Daily Archives: January 20, 2013


Now, there is a new name in the interest scandal: You might have heard of LIBOR, EURIBOR,…… and other -ibor’s. The latest, according to Financial Times is NIBOR of Norway. STIBOR is Sweden’s  contribution to this alphabet soup.

The Norwegian paper Aftenposten reported:


In a letter to the Finanstilsynet [Finance Inspection] the Norwegian CB [said] that in addition to the written correspondence (quoted in extension below) [it] also has received similar disconcerting reports in meetings with foreign banks.


The investigation started after the Norges Bank, the country’s central bank, received  emails from what it calls a “foreign bank” alleging market manipulation, which it then passed on, in August ,to the FSA.

Nordic countries had hitherto been looking at how to reform their interbank rates – on which large volumes of loans to households and companies are based – but the Norwegian probe is the first investigation by a regulator.


Emails obtained by the newspaper, Aftenposten, from an unnamed foreign bank points to the difference between various maturities of Nibor such as three, six and nine months.

Nibor is set by six Nordic banks: DNB, Danske Bank A/S (CPH:DANSKE) (PINK:DNSKY), Handelsbanken, Nordea Bank AB (STO:NDA-SEK)SEB and Swedbank AB (PINK:SWDBY) (STO:SWED-PREF).


Shortly before Christmas, the Norwegian government asked the FSA to look into reforming the way Nibor was calculated. Sweden decided, last week, that the Swedish Bankers’ Association should take over the responsibility for setting the so-called Stibor, going against a trend of taking power away from industry groups. Denmark is also looking to reform its local rate despite finding no evidence of manipulation.

Read on.

Pakistani family brings fraud case against Deutsche Bank

LONDON: Lawyers for Pakistan’s former Minister for Investment and Privatisations Waqar Ahmed Khan have told the Royal Court of Justice’s Commercial Court in London that Deutsche Bank cheated and defrauded their client and members of his family, including his politician parents and siblings.

At the start of the three week long complex litigation trial here, Justice Hamblen heard from the Khan family that Deutsche Bank convinced the family to move their business to Deutsche Bank from UBS by promising them an attractive investment and loan package using the family properties in London as security.

Despite signing the loan agreement, Deutsche unlawfully changed their mind to lend the full amount and then tried to cover up their mistake by sending one of their relationship managers to the family home of the Khans in Lahore to obtain signature of a document allowing the bank to reduce the amount to be drawn down by £11 million. If proven, this amounts not only to a breach of contract by the bank but much more seriously, a potential fraud against their private clients.

At the centre of the dispute is the future ownership of a planned £80 million London “super mansion” at the Bishops Avenue, famously know as billionaires’ row where Arab royal families and business tycoons live, and six luxury apartments worth around £40 million in Knightsbridge, a stone throw away from Harrods shopping centre. The Khan family won planning permission in 2009 to demolish it and replace it with a 46,000sq ft residence, which would have been London’s largest mansion house after Buckingham Palace. But the Khan family claims that Deutsche Bank unlawfully withheld £11 million which was required to carry out the development of the Hampstead mansion.

The result was that the family was unable to carry out its property development plans and lost substantial profits, said to run in to tens of millions of pounds, say the court papers seen by The News.

In addition, the family claim that Deutsche tried to cover up the fraud by engineering a default on the loan agreement using dubious valuations and charging a default rate of interest 3 times the agreed rate. The Deutsche will argue that the property portfolio fell almost by half in value in 2008 and 2010 giving them the right to terminate the loan.

The expert valuations obtained by the Khans assert the overall security value did not fall beneath the required levels. The Khan’s case further alleges the bank behaved badly by breaching their confidence and spreading rumours in the market that the loan was not performing which further prejudiced the perception of value in the market negatively as ‘distressed assets’. Deutsche are also accused of mis-selling the investment products and prematurely liquidating them. In a surprise move shortly before the trial, the Deutsche Bank dropped its claim that five family members, including Senator Waqar and both his parents, are jointly and severally liable to repay a sum in the region of £60 million. The Bank maintains a claim against Senator Gulzar Khan on a guarantee.

