Daily Archives: June 11, 2012

New York City files derivative suit vs. Wal-Mart

Thomson Reuters News & Insight.

New York City’s pension funds on Monday became the latest group to file a derivative lawsuit against Wal-Mart Stores Inc based on reported allegations of bribery in Mexico and a possible cover-up by Wal-Mart officials.

The suit, filed in Delaware Chancery Court, alleges that Wal-Mart’s officers and board of directors breached their fiduciary duty to both the company and shareholders by failing to properly handle claims of alleged bribery and apparently attempting to cover up details of the issue.

The issue was brought to light in an April 21 New York Times report which said that management at Wal-Mart de Mexico, or Walmex, allegedly orchestrated bribes of $24 million to help it grow quickly in the last decade and that Wal-Mart’s top brass tried to cover it up.

“Rooting out the directors and executives responsible for the current crisis would be a first step, but Wal-Mart also needs corporate governance reforms and an independent board that will protect outside shareholders and safeguard against another breakdown of internal controls,” New York City Comptroller John C. Liu said in a statement.

Recession crushed middle-class wealth: Fed survey

WASHINGTON (MarketWatch) — The recession crushed the net worth of middle-class families as real estate values tumbled, according to a survey released by the Federal Reserve on Monday.

The Fed’s survey of consumer finances between 2007 and 2010, which is adjusted for inflation, showed median income fell 7.7% from $49,600 in 2007 to $45,800 in 2010 and that median net worth fell 38.8% from $126,400 in 2007 to $77,300 in 2010, approximately the level recorded in 1992.

The drop was concentrated in middle-class families. Those in the 60th to 79.9th percentile of income saw the biggest drop in wealth, of 40.4%. The second-steepest drop came from those in the 20th to 39.9th percentile of income, of 35%. The top 10% actually saw an increase of 1.8%.

Read on.

Bank of America decides not to sue itself | HousingWire

Bank of America decides not to sue itself | HousingWire.

The ongoing Ocala Funding litigation is presenting more than a few interesting tests to boom-time securitization agreements.

The latest, based on a federal ruling in a Manhattan courthouse last week, is revealing that Bank of America declined to sue itself on behalf of investors.

Those two investors, Deutsche Bank and BNP Paribas Mortgage, asked trustee BofA to sue on behalf of $1.6 billion in loses they suffered on Ocala-issued asset-backed commercial paper.

A month later, BofA refused. But why?

According to Moody’s Investor Service Senior Analyst Sally Acevedo: “BoA was acting as Ocala’s indenture trustee, depositary, collateral agent and custodian prior to the TBW bankruptcy and Colonial Bank failure.”

As collateral agent and custodian, BofA also represents the interest of the Ocala vehicle. Ocala Funding helped finance mortgage operations at Taylor, Bean & Whitaker. However, Deutsche and BNP Paribas argue that they would not have invested, if not for Bank of America being associated with the deal.

Big Banks Slam the Brakes on Public Transit

Dale Burnett stood in the lobby of a Chase bank in downtown Chicago the morning of June 7 and explained why Chase and other big banks need to stop gouging millions from the city’s public transit system. A home care worker who cannot afford a car, Burnett’s job pays her poverty wages and she cannot afford fare increases or service cuts. In contrast, Jamie Dimon, CEO of Chase, has a $23 million compensation package this year. Nationally, 43% of transit riders make under 25,000 annually.

Burnett was among 50 Chicagoland transit riders and community activists who came to send a letter to CEO Jamie Dimon. Representing a coalition of transit riders and transit workers called ReFund Transit, they were asking him to renegotiate the credit default swaps (CDS) that are bleeding public transit across the USA. Simultaneous protests by ReFund Transit were held in other US cities.

Dale Burnett had this to say:

“We are here today because Chase and other big banks are ripping off money for our transit system…I live on the South Side of Chicago. I am a personal assistant for the Illinois Department of Human Services. I provide key life services so an individual can live in their home with dignity.Without me they cannot live and without them, I cannot live. We cannot make any more cuts for vital services, whether its health care, education and transit. I depend upon Chicago’s public transit system for my life.”

