Daily Archives: July 25, 2012

Federal Reserve Audit Bill Overwhelmingly Passes The House

Deadly Clear

Hot news! Now it’s time to call and email your U.S. Senators!
Huffington Post reports

WASHINGTON — In a rare moment of bipartisanship, the House overwhelmingly passed a bill by Rep. Ron Paul (R-Texas) to audit the Federal Reserve.

The bill, which has 270 co-sponsors, passed 327 to 98. All but one Republican voted for it, along with 89 Democrats.

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Legal precedents behind denial of punitive damages to Fannie Mae whistleblower


A former Fannie Mae employee who filed a whistleblower case against the government-sponsored enterprise is highlighting some of the difficulties plaintiffs face when dealing with agencies under conservatorship.

The case also shows the Federal Housing Finance Agency utilizing its statutory powers to avoid penalties and large pay-outs that could adversely effect U.S. taxpayers.

The former employee, Caroline Herron, lost her most recent push for the inclusion of punitive damage claims in a pending lawsuit against Fannie.

While the case is not precedent in most jurisdictions, it does illustrate some of the legal battles ahead for counties and other parties that sue GSEs in the future. These lawsuits may prove difficult given the fact that it’s difficult to ascertain when the GSEs will be classified as government entities with certain immunities or as private corporations.

In the original suit, former Fannie employee Caroline Herron sued the GSE, saying she was wrongfully terminated after bringing attention to allegations that Fannie “acted inappropriately” when assisting the Treasury with home loan modifications. She also accused the GSE of wasting public funds and violating terms of a Treasury contract, according to court records.

In her initial complaint, Herron, a former Fannie Mae vice president and a consultant to the GSE after it entered conservatorship, argued if Fannie is a public entity then she should be able to bring a Constitutional First Amendment violation claim against the mortgage giant in its government capacity.

However, the United States District Court for the District of Columbia threw out the First Amendment claim against Fannie earlier this year, saying the GSE functions as a private entity and even though the Federal Housing Finance Agency took over as conservator, it essentially stepped into the GSE’s role as a private institution.

This legal analysis, which gave Fannie Mae private status, barred the Constitutional claims.

However, Herron still has several claims of wrongful discharge, civil conspiracy and tortious interference pending against Fannie Mae in the same case.

The Federal Housing Finance Agency as conservator filed its own motion with the court, asking them to dismiss Herron’s claims for punitive damages to be included in the remaining suit. It’s here where the classification of the GSEs turns, creating much confusion on how courts and attorneys view the agencies.


Entertaining vs. Educating

Analyst Bove Unimpressed With Wells Fargo’s Service

Being a famous bank analyst apparently doesn’t get you any perks at your neighborhood bank.

Dick Bove, a noted analyst at Rochdale Research, is a long-time Wachovia and Wells Fargo customer. Right now, he’s none too pleased with his bank’s service.

“If I were to rate the bank, again based on one person’s anecdotal experience, it would be rated as unacceptable,” Bove writes in a research report detailing several personal experiences at the bank.

But, being a financial analyst, Bove isn’t saying the poor service means anything for the bank financially. It doesn’t, he says. And he continues to believe Wells Fargo is well managed.

A Wells Fargo spokeswoman said the bank doesn’t comment on analyst reports, but that in thousands of surveys it carries out each month, nearly 80% of customers indicated they are “extremely satisfied” during the merger. The bank also scored No. 1 in an industry survey by the American Customer Satisfaction Index in each of the previous three years.

Read on.

Blacks and Latinos Steered to Government-Backed Loans: Report

Black and Latino borrowers received government-backed loans insured by the Federal Housing Administration or guaranteed by the Department of Veterans Affairs significantly more often than white borrowers, raising concerns about redlining, a new study has found.

The 29-page report, “Paying More for the American Dream,” which the California Reinvestment Coalition released Tuesday, used Home Mortgage Disclosure Act data to analyze lending patterns in seven cities: Boston, Charlotte, Chicago, Cleveland, Los Angeles, New York City and Rochester, N.Y.

The report found a pattern of two-tiered lending in which borrowers in communities of color received more government-backed loans and disproportionately fewer conventional mortgages than white borrowers. Eighty-five percent of black borrowers in Cleveland received FHA or VA loans compared to 47% of white borrowers.

Read on.

TARP Funds For Housing Relief 90 Percent Unspent, Auditor Says

Distressed homeowners have received only 10 percent of nearly $46 billion in federal aid since the money was allocated in 2009 under the Troubled Asset Relief Program, a U.S. auditor’s report said today.

Spending on one of President Obama’s main efforts to avert foreclosures, the Home Affordable Modification Program, totaled $3 billion — about 10 percent of the $22.7 billion originally obligated at the end of June, the Special Inspector General for the TARP program said in a quarterly report to Congress. HAMP pays lenders to restructure loans so borrowers can afford them.

Read on.

Biloxi Buzz for Tuesday

U.S. General Allegedly Suppressed Afghan Hospital Abuse Probe


OOPS: House GOP Bill Mistakes ‘Employment’ For ‘Unemployment’


Geithner Silent On Known Libor-Rigging In 2008, Sources Say