This appears to be a landmark case where the attitude of banks and their commitments to their clients is being examined in the wake of the financial crisis. Banks have been accused of abandoning the interest of their clients in place of their corporate profits.

Read on.

Tavis Smiley: Did You Return All The Money From Wells Fargo?

From Eric L. Wattree of Citizens Against Reckless Middle-Class Abuse (CARMA):

Mr. Smiley, do you intend to return the Millions of dollars that you reportedly made from herding poor Black people and Hispanics into the Wells Fargo “Ghetto Loan” scam to the people who lost their money and homes? And Dr. West, In your learned opinion, what is the appropriate course of action for your friend and associate to take, in accordance with the “prophetic tradition?”
A discrimination lawsuit filed by the Department of Justice, and several articles, including one seeded on Newsvine entitle, “Tavis Smiley – “Ghetto Loan” Peddler for Wells Fargo,” closely associates PBS talk show host, Tavis Smiley, with the Wells Fargo Bank scam targeting poor and middle-class Black and Hispanic borrowers. The article quotes Kelvin Boston, and Keith Corbett of the Center for Responsible Lending, as calling Tavis Smiley “the big draw” of the Wells Fargo scam. Specifically, the article states the following:

“Smiley was the keynote speaker, and the big draw, according to [Kelvin] Boston [host of “Moneywise”] and Keith Corbett, executive vice president of the Center for Responsible Lending, who attended two of the seminars. Smiley would charge up the audience — and rattle the Wells Fargo executives in attendance — by launching into a story about how he hated banks, and how they used to refuse to lend him money for his real estate projects in Compton, Calif., and elsewhere… But what appeared on the surface as a way to help black borrowers build wealth was actually just the opposite, according to a little-noticed explanation of the “Wealth Building” seminar strategy, contained in a lawsuit recently filed by Illinois Attorney General Lisa Madigan.
“Wells’ plan for the seminars all along was to target black borrowers for higher-cost subprime mortgages, not for wealth-building, the suit charged. And the seminars were a part of the bank’s overall illegal and discriminatory practice of steering black and Hispanic borrowers into riskier and more expensive loans, the suit said.”
Subsequent to the law suit, Richard Prince reported in The Washington Independent that Smiley issued a statement indicating that he would sever all ties with Wells Fargo until charges that the company steered minorities into higher-rate loans are resolved. The article went on to say,
“Wells Fargo sponsored Smiley’s radio show on Public Radio International, and underwrote the annual C-Span-televised “State of the Black Union” conference that Smiley organizes. Smiley’s foundation also distributed Wells Fargo materials to young people at foundation events, he told Journal-isms.
‘“I cut everything off with Wells Fargo,’ Smiley declared. He said the move cost ‘a lot of money’; he said he did not know how much.”
On July 12, 2012 Charlie Savage reported in the New York Times that Wells Fargo Bank agreed to pay $175 million to settle the discrimination suit which, according to the Department of Justice, targeted over 30,000 Black and Hispanic borrowers for subprime loans with a higher interest rate than for similarly situated White borrowers between 2004 and 2009.
What makes it particularly ironic that Tavis Smiley would be associated with this scheme to target poor and middle-class minorities is that Smiley is the primary promoter of what he calls “The Poverty Tour,” along with his friend and associate, former Princeton professor, Cornel West. During the tour, on their joint radio talk show, and on numerous media appearances, Smiley and West have gained a reputation for being President Obama’s harshest critics, indicating that the president is not sufficiently focused, and “accountable,” to the nation’s poor and minority community.

