24 Oct 2013
in Crime, economy, politics
Tags: banks, Elizabeth Warren, financial industry, politics, US economy
The Boston Globe has a little blurb about a letter that Senator Warren sent to the Federal Reserve, the SEC, and the OCC. The letter is short but includes some important information:
According to a recent analysis by the Federal Reserve Bank of Dallas, the crisis cost the United States up to $14 trillion in lost economic productivity. While we must continue working to create jobs and accelerate our economic recovery, we also must look back to ensure that those who engaged in illegal activity during the crisis and its aftermath are held accountable.
$14 trillion is a lot of money and yet all too few banks were held criminally responsible–many people became rich using methods that helped to crash the economy. That’s why the information that she requests is extremely important:
1. The number of individuals your agency has charged criminally, including the number of senior officials you have charged;
2. The number of criminal convictions your agency has obtained;
3. The number of prison sentences your agency has secured;
4. The number of individuals your agency has charged civilly, including the number of senior officers you have charged;
5. The number of individuals your agency has suspended or permanently banned from working in the financial industry or elsewhere; and
6. The total amount of funds your agency has obtained through civil judgment or orders of restitution.
If a bank or an individual only has too pay a fine without admitting guilt, then that won’t change their behavior because the individuals still make money–lots of money. So, this is a very important move by Senator Warren.
09 Aug 2013
in craziness, Free Markets, history
Tags: banks, Free Markets, history, Rand Paul, US economy
Janet Yellen has done very well in economic forecasting, but she didn’t get everything right:
Yellen’s big error here wasn’t underestimating what a deflating housing bubble would mean for the real economy, but rather what it would mean for the financial one. Back in 2005, she didn’t appreciate how much shadow banks relied on AAA-rated mortgage-backed-securities (MBS) as collateral to fund their day-to-day operations — or how much even this supposedly high-quality collateral could go bust if housing did. Of course, that’s exactly what happened, and it set off a run on the shadow banking system that forced a fire sale of every other kind of asset, and, in the process, nearly ended the financial world as we knew it.
Deregulation had made bank runs, of a different sort, possible again. Yellen did get it somewhat though:
Lehmangeddon turned what might have been a mild recession and a milder recovery — think a worse 1991 — into the worst crisis in 80 years. So what should have been done in, say, 2005 to have avoided this disaster? Well, Yellen is almost certainly right: the Fed should have tried to regulate away, not prick, the housing bubble. Things like cracking down on liar loans, tightening loan-to-value requirements, and toughening leverage ratios probably would have slowed the bubble, and made any subsequent bust less of a financial cataclysm.
Paul Krugman then talks about what happened after the crisis (go read the article to see his supporting graphs):
For the most part, even those who correctly diagnosed a housing bubble failed to notice or at least to acknowledge the importance of the sharp rise in household debt that accompanied the bubble:
And I would argue that this debt overhang has held back spending even though financial markets are operating more or less normally again.
Finally, nobody really anticipated the disastrous response of policy, above all the squeeze on public spending at a time when we needed more government spending to sustain the economy until private balance sheets were repaired.
Luckily we didn’t have someone like Rand Paul in power who thinks we should have cut the federal budget and doesn’t seem to know that the deficit is now well under a trillion dollars and shrinking fast
07 Aug 2013
in Free Markets
Tags: banks, US economy
So the banks are trying to soften their image:
In print, television, and online advertising, mid-size banks and the nation’s largest institutions are spending millions to stress their relationships with customers, emphasizing the personal touch even as they shutter branches and invest in inventions, like mobile apps and smarter ATMs, that reduce actual human contact.
They’re featuring sepia-tinted photos and feel-good vignettes, with bankers in the background helping families plan for a wedding or buy a new dog. They spotlight their efforts to help military service members, struggling communities, and Main Street businesses.
Their problem came from helping to crash the world economy and world-sized fraud:
The US government has accused Bank of America Corp. of civil fraud, saying the company failed to disclose risks and misled investors in its sale of $850 million of mortgage bonds during 2008.
