Treasury extends controversial bank-card deal with Comerica

Update, Sept. 15, 2014, 5:52 p.m.This story has been updated to include a response from a Treasury spokesman.

The Treasury Department has extended a deal with Comerica Bank to distribute benefits to the elderly and disabled on payment cards despite vowing last year to seek a new vendor for the program, which exposed poor and elderly Americans to fraud.

Treasury’s inspector general plans to review the selection process that led to another contract with Comerica, his counsel said in an email Monday.

Treasury’s announcement that it had signed a new, five-year deal with Dallas-based Comerica to distribute Social Security and disability on bank-issued, taxpayer subsidized cards came in the second-to-last paragraph of a blog entry posted on Friday afternoon. Treasury agreed last year to seek another bank partner after a report by The Center exposed fraud in the program and poor oversight of the contract to provide the cards, known as “Direct Express.”

Read on.

Glitches, complaints plague Ocwen, other mortgage servicers

Tyesha Hansborough and her husband, Christley Paton, had paid the property insurance on their Inglewood home along with their mortgage, putting the money in escrow like most homeowners.

Trouble is, the couple said, their mortgage servicer — Ocwen Financial Corp. — didn’t pass that money on to the insurance company for this year’s premiums.

They battled unsuccessfully for months to reinstate the lapsed policy without additional costs, the couple said. Ocwen instead imposed so-called force-placed insurance — expensive coverage that protects the lender’s interest but doesn’t shield the homeowners from loss.

“There have been so many home-invasion robberies around here, and if that were to happen to us, we wouldn’t be covered,” Hansborough said, prompting Patton to say: “I feel like we were robbed — by Ocwen.”

Read on.

Virginia attorney general sues 13 banks for fraud

State Seal
Commonwealth of Virginia
Office of the Attorney General

name and titleaddress

For media inquiries only, contact: 
Michael Kelly, Director of Communications
Phone: (804)786-5874
Email: mkelly@oag.state.va.us

HERRING BRINGS RECORD $1.15 BILLION LAWSUIT AGAINST BANKS FOR DEFRAUDING VIRGINIA TAXPAYERS

~ Largest suit ever brought under Virginia Fraud Against Taxpayers Act seeks accountability for banks that fraudulently sold mortgage-backed securities to the Virginia Retirement System ~

RICHMOND (September 16, 2014)–Attorney General Mark R. Herring today announced a historic lawsuit against some of the largest commercial banks in the world for fraud committed against Virginia taxpayers during the height of the real estate bubble. A lawsuit unsealed today in Richmond Circuit Court seeks $1.15 billion in damages against thirteen banks that are each accused of fraudulently misleading the Virginia Retirement System (VRS) during the sale of residential mortgage-backed securities (RMBS) to the state retirement fund. The VRS was entitled to accurate information about the underlying mortgages when making decisions on how to invest taxpayer money and contributions by employees. Instead, these large banks purposefully included high-risk mortgages in securities and fraudulently misrepresented the quality of those loans to rating agencies and large investors like VRS. The securities were purchased starting around 2004, and before 2010, Virginia was forced to sell the vast majority of these toxic securities built on junk mortgages and lost $383 million.

In 2013, VRS was funded approximately 66% by Virginia taxpayers and 33% by contributions from state employees, with nearly 600,000 members including 145,000 teachers, 105,000 employees of city and county governments, and 78,000 state employees, as well as state troopers, local law enforcement, and court employees.

This is a rare state-level action brought by an Attorney General to hold banks accountable specifically for damages their fraud and recklessness caused state taxpayers through a public retirement system. It is the largest financial fraud action ever brought by the Commonwealth of Virginia and is the largest case ever brought under the Virginia Fraud Against Taxpayers Act. The Commonwealth will also seek civil penalties against each bank in the amount of $5,500-$11,000 for each violation.

“The message today is clear. It doesn’t matter if you’re a small-time con artist or a multi-billion dollar Wall Street bank. If you try to rip off or defraud Virginia consumers or Virginia taxpayers, you will be caught and you will be held responsible,” said Attorney General Herring.“Every Virginian was harmed by the financial crisis. Homes were lost, retirement accounts were devastated, small businesses saw their credit dry up almost overnight, and state and federal budget cuts hurt vulnerable Virginians. It will take many more years to recover the economic strength and stability we lost, but I will not allow Virginians to be left holding the bag for the reckless, fraudulent business practices of a few big banks who thought they were above the law. These banks lied to Virginia, and taxpayers and state employees lost hundreds of millions of dollars as a result.”

Each bank is alleged to have bundled risky residential mortgages into securities which were then sold to VRS in various quantities. The named banks are:

  • Barclays Capital Inc.
  • Citigroup Global Markets Inc.
  • Countrywide Securities Corporation
  • Credit Suisse Securities (USA) LLC
  • Deutsche Bank Securities Inc.
  • Goldman, Sachs & Co.
  • RBS Securities, Inc.
  • HSBC Securities (USA) Inc.
  • Morgan Stanley & Co. LLC
  • UBS Securities LLC
  • WAMU Capital Corp.
  • J.P. Morgan Securities LLC (and as current owner of Bear, Stearns & Co.)
  • Merrill Lynch, Pierce, Fenner & Smith Incorporated(and as current owner of Banc of America Securities LLC)

Read on.