Here is must see video of former Wells Fargo loan officer who blew the whistle on Wells Fargo steering minorities into subprime loans on Democracy Now show: http://youtu.be/SA0f6jvFE0g

Speeches by Dallas Fed Richard W. Fisher Ending ‘Too Big to Fail’: A Proposal for Reform Before It’s Too Late (With Reference to Patrick Henry, Complexity and Reality)

Everyone and their sister knows that financial institutions deemed too big to fail were at the epicenter of the 2007–09 financial crisis. Previously thought of as islands of safety in a sea of risk, they became the enablers of a financial tsunami. Now that the storm has subsided, we submit that they are a key reason accommodative monetary policy and government policies have failed to adequately affect the economic recovery. Harvey Rosenblum and I first wrote about this in an article published in the Wall Street Journal in September 2009, “The Blob That Ate Monetary Policy.”[3] Put simply, sick banks don’t lend. Sick—seriously undercapitalized—megabanks stopped their lending and capital market activities during the crisis and economic recovery. They brought economic growth to a standstill and spread their sickness to the rest of the banking system.

Congress thought it would address the issue of TBTF through the Dodd–Frank Wall Street Reform and Consumer Protection Act. Preventing TBTF from ever occurring again is in the very preamble of the act. We contend that Dodd–Frank has not done enough to corral TBTF banks and that, on balance, the act has made things worse, not better. We submit that, in the short run, parts of Dodd–Frank have exacerbated weak economic growth by increasing regulatory uncertainty in key sectors of the U.S. economy. It has clearly benefited many lawyers and created new layers of bureaucracy. Despite its good intention, it has been counterproductive, working against solving the core problem it seeks to address.

Read on.

FOMC TRANSCRIPTS: Fed official alleges Geithner may have alerted banks to rate cut


From the Fed Transcripts:

MR. LACKER. If I could just follow up on that, Mr. Chairman.


MR. LACKER. Vice Chairman Geithner, did you say that they are unaware of what we’re considering or what we might be doing with the discount rate?


MR. LACKER. Vice Chairman Geithner, I spoke with Ken Lewis, President and CEO of Bank of America, this afternoon, and he said that he appreciated what Tim Geithner was arranging by way of changes in the discount facility. So my information is different from that.

Oh I see.

Reuters has contacted Mr. Lacker who backed his claim:

Jeffrey Lacker, the head of the Richmond Fed, originally raised the allegation during a Fed conference call in August 2007, and he stuck to his 5-year-old claim against the current U.S. treasury secretary in a statement provided to Reuters on Friday.

“From conversations I had prior to the video conference call on August 16, 2007, I was aware of discussions among a few large banks about borrowing from their discount windows to support the asset backed commercial paper market,” Lacker said in the statement. “My understanding was that (New York Fed) President Geithner had discussed a reduction in the discount rate with these banks in connection with these initiatives.”


Borrowers facing default on a loan can try to prove that the lender orally promised them an extensionthat didn’t appear in the written contract, the state Supreme Court ruled Monday while overturning a 1935 decision that restricted evidence of fraud in contract disputes.

A lawyer for the borrowers, a Fresno County couple, called the unanimous ruling a victory for consumers. The lender’s lawyer said the court had eliminated important protections for written contracts.

The couple, Lance and Pamela Workman, fell behind on repaying a $776,000 loan from the Fresno-Madera Production Credit Association and signed an agreement in March 2007 pledging eight properties as security in return for a three-month extension.

The lender sought foreclosure after the Workmans failed to meet the three-month deadline. But the couple said the credit association’s vice president had told them two weeks before the agreement was signed, and repeated at the time of signing, that they would actually have two years to make the payments and would have to put up only two ranches as security.

The Workmans later repaid the loan – selling the eight properties at a loss, according to their lawyer, Steven Paganetti – and then sued the lender for fraud for allegedly misleading them about the terms of the loan.

More here…

Copy of the ruling below…



Why Did the OCC Let HSBC Off For $249 Million?

By Lynn E. Szymoniak, Esq., January 19, 2013

To judge the reasonableness of the most recent foreclosure fraud settlement announced by the OCC, it is important to consider HSBC’s role in foreclosure fraud.