The Justice Department filed a civil suit Tuesday against the bank and several subsidiaries in federal court in Charlotte, N.C. The Securities and Exchange Commission filed a related suit against Bank of America there, too.
Perhaps they could try to help their image by stopping such things:
Many banks are still violating basic legal requirements when foreclosing on properties in Massachusetts, according to attorneys who represent homeowners fighting to save their homes.
Lenders do not always adhere to a 2007 state law, amended in 2010, that provides homeowners 150 days to catch up on missed mortgage payments before a foreclosure can begin, they say.
Under the law, banks and mortgage companies are required to send ‘‘right-to-cure’’ notices to delinquent borrowers that provide basic information about the foreclosure process, including whom to contact and who holds the mortgage.
They also might trying to reduce fees:
Fewer customers are at risk of leaving the big banks than they were two years ago, Beck says; bank vulnerability has slightly improved since 2011, with the percentage of potential defectors falling from 33% to 26%.
But the problems remain the same, according to Beck. “Interaction [with banks] is not as bad as it was in 2011…[but] there has not been a demonstrable change that has led consumers to feel better.”
The problem is that those things actually cost them more money, so ads it is.
26 May 2013
in Free Markets, politics
Tags: banks, Elizabeth Warren, student loans
This is an interesting bit:
Earlier this month, when Congress was consumed by a hearing on the attack against Americans in Benghazi, Warren took to the Senate floor to introduce the bill, a dramatic cut in the federal interest rate for student loans. Under Warren’s bill, the current rate of 3.4 percent, set to double to 6.8 percent on July 1, would drop for a year to 0.75 percent, to match the short-term rate afforded to big banks by the Federal Reserve.
The issue hit Warren’s sweet spots: what she describes as the built-in advantages enjoyed by big banks, the middle class struggle to repay debts, the universities that bolster the Massachusetts economy, and the college students whose passion helped transform Warren’s Senate campaign into a national cause.
“If the Federal Reserve can float trillions of dollars to large financial institutions at low interest rates to grow the economy, surely they can float the Department of Education the money to fund our students, keep us competitive, and help grow our middle class,” she said.
A pair of scholars from Brookings disagreed, labeling Warren’s proposal a “cheap political gimmick” in an online essay, noting that student borrowers have higher rates of default and are offered generous forgiveness policies not granted to big banks.
“This logic just fails,” said Beth Akers, a fellow at the Brown Center for Education Policy at the Brookings Institution, who co-wrote the piece. “Students are fundamentally different as borrowers from these large financial institutions at the discount window.”
And students didn’t crash the world economy. If they had they would have been due an infusion of hundreds of billions of dollars, right Beth?
15 Feb 2013
in justice, politics, wealth
Tags: banks, Elizabeth Warren, politics
I love this:
On Thursday, Warren urged regulators to step up the legal actions.
“There are district attorneys and US attorneys who are out there every day squeezing ordinary citizens on very thin grounds and taking them to trial in order to make an example,” she said.
As for taking on banks, she added, “I’m really concerned ‘too big to fail’ has become ‘too big for trial.’ That just seems wrong to me.”
Here’s the video:
Warren pushed to establish the Consumer Financial Protection Bureau, but was blocked from becoming its director by Republicans and the financial industry. The financial industry then spent a lot of money to defeat her in her Senate run. Now they get to face her from the Senate where she has a much bigger audience when she wonders why more bankers aren’t in jail and why Republicans filibuster to weaken the CFPB:
Working alongside Sens. Sherrod Brown (D-Ohio) and Jack Reed (D-R.I.), Warren held news conferences Wednesday and Thursday calling on Republicans to bring Cordray’s confirmation to a vote. In response to GOP claims that the bureau operates without controls, the senators noted that CFPB can be overruled by the Financial Stability Oversight Council and has a statutory cap on its funding.
“It is past time for an up-or-down vote,” Warren said Thursday. “The financial industry needs certainty, and families need to know there is a strong and independent watchdog on their side in Washington.”
