cases have awarded much higher multiples of the property’s value. This little paragraph is a litigation goldmine for the right attorneys.

http://www.nakedcapitalism.com/2011/08/bombshell-admission-of-failed-securitization-process-in-american-home-mortgage-servicinglps-lawsuit.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capi talism%29

[boutons_deux]

Buffett’s BofA Stake Nets $1.4B on First Day

http://www.bloomberg.com/news/2011-08-25/buffett-s-bank-of-america-stakes-net-1-4-billion-in-profit-on-first-day.html

===

aka, Wealthy enough to make your own waves. WB did the same with buying $5B of Goldman Sacks in mid-crisis, made about $3B, IIRC.

[Wild Cobra]

Buffett’s BofA Stake Nets $1.4B on First Day

http://www.bloomberg.com/news/2011-08-25/buffett-s-bank-of-america-stakes-net-1-4-billion-in-profit-on-first-day.html

===

aka, Wealthy enough to make your own waves. WB did the same with buying $5B of Goldman Sacks in mid-crisis, made about $3B, IIRC.
Must mean he thinks it's at or near the bottom.

[ElNono]

Must mean he thinks it's at or near the bottom.

Or he has enough money to set what the bottom is.

[Wild Cobra]

Or he has enough money to set what the bottom is.
Maybe, but I think it wakes more than that. Could be people followed him, jacking up the price. artificial price increases usually don't last long, and when they do, you have a tech stock crash, housing bubble bursting, etc.

Follow the leader and get screwed.

[ElNono]

Maybe, but I think it wakes more than that. Could be people followed him, jacking up the price. artificial price increases usually don't last long, and when they do, you have a tech stock crash, housing bubble bursting, etc.

Follow the leader and get screwed.

He effectively set what the bottom is for BoA at this point in time.
The cash he put in there basically covers the spread of liabilities everybody was so concerned about and that made the stock tank.
You can only do that when you have billions to invest.

[boutons_deux]

Obama Goes All Out For Dirty Banker Deal

A power play is underway in the foreclosure arena, according to the New York Times.

On the one side is Eric Schneiderman, the New York Attorney General, who is conducting his own investigation into the era of securitizations – the practice of chopping up assets like mortgages and converting them into saleable securities – that led up to the financial crisis of 2007-2008.

On the other side is the Obama administration, the banks, and all the other state attorneys general.

This second camp has cooked up a deal that would allow the banks to walk away with just a seriously discounted fine from a generation of fraud that led to millions of people losing their homes.

The idea behind this federally-guided “settlement” is to concentrate and centralize all the legal exposure accrued by this generation of grotesque banker corruption in one place, put one single price tag on it that everyone can live with, and then stuff the details into a titanium canister before shooting it into deep space.

This is all about protecting the banks from future enforcement actions on both the civil and criminal sides. The plan is to provide year-after-year, repeat-offending banks like Bank of America with cost certainty, so that they know exactly how much they’ll have to pay in fines (trust me, it will end up being a tiny fraction of what they made off the fraudulent practices) and will also get to know for sure that there are no more criminal investigations in the pipeline.

This deal will also submarine efforts by both defrauded investors in MBS and unfairly foreclosed-upon homeowners and borrowers to obtain any kind of relief in the civil court system. The AGs initially talked about $20 billion as a settlement number, money that would “toward loan modifications and possibly counseling for homeowners,” as Gretchen Morgenson reported the other day.

What is most amazing about Wylde’s quote is the clear implication that even a law enforcement official like Schneiderman should view it as his job to “do everything we can to support” Wall Street. That would be astonishing interpretation of what a prosecutor's duties are, were it not for the fact that 49 other Attorneys General apparently agree with her.

In Schneiderman we have at least one honest investigator who doesn’t agree, which is to his great credit. But everyone else is on Wylde’s side now. The Times story claims that HUD Secretary Shaun Donovan and various Justice Department officials have been leaning on the New York AG to cave, which tells you that reining in this last rogue cop is now an urgent priority for Barack Obama.

Why? My theory is that the Obama administration is trying to secure its 2012 campaign war chest with this settlement deal. If Barry can make this foreclosure thing go away for the banks, you can bet he’ll win the contributions battle against the Republicans next summer.

Which is good for him, I guess. But it seems to me that it might be time to wonder if is this the most disappointing president we’ve ever had.

http://www.rollingstone.com/politics/blogs/taibblog/obama-goes-all-out-for-dirty-banker-deal-20110824?print=true

=======

Yep, Barry the fist-bumping socialist/communist/terrorist subversive anti-American. Fox Repug Propaganda network is ALWAYS right :lol

[boutons_deux]

oops, not crimes, just mistakes, we NEVER make mistakes (when enriching ourselves)

JPMorgan fined for contravening Iran, Cuba sanctions

JPMorgan Chase Bank has been fined $88.3 million for contravening US sanctions against regimes in Iran, Cuba and Sudan, and the former Liberian government, the US Treasury Department announced Thursday.

The Treasury said that the bank had engaged in a number of "egregious" financial transfers, loans and other facilities involving those countries but, in announcing a settlement with the bank, said they were "apparent" violations of various sanctions regulations.

JPMorgan agreed to pay the money "to settle potential civil liability for apparent violations" of seven separate sanctions rules between 2005 and 2011.

Treasury called all of those actions "egregious because of reckless acts or omissions" by the bank.

"OFAC determined that JPMC (JPMorgan) is a very large, commercially sophisticated financial institution, and that JPMC managers and supervisors acted with knowledge of the conduct constituting the apparent violations and recklessly failed to exercise a minimal degree of caution or care with respect to JPMC's US sanctions obligations," the Treasury said.

A JPMorganChase spokeswoman told AFP that none of the cases "involved any intent to violate OFAC regulations."

"These rare incidents were unrelated and isolated from each other. The firm screens hundreds of millions of transaction and customer records per day and annual error rates are a tiny fraction of a percent," Jennifer Zuccarelli said in an email.

http://www.rawstory.com/rs/2011/08/25/jpmorgan-fined-for-contravening-iran-cuba-sanctions/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+TheRawStory+%28The+Raw+Story% 29

[boutons_deux]

Bank of America kept AIG’s legal threat under wraps for months

Top Bank of America Corp lawyers knew as early as January that American International Group Inc was prepared to sue the bank for more than $10 billion, seven months before the lawsuit was filed, according to sources familiar with the matter.

Bank of America shares fell more than 20 percent on August 8, the day the lawsuit was filed, adding to worries about the stability of the largest U.S. bank. It wasn't untilWarren Buffett stepped up with a $5 billion investment that those fears were eased, though hardly eliminated.

The bank made no mention of the lawsuit threat in a quarterly regulatory filing with theU.S. Securities and Exchange Commission just four days earlier. Nor did management discuss it on conference calls about quarterly results and other pending legal claims.

The SEC's rules for litigation disclosure are murky, and some lawyers said Bank of America may have been justified in not revealing AIG's lawsuit before it was filed. The bank's litigation disclosures are in line with those of many rivals.

But other lawyers said banks have an obligation to disclose legal threats that could have major consequences.

http://www.rawstory.com/rs/2011/08/30/bank-of-america-kept-aigs-legal-threat-under-wraps-for-months/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+TheRawStory+%28The+Raw+Story% 29

[boutons_deux]

Nevada Says Bank Broke Mortgage Settlement

The attorney general of Nevada is accusing Bank of America of repeatedly violating a broad loan modification agreement it struck with state officials in October 2008 and is seeking to rip up the deal so that the state can proceed with a suit against the bank over allegations of deceptive lending, marketing and loan servicing practices.

In a complaint filed Tuesday in United States District Court in Reno, Catherine Cortez Masto, the Nevada attorney general, asked a judge for permission to end Nevada’s participation in the settlement agreement. This would allow her to sue the bank over what the complaint says were dubious practices uncovered by her office in an investigation that began in 2009.

In her filing, Ms. Masto contends that Bank of America raised interest rates on troubled borrowers when modifying their loans even though the bank had promised in the settlement to lower them. The bank also failed to provide loan modifications to qualified homeowners as required under the deal, improperly proceeded with foreclosures even as borrowers’ modification requests were pending and failed to meet the settlement’s 60-day requirement on granting new loan terms, instead allowing months and in some cases more than a year to go by with no resolution, the filing says.

The complaint says such practices violated an agreement Bank of America reached in the fall of 2008 with several states and later, in 2009, with Nevada, to settle lawsuits that accused its Countrywide unit of predatory lending. As the credit crisis grew, the settlement was heralded as a victory by state offices eager to help keep troubled borrowers in their homes and reduce their costs. Bank of America set aside $8.4 billion in the deal and agreed to help 400,000 troubled borrowers with loan modifications and other financial relief, such as lowering interest rates on mortgages.

But foreclosure problems mounted in Nevada, where Countrywide originated 262,622 loans, and complaints about the bank’s loan servicing practices began flooding into Ms. Masto’s office shortly after the settlement was struck. She found that Bank of America had “materially and almost immediately violated” the terms of the settlement, according to the complaint.

http://www.nytimes.com/2011/08/31/business/bank-of-america-accused-of-breaching-mortgage-accord.html?_r=1&pagewanted=print

[boutons_deux]

Nevada Lawsuit Shows Bank of America’s Criminal Incompetence

It’s pretty remarkable that Mr. Market shrugged off the devastating implications of the amended lawsuit filed by the Nevada attorney general, Catherine Masto against various Bank of America entities. As we’ve stated before, litigation by attorney general is significant not merely due to the damages and remedies sought, but because it paves the way for private lawsuits.

And make no mistake about it, this filing is a doozy. It shows the Federal/state attorney general mortgage settlement effort to be a complete travesty. The claim describes, in considerable detail, how various Bank of America units engaged in misconduct in virtually every aspect of its residential mortgage business.

The case argues on two tracks: it seeks to overturn the legal shield provided by a 2008 consent decree with Countrywide, since, in simple terms, Countrywide and BofA have flagrantly disregarded it. The case argues a separate series of claims, based on the same fact set, in case the consent decree is deemed to be operative.

The complaint describes abuses from the very outset of the securitization process: how borrowers were mis-sold mortgages (it describes how entire products were effectively predatory), how investors were misled as to their quality, how they were not conveyed properly to securitization trusts, how borrowers were subject to abusive servicing (as in charged improper and impermissible fees), how promises made under the old consent decree regarding mortgage modifications were violated (for instance, even though interest rate reductions were promised, instead modifications often resulted in HIGHER interest rates), and the filing of fraudulent paperwork to execute foreclosures.

http://www.nakedcapitalism.com/2011/08/nevada-lawsuit-shows-bank-of-americas-criminal-incompetent.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capi talism%29

[boutons_deux]

U.S. Is Set to Sue a Dozen Big Banks Over Mortgages


The federal agency that oversees the mortgage giants Fannie Mae and Freddie Mac is set to file suits against more than a dozen big banks, accusing them of misrepresenting the quality of mortgage securities they assembled and sold at the height of the housing bubble, and seeking billions of dollars in compensation.

The Federal Housing Finance Agency suits, which are expected to be filed in the coming days in federal court, are aimed at Bank of America, JPMorgan Chase, Goldman Sachs and Deutsche Bank, among others, according to three individuals briefed on the matter.

The suits stem from subpoenas the finance agency issued to banks a year ago. If the case is not filed Friday, they said, it will come Tuesday, shortly before a deadline expires for the housing agency to file claims.

The suits will argue the banks, which assembled the mortgages and marketed them as securities to investors, failed to perform the due diligence required under securities law and missed evidence that borrowers’ incomes were inflated or falsified. When many borrowers were unable to pay their mortgages, the securities backed by the mortgages quickly lost value.

Fannie and Freddie lost more than $30 billion, in part as a result of the deals, losses that were borne mostly by taxpayers.

In July, the agency filed suit against UBS, another major mortgage securitizer, seeking to recover at least $900 million, and the individuals with knowledge of the case said the new litigation would be similar in scope.

Private holders of mortgage securities are already trying to force the big banks to buy back tens of billions in soured mortgage-backed bonds, but this federal effort is a new chapter in a huge legal fight that has alarmed investors in bank shares. In this case, rather than demanding that the banks buy back the original loans, the finance agency is seeking reimbursement for losses on the securities held by Fannie and Freddie.

The impending litigation underscores how almost exactly three years after the collapse of Lehman Brothers and the beginning of a financial crisis caused in large part by subprime lending, the legal fallout is mounting.

Besides the angry investors, 50 state attorneys general are in the final stages of negotiating a settlement to address abuses by the largest mortgage servicers, including Bank of America, JPMorgan and Citigroup. The attorneys general, as well as federal officials, are pressing the banks to pay at least $20 billion in that case, with much of the money earmarked to reduce mortgages of homeowners facing foreclosure.

http://www.nytimes.com/2011/09/02/business/us-is-set-to-sue-dozen-big-banks-over-mortgages.html?_r=1&partner=rss&emc=rss&pagewanted=print

=============

Taxpayers "lost $30B", do you think the penalties on the banks will make the taxpayers good? nah, pro forma/fool-all-y'all hand slaps, at very max.

[boutons_deux]

The More You Look, The More Bank Criminality You Find in Mortgage Land

First is that the Associated Press reports that Guiford County, North Carolina register of deeds Joe O’Brien has found evidence of robosigning in his filed dating back to 1998. This is significant because:

Servicers did nothing on a one-off basis. If O’Brien found robosigned documents in his files that far back, it is certain there are other examples in other jurisdictions dating back that far.

It indicated the procedural abuses are much longer standing than virtually all commentators had assumed. I had thought it started with the 2002-3 refinancing boom, when servicers failed to staff up to meet big increases in volumes, which led to corners-cuttting in origination and eventually led to abuses in foreclosures. But this records search indicates the bad practices started much earlier and came to be applied over time on a more widespread basis.

The second sighting comes from American Banker’s Kate Berry, and provides additional confirmation of other reports that banks continue to engage in backdating of documents after having piously sworn to stop that sort of thing:

Several dozen documents reviewed by American Banker show that as recently as August some of the largest U.S. banks, including Bank of America Corp., Wells Fargo & Co., Ally Financial Inc., and OneWest Financial Inc., were essentially backdating paperwork necessary to support their right to foreclose.

Some of documents reviewed by American Banker included signatures by current bank employees claiming to represent lenders that no longer exist.

Many banks are missing the original papers from when they securitized the mortgages, in some cases as long ago as 2005 and 2006, according to plaintiffs’ lawyers. They and some industry members say the related mortgage assignments, showing transfers from one lender to another, should have been completed and filed with document custodians at the time of transfer.

“It’s one thing to not have the documents you’re supposed to have even though you told investors and the SEC you had them,” says Lynn E. Szymoniak, a plaintiff’s lawyer in West Palm Beach, Fla. “But they’re making up new documents.”

