Daily Archives: September 15, 2012

Libor-related litigation: Update and forecast

Thomson Reuters News & Insight.


By Joseph B. Crace and David Killion 

(Joseph B. Crace is an attorney at Bass, Berry & Sims PLC, concentrating his practice on corporate and securities litigation, shareholder litigation and general commercial disputes.  David Killion is an attorney at Bass, Berry & Sims PLC, focusing his practice on corporate and securities litigation, including class action defense and officer and director liability, as well as administrative proceedings on behalf of utility industry clients.)    

Litigation over the alleged manipulation of the London Interbank Offered Rate (“Libor”) is continuing to develop at a rapid pace.1 While the majority of litigation prior to this year had focused on possible antitrust claims against the member banks that set Libor, this year has seen the filing of federal securities class actions, derivative cases, and may soon include criminal charges as well.  In fact, this flood of activity and the potential total damages has prompted some commentators to speculate as to whether Libor-related litigation may be the new asbestos.  Below is a synopsis of the litigation landscape to date as well as some brief thoughts regarding other potential developments in Libor-related litigation.

Wall Street Rules Applied to REMIC Classification

Thomson Reuters News & Insight.


ReconTrust is not a qualified foreclosure trustee under Virginia law

Bryllaw website:

ReconTrust is a wholly owned subsidiary of Bank of America, and its function is to foreclose on homes while pretending that a neutral third party and not BOA is doing the foreclosing.

As some may have heard, ReconTrust has been booted out of Washington State as a purported foreclosure trustee.  Now it is time to do the same in Virginia.  Virginia law imposes certain clear requirements on foreclosure trustees before such trustees can be appointed and before they can act under a deed of trust.  Some of the Virginia law’s requirements (including those pertaining to foreclosure trustees) can be found here.  ReconTrust does not meet these requirements and instead relies on “federal preemption” because it is registered with the OCC as a national “bank.”  Nonetheless, federal preemption cannot and should not save ReconTrust.  Rather, ReconTrust must be held accountable for disregarding Virginia law and flouting Virginia’s sovereignty.

Last week, we successfully stopped a Fairfax foreclosure contemplated by ReconTrust based on ReconTrust’s failure to qualify as a substitute trustee under Virginia Code.

If you are a homeowner in Virginia facing foreclosure from ReconTrust, you may well be able to bring your foreclosure to a screeching halt.  Contact our office to determine if we can help you with this.

Wait, Why Is J.P. Morgan Chase Mining Gold In Afghanistan?

In 1998, President Bill Clinton signed the Gramm-Leach-Billey Act. Heralded as the masterpiece of the New Economy, the law stripped away New Deal provisions enumerated in the Glass-Steagall Act and allowed commercial banks to invade the investment sector. Alas, we had the newly created Citigroup, Goldman Sachs and the rest of Wall Street in the American household; years later, this would come to shotgun-spray Lady Liberty back in the face.

However, neither the Gramm-Leach-Bailey nor the Glass-Steagall Acts said anything about banks entering the energy sector; hence why we have gas prices fumbling on the back of a bunch of speculating stock traders. But now, a new chapter has been written in the history of financial energy prop-ups: in their recent cover story on Afghanistan’s trillion-dollar raw material market, the New York Times briefly mentioned that ”an investment consortium arranged by JP Morgan Chase is mining gold.” Think the 1849 Gold Rush in Tora Bora’s backyard, led by the same guys that brought you derivatives.

Like the Iraqi invasion in 2003—in which the U.S. government encouraged war profiteers like Halliburton to basically rebuild Mesopotamia—the bloody Afghanistan mining fields are being chopped and screwed by the Department of Defense and sold to the highest bidder. And that’s the case for the Wall Street titan: in 2010, the DOD’s Task Force for Business and Stability Operations (TFBSO, for brevity issues) bragged it landed its “first Western investment” with a $50 million certificate for JP Morgan Chase to start “drilling and production in northern Afghanistan’s Baghlan Province.”

Read more: Wait, Why Is J.P. Morgan Chase Mining Gold In Afghanistan? · NYU Local http://nyulocal.com/national/2012/09/14/wait-why-is-j-p-morgan-chase-mining-gold-in-afghanistan/#ixzz26Zm1foeV
Under Creative Commons License: Attribution

JPMorgan Chase faces money laundering probe: source

(Reuters) – JPMorgan Chase & Co’s compliance with U.S. anti-money laundering laws is being reviewed by a banking regulator, a source said, making the largest U.S. bank the latest target of a wide investigation of how banks prevent transactions involving drug money and sanctioned countries.