Despite the fact that the financial industry has done really well under Obama, they really don’t like him–he seems to have hurt their feelings. Maybe Warren will make them appreciate that Obama has been extremely nice to them given that they crashed the world economy.
21 Jan 2013
in economy, politics
Tags: banks, economy, politics
Jamie Dimon, of JP Morgan, really has it rough:
Two years ago, Jamie Dimon, chief executive of JPMorgan Chase, told an audience in Davos that people should stop picking on bankers. Mr. Dimon is still waiting for his wish to come true.
JPMorgan Chase slashed CEO Jamie Dimon’s bonus by 53%, citing the fallout from the bank’s so-called London Whale trading losses.
Ok, not that rough:
Earlier this month, for instance, an international conclave of central bankers and bank supervisors, meeting in Basel, Switzerland, relaxed new rules that were intended to ensure that banks would be able to survive an event like the collapse of Lehman Brothers in 2008.
The rules, which are not binding but serve as a benchmark for national regulators, would require banks to maintain a 30-day supply of cash or liquid assets that are easy to convert into cash. But after the decision in Basel this month banks would have until 2019 to accumulate the additional cash and assets, instead of 2015. The regulators also broadened the kinds of assets that qualify, so that now they can include even some mortgage-backed securities—the same general class of security that was at the heart of the crisis.
and this is despite more criminal activity being found such as:
UBS, based in Zurich, agreed to pay a $1.5 billion fine to the global authorities after admitting this month that it had helped manipulate a key benchmark rate used to set mortgage and other interest rates. Wegelin, a private bank based in St. Gallen, Switzerland, shut down earlier this month after admitting it had helped wealthy Americans evade taxes. The bank, founded in 1741, was the oldest in Switzerland.
Banks, at least in the US, are back making record profits:
JPMorgan has reported record profits for three consecutive years and praised what they called Dimon’s forceful response to the trading problems.
And don’t cry too much for Dimon, his ‘punishment’ means he’ll only make $11.5 million this year. I think most of us could scrape by on that.
13 Aug 2012
in craziness, Free Markets
Tags: banks, craziness, Free Markets
So what are bankers up to now:
As they work through a glut of bad loans, companies like American Express, Citigroup and Discover Financial are going to court to recoup their money. But many of the lawsuits rely on erroneous documents, incomplete records and generic testimony from witnesses, according to judges who oversee the cases.
“I would say that roughly 90 percent of the credit card lawsuits are flawed and can’t prove the person owes the debt,” said Noach Dear, a civil court judge in Brooklyn, who said he presided over as many as 100 such cases a day.
The problem, according to judges, is that credit card companies are not always following the proper legal procedures, even when they have the right to collect money. Certain cases hinge on mass-produced documents because the lenders do not provide proof of the outstanding debts, like the original contract or payment history.
At times, lawsuits include falsified credit card statements, produced years after borrowers supposedly fell behind on their bills, according to the judges and others in the industry.
The errors in credit card suits often go undetected, according to the judges. Unlike in foreclosures, the borrowers typically do not show up in court to defend themselves. As a result, an estimated 95 percent of lawsuits result in default judgments in favor of lenders. With a default judgment, credit card companies can garnish a consumer’s wages or freeze bank accounts to get their money back.
If a bank produces false documents, that’s fraud. I expect this means some of the bankers will go to jail … hahahaha. Sorry, couldn’t say that with a straight face.
18 Jul 2012
in Free Markets, politics
Tags: banks, Consumer Protection, Free Markets, politics
Look at that:
Capital One Bank will pay $210 million to settle federal charges that it tricked credit card customers into buying costly add-on services like payment protection and credit monitoring.
Under its agreement with the CFPB, Capital One will pay about $150 million to 2.5 million customers and an additional $25 million penalty. Capital One will pay a $35 million penalty to the Office of the Comptroller of the Currency, a separate federal agency that oversees its banking operations.
The CFPB’s action was also notable for requiring automatic refunds to consumers who were duped — a simple process compared with the mailings and paperwork involved in most class-action settlements.