The banks argue that creating such documents is a routine business practice that simply “memorializes” actions that should have occurred years before. Some courts have endorsed that view, but others, such as the Massachusetts Supreme Judicial Court, have found that this amounts to a lack of sufficient evidence and renders foreclosures invalid.

http://www.nakedcapitalism.com/2011/09/the-more-you-look-the-more-bank-criminality-you-find-in-mortgage-land.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capi talism%29

[boutons_deux]

"Fraud As a Business Model"

Goldman "magnified the impact of toxic mortgages." The Wall Street Journal reviewed data showing that a $38 million subprime-mortgage bond created in June 2006 was referenced in more than 30 debt pool causing around$280 million in losses to investors by 2008. In other words, Goldman kept repackaging, reselling or protecting (buying credit default protection on) losers. It took the wrong kind of nerve for Goldman's CEO to say he was doing "God's work."

William K. Black is a former bank regulator who played a role in hundreds of successful prosecutions after the Savings and Loan Crisis. He told the Wall Street Journal: "It's a great myth that you can't defraud sophisticated financial parties." Particularly when loans are fraudulent and material information was not disclosed.


Until the Securities and Exchange Commission sued Goldman Sachs for fraud in April of 2010, it was easy to forget that we have a regulatory agency designed to protect the public from the pillaging of corporate America. Six months earlier, the SEC has arranged a settlement with JPMorgan that showed how rigged the system is. The banking giant agreed to pay a $25 million penalty and cancel $647 million in fees owed by Alabama's Jefferson County as the result of a complicated derivatives deal that blew up in the county's face. As part of the settlement, JPMorgan neither admitted nor denied wrongdoing--despite overwhelming evidence that it had engaged in plenty of wrongdoing.


http://www.huffingtonpost.com/janet-tavakoli/fraud-as-a-business-model_b_950806.html?view=print&comm_ref=false

[FuzzyLumpkins]

well its nice to see that the Democratic version of WC can fuck up a thread just as well.

On topic, i didn't think the justice department had the balls to even do this much. Its a step in the right direction even if too little way too fucking late.

I will clamor for more draconian tactics against the financial 'industry.'

[boutons_deux]

50 State Attorney General Effort to Sell Out to Banks Makes Even More Egregious Offer

The so-called 50 state attorney general mortgage settlement negotiations (a bit of a misnomer, since at least 4 attorneys general appear to be out, and various Federal banking regulators are alos party to the deal) are looking more and more like a desperate effort to reach any kind of a deal so as to save the officialdom’s face. The only good news is the banks are so insistent on total victory that despite the efforts to pretend the talks are making progress, the odds of a deal being consummated still look remote.

It is nevertheless frustrating to continue to see the media depict the flailing about by the attorneys general headed by Tom Miller as progress. I’ve been involved in negotiations for much of my career, and I’ve never seen so much incompetence on open display. The Financial Times headline, “US banks offered deal over lawsuit” is substantively misleading. You can’t credibly put forward a proposal unless your side has signed off on it. Yet he has just made an offer that his own side may not support. And this isn’t the first time Miller has pulled this trick.

Per the Financial Times:

According to five people with direct knowledge of the discussions, state prosecutors have proposed settlement language in the “robosigning” case that also might release the companies from legal liability for wrongful securitisation practices.

Some state officials have expressed concern that they have offered the banks far too broad a release from liability. Others say the broad language was perhaps inadvertently crafted and will be tightened as negotiations continue. Participants on both sides stressed the talks remain fluid.

Lordie, this is deja vu all over again. As we said in July:

The latest update is comical, if you read between the lines. The deal is cash for a release. Everything else is decoration. And both sides of that deal are falling apart. The banks are squabbling among themselves as to who has to pony up what, with everyone except maybe BofA posturing that they really don’t owe that much. Oh, and the other side of the equation, the release? The banks and the AGs are not on the same page.

But if you read the Wall Street Journal article on the state of play on talks, you might well be fooled by the upbeat tone and the emphasis on the agreement on the stuff that does not matter (we and others went through the original AG term sheet, and it was pathetic, since virtually all of it was nice sounding exhortations which merely having the banks agree to comply with existing law!). For instance:

All sides have agreed to a framework that would govern how banks meet their obligations once a deal is reached. Those include principal reductions on certain mortgages, forgiveness of second-lien loans, restitution to borrowers and dealing with foreclosure-related blight. A person close to one of the banks said remaining differences are narrowing.

Earth to base, “remaining differences” are irrelevant if the biggest items aren’t close to resolution.

I wish someone would put this effort out of its misery. But as long as the media keeps treating the Miller/Federal regulator PR as serious, yours truly will have to keep debunking it

http://www.nakedcapitalism.com/2011/09/50-state-attorney-general-effort-to-sell-out-to-banks-makes-even-more-egregious-offer.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capi talism%29

[Winehole23]

A previously undisclosed HUD investigation reveals that banks took at least $6B in reinsurance kickbacks:

http://www.americanbanker.com/issues/176_173/mortgage-reinsurance-respa-kickbacks-hud-investigation-doj-1041928-1.html

[Winehole23]

Several dozen documents reviewed by American Banker show that as recently as August some of the largest U.S. banks, including Bank of America Corp., Wells Fargo & Co., Ally Financial Inc., and OneWest Financial Inc., were essentially backdating paperwork necessary to support their right to foreclose.


Some of documents reviewed by American Banker included signatures by current bank employees claiming to represent lenders that no longer exist.


Many banks are missing the original papers from when they securitized the mortgages, in some cases as long ago as 2005 and 2006, according to plaintiffs' lawyers. They and some industry members say the related mortgage assignments, showing transfers from one lender to another, should have been completed and filed with document custodians at the time of transfer.


"It's one thing to not have the documents you're supposed to have even though you told investors and the SEC you had them," says Lynn E. Szymoniak, a plaintiff's lawyer in West Palm Beach, Fla. "But they're making up new documents."
http://www.americanbanker.com/issues/176_170/robo-signing-foreclosure-mortgage-assignments-1041741-1.html

[boutons_deux]

Unregulated (and unpunished), self-regulated (just trust us!) capitalism is a beauty to behold.

[boutons_deux]

More Proof of DoJ Lack of Interest in Enforcing the Law: The Case of the Kickback-Demanding Banks

So why is the Department of Justice’s excuse for sitting on its hands? The excuse made is that it lacks the needed accounting skills. If you believe that, I have a bridge I’d like to sell you. Actions speak louder than words, and the evidence is overwhelming that the DoJ has no interest in inconveniencing anyone influential, particularly banks.

http://www.nakedcapitalism.com/2011/09/more-proof-of-doj-lack-of-interest-in-enforcing-the-law-the-case-of-the-kickback-demanding-banks.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capi talism%29

===========

The finance sector OWNS the federal govt, all 3 branches.

[Wild Cobra]

A previously undisclosed HUD investigation reveals that banks took at least $6B in reinsurance kickbacks:

http://www.americanbanker.com/issues/176_173/mortgage-reinsurance-respa-kickbacks-hud-investigation-doj-1041928-1.html
Looks like there should be prosecutions coming. Make an example of people who hold a government role so it doesn't happen so frequently. If this doesn't happen, say no to more government bailout intervention.

[boutons_deux]

the govt didn't cause or commit the kickbacks.

the problem is govt NOT policing/intervening to enforce the law, just as Wall St pays the govt to STFU and GFTO so Wall st can commit crimes unimpeded.

[boutons_deux]

Florida Appellate Decision May Be a Major Obstacle to Foreclosure

A ruling issued today, Glarum v. LaSalle Bank, by the court of appeals for Florida’s fourth district, may have thrown a really big wrench in the foreclosure machinery state-wide. I say “may” because this ruling has such big implications that the bank has good reason to appeal to try to get the decision reversed or narrowed.

The ruling itself is remarkably straightforward and damning. The trial court had issued a summary judgment for foreclosure. The appeals court reversed it because the evidence submitted by LaSalle Bank to establish the amount due and owing was inadequate under Florida’s rules of civil procedure.

http://www.nakedcapitalism.com/2011/09/florida-appellate-decision-may-be-a-major-obstacle-to-foreclosure.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capi talism%29

[Winehole23]

Compare and contrast with Frank-Dodd:

http://bankingcommission.independent.gov.uk/

[boutons_deux]

Regulators Weaken Dodd-Frank Draft Regs, Allow More Risk

Here’s the Wall Street Journal:

[The language] opens the door for banks to make all manner of bets on the market, observers said, because a bank might define the risk to its portfolio broadly, such as the risk of a U.S. recession.

If the language is confirmed in the final rule, expected by late October, it would be a victory for Wall Street firms that have lobbied to relax the ban on proprietary trading.

Reuters reports:

The CFTC's final rule maintains that the Dodd-Frank Wall Street overhaul law requires position limits -- caps on the total number of commodity-linked contracts that any one trader can hold -- to prevent excessive speculation in oil, grain, silver and other commodity markets.

… But in the details of the plan, the CFTC modified key areas that were a major concern for big Wall Street banks like Morgan Stanley and oil companies such as Shell.

In an earlier draft of the rule, the agency had essentially proposed that all the trading positions of a company be added up and that the total be subjected to the position limits, thereby limiting a company’s overall bet on a commodity.

But the latest version, according to Reuters, allows the limits to be applied to individual trading desks within large companies, provided they trade independently. This could allow banks and other companies to accumulate far larger totals of commodity-linked contracts.

http://www.propublica.org/blog/item/regulators-loosen-limits-on-risk-in-latest-drafts-of-dodd-frank-rules

===============

the finance sector OWNS the govt, esp the Repugs, who killed Warren and killed recess appts.

[boutons_deux]

Game Over: California Attorney General Breaks From “50 State” Mortgage Settlement

We’ve been saying for months that the 50 state attorney general settlement was not going to happen. Despite the vigorous efforts by people on the side of the Federal regulators involved in the negotiations and Tom Miller’s (the AG leading the negotiations’) office to make it seem as if the deal was moving forward, the content of the reports showed otherwise. There was a huge gap between the positions of the banks and even the bank friendly position of the state AGs at the table and the banking regulators.

Now that Kamala Harris, the California state attorney general, has officially abandoned the talks, they don’t mean much, at least from the state side. The departure of such a big state, in population, foreclosure exposure, and Electoral college terms, along with other states (New York, Delaware, Nevada, Massachusetts, Kentucky, Minnesota, likely Arizona) means any settlement has limited practical meaning from the state side and even less credibility. It also considerably raises the odds of other states bolting. And needless to say, this is a major repudiation of the Obama Adminstration “let’s sweep foreclosure fraud under the rug” strategy.

The Wall Street Journal points out that the issue that led Harris to leave the talks was the one that we highlighted, that the Federal/state effort had offered an unduly broad release of claims (draft language would, among other things, waive the Federal and State regulatory ability to prosecute chain of title abuses)

Congratulations to the state attorneys general who were courageous enough to stand up to this whitewash early, particularly Eric Schneiderman, Beau Biden, and Martha Coakley.

http://www.nakedcapitalism.com/2011/09/california-attorney-general-breaks-from-50-state-mortgage-settlement.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capi talism%29

[boutons_deux]

Attorneys General Settlement: The Next Big Bank Bailout?

In fact, any federal foreclosure settlement along the lines of what’s been proposed will amount to a last round of post-2008-crisis bailouts. I talked to one foreclosure activist over the weekend who put it this way: “[The AG settlement] will be a bigger bailout than TARP.”

How? The math actually makes a hell of a lot of sense, when you look at it closely.

Any foreclosure settlement will allow the banks to pay one relatively small bill to cover all of their legal liabilities stemming from the monstrous frauds they all practiced in the years leading up to the 2008 crash (and even afterward), when they all schemed to create great masses of dicey/junk subprime loans and then disguise them as AAA-rated paper for sale to big private investors and institutions like state pension funds and union funds.

To recap the crime: the banks lent money to firms like Countrywide, who in turn created billions in dicey loans, who then sold them back to the banks, who chopped them up and sold them to, among other things, your state’s worker retirement funds.

So this is bankers from Deutsche and Goldman and Bank of America essentially stealing the retirement nest eggs of firemen, teachers, cops, and other actors, as well as the investment monies of foreigners and hedge fund managers. To repeat: this was Wall Street hotshots stealing money from old ladies.

Along the road to this systematic thievery, a great many other, sometimes smaller offenses were committed. One involved the use of the MERS electronic registration system. By law, banks were supposed to register with county-level offices in each state every time they sold or resold a mortgage, and pay fees each time.

But they didn’t, instead registering with the private deed-transfer agency MERS, allowing them to systematically, and illegally, bypass local taxes.

So any “AG settlement” might allow the banks to avoid legal damages being sought from three different set of enraged creditors: the public institutions who invested in these sham securities, the private investors who did the same, and the localities who were cheated out of their taxes.

http://www.rollingstone.com/politics/blogs/taibblog/attorneys-general-settlement-the-next-big-bank-bailout-20111005

[Winehole23]

Nov. 22 (Bloomberg) -- JPMorgan Chase & Co., the biggest U.S. bank by assets, was sued for fraud by German lender Bayerische Landesbank over losses on about $2.1 billion in mortgage-backed securities.


JPMorgan units concealed the truth about the poor quality of the loans underlying the securities and knew that credit ratings misrepresented their risk, BayernLB said in a lawsuit filed yesterday in New York State Supreme Court.


“This misconduct has resulted in astounding rates of default on the loans,” BayernLB said. Most of the securities have been downgraded to junk, it said.
http://www.businessweek.com/news/2011-11-22/jpmorgan-sued-by-bayernlb-over-mortgage-backed-securities.html

[Winehole23]

Paying fines and walking away from liability, though, isn’t the only break that the accused have been catching. It has become routine that, on the heels of a settlement with the SEC, big banks and other defendants request and receive waivers from punishments designed to kick in as a result of their settlement orders. My personal favorites are the series of agreements between the SEC and the investment firms it accused of rigging prices of municipal bonds. Five firms have agreed to pay $743 million in bid-rigging cases since December 2010 -- all reaping the benefits of those “neither admit nor deny” clauses along the way, of course.
Start Believing

If we are to believe the SEC, some of those firms that didn’t have to say they did anything wrong really did break laws and hurt the public. Read this quote from a May 4 SEC press release: “Our complaint against UBS reads like a ‘how-to’ primer for bid-rigging and securities fraud,” said Elaine C. Greenberg, chief of the SEC’s Municipal Securities and Public Pensions Unit. “They used secret arrangements and multiple roles to win business and defraud municipalities through the repeated use of illegal courtesy bids, last looks for favored bidders, and money to bidding agents disguised as swap payments.”



I don’t know about you, but that sounds pretty bad to me. Fraud. Secret arrangements. Disguises.



Bad, perhaps, but not bad enough to stop UBS AG’s lawyers at Debevoise & Plimpton LLP from writing to the SEC five days later on May 9 to ask a favor. Through its lawyers, UBS asked the SEC not to enforce a rule that would have disqualified it from participating in securities offerings that are exempt from registration requirements. To help make the case for UBS, the letter cited nine examples of times the SEC had granted waivers for “similar reasons” since 2002, including another action against UBS. On the very same day, the SEC wrote back to say the waiver was granted (http://www.sec.gov/divisions/corpfin/cf-noaction/2011/ubsfinancial050911-3b.pdf).



