Daily Archives: October 12, 2012

Congress illegally withheld cost-of-living salary raises from federal judges in six different years: Federal Circuit ruled

(CN) – Congress illegally withheld cost-of-living salary raises from federal judges in six different years, the the Federal Circuit ruled, overturning 11-year-old precedent.
In 2009, six judges led by Peter Beer filed a class action against the United States for failing to pay certain cost-of-living adjustments in violation of the Ethics Reform Act of 1989 and the compensation clause of the U.S. Constitution.
The act requires automatic adjustment of judicial salaries each year based on the Employment Cost Index. The raise can be withheld only if severe economic conditions make the salary adjustment “inappropriate.”
Congress withheld the salary adjustments for federal judges in 2007 and 2010, citing a lack of funds, but other federal employees received the cost-of-living adjustment.
Judges had challenged these actions before, but the Federal Circuit had upheld the withdrawal of promised cost-of-living adjustments in 2001.
That case, Williams v. United States, concerned unadjusted judicial wages for 1995, 1996, 1997 and 1999. When the court decided it Williams, it relied on the Supreme Court’s 1980 decision in United States v. Will.

Read on.

Bloomberg: OCC forced JP Morgan Chase, Wells Fargo to write down HELOCs

Bloomberg correspondents Dawn Kopecki and Michael J. Moore are reporting JP Morgan ($41.62 -0.48%) and Wells Fargo ($34.25 -0.93%) were forced by the Office of the Comptroller of the Currency to write down home equity loans.

The information is available in today’s earnings reports.

According to the article, JPMorgan wrote off $825 million in loans in the third quarter, 87% of which were HELOCs.

“The guidance by the Office of the Comptroller of the Currency led Wells Fargo to increase net loan charge-offs by $567 million, which was covered by reserves,” they also write.

JPMorgan’s nonaccrual loans increased $1.7 billion because of the decision. Wells Fargo moved $1.4 billion in loans to nonaccrual status, including $1 billion in first mortgages and $262 million in junior liens, according to theBloomberg article.

SEC Watchdog Finds SEC’s Own Recordkeeping in Disarray

The Securities and Exchange Commission (SEC)—a federal regulator that polices recordkeeping on Wall Street, among other things—has failed to properly handle its own records, according to a recent audit by the agency’s inspector general.

The audit report, issued a year after the SEC came under fire for improperly purging investigative files, describes a records system in disarray.

Many SEC staffers are still unsure about when to preserve records and when to dispose of them, the inspector general found. As a result, some SEC offices may have improperly destroyed documents, while others are sitting on piles of records that could have been safely discarded.

In December 2011, President Obama issued a memo calling proper records management the “backbone of open Government.” If agencies fail to update their records policies, “the surge in information could overwhelm agency systems,” the memo states.

It appears the SEC does not always practice what the President preached.

Read on.

Judge disqualifies Covington from Minnesota’s suit against 3M

Oct 11 (Reuters) – A state judge in Minneapolis ruled Thursday that Covington & Burling cannot represent the state of Minnesota in an environmental lawsuit against the law firm’s onetime client 3M Co.

Hennepin County District Court Judge Robert Blaeser disqualified Covington from the case due to the firm’s prior work for 3M on regulatory matters involving fluorochemical products. The Minnesota lawsuit had likewise involved fluorochemicals, creating a conflict, the judge said.

“Covington has exhibited a conscious disregard for its duties of confidentiality, candor, full disclosure, and loyalty to 3M by failing to raise its conflicts arising from the fact that it previously advised and represented 3M on (fluorochemical) matters,” Blaeser wrote.

The ruling followed five months of legal bickering between Covington, the prestigious Washington law firm, and 3M, the Fortune 500 company behind Scotch Tape and Post-it products.

A separate lawsuit by 3M against Covington arising out of the Minnesota case is pending in Minnesota state court.

Read on.


Open thread for Friday

CNBC on Securitization Fraud – Who Really Owns Your Mortgage?


From CNBC video. Click here. http://youtu.be/nJnzW6_4KYQ

The OCC Sham Foreclosure Reviews: Banks Doing Most of the Reviewing Themselves

Here is what Paul Kiel of Propublica is finding on Bank of America’s foreclosure review process:

…a raft of evidence — internal Bank of America memos and emails obtained by ProPublica, interviews with two bank staff members who have worked on the review, and little-noticed documents released late last year by a federal banking regulator — throw the independence of the review into serious doubt. Together, they indicate that Bank of America — the financial giant with the largest number of homeowners eligible for the program — is performing much of the work itself.

The ultimate decision as to whether and how much a homeowner will be compensated is not made by Bank of America, the evidence shows, but is based largely on work that the bank itself performs. One current employee called that crucial judgment “only a matter of double checking” the bank’s work.

Moreover, the bank gets a chance to challenge that key decision before it becomes final — an opportunity not given to homeowners.

And of course, Bank of America is denying this. You be the judge.

One-sixth of Bank of America employees work on troubled mortgages

How’s this for a slice of the scale of the nation’s mortgage mess: 1 in 6 of Bank of America employees (that’s 42,000 people) spend their days servicing the banking giant’s problem loans, Reuters reports.

BofA (NYSE: BAC) has seen operating costs in its unit that services problem mortgages rise 29 percent from a year ago, and the bank added 7,000 employees to the unit, called Legacy Asset Servicing, Reuters reports.

Read on.