Capital One did something wrong, was caught, and the money gets sent back to the consumers without having to do anything. This is the type of thing the new bureau can do and is one of the reasons banks (and Republicans) want to get rid of it. Score one for the consumer.
20 Jun 2012
in economy, World
Tags: banks, Spain
This is typical:
As Harvard economist Ken Rogoff puts it, “Europe is like a couple that wasn’t sure they wanted to get married, so instead they decided to just open a joint checking account and see how things went.” They went badly. Germany, the thrifty partner, is wringing its hands about how to handle the fact that its Mediterranean lover has drained the account and doesn’t want to go on a budget. The southern European attitude is pretty well summed up in Gaga’s lyric “I want your everything as long as it’s free.”
The Germans are also taking heat for insisting that debtor nations like Greece submit to backbreaking austerity budgets. But you can understand the German point of view–why give a blank check to spendthrift nations like Greece when you have no political control over how they spend it?
It’s never explicitly mentioned, but implied that Spain, Italy, and the other countries are having problems because they spent too much. It’s not true (if you search through Paul Krugman’s blog you’ll find much more evidence, but since I’m lazy I’ll just put in this one):
For this is really, really not about fiscal irresponsibility. Just as a reminder, on the eve of the crisis Spain seemed to be a fiscal paragon:
What happened to Spain was a housing bubble — fueled, to an important degree, by lending from German banks — that burst, taking the economy down with it. Now the country has 23.6 percent unemployment, 50.5 percent among the young.
It would be nice if reporters actually reported what was true.
04 Jun 2012
in economy, politics
Tags: banks, politics, regulation, Scott Brown
This isn’t surprising:
Brown’s role in helping to loosen the Volcker rule in advance of casting his vote on Dodd-Frank has been well-documented. Notably, he helped create a provision that allows banks to invest up to 3 percent of their money in riskier investments such as hedge funds and private equity funds, and to own up to 3 percent of an individual fund – additions that won him Wall Street support.
But e-mails obtained by the Globe show that Brown’s work on behalf of the financial sector did not stop when the law was passed. In the second stage, as regulators began the less publicly scrutinized task of writing rules amid heavy pressure from the banking sector, Brown urged the regulators to interpret the 3 percent rule broadly and to offer banks some leeway to invest in hedge funds and private equity funds.
Senator Brown is a moderate Republican but he is still a Republican, so his default is to be against regulations. He was willing to support some new regulations on banks, they did crash the world economy after all, but goes against his grain.
03 Jun 2012
in craziness, economy, Free Markets, wealth
Tags: banks, class warfare, Spain, wealth
Whenever there is talk about reducing payments or the amount owed for someone who is having trouble with their mortgage,economists will always say it’s problematic because of moral hazard. And when there are discussions about income taxes in the US, Republicans say that everyone needs to pay something so they have ‘skin in the game’. Of course, this doesn’t apply to banks (via Atrios):
Seven years ago a local savings bank persuaded Reyes, a cleaner, to take out a 100% mortgage to buy the flat for €195,000 (£157,000). The bank has since merged with half a dozen others, all of which had thrown bad money at property speculators, to form a sick giant called Bankia.
Last week, as Reyes waited for the bailiffs, Bankia was demanding €23.5bn of taxpayers’ money to stave off collapse. That is €1,350 from each working Spaniard. Among other costs that need absorbing by the savings banks that made up Bankia are a €6.2m payoff to one senior executive who helped drive the bank to disaster and €14m to another.
The banks who helped destroy the world economy are bailed out at public expense and the top executives who made the decisions keep all the money they made, while a lot of ordinary people lost their jobs and then their houses. What will stop future banks and bankers from making similar decisions?
02 May 2012
in economy, Free Markets, politics
Tags: banks, politics, Romney
Mitt Romney has the typical Republican stance on regulation of banks (pay link) and regulations in general:
Republican Mitt Romney is pledging, if he is elected president, to repeal the Dodd-Frank financial regulations, a position favored by donors on Wall Street who have sent millions the candidate’s way. But he is nearly silent on how – without the regulation – he would prevent Wall Street from once again engaging in the risky practices that helped cause the 2008 financial crisis.