In case you are having trouble keeping track, what we’re talking about here is an exemption from a ban from an exemption. Regulators do have the ability to bring administrative proceedings if a firm abuses the privileges it gets from a waiver. But if we need to go to this much trouble to undo the rules when somebody gets caught -- but doesn’t admit it anyway - - why have rules at all? UBS didn’t respond to a request for comment.



While all the settling and waiving and exempting is going on, the banks paying the most for legal juice benefit from remarkable access. Thanks to research (http://www.pogo.org/pogo-files/reports/financial-oversight/revolving-regulators/fo-fra-20110513.html) by the Project on Government Oversight, the public got hard data back in May showing just how easy it was for SEC professionals to leave their posts for the private sector and, on behalf of their new financial-industry clients, to get rapid entree to sitting securities regulators.
http://www.bloomberg.com/news/2012-01-04/wall-street-s-big-swingers-get-biggest-breaks-commentary-by-susan-antilla.html

[Winehole23]

wrong thread
(http://www.spurstalk.com/forums/showthread.php?t=133663)

[boutons_deux]

Under Foreclosure Fraud Settlement Proposal, Investors – Not Banks – On the Hook for Penalties

Investors in US home mortgage bonds may have to swallow losses as part of a wide-ranging settlement being discussed between leading banks and the Obama administration to resolve allegations of foreclosure misdeeds [...]

According to the terms of the settlement currently under discussion, each of the banks involved will have to meet a certain dollar target to fulfil their end of the deal. Each dollar of reduced payments or overall loan balances would be treated like a credit. A dollar of principal reduction on loans held on the banks’ own books would get a higher credit – for example, 100 cents on the dollar – than reducing a dollar of loan principal on mortgages owned by bond investors.

The servicers would have to determine that a mortgage restructuring would be more beneficial to the investor than a foreclosure, and the contracts governing the mortgage securities would have to allow for loan modifications. Investors probably would have no say in the decision, according to people familiar with the matter [...]

Officials have discussed giving the banks credit to the tune of roughly 50 cents on the dollar for cutting the principal on mortgages owned by bond investors.

Because the banks would get less credit for reducing the principal on bond investors’ mortgage holdings, some officials expect that the banks would mostly cut principal balances on their own mortgages.

In fact, I can tell you exactly what will happen: all the mortgage mod money will come out of investors, and it will come out of the very biggest loans, since the bigger the loan, the fewer the number of mods the bank has to make (the cost of making a mod is not related to the size of the loan). So that means that this approach assures that the mods will go to comparatively few people in big ticket homes and will do nada to help middle and lower middle class people.

http://news.firedoglake.com/2012/01/06/under-foreclosure-fraud-settlement-proposal-investors-not-banks-on-the-hook-for-penalties/

[Winehole23]

The SEC is about to get tougher on Wall Street crime. A little bit.

The Securities and Exchange Commission said Friday that in certain cases, it will no longer allow defendantsto settle complaints without admitting or denying the allegations against them.

The catch is that the change to this controversial policy applies only to cases in which defendants have been convicted of the same conduct in criminal proceedings, or in which they've admitted to the conduct as part of an agreement with law enforcement officials to avoid or delay criminal prosecution.

The SEC does not have the power to bring criminal complaints.

Defendants will still be able to reach SEC settlements without admitting or denying the allegations against them when there are no concurrent criminal convictions or admissions of criminal violations for the same conduct. http://money.cnn.com/2012/01/06/news/sec_admit_deny/index.htm?iid=HP_LN

[boutons_deux]

"SEC does not have the power to bring criminal complaints."

hmm, that was a fortuitous oversight in creating the SEC. I wonder where that idea came from?

[Winehole23]

Joe Kennedy?

[boutons_deux]

Fraud and Folly: The Untold Story of General Electric's Subprime Debacle

For General Electric Co., hawking subprime mortgages was a long way from making light bulbs and jet engines.

That didn't stop the industrial giant from jumping into the subprime business in 2004, lending blue-chip respectability to the market for risky home loans by paying roughly half a billion dollars to buy California-based WMC Mortgage Corp.

What GE got in the bargain, former WMC employees say, was a place where erstwhile shoe salesmen, ex-strippers and even a former porn actress could sign on as sales reps and make big money pushing home loans. WMC's top salespeople earned a million dollars a year or more and lived fast, swigging $1,000 bottles of Cristal and wheeling around in $100,000 Ferraris and Bentleys.

In pursuit of these riches and perks, several ex-employees claim, many WMC sales staffers embraced fraud as a tool for pushing through loans that borrowers couldn’t afford.

Dave Riedel, a former compliance manager at WMC, says sales reps intent on putting up big numbers used falsified paperwork, bogus income documentation and other tricks to get loans approved and sold off to Wall Street investors.

One WMC official, Riedel claims, went so far as to declare: “Fraud pays.”

How well did GE address WMC’s fraud problems?

GE says it did plenty to deal with the issue. Some ex-employees counter that GE officials didn’t do enough to rein in illicit practices, despite warnings from Riedel and other whistleblowers inside the lender. GE dispatched emissaries to look into the problem, the ex-employees say, but their efforts were too little, too late.

“They sent in people we thought were going to bring us back in the right direction,” Victor Argueta, a former risk analyst at WMC, says. “But it just never happened.”

By 2007, WMC was bleeding bad loans and red ink. General Electric shut the lender and reported related losses totaling more than $1 billion.

http://www.alternet.org/module/printversion/153679

[boutons_deux]

The Obama Administration's 'New' Bank Fraud Deal: Still Unfair, Still Unjust, Still Unbalanced

proposed settlement, whose stated purpose is to punish banks and reduce the amount of money owed by underwater homeowners. But it's increasingly clear that the deal wouldn't help homeowners very much and wouldn't punish bankers at all.

Banks could lower those loan balances by reducing the amount owed on mortgages owned by investors and not by the bank itself.

Many of the investors are from the 99 percent, not the one percent. As the head of the Association of Mortgage Investors told the Financial Times, "It would be a pyrrhic victory to settle the mortgage crisis with the money of public institutions, pension funds and seniors."

The proposed deal would force banks to meet a certain dollar limit for reducing mortgage principal. But it's designed to let them use other people's money - mortgage investors' money - to reach that limit.

What if you were given a choice between spending a thousand dollars of your own money to pay a fine - or two thousand dollars of someone else's? (And remember: You're a banker, so don't let conscience influence your decision.) What would you do?

The entire amount of the deal is $25 billion, and we now know that even some of that will be payable out of other people's funds. Let's put that figure in perspective:

American homes have lost more than ten trillion dollars in value as a result of the bank-fueled bubble and crash. $25 billion is one-fourth of one percent of the lost value.

Americans owed $750 billion in principal for non-existent real estate that evaporated after the crash, as of the last study. That's money borrowed against values that were artificially inflated by the banks, which made bankers rich and left homeowners holding the bag. That figure has risen since then.

But even if we don't adjust for additional losses, $25 billion is a little more than 3 percent of the amount that's owed for nothing - that is, for bank-inflated and now nonexistent home value.

The "good news" for 2011 was that US homes only lost an estimated $681 billion in value. That's down from the $1.1 trillion lost in 2010. But even at last year's slower rate of loss, know how long it would take for US homes to lose the entire $25 billion amount of this settlement in value?

Less than two weeks.

http://www.huffingtonpost.com/rj-eskow/the-obama-administrations_b_1198298.html?view=print&comm_ref=false

[Winehole23]

By 2007, WMC was bleeding bad loans and red ink. General Electric shut the lender and reported related losses totaling more than $1 billion.
judge lets lawsuit against GE for misleading investors stand: http://www.chicagotribune.com/business/sns-rt-us-generalelectric-lawsuittre80c01z-20120112,0,2805331.story

[clambake]

judge lets lawsuit against GE for misleading investors stand: http://www.chicagotribune.com/business/sns-rt-us-generalelectric-lawsuittre80c01z-20120112,0,2805331.story

thanks. i was about to pull the trigger on stock.

[Winehole23]

You're welcome!


(WH23 is not a financial adviser and does not give advice about investments in these pages.)

[clambake]

it was at 18 on the 11th.

think i'll go with cummins. its at 98.

[Winehole23]

Citigroup Inc (C.N (http://uk.reuters.com/business/quotes/overview?symbol=C.N)) was sued for fraud by Loreley Financing over nearly $1 billion worth of collateralized debt obligations purchased in 2006 and 2007.

Citigroup is accused of defrauding Loreley into purchasing "fraudulent investments that are now worthless," Loreley said in a complaint filed Tuesday in New York State Supreme Court in Manhattan.

Citi used the CDOs to offload the risks of toxic mortgage-backed securities on its books and to help preferred clients "short" the housing market, the lawsuit claims.
(http://www.goldinvesting.dianomi.com/partner/reuters/brochures.epl?offer=160357&score=0&header=0&tag=smartlink:title.%0Ds%20%20%20%20%20%20Citigrou p%20sued%20for%20fraud%20over%20%241%20billion%20o f%20CDOss%7C%20Reutersss&smartreferer=http%3A%2F%2Fuk%2Ereuters%2Ecom%2Fart icle%2F2012%2F01%2F24%2Fus%2Dcitigroup%2Dloreley%2 DidUKTRE80N2JO20120124%3Ftype%3DcompanyNews&partner=17&ad=859&savid=1538&topProductTypeId=576&top_pid=2367&tag=smartad&said=1107&adv=2251&psa=65753601)http://uk.reuters.com/article/2012/01/24/us-citigroup-loreley-idUKTRE80N2JO20120124?type=companyNews

[Winehole23]

Michael Lewis is terrific both at picking topics and in his exposition. What I thought was most interesting about this book was that there is, to this day, a view about the whole pathology of collateralised debt obligations (CDOs) – these highly complex, packaged mortgage securities – as well as the credit default swaps – the insurance contracts written on those securities – that Wall Street created them and they simply got out of hand. They didn’t anticipate it would be hard to value them, how they would be misused, and so forth. What Michael Lewis points out very forcefully is that they were deliberately created by Wall Street banks in order to produce non-transparent securities that could not be adequately evaluated by the rating agencies, which then could be sold to less sophisticated investors, who would buy the idea that this junk debt actually had triple A ratings. So what this book does quite brilliantly is show that there was actually a high degree of intentionality in creating the crisis. The worst of all these securities are the so-called synthetic CDOs. A CDO is a bond that represents maybe a couple of thousand mortgages; a synthetic CDO is a group of hundreds of CDOs, all packaged into a single security. When you get to that level of complexity, no one can evaluate what this thing is worth. You can come up with sophisticated rationales for why this might actually follow some kind of market logic, but I think Lewis shows that the reason this happened is that they didn’t want anyone to be able to rate it.http://thebrowser.com/interviews/francis-fukuyama-on-financial-crisis

[Winehole23]

I’ve never been a fan of Wall Street, which I covered as a financial journalist and found considerably more secretive than the Chinese companies I followed as a reporter in Shanghai. In the case of Goldman Sachs, I remember even having a hard time finding out who their head of international equity was, as if this was some sort of big secret. However, I also know quite a few people who have worked there, and I find the idea of systematic fraud hard to buy.

It depends what you mean by systematic. Lloyd Blankfein doesn’t get up in the morning and say, “OK. How are we going to defraud people today?” but I do think the relationship of these banks to social rules is fairly dodgy. Rules are viewed as potential obstacles that you try to get around if that maximises your profit. This is a deeper social issue that I think has to do with the economisation of a lot of thinking. Economists have this model of rational utility maximisation – that social benefit comes out of everybody pursuing their private rational self-interest. This has shaded over – imperceptibly over the past couple of generations – to a downplaying of social norms as constraints on behaviour. You see this in a number of places. In business schools, for example. Back in the 1960s and 70s, business schools regarded themselves as professional schools along the lines of law schools or architecture schools. They were meant to inculcate a certain sense of professional responsibility, that you have obligations to society at large. But as a result of the economisation of a lot of what was taught in these schools, individual profit maximisation began to displace this normative sense, and this spilled over into the behaviour of the people who went on from these programmes into the financial sector. In their minds, they weren’t deliberately trying to defraud people, but if they saw an opportunity to take advantage of less sophisticated buyers of subprime mortgages, they would go ahead and do it.
same

[Winehole23]

Let’s go on to Simon Johnson and James Kwak’s 13 Bankers. You mention in one article (http://www.the-american-interest.com/article-bd.cfm?piece=906) that “this book comes closest to the Marxist plutocracy conspiracy” theory of the crisis, which made me laugh, considering Johnson is, like Rajan, a former chief economist of the IMF.

Obviously that’s way overstated, but it is remarkable that here we are in 2012, the fourth year after the crisis. We still don’t have an adequate regulatory system in place to prevent a crisis like this from happening, and the recent collapse of MF Global (http://thebrowser.com/articles/rise-and-fall-mf-global-chief-jon-corzine) indicates that in many respects Wall Street hasn’t learned lessons either, in terms of the kinds of risks they’re willing to take.


I’ve got this very simple view, which is that I don’t think regulation of the Dodd-Frank sort is going to work. The investment banks have got way too much talent, are way too creative and way too nimble for regulators ever to keep up. Therefore the real solution all along should have been to break these big banks up into smaller pieces, which is essentially what Glass-Steagall and the interstate banking regulations of the 1930s did. Once the banks are no longer too big to fail, then you can just let the market work the way it’s supposed to. If people take outsized risks and they get into trouble, then they just go bankrupt, and that is essentially what happened to MF Global. It hurts people, but it’s not a systemic crisis.


That option was never seriously considered. We briefly toyed with the idea of nationalising the banks in the depths of the crisis. In the debate leading up to Dodd-Frank, there was actually one really interesting roll call vote. There was an amendment (http://www.opencongress.org/vote/2010/s/136) proposed that would have limited the size of financial institutions. It was defeated something like 60 to 30, and if you look at the list of the people who voted against it, it includes Chuck Schumer and all of these liberal Democrats. They’re the ones who should have been leading the charge against this kind of concentrated power, but given where they get their money, they weren’t willing even to consider it. That’s why we still haven’t solved this problem. In that one specific respect, Johnson is completely correct. It’s not just a matter of corrupt money bribing people; it’s also a case of intellectual capture. People just can’t think outside the parameters that are set by this community and just don’t entertain certain kinds of potential solutions to it.
same

[Winehole23]

JPMorgan Chase, the largest bank in the United States, said Thursday that it lost $2 billion in a trading portfolio designed to hedge against risks the company takes with its own money.


The company's stock plunged almost 7 percent in after-hours trading after the loss was announced. Other bank stocks, including Citigroup and Bank of America, suffered heavy losses as well.


"The portfolio has proved to be riskier, more volatile and less effective as an economic hedge than we thought," CEO Jamie Dimon told reporters.http://www.businessweek.com/ap/2012-05/D9UM49MG3.htm

[boutons_deux]

How J.P. Morgan Chase Has Made the Case for Breaking Up the Big Banks and Resurrecting Glass-Steagall

Word on the Street is that J.P. Morgan's exposure is so large that it can't dump these bad bets without affecting the market and losing even more money. And given its mammoth size and interlinked connections with every other financial institution, anything that shakes J.P. Morgan is likely to rock the rest of the Street.

