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they'll "settle" for nothing, lawyers win
http://www.businessweek.com/news/201...age-bonds.htmlJPMorgan, 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 ins utions 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 do ents that contained untrue statements or lacked important information, according to one complaint. RBS used do ents 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).
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.
get back to me when F&F cram back down to the lenders all the fraudulent mortgages they were sold.
Sure. It adds up over time.
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 slapped so hard that the rest of them would think twice about peddling dishonest bull .
"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.
If we didn't have politicians bailing them out with our money, that might happen.
"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.
slap that wrist...
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...tml?view=print
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/2011/0...tml?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 le and/or just by making errors.
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 “ 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/...+capitalism%29
$8.5 billion is a of a settlement.
There were $100Bs involved.
You minimize.
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
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/bu...gewanted=print
Now, if the financial sector set aside $1T+ to buy back the toxic they sold the Treasury, and bad mortagges they sold to Fannie and Freddie ....
That cost got socialized. We set aside $750B to buy even more of that toxic .
Make all the executives give back their bonuses as penalty.
That might get their attention.
Ah, one can fantasize.
Clawback? Anti-business!
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 ins ution." 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/w...iew/index.html
Yves Smith:
BofA “Settlement”: Not a Done Deal, and Not a Good Deal for Investors
http://www.nakedcapitalism.com/2011/...+capitalism%29
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