The industry objects to the new rules and restrictions, and Romney said in May 2011 that the law “scared the dickens out of the financial sector and caused banks to pull back from lending.’’ He has joined his Republican presidential rivals in calling for an outright repeal of the legislation.
Romney has criticized both the Consumer Financial Protection Bureau, which is designed to monitor things like credit card applications and home mortgages, and the Financial Stability Oversight Council, which is supposed to monitor for systemic risks in the markets. Romney says both are too powerful and run by unelected bureaucrats.
Republicans would like to get rid of almost all these regulations without replacing them. The problem is that the financial industry crashed the world economy and so people don’t much like it. Therefore they pretend that they’ll replace it with something–of course it has to be generic, because anything specific will cause problems with the financial industry which gives them so much money (they also give Democrats a lot of money which is why the regulations were watered down). If you believe that the financial industry will now be responsible then Romney’s your guy. If you think they’ll do most anything to make a bigger profit, then … ok neither candidate is really for you, but Obama is a bit better.
23 Aug 2011
in economy, politics
Tags: banks, economy
A nice contrast. The banks:
Fed Chairman Ben S. Bernanke’s unprecedented effort to keep the economy from plunging into depression included lending banks and other companies as much as $1.2 trillion of public money, about the same amount U.S. homeowners currently owe on 6.5 million delinquent and foreclosed mortgages. The largest borrower, Morgan Stanley (MS), got as much as $107.3 billion, while Citigroup took $99.5 billion and Bank of America $91.4 billion, according to a Bloomberg News compilation of data obtained through Freedom of Information Act requests, months of litigation and an act of Congress.
“These are all whopping numbers,” said Robert Litan, a former Justice Department official who in the 1990s served on a commission probing the causes of the savings and loan crisis.“You’re talking about the aristocracy of American finance going down the tubes without the federal money.”
And this was with loosened requirements for collateral, interest rates as low as 1.1% (at a time when they couldn’t get loans anywhere else), and with no publicity. To be fair, the Fed made money on this.
Now the rest of us:
Not surprising, the large banks, which are eager to reach a settlement, have grown increasingly frustrated with Mr. Schneiderman. Bank officials recently discussed asking Mr. Donovan for help in changing the attorney general’s mind, according to a person briefed on those talks.
In an interview on Friday, Mr. Donovan defended his discussions with the attorney general, saying they were motivated by a desire to speed up help for troubled homeowners. But he said he had not spoken to bank officials or their representatives about trying to persuade Mr. Schneiderman to get on board with the deal.
“Eric and I agree on a tremendous amount here,” Mr. Donovan said. “The disagreement is around whether we should wait to settle and resolve the issues around the servicing practices for him — and potentially other A.G.’s and other federal agencies — to complete investigations on the securitization side. He might argue that he has more leverage that way, but our view is we have the immediate opportunity to help a huge number of borrowers to stay in their homes, to help their neighborhoods and the housing market.”
This would be funny, if it wasn’t so awful. In August 2011 the Obama administration says that are motivated by a desire to speed up help for homeowners, hahahaha … ha. There are good posts on this here and here:
You see, the Administration has an “immediate opportunity to help a huge number of borrowers stay in their homes,” without any action from Eric Schneiderman. They have a way to do so more swiftly, in such a way the servicers actually would be held accountable. It would involve offering refis with principal reductions to all the underwater homeowners whose loans are owned by Fannie and Freddie. That would not only help a huge number of borrowers stay in their home, but it would be massive stimulus.
15 May 2011
in craziness, economy, politics, wealth
Tags: banks, financial industry, politics, wealth
The financial industry nearly bankrupt the entire world and yet got off with much less pain than the rest of us, but that’s not stopping them from complaining about rules designed to stop them from doing it again. And Republicans are happy to oblige in return for money:
But the shift in political focus overall in donations to Congress has been clear. The industry’s contributions went from a 52-48 percent split in favor of Democrats in 2007-2008 to a 54-46 percent split in favor of the GOP in 2009-2010, according to data compiled by the center.