Ever since the start of the banking crisis in 2008, Dimon has been arguing that more government regulation of Wall Street is unnecessary. Last year he vehemently and loudly opposed the so-called Volcker rule, itself a watered-down version of the old Glass-Steagall Act that used to separate commercial from investment banking before it was repealed in 1999, saying it would unnecessarily impinge on derivative trading (the lucrative practice of making bets on bets) and hedging (using some bets to offset the risks of other bets).

Dimon argued that the financial system could be trusted; that the near-meltdown of 2008 was a perfect storm that would never happen again.

Since then, J.P. Morgan's lobbyists and lawyers have done everything in their power to eviscerate the Volcker rule -- creating exceptions, exemptions, and loopholes that effectively allow any big bank to go on doing most of the derivative trading it was doing before the near-meltdown.

http://www.huffingtonpost.com/robert-reich/-jp-morgan-losses_b_1508928.html?ref=daily-brief?utm_source=DailyBrief&utm_campaign=051112&utm_medium=email&utm_content=BlogEntry&utm_term=Daily%20Brief

[boutons_deux]

JPMorgan's Outsize Trades Drew Interest of Regulators

United States and British regulators have been in discussions with JPMorgan Chase for almost a month about the trading group that disclosed more than $2 billion in losses

This is not the first time that the United States bank, which has a large trading operation in London, has run afoul of British regulation. Last month, the F.S.A. fined Ian Hannam, JPMorgan's global chairman of equity capital markets, £450,000 for disclosing inside information. Mr. Hannam resigned from the bank, and is appealing the fine.

http://mobile.nytimes.com/article?a=949341&f=19

[Wild Cobra]

Can you imagine what would happen to housing prices if all the banks were forced to sell their foreclosed homes?

[Winehole23]

be nice if they were that far along

[boutons_deux]

How Wall Street Killed Financial Reform

Two years later, Dodd-Frank is groaning on its deathbed. The giant reform bill turned out to be like the fish reeled in by Hemingway's Old Man – no sooner caught than set upon by sharks that strip it to nothing long before it ever reaches the shore. In a furious below-the-radar effort at gutting the law – roundly despised by Washington's Wall Street paymasters – a troop of water-carrying Eric Cantor Republicans are speeding nine separate bills through the House, all designed to roll back the few genuinely toothy portions left in Dodd-Frank. With the Quislingian covert assistance of Democrats, both in Congress and in the White House, those bills could pass through the House and the Senate with little or no debate, with simple floor votes – by a process usually reserved for things like the renaming of post offices or a nonbinding resolution celebrating Amelia Earhart's birthday.

The fate of Dodd-Frank over the past two years is an object lesson in the government's inability to institute even the simplest and most obvious reforms, especially if those reforms happen to clash with powerful financial interests. From the moment it was signed into law, lobbyists and lawyers have fought regulators over every line in the rulemaking process. Congressmen and presidents may be able to get a law passed once in a while – but they can no longer make sure it stays passed. You win the modern financial-regulation game by filing the most motions, attending the most hearings, giving the most money to the most politicians and, above all, by keeping at it, day after day, year after fiscal year, until stealing is legal again. "It's like a scorched-earth policy," says Michael Greenberger, a former regulator who was heavily involved with the drafting of Dodd-Frank. "It requires constant combat. And it never, ever ends."


http://www.rollingstone.com/politics/news/how-wall-street-killed-financial-reform-20120510

And like the Muslim terrorists in THEIR COUNTRIES, the UCA in ITS COUNTRY will out-wait and out-fight any reform/regulatory effort, will gut any law or regulation.

America is fucked and unfuckable.

[boutons_deux]

One Month Ago, Dimon Called Critics Of Big Bank Trading ‘Infantile’ And ‘Nonfactual’

The loss, and the embarrassment it held for Jamie Dimon, the bank’s imperious chief executive, came just one month after a private dinner party in Dallas at which he assailed two respected public figures who have pushed for policies that would make banks like JPMorgan smaller and less risky.

One was Paul Volcker, the former Federal Reserve chairman, whose remedy for risky trading by too-big-to-fail banks is known as the Volcker Rule. The other was Richard W. Fisher, president of the Federal Reserve Bank of Dallas, who has also argued that large institutions should be slimmed down or limited in their risky trading practices. [...]

During the party, Mr. Dimon took questions from the crowd, according to an attendee who spoke on condition of anonymity for fear of alienating the bank. One guest asked about the problem of too-big-to-fail banks and the arguments made by Mr. Volcker and Mr. Fisher.

Mr. Dimon responded that he had just two words to describe them: “infantile” and “nonfactual.”


http://thinkprogress.org/economy/2012/05/14/483467/dimon-critics-infantile/

[Winehole23]

egg on his face

[boutons_deux]

As always, top mgmt/top generals never responsible.

Always only an isolated, rogue bad apple that falls

[Winehole23]

I heard a small handful of JP Morgan execs would be resigning...

[coyotes_geek]

JPM's chief investments officer has already stepped down. That's a pretty big head to roll....

[boutons_deux]

no structural damage or changes, business will continue as usual, as will all gutting/blocking of govt regs

"JPMorgan's Losses Could Top $4 Billion"

http://www.npr.org/blogs/thetwo-way/2012/05/14/152656645/reports-jpmorgans-losses-could-top-4-billion-three-execs-to-resign?sc=17&f=1001

[Winehole23]

HuffPo with the Sheila Bair reaction roundup:
Sheila Bair: JPMorgan Debacle Signals That Big Banks 'Too Big To Manage' By Bonnie Kavoussi (http://www.huffingtonpost.com/bonnie-kavoussi)

JPMorgan's $2 billion trading loss is proof that the big banks need to be broken up, former financial regulator Sheila Bair said on CNN (http://cnnpressroom.blogs.cnn.com/2012/05/14/shelia-bair-on-jp-morgan-fiasco-financial-institutions-are-too-big-to-manage/) on Monday.

"I think it does underscore that even with very good management these institutions are just too big to manage," Bair told CNN (http://cnnpressroom.blogs.cnn.com/2012/05/14/shelia-bair-on-jp-morgan-fiasco-financial-institutions-are-too-big-to-manage/).

Bair, who served as chair of the Federal Deposit Insurance Corporation until last July (http://www.huffingtonpost.com/2011/05/09/fdic-chair-sheila-bair-resign_n_859593.html), also told Bloomberg TV on Monday (http://www.bloomberg.com/video/92617655/) that the Federal Reserve's efforts to keep interest rates low are leading to more risk-taking by financial institutions, pointing to JPMorgan's disastrous bet (http://www.huffingtonpost.com/2012/05/10/jpmorgan-chase-london-whale_n_1507662.html)as a glaring example.

Bair explained that banks are taking more risks to get the same return that they would have gotten on safer investments if interest rates were higher.

"With interest rates so low now on the really safe investments, they’re going to higher-risk securities to maximize the spread, the return they’re getting," Bair told Bloomberg. "The regulators should be very, very focused on [this].... It can have unintended consequences of the type that I think may have played a role here with the JPMorgan trading losses."

"It's not just banks that are feeling pressure to search for yield; it's pension funds, it's others that are traditionally risk-averse and perhaps should be, are looking for higher-risk, higher-yield assets to deploy all this money that has been pumped into this system," Bair added.

Bair wrote in Fortune Magazine (http://finance.fortune.cnn.com/2012/05/11/sheila-bair-economy/) on Friday that it is time for the Federal Reserve to raise interest rates, since low interest rates are encouraging irresponsible risk-taking.

"Near zero interest rates...encourage highly leveraged speculative investments based on short-term price fluctuations, not long term economic fundamentals," Bair wrote in Fortune (http://finance.fortune.cnn.com/2012/05/11/sheila-bair-economy/)http://www.huffingtonpost.com/2012/05/14/sheila-bair-low-interest-rate-policies-jpmorgan-chase-trading-loss_n_1515397.html

[coyotes_geek]

Bair explained that banks are taking more risks to get the same return that they would have gotten on safer investments if interest rates were higher.

"With interest rates so low now on the really safe investments, they’re going to higher-risk securities to maximize the spread, the return they’re getting," Bair told Bloomberg. "The regulators should be very, very focused on [this].... It can have unintended consequences of the type that I think may have played a role here with the JPMorgan trading losses."

"It's not just banks that are feeling pressure to search for yield; it's pension funds, it's others that are traditionally risk-averse and perhaps should be, are looking for higher-risk, higher-yield assets to deploy all this money that has been pumped into this system," Bair added.

Certainly agree with Bair 100% about breaking up the TBTF's, but this part jumped out at me. With the results essentially-0% rates having an underwhelming effect on the recover I've wondered whether or not it might be time to go contrarian and start raising rates. I know that's taboo to most traditional thinkers who believe that would stall whatever limited recovery we're having, but a lack of confidence seems to be holding things back. Would raising interest rates restore some of that confidence by providing a way to be risk averse while still earning something as a return on investment? I think Bair hits on a great point that with rates as low as they are investors are being forced into taking risks if they want any kind of positive return at all.

[Winehole23]

jumped out at me too. the pressure to seek a good return is always intense, how much more so in the wake of an epochal financial panic.

[boutons_deux]

"People are saying" the JPMorgan escaped the 2008 crisis, but in fact JPM had to convert to an insured bank, just like Goldman Sacks, etc, to qualify for Bernanke's free money.

That's exactly like people who can afford health insurance, but refuse to buy until they get sick. aka, gaming the system.

below is great trashing of the deficit pimping for what it is: a distraction from the real problems of VRWC tax cuts and VRWC destruction of govt.

Also, info on JPM

Deficit Reduction: The Great Distraction

This is the week of the third annual Deficit Fest, the event sponsored by Wall Street billionaire Peter G. Peterson. At this event, many of the people most responsible for the current downturn come together to tell us why we should be worried about the deficit at a time when 25 million people are unemployed, underemployed or have given up looking for work altogether and millions face the prospect of losing their homes.

Past deficit fests included exchanges where Peter Peterson and former Treasury Secretary and Citigroup honcho Robert Rubin mused about their comparative net worth. We also got to witness President Clinton bemoan the fact that the Democratic and Republican leadership in Congress teamed up to prevent him from cutting Social Security. Had Clinton gotten his way, millions of seniors would be getting by on Social Security checks that are more than 10 percent smaller than what they now receive.

Peterson is also known for his sponsorship of the "Economic Sleepwalk" tour, which was officially billed as the "Fiscal Wakeup" tour. This involved sending a group of policy wonks around the country to complain about the budget deficit at a time when the housing bubble was growing to ever more dangerous levels. While some of us were doing our best to warn of the imminent disaster, Peterson was using his money and political connections to dominate media space at a time when the country's debt-to-GDP ratio was actually falling.

http://www.huffingtonpost.com/dean-baker/deficit-reduction-the-gre_b_1516543.html?view=print&comm_ref=false

[Winehole23]

The performance of anyone doing anything will exhibit regression to the mean. If you do well at something, it’s because of some combination of skill and luck. If JPMorgan came through the financial crisis well, it was some combination of skill and luck. Remember, JPMorgan didn’t have as big a portfolio of toxic assets as its competitors because it was late to the party; only in retrospect do we ascribe this good fortune to the supposed skill of Jamie Dimon. JPMorgan was never as good as people (both supporters and critics) made it out to be, so we shouldn’t be so surprised that it just lost $2 billion (and counting).


The more disturbing thing isn’t that commentators fell for this statistical red herring. It’s that people inside JPMorgan seem to have fallen for it, too. This was Dimon’s response to a question about whether the Chief Investment Office was becoming more aggressive, as reported by Bloomberg (http://www.bloomberg.com/news/2012-05-11/jpmorgan-loses-2-billion-as-mistakes-trounce-hedges.html):

“I wouldn’t call it ‘more aggressive,’ I would call it ‘better,’” Dimon told analysts yesterday. “We added different types of people, talented people and stuff like that.” Until recently, they were careful and successful, he said.
People don’t suddenly go from being good to bad overnight. What happens is they go from lucky to unlucky. They are the same people doing the same things.


“Inside JPMorgan, leadership is stunned by the situation, according to two senior executives,” also as reported by Bloomberg (http://www.bloomberg.com/news/2012-05-14/dimon-fortress-breached-as-push-from-hedging-to-betting-blows-up.html). If that’s true, that’s bad news for all of us. It’s one thing if, as many of us thought, JPMorgan was consciously trying to take on more risk (as has been amply documented, Dimon pushed the Chief Investment Office into profit-seeking trades) while denying it to regulators and the press. That’s what we expect.


It’s another thing if the bank didn’t realize it was taking on risks of this magnitude. That implies that JPMorgan executives had started believing their own hype—that is, they believed that they really were just good, not lucky. And that should make all of us very worried.
http://baselinescenario.com/2012/05/14/regression-to-the-mean-jpmorgan-edition/

[Winehole23]

On Not Learning The Lessons Of Long-Term Capital's Failure

Randall Dodd, Director, Derivatives Study Center
September, 2000 -- unpublished


Learning from mistakes is finding silver linings to dark clouds. Failing to learn from mistakes is condemning oneself to repeat them.

Congress is rushing to deregulate derivatives markets – the markets for transactions such as futures, options and swaps. In order to not be deemed a do-nothing Congress, the House Republican leadership pressured committees to report out legislation in July, and they will be trying to bring a bill to the floor this September. In doing so, the advocates of deregulation seem to have completely forgotten the two key lessons found in the near disaster that was the collapse of the hedge fund known as Long Term Capital Management. LTCM, you may recall, leveraged $5 billion in capital to control $125 billion in assets and $1.4 trillion dollars in derivatives (mostly interest rate swaps).

Lesson one is that a major problem in over-the-counter derivatives markets stems from their lack of transparency. Lesson two is that a major source of vulnerability in financial markets comes from highly leveraged transactions and institutions, some of which are largely unregulated.

Do these deregulatory proposals show that these lessons have been learned? Not the first lesson. The proposals not only fail to make any improvements in transparency in the over-the-counter derivatives markets, but they will actually reduce transparency in futures exchanges.

The over-the-counter (OTC) derivatives markets have never been subject to any meaningful reporting requirements. The only public information about these markets comes in quarterly or semi-annual reports from the Treasury’s Office of Comptroller of the Currency and the Bank for International Settlements. However this information is limited to the aggregate volume of outstanding volume and open positions in a few major categories of derivatives. It is not enough information, and it is not of sufficient frequency, for the government or market participants to spot pressures or vulnerabilities building up in the markets.

The futures exchanges and futures brokers are presently required to report on daily trading volume, prices, open positions and most importantly large trader positions. This information has been used effectively by the Commodity Futures Trading Commission, which meets weekly to discuss surveillance issues, to detect and deter manipulation as well as to head-off potential "disorder" in the markets from the lack of deliverable supplies. These preventative measures enable the Commission to identify markets and traders with proportionately large market shares and contact them in order to inquire as to their purpose. If it does not relate to a valid purpose, it allows the Commission and the futures exchange to demand an orderly liquidation of the positions.

Despite the lessons from Long-Term Capital and the successes of the CFTC in market surveillance, the current proposals will eliminate the reporting requirements for trading on some of the new regulatory designations for exchanges. This will actually reduce transparency in the derivatives markets.

