Daily Archives: June 15, 2012

JPMorgan Sued by Louisiana Police Pension Plan Over Loss

JPMorgan Chase & Co. (JPM) was sued by a Louisiana police pension fund for alleged securities fraud tied to a trading loss of at least $2 billion.

The Louisiana Municipal Police Employees Retirement System claimed the biggest U.S. bank and top officials including Chief Executive Officer Jamie Dimon misled investors about its risk management and financial condition from February 2010 to May 2012.

“Defendants made false and misleading statements and concealed material information relating to the company’s trading practices, hedging of risk, risk management, and exposure to risk of loss,” according to the complaint filed today in U.S. District Court in Manhattan.

The police pension plan is seeking class-action, or group, status on behalf of all who bought JPMorgan Chase common stock from February 2010 to May 2012, a number which may be in the tens of thousands, according to the complaint. It is also seeking unspecified compensatory and punitive damages.

Joseph Evangelisti, a spokesman for the New York-based bank, declined to comment on the allegations.

 

Read on.

Should we just put an * by our Foreclosure Era?

From Chip Parker, Jacksonville Bankruptcy Attorney:

In foreclosure cases, lawyers who swore to uphold the United States Constitution and to never misrepresent facts and evidence to our trial courts lie with regularity and purpose. There is no question that most lawyers handling foreclosure cases on behalf of mortgage servicers have routinely misrepresent critical facts to judges and have presented fraudulent documents in the process of extracting a citizen from his home. I have personally seen dozens of examples of this, and I have heard of hundreds more. The Florida Bar has never disciplined one foreclosure mill lawyer for manufacturing and submitting knowingly fraudulent evidence, but The Bar DID investigate me and other defense lawyers for talking about it to the press.

And there is also no question that judges, whether they be retired senior judges or duly elected officials, routinely ignore fundamental rule of law in foreclosure cases. Our Courts have set up an alternate reality in foreclosure cases, focusing on homeowners missed payments rather than restoring confidence that mortgage servicers and banks will be held to the same standard as every other plaintiff who brings a lawsuit. I have personally seen dozens of examples of this, and I have heard of hundreds more. For instance, Senior Judge Sandra Taylor was admonished for conducting illegal communications with the bank’s lawyers outside the presence of the defendant, but in the end, Judge Taylor was never disciplined.

We all know its there. The 5 largest banks admitted to this fraud when they signed off on their $25B sweetheart deal with the Attorneys General from throughout the USA. Plus, there are only pockets of resistance at the appellate court level, where some appellate judges are reversing only the most obvious examples of trial court misunderstanding of basic law.

All in all, the truth does not matter because we are all but cattle to the banking industry. Just look at Jamie Dimon’s testimony before the Senate Banking Committee. The panel is comprised of the biggest beneficiaries of Dimon’s campaign contributions, and it shows. These senators were practically apologizing for “our government’s role” in JPMorgan’s estimated $7 Billion loss in the risky hedge funds market. “We’re sorry, Mr. Dimon. Shame on us.”

According to the media wonks, we’re all apparently tired of hearing about it. Two years ago, CBS News interviewed me about a foreclosure case, and the executive producer told me off camera, “The Country has foreclosure fatigue.” TWO YEARS AGO!!

Heck, I get it. I know I have foreclosure fatigue. I’m ready to put the foreclosure crisis behind me and move on to our next national undoing: student loans! Sadly, foreclosure fatigue does not translate into foreclosure prevention or foreclosure cure.

We cannot bury this crisis in the litter box of history until we recognize how foreclosures have changed the way most Americans look at our judges, our political leaders and our banking system – all of whom have justifiably lost respect from the rest of us.

 

Syncora Lawyers Could Clear Big Legal Hurdle making JP Morgan pay Billions in Putback Suits

The mortgage crisis litigation team at Paterson Belknap Taylor & Webb had their big RMBS putback hearing yesterday in New York Federal Court. It centered on one of the first monolines, Syncora, to highlight the alleged massive securities fraud Bear Stearns and EMC were engaged in when they sold billions of residential mortgage backed securities to Wall Street investors at the beginning of the financial crisis. Syncora’s lawyers at PBWT were asking for the court to allow them more damages if they can prove there was a material adverse effect in their breach of contract case against the Bear Stearns companies now owned by JP Morgan.