Shifts for some individual firms were dramatic. Political committees and executives connected to Goldman Sachs, for example, went from giving 25 percent of their contributions to Republicans in the 2008 election cycle to giving them 60 percent during the 2010 cycle. Goldman Sachs declined to comment.
In some sense, this is business as usual. Industry has almost always given more money to the party in power, but look at what the two parties offer:
The Dodd-Frank Wall Street Reform and Consumer Protection Act, signed into law last July, is the most sweeping overhaul of financial regulations in decades and was a response to the largest US economic crisis since the Depression.
It placed new restrictions on derivatives trading, whose practices were widely seen as contributing to the virtual collapse of credit markets that helped cause the crisis. It also created the new consumer protection agency with the power to regulate how loans and other financial products are marketed and sold to the public, an effort to forestall a repeat of the massive foreclosure crisis.
Among the GOP initiatives currently under consideration are measures that would exempt large swaths of the $600 trillion derivatives market from new regulations designed to rein in risky practices. Republicans also want to roll back certain measures that are intended to introduce more transparency, accountability, and oversight of financial transactions.
Also very high on the GOP target list: restructuring the consumer protection agency by replacing its single-director position with a panel and making the agency’s budget subject to congressional approval. Currently, the agency — which is supposed to begin operating in July — is funded through the Federal Reserve.
And remember this quote from the current chair of the Financial Services Committee (it’s actually from here, but you have to be registered to see it):
Underlining the change in Congress, Mr Bachus, who as ranking Republican on the committee could replace Barney Frank as chairman of the panel, expressed concern that shareholders of Goldman Sachs and JPMorgan Chase will be hurt because the banks will be less profitable.
When the chair is more worried about the profits of the financial industry than making sure they don’t collapse the economy, it’s hard for Democrats to compete (not that some of them don’t try).
28 Mar 2011
in economy, politics
Tags: banks, financial industry, politics
This post at the Wall Street Journal has two interesting bits.
Since then, the sector has come roaring back. The GDP report shows finance profits jumped to $426.5 billion. While profits haven’t returned to their high levels of 2006, the gain in finance profits last quarter more than offset a drop in profits posted by nonfinancial domestic industries.
After rising like the Phoenix, the financial industry now accounts for about 30% of all operating profits. That’s an amazing share given that the sector accounts for less than 10% of the value added in the economy.
which tells us that people (on average) in the financial industry are vastly overpaid and:
The profit resurgence also calls into questions the lobbying going on in Washington about financial reform. Banks and Wall Street firms argue that any new regulation will hold down their profits. That’s because some profits now accruing to the finance sector will shift to others.
Take the debit-card legislation now proposed. The reforms entail how much banks can charge when their customers swipe a debit card to make a purchase at a store. The question is who will get to book the revenue. If fee rates remain high, then banks will benefit. If the fees are cut, then retailers will win.
If you put the two together you see that what’s good for the financial industry is not necessarily good for the rest of us (or even the rest of businesses) and that they are using all that extra money to try to keep things as they are.
04 Nov 2010
in craziness, economy, politics, wealth
Tags: banks, craziness, politics, Republicans
The huge win by Republicans is surreal to me. People were upset by the economy and the financial institutions, so they elected people such as (via here):
Mr Bachus, who as ranking Republican on the committee could replace Barney Frank as chairman of the panel, expressed concern that shareholders of Goldman Sachs and JPMorgan Chase will be hurt because the banks will be less profitable.
Of course he pretends that this is all about jobs (if we don’t allow bankers to make millions, why the economy will collapse), but it’s obvious to anyone with a brain that it’s not. So we have just elected people whose response to the financial industry almost shutting down the world economy because of their greed and incompetence is to worry that regulations might hurt them. Thanks people.