The supporters of deregulations will argue that there is no reason to be concerned with manipulation. They claim that it does not happen too often, and that it cannot happen in large financial markets. The facts are to the contrary. Even the enormous and sophisticated market for U.S. Treasury securities has been hit with a couple a major attempts at manipulation in the past decade, and the Federal Reserve Bank of New York has recently warned about problems in the repo market for Treasury Securities. The market for some commodities is larger than that for some financial instruments, and the grand manipulation of the global copper market was discovered only a few years ago – and it was discovered by the CFTC even though the manipulation was organized out of Japan using a British futures exchange with credit supplied by a French bank.

Another dimension to the concern with manipulation is the degree of concentration in some of these markets. The most recent data from the Office of Comptroller of the Currency shows that the top four dealer banks are counterparties to 91% of interest swaps held by U.S. banks, and that the largest dealer Chase has over 42% of the market to itself. This is not a monopoly, but it is without question highly concentrated.

What about the lesson on the dangers of leverage? After the LTCM debacle, Treasury official Lewis Sachs testified before the House Banking Committee that the question of how to constrain of the leverage of hedge funds was "the central public policy issue raised by the LTCM episode."
This too seems to have been forgotten. Deregulation will eliminate the possibility of addressing such "central public policy issues" by completely excluding OTC derivatives from federal regulatory authority. Gone will be the ability to set minimum standards for collateral or margin, to put limits on the size of speculative position (as is currently the practice on futures exchanges), and to put the same obligations on the dealers in OTC derivatives as is placed on securities dealers who are required to make a market – and thus assure market liquidity – by maintaining bid and offer quotes.

Altogether, the deregulation of derivatives markets is an odd policy response to the long economic expansion and the longer bull market – instead of protecting our lead, these policymakers are taking it as an opportunity to play more recklessly.

Yet there is no urgency, and thus this rush to deregulate is needlessly risky. The prudential policy course to pursue is first allow time and resources to study these markets – about which too little is known – since the President’s Working Group’s report contained no such research or analysis. Once more is known, a broader public can participate in the policy debate. (The recent round of Congressional hearings have heard mostly from derivatives dealers and federal regulators.) And what will hopefully be learned are the lessons from past mistakes and how to adopt policies so that they are not repeated.

Randall Dodd, Director of the Derivatives Study Center at the Financial Policy Forum
http://www.financialpolicy.org/dsclessons.htm

[Winehole23]

via this article (http://www.huffingtonpost.com/2012/05/14/brooksley-born-jpmorgan-chase-derivatives-long-term-capital-management_n_1515500.html)in HuffPo

[Winehole23]

oops

[coyotes_geek]

jumped out at me too. the pressure to seek a good return is always intense, how much more so in the wake of an epochal financial panic.

I'm sure that pressure is immense. It's got to be most intense on investors who were content with avoiding big risks while still being able to earn an "average" return.

[Winehole23]

good point. seeking more exotic risk is now the rational thing to do if you want "average" returns.

[boutons_deux]

how hard will Wall St fight to keep using insured deposits for casino betting?

[Winehole23]

for us or them? I'd say Wall Street is the odds on favorite there. Their case just got a little harder, but their resources and perseverance are vast. next week we'll all be talking about something else.

[boutons_deux]

finance sector is immune to regulation and any restraints.

[Winehole23]

not to hear them tell it. immune is probably too strong a word.

[Winehole23]

An analysis by researchers at Syracuse University (http://trac.syr.edu/) found that under the Obama administration federal financial-fraud prosecutions have dropped to 20-year lows, Peter Boyer and James Schweizer wrote (http://www.thedailybeast.com/newsweek/2012/05/06/why-can-t-obama-bring-wall-street-to-justice.html) in The Daily Beast last week. Prosecutions are down 39 percent from 2003, when executives at Enron and WorldCom were convicted in high-profile cases.


Today, the number of financial-fraud cases is at one-third the level it was during the Clinton administration. (Obama administration officials argue that the number would be higher if new categories of crimes were counted.)


"Casting Romney as a plutocrat will be easy enough," Boyer and Schweizer wrote. "But the president's claim as avenging populist may prove trickier, given his own deeply complicated, even conflicted, relationship with Big Finance."
http://www.theatlantic.com/business/archive/2012/05/the-lesson-of-jp-morgans-2-billion-loss-break-up-the-big-banks/257050/

[TDMVPDPOY]

so are they gettin sued or what?

[Winehole23]

I'm not current on the lawsuits, if that's what you're asking. I've no idea what's happening on that front.

[boutons_deux]

not to hear them tell it. immune is probably too strong a word.

they're liars

in spite of their continuining, uninterrputed, unlimited power to fuck up the planet, they bitch about being victimized and bullied if any regs are put on them. fuck the entire financial sector to hell

[coyotes_geek]

so are they gettin sued or what?

Not really sure what grounds there would be for any lawsuits against JPM over this. Unless there's more to the story that we haven't heard yet, specifically JPM having done something illegal, this is just a case of JPM losing money on some bad business decisions. If that's all there is to this story, then things pretty much end with a "sucks to be you, JPM".

That being said, there's never a shortage of lawyers interested in filing lawsuits against deep pockets, so we can't rule out the possibility of there being some kind of shareholder lawsuit. Not sure there would be much merit behind their case though.

[MannyIsGod]

I get how raising rates helps Wall Street but I get how it hurts everyone else. Why volunteer to pay more as a country and as individuals when we should just actually deal with the problem of being TBTF?

I'm not even sure it would work. Sure, it might present safer and better options, but since when are capitalistic enterprises satisfied with a modest return when they can get higher returns? Did we really learn nothing from the systematic behavior during the sub prime mortgage debacle? They weren't merely trying to get back to what bonds would give them.

[boutons_deux]

"a lack of confidence seems to be holding things back."

ah, the old confidence fairy. Still believe in it? at your age?

Next, tell us high taxes on corps and the very wealthy, on small businesses, plus regulations are killing the economy. If only the 1% were much more wealthy, we'd all be loving the trickle down largesse.

[boutons_deux]

Don't Look Now -- Banks Are Still Ruining America: 6 Harsh Lessons from the JP Morgan Fiasco

http://www.alternet.org/module/printversion/155431

[Winehole23]

Yale Law School’s Jonathan Macey places JP Morgan’s $2 billion loss in perspective (http://online.wsj.com/article/SB10001424052702304371504577402773794646692.html). His article begins:

Regulators, politicians and news reporters are hysterical at the news of J.P. Morgan’s recent $2 billion trading loss. The Securities and Exchange Commission is investigating to see whether laws were broken.
We appear to be on the verge of making it a crime for a business to lose money. The truth is that nobody should care about J.P. Morgan’s loss—nobody except J.P. Morgan stockholders and a few top executives and traders who will lose their bonuses or their jobs in the wake of this teapot tempest. The three executives with the closest ties to the losses are already out the door.


After the $2 billion in losses, J.P. Morgan still had $127 billion in equity. This means that J.P. Morgan could lose another $100 billion and creditors would still have an equity cushion that could absorb 10 times the losses that the bank suffered on this trade. The trading loss wasn’t close to apocalyptic even for shareholders. J.P. Morgan’s shares dropped 9.28% in the wake of the loss. A shareholder with a $100,000 investment in J.P. Morgan would see the value of his investment reduced to $90,720, hardly a financial Chernobyl.
The $2 billion loss also resulted from trades designed to hedge against the threat of even bigger losses. Macey also explains why JP Morgan’s loss is not a justification for additional government regulation.

The real lesson of what J.P. Morgan CEO Jamie Dimon has called the bank’s “egregious failure” in risk management is that hedging is far more difficult to do in real life than it appears to be in theory—because the real world is a complicated place. The trades that J.P. Morgan made were extremely complex, and it certainly appears that they did not work the way that they were supposed to. But the reason that markets work better than central planning is because market participants learn from experience, and they learn fast and thoroughly because they suffer significant losses when their investments, whether they be hedges or not, turn out badly.


Thus, far from serving as a pretext to justify still more regulation of providers of capital, J.P. Morgan’s losses should be treated as further proof that markets work. J.P. Morgan and its competitors will learn from this experience and do a better job of hedging the next time. They will learn because they have to: In the long run their survival depends on it. And in the short run their jobs and bonuses depend on it.
http://volokh.com/2012/05/15/is-jp-morgans-2-billion-loss-a-mountain-or-a-molehill/

[coyotes_geek]

"a lack of confidence seems to be holding things back."

ah, the old confidence fairy. Still believe in it? at your age?

Well, the confidence fairy has his/her/it's own economic tracking index, so apparantely I'm not the only one who thinks confidence, or lack thereof, can affect things. If you'd like to try and make a case about how the economy is unaffected by perceptions, feel free.


Next, tell us high taxes on corps and the very wealthy, on small businesses, plus regulations are killing the economy. If only the 1% were much more wealthy, we'd all be loving the trickle down largesse.

You're the one who believes in corporate welfare (http://spurstalk.com/forums/showthread.php?p=5473933), not me.

bailing out GM was a stimulus, like giving money to states and municipalities to preserver public service jobs. the GM money went right to salaries of the 99% GM employees and employees of GM's supply chain.

Can't you just see the money trickling down before your very eyes!

[boutons_deux]

JPMorgan Chase Chief Investment Office Played By Different Rules

http://www.huffingtonpost.com/2012/05/16/jpmorgan-chase-chief-investment-office_n_1520377.html?view=print&comm_ref=false

as long as that office's big risky bets were paying off, Jamie Daemon loved pocketing the winnings.

[boutons_deux]

Well, the confidence fairy has his/her/it's own economic tracking index, so apparantely I'm not the only one who thinks confidence, or lack thereof, can affect things. If you'd like to try and make a case about how the economy is unaffected by perceptions, feel free.

You're the one who believes in corporate welfare (http://spurstalk.com/forums/showthread.php?p=5473933), not me.


Can't you just see the money trickling down before your very eyes!

bailing out the GM/Chrysler wasn't trickle down. Even Gecko lies that he was for it now that it has been a huge success.

the confidence fairy is a huge player in the herd-driven stock market, not so with inventory professionals, small/medium business managers, and households with debts and stagnant/declining incomes

that somebody tries to quantify the confidence fairy is nothing but a con game. Thanks for playing.

[coyotes_geek]

bailing out the GM/Chrysler wasn't trickle down. Even Gecko lies that he was for it now that it has been a huge success.

It's trickle down. You just don't want to call it that because it's listed as a bad word in your team's playbook.


the confidence fairy is a huge player in the herd-driven stock market, not so with inventory professionals, small/medium business managers, and households with debts and stagnant/declining incomes

that somebody tries to quantify the confidence fairy is nothing but a con game. Thanks for playing.

Do inventory professionals, small/medium business managers and households adjust their spending based on their perceptions of the economy as a whole?

[boutons_deux]

to try to bring some light to your benighted perspective, trickle down is strategy that says enriching the super wealthy 1% with tax cuts, tax evasion/avoicance will allow their wealth to trickle down to/float the boats of the 99%. Never worked.

govt bailing out GM/Chrysler is totally different, and it worked.

"spending based on their perceptions of the economy as a whole"

they base their perceptions of on the micro-economics of their sales and sales forecasts, their cash flow, their debt positions, not some "financial fairy tale" spewed by "economists" and stock-market pumpers.

[coyotes_geek]

Good things happen when you give taxpayer money to rich people and corporations. Just ask boutons.

[TeyshaBlue]

to try to bring some light to your benighted perspective....

Irony alert.:lmao

[Winehole23]

so are they gettin sued or what?what a difference a day makes:


JPMorgan Chase & Co was the target of two separate lawsuits by shareholders on Wednesday, accusing the bank and its management of excessive risk that led to trading losses of at least $2 billion.http://www.reuters.com/article/2012/05/16/us-jpmorgan-lawsuits-idUSBRE84F0OC20120516

[boutons_deux]

Does the pro-business/anti-citizen SCOTUS' prevention of class action suits (nearly 100 suits thrown out so far) apply to shareholders suing companies?

[Winehole23]

you don't ever tire of insisting on absolutes, do you?

[TeyshaBlue]

you don't ever tire of insisting on absolutes, do you?

It's easier than thinking.

[Winehole23]

I always wondered what people were talking about when they said: "if you keep making that face, someday it'll freeze like that."

[coyotes_geek]

Shareholder class action suits do occasionally go somewhere. I've had a few settlement bucks come my way for being part of a class. Hell, Enron alone had me party to at least a half dozen class actions.

[RandomGuy]

http://volokh.com/2012/05/15/is-jp-morgans-2-billion-loss-a-mountain-or-a-molehill/

The guy is right about the relative size of the loss to the bank overall.

What I find a bit less credible is his blanket acceptence of JP's charactorization that this was "hedging" activity.

You don't lose billions "hedging".

You spend a small amount of money buying insurance against really big losses.

Such transactions are supposed to be designed to spread existing risk, not create new risks.

What the author also downplays, is that this activity happened at all.

The CEO couldn't, or wouldn't explain it when asked for days, other than vague generalities.

That is an enormous red flag. It is a warning sign that things are going on that are not fully understood by those at the top.

It isn't JUST the $2(probably 3) billion dollars.

It is what that says about the "tone at the top" and general environment at the company.

[Agloco]

Shareholder class action suits do occasionally go somewhere. I've had a few settlement bucks come my way for being part of a class. Hell, Enron alone had me party to at least a half dozen class actions.

Likewise.

I'm not sure how much traction this gets though...or perhaps a settlement is inevitable simply due to the context in which this suit takes place (with respect to the events of the past 5 years or so).

[coyotes_geek]

Likewise.

I'm not sure how much traction this gets though...or perhaps a settlement is inevitable simply due to the context in which this suit takes place (with respect to the events of the past 5 years or so).

A settlement wouldn't suprise me, but I'm struggling to see what kind of merit the lawsuits could have. JPM made some bad decisions, but shareholders know that investing comes with risk.

[coyotes_geek]

JPMorgan's Trading Loss Is Said to Rise at Least 50%
(http://finance.yahoo.com/news/jpmorgans-trading-loss-said-rise-100803486.html;_ylt=AiNV6ZThIRCis0fTieuBLKuiuYdG;_ ylu=X3oDMTQzNzNoMmt2BG1pdANGaW5hbmNlIEZQIEp1bWJvdH JvbiBMaXRlBHBrZwNiOGEyNWJkZS1lMmNjLTNmZWYtOWZmYS0w NTIxMjdmMDRmYjMEcG9zAzEEc2VjA2p1bWJvdHJvbgR2ZXIDMz E3ZWM2ODAtYTAwOC0xMWUxLWIzZDktN2JlMDRmODQxYjFl;_yl g=X3oDMTFpNzk0NjhtBGludGwDdXMEbGFuZwNlbi11cwRwc3Rh aWQDBHBzdGNhdANob21lBHB0A3NlY3Rpb25z;_ylv=3)

[boutons_deux]

"Shareholder class action suits do occasionally go somewhere"

74+ suits have been killed by referring to the recent SCOTUS anti-citizen decision greatly restricting class action suits. It means that, eg ATT, could screw 10Ms of users on their phone bills, pocketing $100Ms for doing nothing, with false/erroneous charges. Each user would have to sue individually.