Credit default swaps were among a swarm of exotic securities that gestated inside of Wall Street and then burst forth to reproduce across the planet. What follows is the short version of how swaps work. For the long version please download this free report.

How Credit Default Swaps Work

To fund new projects with the swaps, the banks asked that cities and states pay the loans at a fixed rate, but the banks would pay back a variable rate that the cities and states could use to pay the interest. The swaps were kind of rebate, but a treacherous one.

Then came the 2008 Crash, the tax payer funded bank bailout, and the decision by the Federal Reserve to lower interest rates to near zero. Now the banks could borrow from the Fed almost for free, and their swap payments to cities fell to nearly zero. The cities were stuck with a fixed rate of anywhere of 3% to over 6%.

Read on.

Unauthorized individual from Chase runs over homeowner, takes off, police, County DA fail to prosecute

From a reader of 4closurefraud website:

On 30 April 2012, a hit and run incident occurred on my property. The unauthorized individual was spotted on the property trying to place and envelop containing a notification from Chase Bank. He was standing in my yard holding a camera in one hand and the notification in another. He said is was from “the mortgage company” but would not reveal his full identity. His truck was parked in my drive way, and as I proceeded to get his license plate number, he immediately climbed in the vehicle, put it in high gear and ran over me. I was rushed to the CMC ER with substantial injuries and the Mint Hill NC police and Mecklenburg County DA failed to prosecute the suspect and didn’t even file an accident report. Therefore, I could not get representation from any personal injury attorneys in Charlotte. All of this has been documented and a report/complaint has been filed by me with all law enforcement agencies in NC and the OCC — but nothing has been done as of yet. I am a disabled African American and I am appalled that no one from the African American Community with the exception of Congressman Mel Watt’s office is trying to get something done about the foreclosure situation. His office has communicated the problem to legal Aid, the Attorney General, and the US Treasury, but no one has come forward to solve the problem. Therefore, I would like to get my story on the internet through your blog if possible.

Chapter 11 Fees Go Mainstream

Bankruptcy lawyers moved to the top tier of corporate practice in 1978 when a federal statute allowed them to be paid top hourly fees, which courts had traditionally limited in bankruptcy proceedings. In recent years, legal fees in Chapter 11 reorganization cases have soared as deals have grown bigger and more complex.

Even in the economic downturn, bankruptcy lawyers have been shielded from the market and client pressures that have forced lawyers in other specialties to cut their fees. Federal law gives payment of lawyers’ fees priority over debt in a bankruptcy; the law firm handling the Lehman Brothers bankruptcy received $399 million through February, public records show.

Reports of very high fees in cases where employees lost jobs and creditors received pennies on the dollar have shaken public confidence, according to the Justice Department. To address this issue, a division of the department that oversees bankruptcy cases has proposed new rules for bankruptcy judges to use in approving lawyers’ fees.

Read on

 

Former MF Global CFO under scrutiny over conflicting statements

Thomson Reuters News & Insight.

WASHINGTON, June 8 (Reuters) – When Henri Steenkamp, MF Global’s chief financial officer, appeared before two congressional panels about the firm’s collapse, he said he was in the dark over how some $1.6 billion in customer funds went missing.

But a report from the bankruptcy trustee filed this week paints a different picture of an executive closely involved as the firm’s liquidity was stretched and it began tapping into customer accounts to help fund operations.

Congressional investigators have flagged the discrepancies and said they plan to examine them further.

“We’re looking closely at all aspects of the MF Global collapse … We’ll be paying close attention to any apparent inconsistency in Mr. Steenkamp’s testimony,” said Republican Representative Randy Neugebauer.

Steenkamp has been a central figure for lawmakers and investigators such as the Justice Department and the Commodity Futures Trading Commission who are probing why the firm imploded and left hundreds of farmers and traders without access to funds they thought were safe at the commodities brokerage.