At the center of this highly watched legal debate is whether RMBS investors will have to do the costly legwork to prove exactly which loans were losses and how that loss was caused by a breach of contract. In the case of the $600mn-ish security Syncora is arguing over, that equates to digging through around 10,000 loans – which would delay discovery and be a huge financial burden to the a smaller sized monoline. So instead, PBWT’s Philip Forlenza and Erik Haas are arguing if they can prove the whole Bear Stearns RMBS sausage machine was so corrupt and irresponsible the entire due dilly process was knowingly broken and as a result the humpty dumpty of a RMBS they bought can’t be put back together again then the whole damn securities should be repurchased. In legal terms that means they don’t want the judge to make them prove loss causation for each loan and they want a return of all the money they paid out to investors when the RMBS failed.

JP Morgan’s outside counsel Bob Sacks of Sullivan Cromwell hardly challenged the PBWT lawyer’s legal theory about loss causation and instead led a condescending oral argument ‘telling’ Judge Crotty this isn’t an issue to decide til trial. In other words, it was just another kick the can down the road game by JP Morgan because, as I pointed out a few weeks ago, they don’t want to up their RMBS putback legal reserves and take a hit to regulatory capital levels. Sacks, represented the stereotypical, puffy-chested, arrogant Wall Street lawyer Sullivan Cromwell is known to breed, but I was surprised to see him talk down to the federal judge and insult his seasoned experience with lines like, “Your honor how can you decide on this when they haven’t even presented any evidence yet.” Judge Crotty politely reminded Sacks he does have equity power to make this decision and asked once again if JPM/Bear/EMC’s argument is still the RMBS failed because of the financial crisis and not because of a breach of reps and warranties. And Sacks boldly answered, “YES!”

The notion that no evidence has been presented yet in this case is absurd considering PBWT has brought in over 30 whistleblowers and shown internal emails/memos from Bear Stearns telling its staff to not waste money on loan level due diligence. The whole Sullivan and Cromwell oral argument read like an attempt to deflect from the real legal issues on the table because lawyers like Sacks know how serious this is for JP Morgan’s balance sheet if the judge decides in Syncora’s favor. I emailed Sacks after the hearing asking if he’s usually this arrogant when speaking with a Federal judge but surprise surprise I didn’t get a comment.

Read on.

Biloxi Buzz for Friday

Pentagon To Formally Recognize Gay Troops

Violence Continues To Plague For-Profit Youth Prison

Walmart ‘Spy’ Fired For Posing As Reporter

Gay Teen’s Heartbreaking Suicide Note

Georgia now nation’s worst in foreclosure: What it portends

Ga. now nation’s worst in foreclosure: What it portends.

Georgia, long the nation’s leader in the number of bank failures, is now the epicenter of its foreclosure crisis as well.

According to the latest numbers from RealtyTrak, one in every 300 housing units in the state is going through foreclosure, more than double the national average of one in every 639 housing units.

“Georgia’s foreclosure rate leapfrogged the foreclosure rates in Arizona, Florida, California and Nevada,” RealtyTrak reports, jumping 33 percent in May over April to become the nation’s highest.

That ought to be compelling evidence that the housing market in this state has been permanently altered. The previous growth model of suburban and ex-urban development — cheap open land served by long highways converted to large-lot housing — is over and is not coming back. But I don’t see that realization informing much of our public debate over transportation planning, zoning and related issues.

A look at the county-by-county foreclosure rates (see interactive map below) drives home the enormity of that change. Metro Atlanta’s inner-core counties have certainly been hit hard by foreclosures. In Fulton, one in 272 housing units was in foreclosure in May; in DeKalb it was even worse, with one in 234 units under foreclosure. In Cobb, it was one in 337, better than the Georgia average but twice as bad as the national average.

FHFA Draft Strategic Plan 2013-2017

Experian Debuts New Credit Score, Helps Bring ‘Underbanked’ Into Lending Fold

The poorest consumers, currently living off the financial grid, may soon be pulled back onto it in an unexpected way.

Experian, a data collection and credit reporting bureau, launched its new credit score, Extended View, on Wednesday. It claims that it could bring as many as 64 million American consumers who don’t have credit scores into the lending fold.

Extended View takes into account a wide variety of information not included in a traditional credit score. That includes everything from payday loan repayment history to rental payment history, and even takes a deep dive into public records — taking into account, for example, missed child support payments.

The Extended View score will be based on a scale similar to VantageScore, which has a range of 401 to 900.

Fifteen lenders are currently considering using the score, Steven Wagner, president of Experian Consumer Information Services, told The Huffington Post. He would not identify which companies they were, but said that among them were both small and large lenders. The company said the score could be used by banks, credit unions and auto lenders, as well as phone and utility providers.

Read on.