[boutons_deux]

Romney: JPMorgan’s $3 billion loss is ‘the way America works’

saying it was just “the way America works.”

“I would not rush to pass new legislation or new regulation,” Romney said during a Wednesday interview with Hot Air blogger Ed Morrissey. “This is, in the normal course of business, a large loss but certainly not one which is crippling or threatening to the institution.”

http://www.rawstory.com/rs/2012/05/17/romney-jpmorgans-3-billion-loss-is-the-way-america-works/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+TheRawStory+%28The+Raw+Story% 29&utm_content=Google+Reader

========

iow, W. Gecko, predatory capitalist, will do nothing to shutdown or even restrict extremely risky, uncoverable bets in the Wall St casino.

[boutons_deux]

Michael Crimmins: Why the Cops Should be Knocking on Jamie Dimon’s Door Soon

The scandal surrounding JP Morgan’s losses in its Chief Investment Office is not going away, and for good reason. Its trading book continues to lose money at an astounding rate. The most recent report estimates that the losses have increased by at least 50% more than the bank’s original loss estimates. The total damage is anyone’s guess at this point.

This fiasco is beginning to look a lot like accounting control fraud. The Justice Department and the FBI have begun criminal probes. The SEC is also investigating. So far, the objectives of these investigations are under wraps, but if I were an SEC or DOJ enforcement official I’d be laser-focused on bringing a Sarbanes-Oxley case against Jamie Dimon.

Sarbanes-Oxley emerged out of the Enron frauds. This law requires the CEO to certify that internal controls are operating effectively to give comfort to readers of the financial statements that the disclosures contained in the reporting are reliable. There are civil penalties for filing a false certification and criminal penalties, including jail time, for false filings found to be fraudulent. So far none of the obvious candidates like Dick Fuld at Lehman or Jon Corzine at MF Global have been prosecuted under the law.

Jamie Dimon looks like a very attractive candidate to investigate for SOX violations.

For starters, Dimon’s description of what happened rings SOX alarm bells:

First of all, there was one warning signal — if you look back from today, there were other red flags. That particular red flag — you know, we made a mistake, we got very defensive and people started justifying everything we did. You know, the benefit in life is to say, ‘Maybe you made a mistake, let’s dig deep.’ And the mistake had been brewing for a while, so it wasn’t just any one thing.

- Meet the Press, May 13, 2012

Warning signs and red flags were ignored. And they’ve apparently been ignored since 2007. Once again, echoing what happened at MF Global, risk managers who raised alarms about the riskiness of the positions in 2009 were replaced with more cooperative risk managers:

Several bankers said that risk controls were not sufficiently strengthened by Doug Braunstein, who took over as chief financial officer in 2010, another reason the bolder trades continued.

More damning is Dimon’s tacit admission that the controls designed to protect the firm from these sorts of blowups were ineffective, due to lack of intervention. Ignoring internal controls, or red flags as Dimon characterizes them, is a failure in the control environment. The failure to disclose inoperative key controls in the CEO certification is a violation the law.

http://www.nakedcapitalism.com/2012/05/michael-crimmins-why-the-cops-should-be-knocking-on-jamie-dimons-door-soon.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capi talism%29&utm_content=Google+Reader

[boutons_deux]

What the Mainstream Media Still Doesn't Get About Big Banks

Eliot Spitzer suggested persuasively that Occupy should hold protests calling for Jamie Dimon’s removal from the board of the New York Federal Reserve Bank, which is tasked with overseeing banks like JPMC. Spitzer writes,

“The Fed conflict is so obvious that it defies any possible rationalization or explanation. For a decade, the New York Fed has failed to pick up on any of the significant Wall Street threats: excess leverage, subprime fraud, dangerous concentration in “too big to fail” entities. Maybe the reason is that the board is controlled by the very voices that have been at the root of the failure.”

Elizabeth Warren joined Spitzer in calling for Dimon's ouster, saying, "[w]e have to say as a country, no, the banks cannot regulate themselves."

http://www.alternet.org/module/printversion/155450

... why Wall St took down Spitizer and is spending $Ms to defeat Warren.

[boutons_deux]

The point is that it’s not O.K. for banks to take the kinds of risks that are acceptable for individuals, because when banks take on too much risk they put the whole economy in jeopardy — unless they can count on being bailed out. And the prospect of such bailouts, of course, only strengthens the case that banks shouldn’t be allowed to run wild, since they are in effect gambling with taxpayers’ money.

Incidentally, how is it possible that Mr. Romney doesn’t understand all of this? His whole candidacy is based on the claim that his experience at extracting money from troubled businesses means that he’ll know how to run the economy — yet whenever he talks about economic policy, he comes across as completely clueless.

Anyway, it goes without saying that Jamie Dimon is no Jimmy Stewart. But he has, in a way, been playing Jimmy Stewart on TV, posing as a responsible banker who knows how to manage risk — and therefore the point man in Wall Street’s fight to block any tightening of regulations despite the immense damage deregulated banks have already inflicted on our economy. Trust us, Mr. Dimon has in effect been saying, we’ve got this covered and it won’t happen again.

Now the truth is coming out. That multibillion-dollar loss wasn’t an isolated event; it was an accident waiting to happen. For even as Mr. Dimon was giving speeches about responsible banking, his own institution was heaping on the risk. “The unit at the center of JPMorgan’s $2 billion trading loss,” reports The Financial Times, “has built up positions totaling more than $100 billion in asset-backed securities and structured products — the complex, risky bonds at the center of the financial crisis in 2008. These holdings are in addition to those in credit derivatives which led to the losses.”

And what was going on as these positions were being accumulated? According to a fascinating report in Sunday’s Times, the reality behind JPMorgan’s facade of competence was a scene all too reminiscent of the behavior that brought down firms like A.I.G. in 2008: arrogant executives shouting down anyone who tried to question their activities, top management that didn’t ask questions as long as the money kept rolling in. It really is déjà vu all over again.

The point, again, is that an institution like JPMorgan — a too-big-to-fail bank, not to mention a bank whose deposits are already guaranteed by U.S. taxpayers — shouldn’t be engaged in this kind of speculative investment at all. And that’s why we need a return to much stronger financial regulation, stronger even than the Dodd-Frank regulations passed back in 2010.

http://www.nytimes.com/2012/05/21/opinion/dimons-deja-vu-debacle.html?_r=1

[boutons_deux]

...

[Winehole23]

http://www.businessweek.com/ap/2012-05/D9UM49MG3.htm
Banks are urging U.S. authorities to broaden a little-noticed exemption in the Volcker rule's trading curb that critics say could blind regulators to the next version of the JPMorgan Chase & Co Whale trade.

The forthcoming Volcker rule to curb proprietary trading is one of the most hotly debated measures called for in the 2010 Dodd-Frank financial reform law.


Advocates say the rule is needed to make sure banks that receive government backstops like deposit insurance don't make risky bets that could blow up and create the need for a taxpayer bailout. Wall Street has pushed back, saying the rule is too severe and will prevent banks from managing their operations, especially their ability to hedge risk.


At the center of debate are hedging and market-making exemptions tucked into the proposal that regulators issued in October.


Concerns about exemptions grew in May when JPMorgan revealed that a botched hedging strategy had "morphed" into a risky bet at a London unit that was supposed to be balancing the bank's overall credit exposure, costing the bank at least $5.8 billion. The trader was nicknamed the "London Whale" for the giant positions he took.


But another exemption designed to protect banks' ability to manage liquidity risk has mostly escaped the glare.


The exemption covers a special type of account, designed to prevent the kind of cash crunches that took down Bear Stearns and Lehman Brothers in the heat of the 2007-2009 financial crisis.


Banks want an even broader exemption. But critics say the proposed rule, as is, already excludes liquidity trades almost entirely from the Volcker rule, expected to be finalized later this year.


As is, the liquidity exemption "deeply undermines the applicability of the Volcker firewall," Democratic Senator Jeff Merkley, one of the authors of the Dodd-Frank provision authorizing the rule, said in an interview.
http://in.reuters.com/article/2012/08/29/volckerrule-liquidity-idINL2E8JF34O20120829

[coyotes_geek]

Advocates say the rule is needed to make sure banks that receive government backstops like deposit insurance don't make risky bets that could blow up and create the need for a taxpayer bailout. Wall Street has pushed back, saying the rule is too severe and will prevent banks from managing their operations, especially their ability to hedge risk.

Just a thought, if we break up the banks into small enough pieces where no single piece is too big to fail, we can get the same assurance that there won't need to be another bailout without having to put our trust in yet another inept and incompetent government oversight program. We could even let those smaller banks manage their operations and hedge their risk however they darn well please.

[Winehole23]

needs to happen; almost surely will not, barring another financial panic. which is not impossible.

[coyotes_geek]

You're right of course, but for some reason I still feel the need to shout this into the wind every so often.

[Winehole23]

There is a new twist in the London Whale trading scandal that cost JPMorgan Chase $6.2 billion in trading losses last year. Some of the firm's own traders bet against the very derivatives positions placed by its chief investment office, said three people familiar with the matter.

The U.S. Senate Permanent Committee on Investigations, which launched an inquiry into the trading loss last fall, is looking into the how different divisions of the bank wound up on opposite sides of the same trade, said one of the people familiar with the matter.http://www.reuters.com/article/2013/01/30/market-chatter-idUSL1N0AZ1P520130130

[coyotes_geek]

That seems more like an issue of poor coordination internally than anything criminal going on. Any business with multiple divisions that operate independently runs the risk of left hand not talking to right hand. Ideally a situation to be avoided, but not an uncommon occurence.

[boutons_deux]

needs to happen; almost surely will not, barring another financial panic. which is not impossible.

not impossible? :lol

it's inevitable, just as soon as the Banksters and wealthy figure out their next scam, like they have ever since lending and banking were invented 100s of years ago.

[Winehole23]

if you keep saying it every day for 30 years you're bound to be right every now and then . . .

[boutons_deux]

if you keep saying it every day for 30 years you're bound to be right every now and then . . .

the history of the financial sector's ripoff, scams, bubbles, collapses, disaster is well known. Aren't you supposed to be some kind of financial student or expert or something?

[boutons_deux]

Lanny Breuer Now Blames 94 US Attorneys for Immunizing Banksters (http://www.nakedcapitalism.com/2013/01/marcy-wheeler-lanny-breuer-now-blames-94-us-attorneys-for-immunizing-banksters.html)
It’s not Lanny’s fault the banksters have gone free, you see, it’s the fault of people like John Leonardo, Arizona’s US Attorney, Alicia Limtiaco, Guam’s US Attorney, or Felicia Adams, Northern Mississippi’s US Attorney, all of whom had no hint of jurisdiction in these cases.

This, in spite of the fact that Lanny has repeatedly admitted being personally involved in the bankster cases.

This, in spite of the fact that Lanny did play a leadership role in one of the few cases that had a similar task force structure as BP–the mortgage fraud settlement. In that case, Lanny under-resourced t (http://www.nakedcapitalism.com/2012/04/yet-another-obama-big-lie-mortgage-fraud-investigation-not-even-staffed.html)he investigative team, ensuring it would be unable to do adequate investigation to reach adequate settlement. And he didn’t even show up (http://www.nakedcapitalism.com/2012/01/lanny-breuer-task-force-leader-doesnt-bother-showing-up-for-mortgage-fraud-press-conference.html) for the big announcement that–basically–the settlement was immunizing the banksters for stealing millions of people’s homes. Somehow, now that it’s time to claim credit, Lanny has forgotten about that willful attempt to help banks bury their crimes.

Lanny has, in the past, clearly admitted to actions that led directly to amnesty for banksters. But in his effort to shore up his reputation as he heads out the door (though not until March 1, unfortunately), he’s gonna blame everyone else for the fact that, on his watch, the most destructive criminals in the country got a pass.


http://www.nakedcapitalism.com/2013/01/marcy-wheeler-lanny-breuer-now-blames-94-us-attorneys-for-immunizing-banksters.html#wdemx94qlLoj8yic.99

[boutons_deux]

Yet Another Cost of Doing Business Fine: Lender Processing Services Settles with 46 Attorneys General for $127 Million (http://www.nakedcapitalism.com/2013/02/yet-another-cost-of-doing-business-fine-lender-processing-services-settles-with-46-attorneys-general-for-127-million.html)


As we recounted at length on this blog, the issues with LPS go well beyond robosigning. “Robosigning” was a convenient label to divert attention from the fact that the party that was attempting to foreclose didn’t merely have improperly executed documents, which is what this lame settlement would lead you to believe. It was that it was often the improper party, raising a host of issues (borrower exposure to liability from the proper party, which has occasionally turned out to be a real issue, clouded title). I happened to speak to a reporter on the mortgage beat one of the major New York papers, and that individual was sputtering about the settlement.

Worse, notice how this settlement institutionalized the undermining of procedures that go back to the 1677 Statute of Frauds. LPS is permitted to sign documents on behalf of a servicer if it is authorized to do so. But a bedrock concept of the law has been that evidence submitted in court (an an affidavit stands in lieu of testimony) is based on personal knowledge. LPS does not know the integrity of the underlying servicer systems (and our Bank of America series confirms our suspicion that they often suck). Is it going to be, as before, that servicers file affidavits attesting as to the amount the borrower owes? We might as well throw our judicial system down the toilet if so.



http://www.nakedcapitalism.com/2013/02/yet-another-cost-of-doing-business-fine-lender-processing-services-settles-with-46-attorneys-general-for-127-million.html#IYGTyAMquZlkOZPl.99 (http://www.nakedcapitalism.com/2013/02/yet-another-cost-of-doing-business-fine-lender-processing-services-settles-with-46-attorneys-general-for-127-million.html#IYGTyAMquZlkOZPl.99)

[Winehole23]

the history of the financial sector's ripoff, scams, bubbles, collapses, disaster is well known.Alright then, give it to us in a nutshell.


Aren't you supposed to be some kind of financial student or expert or something?Nope. Just an interested reader. Are you an expert?

[boutons_deux]

Alright then, give it to us in a nutshell.

Nope. Just an interested reader. Are you an expert?

of course, why do you even bother to ask?

[Winehole23]

Morgan settles with Justice for $13B, agrees to cooperate with criminal investigations.


JPMorgan Chase has reached a tentative $13 billion settlement with the Justice Department over a number of investigations related to to the bank's (http://online.wsj.com/news/articles/SB10001424052702304864504579145723830525920?mod=WS J_hpp_LEFTTopStories) residential mortgage-backed securities business, according to The Wall Street Journal.

Tweets from The Wall Street Journal and CNBC broke the news Saturday.


News of the deal comes just a day after a JPMorgan was reported to have reached a tentative $4 billion settlement with the Federal Housing Finance Agency (http://www.huffingtonpost.com/2013/10/18/jpmorgan-settlement_n_4124690.html?utm_hp_ref=business&utm_hp_ref=business) over claims it sold bad mortgages to government agencies ahead of the financial crisis
At $13 billion, the potential settlement with the Justice Department exceeds estimates in September that JPMorgan would end up paying as much as $11 billion (http://www.huffingtonpost.com/2013/09/25/jpmorgan-chase-settlement-mortgage_n_3991146.html) over the allegations. If finalized, the settlement would be the largest the U.S. government has ever made with a single company (http://online.wsj.com/news/articles/SB10001424052702304864504579145723830525920?mod=WS J_hpp_LEFTTopStories), according to WSJ.


