good read. thanks for posting, boutons.
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good read. thanks for posting, boutons.
U.S. Deal With JPMorgan Followed a Crucial Call
http://mobile.nytimes.com/blogs/deal...?from=homepage
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.Quote:
Originally Posted by CosmicCowboy
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.
when you buy another company, you buy the liabilities.Quote:
Originally Posted by CosmicCowboy
lol CC suggesting that cost should have been socialized
I suggested no such thing.Quote:
Originally Posted by Winehole23
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.Quote:
Originally Posted by Winehole23
Merril Lynch, WaMu, etc were bankrupt, why not let bankruptcy take its course? they weren't TBTFQuote:
Originally Posted by CosmicCowboy
so then, you and me should pick up the tab? what's the alternative to JP Morgan assuming liabilities for companies they bought?Quote:
Originally Posted by CosmicCowboy
Quote:
Originally Posted by boutons_deux
We were inevitably going to pick up the tab before the fed arm twisted JP Morgan/Chase into rescuing them.Quote:
Originally Posted by Winehole23
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.
always interesing when talking about the corrupt, criminal, incompetent financial sector
http://projects.propublica.org/bailout/list
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.
How JP Morgan Could Wiggle Out Of Its Record-Breaking Settlement Fine
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.” Banks have successfully manipulated 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. By one estimate, JPM could pass close to $4 billion along to taxpayers thanks to such deductions, further deflating the headline-grabbing $13 billion figure.
http://thinkprogress.org/economy/201...on-settlement/
Here are some of the details of those deals:Quote:
Originally Posted by CosmicCowboy
Quote:
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, 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 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 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.
no comment, CC?
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-m...age=1#bookmark
Quote:
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."
Quote:
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.
Quote:
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.
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.