07 Oct 2010
in craziness, economy, justice, Media, wealth
Tags: banks, craziness, foreclosures, Media
Let’s see, it seems the banks have not exactly been following the law during foreclosures. So what does Congress do? Why pass a bill to change the law. Amazingly, it seems that President Obama will veto the bill although he doesn’t seem to be outraged:
“We believe it is necessary to have further deliberations about the intended and unintended impact of this bill on consumer protections, including those for mortgages, before this bill can be finalized,” Mr. Pfeiffer said in a blog posting.
Now it seems that banks are doing things that are even more obviously illegal (via here):
It turns out that a Sarasota company working for a lender trying to retake the property through foreclosure sent two men to the Punta Gorda home to break in and change the locks, even though the home was obviously occupied.
It is illegal for any bank representative to enter a property if they have not yet retaken it at a foreclosure sale, especially if there is any sign the home is occupied, foreclosure experts say.
So what will happen? Nothing, of course, these are banks:
Some property owners are reporting the break-ins to law enforcement as burglaries. Yet investigators consider the disputes a civil matter because the contractors do not display criminal intent.
That essentially leaves the property owners without recourse.
They have even broken into homes that banks were not trying to foreclose.
A couple people are suitably outraged. One is Rep. Grayson of Florida:
“First we see systemic fraud in the foreclosure process. Now we’re literally seeing banks breaking into people’s homes and terrifying homeowners. The big banks claim these confrontations are a result of innocent errors. Come on! How many times are we going to force a woman to cower in her bathroom for fifteen minutes and dial 911 while a man breaks into a home, before we do something about it?
Breaking and entering does not become legal just because a big bank does it. The rule of law must apply equally to everyone. It’s long past time to halt this blatantly illegal activity. We need investigation and law enforcement, not coddling of failed institutions. We need justice for all.”
Another is AG Cordray of Ohio (via here):
He has filed a lawsuit in Lucas County (Toledo) Common Pleas Court against GMAC Mortgage and their parent company Ally Financial, in a suit which names Jeffrey Stephan, the infamous “robo-signer” who signed off on up to 10,000 foreclosures a month across the country with affidavits, without verifying the information in the foreclosure documents. The lawsuit alleges fraud on the part of GMAC, along with violations of the Ohio Consumer Sales Practices Act, in filing false affidavits to mislead the courts in what they describe as “hundreds” of Ohio foreclosure cases. And, the Attorney General is treating every single false affidavit filed in an Ohio court as a separate violation, with a fine of up to $25,000, plus additional restitution for the homeowner of an unspecified amount.
How is it that this isn’t a national scandal covered by all the media?
30 Sep 2010
in craziness, economy, justice, Media, wealth
Tags: banks, craziness, foreclosures, Media
Another in the long series showing that only the little people need to follow the laws:
The short problem is that banks are foreclosing without showing clear ownership of the property. In addition, “foreclosure mills” are processing 100,000s of foreclosures a month without doing any of the actual due diligence or legal legwork required for the state to justify the taking of property and putting people on the street. Even worse, many are faking documentation and committing other fraud in the process. The government is allowing this to happen both by not having courts block it from going forward, but also through purchasing the services of these mills. As Barney Frank noted: “Why is Fannie Mae using lawyers that are accused of regularly engaging in fraud to kick people out of their homes?”
You should click on his links, especially this one that looks at the situation in Florida and notes;
But perhaps most important, the explicit objective of these courts is to clear up the backlog. And that is coming to pass not by the Legislature having thrown enough resources at the problem (that is, having greatly enlarged court capacity to process more cases in parallel) but by pushing for faster resolution. The problem is that an accelerated process runs roughshod over due process and allows banks to foreclose when they may not be the right party, or worse, when the foreclosure is the result of servicing error.
Now try to imagine this from the other side: a judge not worrying if the actual person (as opposed to bank) has the proper documents; a court that is specially designed to force banks to lower payments so more people can stay in their home. I can’t. I also try to imagine that these types of stories get wide coverage.