JPMorgan may still also face criminal charges, according to a tweet by CNBC reporter John Harwood:
More from Reuters:

WASHINGTON, Oct 19 (Reuters) - JPMorgan Chase & Co has reached a tentative $13 billion agreement with the U.S. Justice Department to settle government agency investigations into bad mortgage loans the bank sold to investors before the financial crisis, a source said on Saturday.

The tentative deal does not release the bank from criminal liability for some of the mortgages it packaged into bonds and sold to investors, a factor that had been a major sticking point in the discussions, the source said.
As part of the deal, the bank will likely cooperate in criminal inquiries into certain individuals involved in the conduct at issue, the source, who declined to be identified, said.
Officials at JPMorgan and the Justice Department declined to comment.


Another source close to the discussions characterized a deal as likely, but cautioned that parts of the agreement are still being hammered out, and the settlement could conceivably fall apart.
The record settlement could help resolve many of the legal troubles the New York bank is facing. Earlier this month JPMorgan disclosed it had stockpiled $23 billion in reserves for settlements and other legal expenses to help cover the myriad investigations into its conduct before and after the financial crisis.


The deal is being hammered out by some of the most senior officials at the Department of Justice and the largest U.S. bank. Attorney General Eric Holder and JPMorgan Chief Executive Jamie Dimon spoke on the phone on Friday night to finalize the broad outlines of the broad deal, the first source said.


The bank's general counsel Stephen Cutler and Associate Attorney General Tony West are negotiating a statement of facts that will be part of a final agreement, the source said.
Long considered one of the best-managed banks, JPMorgan has stumbled in recent years, with run-ins with multiple federal regulators as well as authorities in several states and foreign countries over issues ranging from multibillion-dollar trading losses and poor risk controls to probes into whether it manipulated a power market.


In September, as the Justice Department prepared to sue the bank over mortgage securities that the bank sold in the run-up to the financial crisis, JPMorgan tried to reach a broader settlement with DOJ and other federal and state agencies to resolve claims over its mortgage-related liabilities stemming from the bust in house prices.


Dimon went to Washington to meet with Holder on Sept. 25, and discussed an $11 billion settlement at that point.


Some of the problems relate to mortgage bank Washington Mutual and investment bank Bear Stearns, two failing firms that JPMorgan took over in 2008.


The bank and the Justice Department have been discussing a broad deal that would resolve not only the inquiry into mortgage bonds it sold to investors between 2005 to 2007 that were backed by subprime and other risky residential mortgages, but also similar lawsuits from the Federal Housing Finance Agency, the National Credit Union Administration, the state of New York and others.


The broader settlement is a product of a government working group created nearly two years ago to investigate misconduct in the residential mortgage-backed securities market that contributed to the financial crisis. Officials from the Justice Department, the New York Attorney General and others helped to lead the group.


Reuters reported late Friday that JPMorgan and FHFA had reached a tentative $4 billion deal. That agreement is expected to be part of the larger $13 billion settlement.(Full Story)


http://www.huffingtonpost.com/2013/10/19/jpmorgan-settlement_n_4128994.html

[Winehole23]

http://www.spurstalk.com/forums/showthread.php?t=223481&p=6887298#post6887298

[boutons_deux]

So How Big a Deal is the Pending “$13 Billion” JP Morgan Settlement? (http://www.nakedcapitalism.com/2013/10/so-how-big-a-deal-is-the-pending-13-billion-jp-morgan-settlement.html)

http://www.nakedcapitalism.com/2013/10/so-how-big-a-deal-is-the-pending-13-billion-jp-morgan-settlement.html#EJQZjlWkAZyzvJz7.99

As always, the comments are as interesting as the articles.

[Winehole23]

good read. thanks for posting, boutons.

[boutons_deux]

U.S. Deal With JPMorgan Followed a Crucial Call

http://mobile.nytimes.com/blogs/dealbook/2013/10/20/u-s-deal-with-jpmorgan-spurred-by-a-phone-call/?from=homepage

[CosmicCowboy]

I vividly remember the Fed orchestrating the shotgun weddings between JP Morgan and Bear Stearns and Washington Mutual to help "avoid the meltdown of the financial system". I'm not saying that JP Morgan wasn't eyeball deep in selling bad paper themselves, but holding them responsible now for the bad deeds done at Bear Stearns and WAMU prior to the mergers is pretty cheesy.

[boutons_deux]

I vividly remember the Fed orchestrating the shotgun weddings between JP Morgan and Bear Stearns and Washington Mutual to help "avoid the meltdown of the financial system". I'm not saying that JP Morgan wasn't eyeball deep in selling bad paper themselves, but holding them responsible now for the bad deeds done at Bear Stearns and WAMU prior to the mergers is pretty cheesy.

yeah, I remember that, too. Same with other Big Banks forced to swallow bankrupt smaller fry.

They're all profoundly corrupt, so I don't GAF how badly any of them get hand-slapped. It's not enough. They stole 1M+ homes. Their MERS is pure, criminal chain-of-title fraud anyway.

[Winehole23]

I vividly remember the Fed orchestrating the shotgun weddings between JP Morgan and Bear Stearns and Washington Mutual to help "avoid the meltdown of the financial system". I'm not saying that JP Morgan wasn't eyeball deep in selling bad paper themselves, but holding them responsible now for the bad deeds done at Bear Stearns and WAMU prior to the mergers is pretty cheesy.when you buy another company, you buy the liabilities.

[Winehole23]

lol CC suggesting that cost should have been socialized

[CosmicCowboy]

lol CC suggesting that cost should have been socialized

I suggested no such thing.

[Winehole23]

so you say. what's the alternative here?

[CosmicCowboy]

so you say. what's the alternative here?

It seems you just want to argue for the sake of arguing here. If the Fed orchestrated the shotgun merger, and the improper actions at Bear Stearns and WAMU were prior to the Fed orchestrated merger I personally think that under the circumstances it's not "right" to hold them responsible for prior actions they didn't do when they were arm twisted by the fed to do the deal to start with.

[boutons_deux]

It seems you just want to argue for the sake of arguing here. If the Fed orchestrated the shotgun merger, and the improper actions at Bear Stearns and WAMU were prior to the Fed orchestrated merger I personally think that under the circumstances it's not "right" to hold them responsible for prior actions they didn't do when they were arm twisted by the fed to do the deal to start with.

Merril Lynch, WaMu, etc were bankrupt, why not let bankruptcy take its course? they weren't TBTF

[Winehole23]

It seems you just want to argue for the sake of arguing here. If the Fed orchestrated the shotgun merger, and the improper actions at Bear Stearns and WAMU were prior to the Fed orchestrated merger I personally think that under the circumstances it's not "right" to hold them responsible for prior actions they didn't do when they were arm twisted by the fed to do the deal to start with.so then, you and me should pick up the tab? what's the alternative to JP Morgan assuming liabilities for companies they bought?

[CosmicCowboy]

Merril Lynch, WaMu, etc were bankrupt, why not let bankruptcy take its course? they weren't TBTF



so then, you and me should pick up the tab? what's the alternative to JP Morgan assuming liabilities for companies they bought?

We were inevitably going to pick up the tab before the fed arm twisted JP Morgan/Chase into rescuing them.

So, damned if you do, damned if you don't?

I'm far from in love with Chase (although I love the hell out of my Freedom and Ink credit cards) but it's not right to do the fed a huge favor and then get that favor shoved up your ass by the justice department.

[boutons_deux]

always interesing when talking about the corrupt, criminal, incompetent financial sector

http://projects.propublica.org/bailout/list

[CosmicCowboy]

No surprise that besides Fannie and Freddy that GMAC is one of the biggest offenders...that has to be one of the worst managed financial institutions the world has ever seen.

When my sister died 4 years ago she was upside down in her $200,000 condo (she quit paying taxes when she was terminal and the IRS had liens on the condo) GMAC was the first lienholder. I immediately notified them that the (broke) estate wasn't interested in the condo and got all of the family to sign releases so GMAC could immediately repossess and resell the condo on a voluntary foreclosure. Over the years I have spoken to dozens of GMAC employees, attorneys, etc. Not only did they not repossess it but they are now hiring a collection agency to try to collect the outstanding balance :LOL.s

It's like...what part of FUCK OFF don't you understand? :lol

Now I hear that they are going into sub-prime (not credit worthy) new car auto finance to promote sales at Chevrolet. If your credit is trashed you can go buy a new car at a Chevy dealer but can't at a Ford, Chrysler, Toyota, Honda dealer etc. That can ONLY end badly.

[boutons_deux]

How JP Morgan Could Wiggle Out Of Its Record-Breaking Settlement Fine (http://thinkprogress.org/economy/2013/10/21/2808481/morgan-13-billion-settlement/)


First, the bank is not paying out $13 billion in cash. The settlement reportedly consists of “$9 billion in fines and $4 billion in relief for struggling homeowners (http://dealbook.nytimes.com/2013/10/19/jpmorgan-said-to-be-discussing-13-billion-settlement-over-mortgage-loans/?ref=international-home&_r=2).” Banks have successfully manipulated (http://thinkprogress.org/economy/2012/11/19/1215071/big-banks-gaming-settlement/) other recent, highly touted settlements requiring “relief for struggling homeowners” in ways that minimize both how much help homeowners get and the penalty banks actually absorb from providing it.

Second, the bank has repeatedly insisted that it is not responsible for settlement costs relating to federally-insured bank units that it bought during the crisis such as Washington Mutual (WaMu), a major player in the mortgage wrongdoing at the core of this weekend’s reported settlement. JPM argues that it shouldn’t be liable for WaMu’s misdeeds, and instead the taxpayer-funded Federal Deposit Insurance Corporation (FDIC) should bear those costs since WaMu was an FDIC-insured bank that had failed at the time JPM bought it.

Third, many regulatory fines are tax deductible (http://thinkprogress.org/economy/2012/10/15/1011381/a-big-loophole-lets-wall-street-banks-write-off-government-fines-on-their-taxes/). By one estimate, JPM could pass close to $4 billion along to taxpayers (http://dealbook.nytimes.com/2013/10/19/jpmorgan-said-to-be-discussing-13-billion-settlement-over-mortgage-loans/?ref=international-home&_r=2) thanks to such deductions, further deflating the headline-grabbing $13 billion figure.

http://thinkprogress.org/economy/2013/10/21/2808481/morgan-13-billion-settlement/

[Winehole23]

I vividly remember the Fed orchestrating the shotgun weddings between JP Morgan and Bear Stearns and Washington Mutual to help "avoid the meltdown of the financial system". I'm not saying that JP Morgan wasn't eyeball deep in selling bad paper themselves, but holding them responsible now for the bad deeds done at Bear Stearns and WAMU prior to the mergers is pretty cheesy.Here are some of the details of those deals:


Papers like the Journal have particularly complained that Chase should not be held responsible for the offenses committed by companies long before Chase acquired them. What they forget is that Chase has made a fortune off its acquisitions of Bear and Washington Mutual, two purchases which were massively subsidized by the state. Nobody complained about potential liability back when all those two deals were doing for Chase was helping its executives buy overpriced art and summer homes.

And remember, this sort of liability was basically the only risk Chase took in these deals. The government took on most of the rest, in order to make the acquisitions happen.


Chase got to buy Bear Stearns with $29 billion in Fed guarantees (http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aEZiY02M5pIA&refer=home), with the state setting up a special bailout facility, Maiden Lane, to unwind all of the phony-baloney loans created through Bear's Ponzi-mortgage-mechanism described above. So Chase got to acquire one of the world's biggest investment banks for pennies on the dollar, and then got the Fed to buy up all the toxic parts of the bank's portfolio, essentially making the public the involuntary customer of Bear's criminal inventory.


Later on, Chase took $25 billion in TARP money, bought Washington Mutual and its $33 billion in assets for the fire-sale price of $1.9 billion, and then repeated the Bear scenario, getting another Maiden Lane facility to take on the deadliest parts of Washington Mutual's portfolio (including, for instance, a pool of mortgages (http://www.bloomberg.com/news/2010-04-01/fed-reveals-bear-stearns-assets-swallowed-to-get-jpmorgan-to-rescue-firm.html) in which 94 percent of the loans had limited documentation).


Incidentally, the notion that Chase was somehow dragged kicking and screaming by the government and forced to buy these two massive companies essentially for free is almost as laughable and ridiculous as the oft-cited explanation for the financial crisis, that the government forced banks to lend to the poor.


Chase, as has been reported by multiple outlets, had already tried on its own to buy both companies (http://dealbook.nytimes.com/2013/09/30/despite-cries-of-unfair-treatment-jpmorgan-is-no-victim/?_r=0) before the state arranged its infamous shotgun weddings. Only after both firms collapsed, the economy was in crisis, and Chase was able to get the Fed to eat the toxic portfolios of both companies did these already-longed-for acquisitions take place.


Read more: http://www.rollingstone.com/politics/blogs/taibblog/nobody-should-shed-a-tear-for-jp-morgan-chase-20131025#ixzz2kLyJDAsn

[Winehole23]

no comment, CC?

[boutons_deux]

12 Ways JP Morgan Admitted It Ripped Off Americans to the Tune of Billions

Wall Street’s latest chapter in corporate accountability is hardly satisfying, even if it is a rare admission of wrongdoing from a major bank. On Tuesday, the Justice Department announced a $13 billion settlement with J.P. Morgan for its rapacious role in the housing market bubble and collapse.

Beyond analyses showing that the government’s supposed largest fine ever might end up “closer to $2.74 billion [3],” and that $7 billion of it is tax deductible [4]—tantamount to America’s 138 million taxpayers [5] each giving a $50 bill to Morgan—the nation’s business press is filled with praise [6] for the bank turning a page.

No one should hold their breath waiting for the Justice Department to announce criminal charges against bank executives; even if Attorney General Eric Holder says the case it not closed. Instead, what Americans are left with is an odd legal creature—a so-called “Statement of Facts [7]”—describing Morgan’s greedy sins.

This declaration is not written in plain English. So here’s AlterNet’s translation of what Morgan said that it did, followed by the relevant legalese. This is as close to a corporate confession of greed and deceit as Americans get today.

1. J.P. Morgan knew it had bad loans from the start.

J.P. Morgan made billions by buying high-interest mortgages and selling them as packages to investors, who expected solid returns. Inside Morgan, its contactors knew that they were buying loans that didn’t even meet the brokers’ standards.

“JPMorgan employees were informed by due diligence vendors that a number of the loans included in at least some of the loan pools that it purchased and subsequently securitized did not comply with the originators’ underwriting guidelines.”

2. J.P. Morgan knew appraisers were inflating values.

To get a mortgage, lenders require an appraisal as part of a clearance process. Morgan knew appraisers were rubber-stamping home values that were absurdly high, but ignored it. The bigger the loan, the more profit in interest payments.