The Office of the Comptroller of the Currency, an independent branch within the Treasury Department, is examining JPMorgan’s systems that are designed to monitor and filter such transactions, said the source, who is familiar with the situation.

The exact scope of the inquiry and the size of potential liabilities for the bank could not be learned.

JPMorgan spokesman Joseph Evangelisti declined to comment on Saturday.

Read on.

FHFA OIG | Debt Collectors with a GUN – “We’re not just going to demand repayment, we’re going to lock people up.”

Strategic defaulters, beware. The feds are coming for you. And they are not happy.

Not the FBI. The Office of the Inspector General at the Federal Housing Finance Agency.

The OIG may not have the same fearsome “G-man” reputation as its better-known counterparts at the Federal Bureau of Investigation, but it is every bit as much a law enforcement agency, with the same powers to search, seize and arrest. Special OIG agents are even authorized to carry firearms.

The OIG’s mission is to seek administrative sanctions, civil recoveries and criminal prosecutions against anyone who abuses the FHFA’s programs. And it is pursuing its calling with passion, if not vengeance.

Read on.

Chicago Man Charged with Hate Crime for Allegedly Attacking Man Hired to Maintain Foreclosed Home

Police say victim had been hired by a bank to maintain a neighbor’s foreclosed home and was attacked while at house

A Tinley Park man was charged with a felony hate crime for allegedly attacking a man who had been hired by a bank to maintain a neighbor’s foreclosed home earlier this month.

Joseph Berndt, 47, allegedly shouted racial slurs at the 51-year-old African-American man as he was working outside a house in the 6200 block of West 179th Street, then threw a beer can and a brick at the man, chased him through the yard while brandishing a pipe and attempted to strangle him, prosecutors said.

The victim said Berndt approached him as he was checking the gas and electric meters at the house, which he had been hired to maintain and had visited several times during the week prior, according to a Tinley Park Police report on the Sept. 1 incident.

“Hey, what are you doing? You are probably breaking in you (expletive),” Berndt said, the report states.

The victim explained he had permission to be at the house, and resumed working in the yard. Berndt left his house, which was adjacent to the foreclosed home, threw a beer can at the man and said “I’m gonna kill your (expletive),” the report states. The man ran behind a fence, but said Berndt threw a “large landscaping brick at him.”

Berndt than allegedly began swinging a large pipe at the victim, who took off running through the yard. When the man slipped and fell, Berndt allegedly jumped on his back and placed his hands around the man’s throat, repeating “I’m gonna kill your (expletive),” the report states. After a struggle, the man was able to free himself and again ran from Berndt, who spent a few minutes catching his breath and returned home.

Rest here…

Washington state highest court ruling deals blow to U.S. bank mortgage system, ruled that a company that has foreclosed on millions of mortgages nationwide can be sued for fraud

(Reuters) – The highest court in the state of Washington recently ruled that a company that has foreclosed on millions of mortgages nationwide can be sued for fraud, a decision that could cause a new round of trouble for the nation’s banks.

The ruling is one of the first to allow consumers to seek damages from Mortgage Electronic Registration Systems, a company set up by the nation’s major banks, if they can prove they were harmed.

Legal experts said last month’s decision from the Washington Supreme Court could become a precedent for courts in other states. The case also endorsed the view of other state courts that MERS does not have the legal authority to foreclose on a home.

“This is a body blow,” said consumer law attorney Ira Rheingold. “Ultimately the MERS business model cannot work and should not work and needs to be changed.

Read on.

Lanny Breuer Admits That Economists Have Convinced Him Not to Indict Corporations


I’ve become increasingly convinced that DOJ’s head of Criminal Division, Lanny Breuer is the rotting cancer at the heart of a thoroughly discredited DOJ. Which is why I’m not surprised to see this speech he gave at the NYC Bar Association selling the “benefits” of Deferred Prosecution Agreements.  (h/t Main Justice) He spends a lot of his speech claiming DPAs result in accountability.

And, over the last decade, DPAs have become a mainstay of white collar criminal law enforcement.

The result has been, unequivocally, far greater accountability for corporate wrongdoing – and a sea change in corporate compliance efforts. Companies now know that avoiding the disaster scenario of an indictment does not mean an escape from accountability. They know that they will be answerable even for conduct that in years past would have resulted in a declination. Companies also realize that if they want to avoid pleading guilty, or to convince us to forego bringing a case altogether, they must prove to us that they are serious about compliance. Our prosecutors are sophisticated. They know the difference between a real compliance program and a make-believe one. They know the difference between actual cooperation with a government investigation and make-believe cooperation. And they know the difference between a rogue employee and a rotten corporation.