Daily Archives: June 14, 2012

New York Proposed Foreclosure Fraud Bill A10629

New York Proposed Foreclosure Fraud Bill A10629.

Some the best moments from the dog and pony Senate hearing show with Dimon

Written by Biloxi

I got a chance to watch the entire Senate hearing with JP Morgan Chase CEO Jamie Dimon’s testimony on the London Whale $2 billion trading loss. As predicted, many of the Senate Committee members fluffed Dimon’s pillow and provided softball questions. And I’m not going to get into the fact that some members on the committee’s financial ties to JP Morgan Chase. However, I wanted to point out the best moments I found from the Senate hearing:

1. London Whale: The Russian Roulette

Sen. Robert Menendez: “When you reduce a hedge, or hedge a hedge, isn’t that gambling?” Dimon: “No.”  Sen. Robert Menendez: You said the hedge morphed. What did it morph into, Russian roulette?

2.  Examiners unaware of London Whale risk until April

Sen. Sherrod Brown: Asked OCC, they said that there are five examiners in London. Portfolio of assets in question $200B. They said trades “transparent to regulators.” But said examiners unaware of risk until April. Was OCC told before April 6?

Dimon: We try to be “open-kimono” with regulators. We were misinformed, we had them misinformed. The second we found out, we told the regulators.

Sen. Sherrod Brown: April 13 (2012), earnings call, was OCC told of trades?

Dimon: I don’t know. Probably continued to misinform. When we found out, we called board and regulators, probably not in that order.

Sen. Sherrod Brown: Did OCC inquire about trades?

Dimon: I don’t know. Brown: When did OCC challenge the trades? Dimon: When they understood significance, they challenged it every day.

Sen. Sherrod Brown: Five regulators in London enough?

Dimon: Don’t know, but physical location not that important.

And the zinger?

3. JPMorgan Chase would have failed if not for “massive federal bailouts” as Senator Jeff Merkley reminded Dimon:

Senator Merkley reminded Dimon that of TARP money and indirect aid to JP Morgan Chase including the Treasury’s bailout of AIG. Here was the Merkley-Dimon exchange:

“JPMorgan took TARP because we were asked to,” Mr. Dimon said, his voice rising. “We were asked that if the nine banks take this TARP we can keep the system from going down. “We were not bailed out by AIG. We would have had a loss of about $1 billion if AIG had gone under.”

“Sir, this is not your hearing,” Senator Merkley interrupted. And: “I think a lot of experts would say that without federal aid, JPMorgan would have gone down, and that you would have been out of a job.”

Lastly, Senator Merkley pressed  Dimon on a Bloomberg article suggesting  Dimon’s vision of his CIO firm as a profit center. From the Bloomberg article:

“We want to ramp up the ability to generate profit for the firm,” David Olson, a former head of credit trading for the CIO in North America, recalled being told by two executives when he was hired in 2006. “This is Jamie’s new vision for the company.”

And Dimon’s response to Merkley? “I don’t believe everything I read, and I hope you don’t either.”

4. Be careful what you say, Mr. Dimon.

Dimon has been called arrogant in the public eye. Well, here is Senator Jerry Moran’s question to Dimon. Moran asked Dimon to elaborate on comments earlier in the hearings in which he observed that large organizations have a tendency to become arrogant. And Dimon’s response?  “I wasn’t talking about the Senate, definitely not. Not now.”

Dimon’s has another date on Capital Hill…with Congress: June 20, 2012


Former Wells Fargo CEO Dick Kovacevich blasts TARP: An ‘unmitigated disaster’

Former Wells Fargo Chairman and CEO Dick Kovacevich says the federal government’s bank bailout during the depths of the financial crisis was an “unmitigated disaster” and laid much of the blame for the financial crisis on “ineffective regulators.”

“The decision by the U.S. Treasury and the Federal Reserve in October 2008 to make banks take TARP money even if they didn’t want it or need it was one of the worst economic decisions in the history of the United States,” Kovacevich told about 100 people attending a Stanford Institute for Economic Policy Research event Tuesday evening.

Kovacevich then offered a roster of reasons fueling his criticism of the government’s Troubled Asset Relief Program, including “spooking the financial markets,” damaging the reputation of financial institutions who did nothing wrong, and institutionalizing the concept that some institutions are too big to fail.

Read on

Attention Distressful Homeowners: Jamie Dimon Is Taking Your Phone Calls on Foreclosure Paperwork


First of all, a set of anti-foreclosure activists disrupted the hearing at the beginning, demanding Dimon to “stop foreclosures now!”  As that wasn’t the point of the hearing, this went mostly unaddressed on the panel.  But then unassuming Sen. Herb Kohl decided to bring it up.

After a discussion about how JPMorgan’s loan-to-deposit ratios are much lower than comparable banks, giving them more funds to gamble with, Kohl said that his constituents often call him, and every other Senator, with loan modification problems.  “Often they say the banks lose their paperwork.  One constituent said to me ‘I don’t want to lose my house because they can’t get their paperwork straight.’”  We know from Paul Kiel’s book that most of these “lost documents” simply went over to India in a cost-cutting measure, never to be seen again:

When homeowners faxed their documents, they didn’t go to Litton, Wyatt says. They went to India, where a low-cost company scanned and filed the documents — but often misfiled or lost them. Wyatt says Litton routinely denied modifications because homeowners had not sent their documents when, in fact, they had.

In a process internally referred to as a “denial sweep,” Litton’s computers would automatically generate denial letters for every homeowner who, according to Litton’s records, hadn’t sent their documents. But untold numbers of those documents had been lost on another continent. Wyatt complained about the practice in multiple meetings with senior management, he says, but managers were chiefly worried about reducing the overwhelming backlog.

So that was the issue at hand.  Dimon’s response was priceless.  First of all, he said to forward the information from the constituent to him personally, and he will take care of it.  This is the typical fashion; the banks don’t jump on a foreclosure problem until it gets media attention or attention from a Senator in a hearing.  After that it’s a fire alarm.  Dimon then said, and I quote, “We don’t want you to lose your home because of our paperwork problem.”

How many hundreds of thousands of Americans have lost their homes because of paperwork problems over the last few years?  How many are being thrown out using false documents, back-dated documents, forged documents and robo-signed documents?  How many homeowners have lost their home because of technical screw-ups?  Lost payments?  Misapplied payments?  Payments with 2 cents missing (that’s a real case)?  Banks trying to foreclose on homes with no mortgage?  Banks breaking and entering into the wrong home, one that doesn’t even have a delinquency?   Is the number even countable at this point?

Biloxi Buzz for Thursday

Feds Drop Edwards Case

Justice Department Targets Big Cable

Military Wants More Drones In Latin America


NY AG Schneiderman announces a bill that makes foreclosure robo-signing a felony

ALBANY — After making national headlines during the home foreclosure crisis, Attorney General Eric Schneiderman announced a proposal Wednesday to create a new crime in New York: foreclosure fraud.

The measure would make it a felony for firms to engage in “robo-signing,” a fraudulent practice that allowed companies to rapidly pursue foreclosures, triggering an explosion in cases. In some instances,…

Read on.