“A number of the properties securing the loans had appraised values that were higher than the values derived in due diligence testing from automated valuation models, broker price opinions or other valuation due diligence methods.”

3. J.P. Morgan lied about these values to investors.

Their business was based on reselling bundles of loans, so they deliberately over-promised to investors and hid information that the loans would likely fail.

“JPMorgan represented to investors in various offering documents that loans in the securitized pools were originated “generally” in conformity with the loan originator’s underwriting guidelines.”

4. When asked about bad loans, they said, ‘Don’t worry.”

When asked about bad loans in their budled investments, the bank said they were looking at mortages one-by-one and carefully certified their loans.

“Exceptions were made based on “compensating factors,” determined after “careful consideration” on a “case-by-case basis.”

5. They were buying loans like sharks biting at bait.

J.P. Morgan went right to the worst mortgage mills and starting buying everything that they had written, which included very-high interest loans on home values that were overstated with unsupportable payments.

JPMorgan began the process of creating RMBS [residential mortgage backed securities] by purchasing pools of loans from lending institutions, such as Countrywide Home Loans, Inc., or WMC [Washington Mutual] Mortgage Corporation, that originated residential mortgages by making mortgage loans to individual borrowers.”[WMC collapsed and was taken over by the federal government in 2008].

6. Their sales pitches were filled false assurances.

J.P. Morgan’s sales team, which included newly minted M.B.A. business school graduates working the phones and higher-ups at industry conferences armed with Powerpoint presentations, boasted of quality controls and vetting.

“JPMorgan salespeople marketed its due diligence process to investors through oral communications that were often scripted by internal sales memoranda, through presentations given at industry conferences, and to certain individual investors. In marketing materials, JPMorgan represented that the originators had a “solid underwriting platform,” and that JPMorgan was familiar with and approved the originators’ underwriting guidelines.”

7. Meanwhile, Morgan knew it was buying bad loans.

Back at corporate headquarters, the auditors that Morgan hired to review the mortgages that they were buying found that a sizeable slice of them—from the originators like Countrywide—did not even meet the mortgage broker’s supposed standards, and lacked information showing borrowers could pay them back.

“JPMorgan’s due diligence vendors graded numerous loans in the samples as Event 3’s, meaning that, in the vendors’ judgment, they neither complied with the originators’underwriting guidelines nor had sufficient compensating factors, including in many instances because of missing documentation such as appraisals, or proof of income, employment or assets.”

8. They dumped bad loans, en masse, into loan pools.

Executives ignored their auditors and threw the bad loans into the larger pot, as if that would make them go away, as if their solution was diluting its impact. When that didn’t work on an individual loan basis, they signed off on bad loans in bulk.

“JPMorgan directed that a number of the uncured Event 3 loans be “waived” into the pools facilitating the purchase of loan pools, which then went into JPMorgan inventory for securitization. In addition to waiving in some of the Event 3 loans on a case-by-case basis, some JPMorgan due diligence managers also ordered “bulk” waivers.”

9. They had twice the bad loans as their standards allowed.

The bank’s internal standards allowed for up to 15 percent of their bundled loans to be risky. But Morgan’s auditors found that they had nearly double that figure. So they cooked their books, by re-grading those bad loans, from so-called “Event 3” to “Event 2” status, to make its portfolio look like it met the bank’s standards.

“From the first quarter of 2006 through the second quarter of 2007, of the 23,668 loans the vendor reviewed for JPMorgan, 6,238 of them, or 27 percent, were initially graded Event 3 loans and, according to the report, JPMorgan ultimately accepted or waived 3,238 of these Event 3 loans – 50 percent – to Event 2.”

10. They met with Countrywide, but kept buying bad loans.

Morgan auditors obviously knew that they had a very big problem on their hands and met with the slippery loan originators. But that did not stop other executives from buying bundles of bad loans—such as ones where borrowers made up their income on loan applications. Instead of approving individual mortgages, Morgan picked up its pace and approved these loan purchases in bulk.

“JPMorgan Managing Directors in due diligence, trading, and sales met with representatives of the originator to discuss the loans, then agreed to purchase two loan pools without reviewing those loan pools in their entirety as JPMorgan due diligence employees and managers had previously decided; waived a number of the stated income loans into the pools; purchased the pools; and subsequently securitized hundreds of millions of dollars of loans from those pools into one security.”

11. They kept telling investors everything was peachy.

Even though this skullduggery, mismanagement and distortions was going on inside the bank’s offices and known to top Morgan executives, they said nothing and kept selling the bundles with bad loans to investors.

“None of this was disclosed to investors.”

12. Other Wall Street giants did the exact same thing.

During the financial crisis brought by the collapse of the housing market, Morgan bought Bear Stearns, an investment bank, and Washington Mutual Bank. These banks did the exact same thing as Morgan; knowingly buying mortgages that never should have been written in the first place and ignoring auditors.

“Bear Stearns would purchase loans where there was a variance from the guidelines that the managers or other employees deemed acceptable. In addition, Bear Stearns completed bulk purchases of Alt-A loan pools even though the rate of loans with exceptions in the due diligence samples indicated that the un-sampled portion of a pool likely contained additional loans with exceptions.”

And so did Washington Mutual, which failed was closed by the government’s Office of Thrift Supervision in 2008.

“WaMu did not disclose to securitization investors in written offering materials the information from its internal reviews concerning instances of borrower fraud and misrepresentations regarding borrower credit, compliance, and property valuation, in the origination of loans, including as to loans that were sold into securitizations.”

These terse, matter-of-fact sentences from Department of Justice lawyers are what a corporate confession of massive greed and wrongdoing looks like today. It’s not very satisfying or reassuring to know that banks like Morgan preyed on the public—with predatory loans, cooked books, false sales pitches and no real effort to rein in abuses—because they were making money hand over fist.

While they partied on, the collapse of the housing market eviscerated the life savings of millions of people, as home values fell and still have not recovered. Meanwhile, the fact that apparently $7 billion of the settlement will be deductible from Morgan’s taxes is maddening. That’s equal to every American taxpayer handing Morgan CEO James Dimon a $50 bill—as if he’s not rich enough.

http://www.alternet.org/economy/jp-morgans-corporate-crime-confession?paging=off&current_page=1#bookmark

[Winehole23]

Alayne Fleischmann is the central witness in one of the biggest cases of white-collar crime in American history, possessing secrets that JPMorgan Chase CEO Jamie Dimon late last year paid $9 billion (not $13 billion as regularly reported – more on that later) to keep the public from hearing.


Back in 2006, as a deal manager at the gigantic bank, Fleischmann first witnessed, then tried to stop, what she describes as "massive criminal securities fraud" in the bank's mortgage operations.


Thanks to a confidentiality agreement, she's kept her mouth shut since then. "My closest family and friends don't know what I've been living with," she says. "Even my brother will only find out for the first time when he sees this interview."


Six years after the crisis that cratered the global economy, it's not exactly news that the country's biggest banks stole on a grand scale. That's why the more important part of Fleischmann's story is in the pains Chase and the Justice Department took to silence her.


She was blocked at every turn: by asleep-on-the-job regulators like the Securities and Exchange Commission, by a court system that allowed Chase to use its billions to bury her evidence, and, finally, by officials like outgoing Attorney General Eric Holder, the chief architect of the crazily elaborate government policy of surrender, secrecy and cover-up. "Every time I had a chance to talk, something always got in the way," Fleischmann says.


This past year she watched as Holder's Justice Department struck a series of historic settlement deals with Chase, Citigroup and Bank of America. The root bargain in these deals was cash for secrecy. The banks paid big fines, without trials or even judges – only secret negotiations that typically ended with the public shown nothing but vague, quasi-official papers called "statements of facts," which were conveniently devoid of anything like actual facts.




And now, with Holder about to leave office and his Justice Department reportedly wrapping up its final settlements, the state is effectively putting the finishing touches on what will amount to a sweeping, industrywide effort to bury the facts of a whole generation of Wall Street corruption. "I could be sued into bankruptcy," she says. "I could lose my license to practice law. I could lose everything. But if we don't start speaking up, then this really is all we're going to get: the biggest financial cover-up in history."


Read more: http://www.rollingstone.com/politics/news/the-9-billion-witness-20141106#ixzz3IPVv0O5H

[Winehole23]

But the deal's most brazen innovation was the way it bypassed the judicial branch. Previously, federal regulators had had bad luck with judges when trying to dole out slap-on-the-wrist settlements to banks. In a pair of celebrated cases, an unpleasantly honest federal judge named Jed Rakoff had rejected sweetheart deals worked out between banks and slavish regulators and had commanded the state to go back to the drawing board and come up with real punishments.

Seemingly not wanting to deal with even the possibility of such a thing happening, Holder blew off the idea of showing the settlement to a judge. The settlement, says Kelleher, "was unprecedented in many ways, including being very carefully crafted to bypass the court system. . . . There can be little doubt that the DOJ and JP-Morgan were trying to avoid disclosure of their dirty deeds and prevent public scrutiny of their sweetheart deal." Kelleher asks a rhetorical question: "Can you imagine the outcry if [Bush-era Attorney General] Alberto Gonzales had gone into the backroom and given Halliburton immunity in exchange for a billion dollars?"


The deal was widely considered a good one for both sides, but Chase emerged with barely a scratch. First, the ludicrously nonspecific language surrounding the settlement put you, me and every other American taxpayer on the hook for roughly a quarter of Chase's check. Because most of the settlement monies were specifically not called fines or penalties, Chase was allowed to treat some $7 billion of the settlement as a tax write-off.


Couple this with the fact that the bank's share price soared six percent on news of the settlement, adding more than $12 billion in value to shareholders, and one could argue Chase actually made money from the deal. What's more, to defray the cost of this and other fines, Chase last year laid off 7,500 lower-level employees. Meanwhile, per-employee compensation for everyone else rose four percent, to $122,653. But no one made out better than Dimon. The board awarded a 74 percent raise to the man who oversaw the biggest regulatory penalty ever, upping his compensation package to about $20 million.


Read more: http://www.rollingstone.com/politics/news/the-9-billion-witness-20141106#ixzz3IPaC3pEg

[Winehole23]

In September, at a speech at NYU, Holder defended the lack of prosecutions of top executives on the grounds that, in the corporate context, sometimes bad things just happen without actual people being responsible. "Responsibility remains so diffuse, and top executives so insulated," Holder said, "that any misconduct could again be considered more a symptom of the institution's culture than a result of the willful actions of any single individual."


In other words, people don't commit crimes, corporate culture commits crimes! It's probably fortunate that Holder is quitting before he has time to apply the same logic to Mafia or terrorism cases.


Read more: http://www.rollingstone.com/politics/news/the-9-billion-witness-20141106#ixzz3IPb4TvsL
=

[boutons_deux]

no surprise, the finance sector owns govt at all levels, runs the govt, that's why any "tax reform" is DOA

and does anybody think a Repug Justice Dept, Treasury (Goldman's Paulson! :lol) would have been any tougher, or even been as "tough" as this DoJ, even it would have even pursued Wall St at all?

Like Deep State, the finance sector is untouchable. eg, Repugs will now totally gut CFPB, defund IRS and SEC even more.

America is fucked and unfuckable.

And who is surprised that the tea baggers in Congress aren't opening "oversight" witch hunts on Wall St? Now they have total control of Congress, my bet is that the Repugs WILL DO NOTHING but harass and witch hunt Obama, EPA, OSHA, etc, etc.

the Repugs' position is that financial regulations, IRS are illegitimate, govt overreach, and so breaking regulations, financial fraud, tax evasion, stealing Ms of home from Americans is OK with Repugs.

[Winehole23]

Credit Suisse settles NJ lawsuit for $495 million


Credit Suisse has agreed to pay $495 million as part of a settlement with the U.S. over a yearslong dispute tied to mortgage-backed securities, an investment vehicle that played a central role in the 2008 financial crisis.


The Swiss bank said that some of the transactions were prior to 2008.


The New Jersey Attorney General, which announced the settlement Monday, filed a lawsuit in 2013 alleging more than $3 billion in damages citing the involvement of Credit Suisse.

“This agreement in principle holds Credit Suisse accountable for the loss of billions of dollars that helped put the nation in financial crisis,” said First Assistant Attorney General Lyndsay Ruotolo. “It has taken more than a decade of investigation and litigation to reach this historic result, but we never wavered in our resolve to get here. The recovery Credit Suisse has agreed to pay reflects the magnitude of harm it inflicted on the public and underscores New Jersey’s commitment to vigorously pursue cases, no matter the challenges, to protect the financial interests of the investing public.”
https://www.newsbreak.com/news/2788783010857/credit-suisse-pays-495m-tied-to-mortgage-backed-securities

[boutons_deux]

$500M is nothing for Credit Suisse, just the cost of doing business

[Winehole23]

Read more: http://www.rollingstone.com/politics/news/the-9-billion-witness-20141106#ixzz3IPVv0O5H

updated. the shenanigans never stopped.



During JPMorgan Chase’s London Whale scandal in 2012 and 2013, where the bank gambled with bank depositors’ money in exotic derivative trades in London and lost at least $6.2 billion, Michael Bloomberg was Mayor of New York City. Instead of condemning this outrageous risk-taking with federally-insured deposits, Bloomberg was quoted in the Wall Street Journal calling Dimon “a very smart, honest, great executive,” adding “The controls failed. He’ll look at that and fix it.” That statement appeared in May of 2012. The five felony counts followed from 2014 to 2020.


On September 16, 2019, for the first time that anyone on Wall Street can remember, RICO charges were brought against traders at JPMorgan Chase (https://www.justice.gov/opa/pr/current-and-former-precious-metals-traders-charged-multi-year-market-manipulation) by the U.S. Department of Justice. Its precious metals trading desk was characterized at the time as a racketeering enterprise by the Justice Department. The DOJ couldn’t bring itself to state the name of the bank where the traders were located, calling JPMorgan Chase simply “Bank A.”


On September 29, 2020, the Justice Department brought the fourth and fifth felony counts against JPMorgan Chase (https://www.justice.gov/opa/pr/jpmorgan-chase-co-agrees-pay-920-million-connection-schemes-defraud-precious-metals-and-us). One count involved traders rigging the precious metals markets and the other count was for rigging the U.S. Treasury market. As the Justice Department had done in all the previous felony charges against the bank, it settled the charges with large fines, deferred prosecution agreements, and a probation period. (The bank has had three probation periods since 2014 for criminal activity.) But the Justice Department did one thing on September 29, 2020 that was unprecedented for a felony charge involving the rigging of the U.S. Treasury market. The Justice Department announced the charges without holding its usual press conference and taking questions from reporters.

The Justice Department’s deal was so sweet for a criminal recidivist that it wrote in its deal with the bank that “an independent compliance monitor was unnecessary” despite also revealing that the bank “did not voluntarily and timely disclose to the Fraud Section and the Office the conduct described in the Statement of Facts.”
https://wallstreetonparade.com/2023/03/jpmorgans-high-risk-footprint-bloomberg-news-as-pr-agent-for-jamie-dimon-and-the-untold-story-of-the-failed-rescue-of-first-republic-by-the-mega-banks/