24 Aug 2010
in craziness, justice
Tags: banks, craziness, judges, justice, Justice Department
Some judges have been complaining about settlements between the government and banks. Here’s one of the cases:
The Barclays settlement, which Judge Sullivan approved last week, involved charges that the British bank helped customers in Iran, Cuba and other sanctioned nations move more than $500 million into the United States, breaking federal law — and undermining national policy — for more than a decade. The bank distributed instructions to employees for circumventing internal controls, for example by obscuring the source of the transfers.
Moreover, employees knew the transfers were illegal.
The cover sheets “must not mention” the offending entity, which could cause the funds to be seized, one employee wrote in an e-mail quoted by prosecutors. “A good example is Cuba, which the U.S. says we shouldn’t do business with but we do.”
The Justice Department agreed not to pursue criminal charges against the bank. In exchange, Barclays admitted to wrongdoing, forfeited $298 million and agreed to improve employee training.
It seems like a lot of money, except:
Profit increased to £2.4 billion, or $3.8 billion, in the first six months of this year from £1.9 billion in the same period last year, the bank said, beating some analyst expectations. Provisions for bad loans and other credit at the entire company fell 32 percent to £3 billion.
The judge doesn’t have much power in settlement cases and so approved the deal even though he wondered at it:
In the Barclays case, Judge Sullivan questioned whether the bank was being penalized if it paid back only the money involved. He said he wanted information about the penalties at another hearing scheduled for Wednesday.
Frederick Reynolds, a lawyer for the Justice Department, defended the agreement and said the amount of money Barclays would pay was “beyond what they earned.”
Wow, somehow I don’t think that’s the standard applied to actual people. If I stole $100 from a store, would I be let go with a fine of $150? Somehow I think not.
30 Jun 2010
in Free Markets, politics
Tags: banks, financial industry, Scott Brown
It seems that Scott Brown is more interested in helping big banks than in helping the rest of us. He successfully used his leverage to get rid of a new tax on banks to pay for the new financial regulations bill. This is the second change in the bill that he has forced that has helped big banks.
He also says he is for extending unemployment benefits, but has filibustered against it three times.
If you look at these two issues a bit closer, you see him use the same type of language:
His plan would pay for the additional spending using unspent stimulus funding, along with cuts in other areas.
“There are some programs in that legislation that are important to Massachusetts during this economic crisis,’’ Brown, a Republican, says in a video message he is planning to release this morning. “But we need to find a way to pay for them.’’
for the financial regulations:
“If the final version of this bill contains these higher taxes, I will not support it,’’ Brown wrote.
Brown said Dodd and Frank should “find a way to offset the cost of the bill by cutting unnecessary federal spending.’’
Brown did not identify where those cuts should be made, but wrote, “There are hundreds of billions in unspent federal funds sitting around, some authorized years ago for long-dead initiatives. Congress needs to start looking there first, and I stand ready to help.’’
It’s interesting to note that when it came to voting for the financial regulations, making the deficit larger was not as important as not taxing the banks:
The Senate version of the bill, which Brown voted for, did not include a method of paying for the new regulations. Instead, it would have added to the federal deficit – a spending approach that Brown has opposed in other instances, most notably to vote against extending unemployment insurance.
On the other hand, he is adamant that he will not vote for extended unemployment benefits unless the bill is revenue neutral … and taxes can’t be raised and he won’t point to any particular thing to cut. Somehow, I think his new bill is going nowhere.
It’s easy to see where his priorities lie. Kevin Drum has a good explanation for why this bill is better than nothing. Of course, if Scott Brown has his way it will continue to get worse.
In a separate matter, we see how much all of the federal government helps big banks:
When the government began rescuing it from collapse in the fall of 2008 with what has become a $182 billion lifeline, A.I.G. was required to forfeit its right to sue several banks — including Goldman, Société Générale, Deutsche Bank and Merrill Lynch — over any irregularities with most of the mortgage securities it insured in the precrisis years.
These banks ended up getting every cent that AIG owed them even though AIG was basically bankrupt. Do you think taxpayers will get all our money back?