Big Blow to Banks as CFTC Policy Change Is Upheld

(CN) – A federal judge dealt a blow to big-banking interests by upholding a policy extending regulatory reach to the overseas subsidiaries of U.S. financial firms involved in derivative swaps.
The Commodity Futures Trading Commission (CFTC) announced a new policy regarding cross-border derivative swaps in July 2013, trying to address a problem made clear by the 2008 financial crisis: that the investment decisions of foreign offices had major ramifications for U.S. financial firms.
American International Group nearly failed because of the risks incurred by swaps made by its London-based subsidiary, AIG Financial Products – but the U.S. government bore the burden of bailing the company out.
And Lehman Brothers, which did not benefit from a government bailout, similarly guaranteed nearly 130,000 derivative contracts held by one of its London-based subsidiaries when it filed for bankruptcy in 2008.
The derivatives market has since rebounded from the crisis, and financial firms have an estimated $700 trillion derivatives exposure worldwide.
In a “Cross-Border Action,” which the CFTC described as a policy rather than a binding rule, the agency said major swap dealers must register with the CFTC to clear swaps involving a foreign party through a derivative clearing organization. Such registration aims to reduce the risk of default and imposes reporting obligations on swap participants, the CFTC said.
The policy states that “where the conduit is located outside the United States, but is owned and controlled by a U.S. person … to recognize the economic reality of the situation, the conduit’s swaps should be attributed to the U.S. affiliate(s).”

Read on.

CFPB Wants To Start Regulating Auto Companies’ Loan Units

Law360, Los Angeles (September 17, 2014, 10:36 PM ET) — The Consumer Financial Protection Bureau on Wednesday proposed a new rule that would let the federal government regulate roughly 38 major nonbank auto loan companies for the first time and released a report detailing $56 million in penalties banks had been hit with for alleged discriminatory auto loan practices.

The consumer watchdog said the new rule would allow the CFPB to supervise unspecified auto company lending units that account for about 90 percent of nonbank auto loans and leases, make or refinance at least 10,000 loans…

Source: Law360

Renewed DOJ Fraud Focus Should Worry Bank Execs

Law360, Washington (September 17, 2014, 8:03 PM ET) — U.S. Attorney General Eric Holder’s proposal Wednesday to raise the cap on rewards for certain financial industry whistleblowers and make a renewed effort to pursue criminal financial fraud cases should give bank executives pause as they consider the prospect of prosecutors knocking on their doors, attorneys say.

In a speech at the New York University School of Law, Holder said he would push Congress to raise the $1.6 million cap on rewards for whistleblowers who report financial crime under the Financial Institutions Reform, Recovery and Enforcement…

Source: Law360

Chris Hayes plays horrifying 911 call from Federal Judge Mark Fuller’s wife, lawmakers are calling for him to either resign or face impeachment

MarkFuller_KelliFuller_911Call

This case should be also focus in domestic violence conversation as domestic violence in this country is not just a NFL problem!!!

On Tuesday night’s All In with Chris Hayes on MSNBC, at the end of asegment on the NFL’s growing domestic violence controversies, he finally delved into the outrageous case we’ve been reporting in great detail since early August, when Alabama’s federal U.S. District Court Judge Mark Fuller was arrested and charged with beating his wife bloody in an Atlanta hotel room.

Hayes plays audio from a portion of the911 call from Fuller’s wife, including the segment in which it sounds as if she is being repeatedly struck, as later cited by the 911 dispatcher. “Please help me. He’s beating on me,” she is heard crying afterward.

Hayes’ brief segment on the Fuller wife-beating case — with a promise to cover the story more in the future — begins just after the 4:00 minute mark in the video below…

Read on and view the video.

Judge Fuller is the same judge that presided on the political prosecution case of former Alabama governor Don Siegelman whom I wrote to him while he was prison. Here is the background story of Siegelman. And this is not the only encounter by Fuller of domestic violence:

Fuller, as we have reported in some detail previously, is a former Alabama G.O.P. Executive Director and a client of Karl Rove. Fuller refused to recuse himself from thepolitical prosecution of former AL Gov. Don Siegelman, despite a long held grudgeagainst the very popular southern Democratic governor. Thanks to Fuller, Siegelman was shackled in handcuffs and leg irons and shuffled off to prison immediately after he was found guilty of a crime that 113 former U.S. state Attorneys General say has never been a crime before Siegelman was charged with it. Customarily, in a case such as Siegelman’s, the Governor would have been allowed to go free pending appeal. Fuller did not allow him that courtesy.

In the meantime, Siegelman continues to serve a 6.5 year sentence in federal prison as he seeks a re-trial (based on, among other things, improprieties by Judge Fuller), while Fuller, a violent wife-beater (who appears to have beaten more than one wife!) still sits on the federal bench and will soon have his arrest record erased entirely, as if it never even happened.

On a side note: Mr. Siegelman’s appeal case is moved to December. Click here to read more.