HSBC Bank USA, N.A. acted as Trustee for several hundred mortgage-backed trusts. This means that ultimately the mortgage servicer was paid by and answerable to HSBC as Trustee. HSBC served as Trustee for the following series of trusts, among others:

Ace Securities Corp. Home Loan Trusts
Deutsche Alt-A and Alt-B Securities Trusts
Fremont Home Loan Trusts
GSAA Home Equity Trusts
Nomura Asset Acceptance Corporation Trusts
People’s Choice Home Loan Trusts
Renaissance Equity Loan Trusts and
SG Mortgage Securities Trusts

These trusts had very high default rates. In South Florida, HSBC as Trustee filed thousands of foreclosure cases from 2008 – 2012.

A few weeks before or a few weeks after filing these cases, the mortgage servicers for these trusts filed Mortgage Assignments in the county official records so that these trusts could prove ownership of the mortgages they were seeking to foreclose. In most cases, the bank lawyers filed a related pleading in the foreclosure case, most often titled “Notice of Filing Original Note and Mortgage Assignment.”

In all but a handful of cases, however, these Mortgage Assignments were not part of the mortgage documentsobtained and maintained by the trusts. These were not “original” Mortgage Assignments. The vast majority of these trusts closed in 2004, 2005 and 2006. The mortgage assignments should have been executed in those years (or ownership transferred to the trusts on the MERS system during those years).

The vast majority of the assignments filed in the county official records and in the related foreclosure cases were not prepared and executed until well after 2008. They were not signed by employees of the original lenders, but by employees of the mortgage servicers for the trust or employees of the law firms handling the foreclosures.

Scott Anderson of Ocwen Loan Servicing was one of the most frequent signers. Astute King’s County, New York, judges have already identified Scott Anderson as a frequent signer of questionable mortgage documents. He has already admitted that he authorized others to sign his name on witnessed and notarized documents.

Cheryl Samons, the former officer manager for the law offices of David Stern, was also one of the most frequent signers. Sterns’ offices were closed down after Andy Kroll writing in Mother Jones, among others exposed the Stern firm for its shoddy and fraudulent practices.

Linda Green, Tywanna Thomas and other DocX employees were also frequent signers. 60 Minutes exposed the fraudulent practices at DocX in an award-winning segment. Lender Processing Services owned DocX. The former president of DocX and a senior officer of Lender Processing Services, Lorraine O’Reilly Brown, is facing sentencing after pleading guilty to conspiracy to commit mail fraud relating to these
mortgage document practices. Employees of Lender Processing Services office in Minnesota also regularly prepared and signed these documents for HSBC trusts.

Denise Bailey and Marti Noriega from Litton Loan Servicing signed hundreds of these documents. Goldman Sachs owned Litton so Bailey and Noriega’s names show up in particular on documents for the GSAA
(Goldman Sachs Alternative A) trusts. (Goldman Sachs sold Litton to Ocwen in 2011.)

In total, South Florida mortgages worth several billion dollars were transferred to HSBC trusts for foreclosurefrom 2008 to 2012. These documents were not in any way limited to South Florida. These same documents, signed by Scott Anderson, Linda Green, Marti Noriega, etc. were used to foreclose nationwide to transfer at least $10 billion of mortgages to the HSBC trusts.

So why did the OCC agree to let HSBC off the hook for these multibillion dollar foreclosure fraud acts for $249 million? Why would the OCC settle without requiring HSBC to notify homeowners, courts and county recorders that fraudulent assignments to trusts were filed?

One plausible explanation for this settlement was that the OCC was seeking to be consistent with its past enforcement actions against banks for foreclosure fraud.


Now on a side note: The “Independent” Reviewer for HSBC was Ernst & Young. Ernst & Young is a registered lobbyist for HSBC….http://soprweb.senate.gov/index.cfm?event=getFilingDetails&filingID=567AF796-8545-4F6E-9779-6E0474C853E4