Daily Archives: January 24, 2013

Bob Diamond among executives denied anonymity in Barclays Libor trial

Some of Barclays’ most senior bosses, including former chief executives Bob Diamond and John Varley and current head of investment banking Rich Ricci, are among 104 people who unsuccessfully attempted to keep their names private ahead of the UK’s first trial related to the manipulation of Libor.

The names were disclosed on Thursday following a legal challenge led by The Telegraph which saw their attempt to seek anonymity, which was paid for by Barclays, dismissed in a High Court hearing in London.

The group includes a “shortlist” of 24 current and former Barclays staff directly involved in setting libor who were referred to in regulatory settlements which followed the scandal over banks’ fixing of the benchmark interest rate – which led to a £290m fine for the bank.

The list of 104 individuals came to light in a case brought by Guardian Care Homes, which is seeking about £38m in damages from Barclays over interest rate swaps it claims it was mis-sold by the bank.

Guardian Care Homes says that the swap product it was sold was tied to Libor, which it argues was set dishonestly.

Barclays was ordered to give lawyers working for Guardian Care Homes the identities and emails of staff that it passed to regulators investigating the manipulation of the key interest rate.

Read on.

The problem of Lanny Breuer

Firedoglake:

Breuer tried his best to dodge questions about why he violated his promise to Senator Kaufman that he was actually conducting an investigation of Wall Street fraud. Martin Smith, the interviewer, asks:

We spoke to a couple of sources from within the fraud section of the Criminal Division, and through mid-2010 they reported that when it came to Wall Street, there were no investigations going on; there were no subpoenas, no document reviews, no wiretaps.

Breuer responds: “we looked very hard at the types of matters that you’re talking about.” He doesn’t deny that there were no investigations; no subpoenas, no document reviews, no wiretaps. Instead, he tries to shift the subject to his pointless insider trading cases, his Ponzi cases, the Lee Farkas case (the mortgage firm Taylor, Whitaker and Bean), and a few hapless mortgage originator cases, and even a policeman defrauded by some fraud or other. Smith won’t let that pass. Eventually we get to the heart of the problem to Breuer:

But in those cases where we can’t bring a criminal case — and federal criminal cases are hard to bring — I have to prove that you had the specific intent to defraud. I have to prove that the counterparty, the other side of the transaction, relied on your misrepresentation. If we cannot establish that, then we can’t bring a criminal case.

But in reality, in a criminal case, we have to prove beyond a reasonable doubt — not a preponderance, not 51 percent — beyond any reasonable doubt that a crime was committed. And I have to prove not only that you made a false statement but that you intended to commit a crime, and also that the other side of the transaction relied on what you were saying. And frankly, in many of the securitizations and the kinds of transactions we’re talking about, in reality you had very sophisticated counterparties on both sides.

Smith says “You do have plaintiffs who will come forward and say that they relied on the reps and warranties, and they relied on the due diligence claims that were made by the bank.”

Breuer keeps talking, but he can’t worm out of this one. Smith then says:

“We’ve spoken to people inside the Residential Mortgage-Backed Securities Working Group who said that when they began their work in January, February, March of 2012 that they found nothing at the Justice Department in the pipeline, no ongoing cases looking at securitization.”

And lest we forget, Lanny reminds us that these cases have ramifications for the rest of the bank. I don’t know who told Breuer that indicting the investment banking arm of a megabank would destroy the bank, but that’s a piece of idiocy that he claims to believe. This is from a speech he gave last September:

In my conference room, over the years, I have heard sober predictions that a company or bank might fail if we indict, that innocent employees could lose their jobs, that entire industries may be affected, and even that global markets will feel the effects. Sometimes – though, let me stress, not always – these presentations are compelling. In reaching every charging decision, we must take into account the effect of an indictment on innocent employees and shareholders, just as we must take into account the nature of the crimes committed and the pervasiveness of the misconduct. I personally feel that it’s my duty to consider whether individual employees with no responsibility for, or knowledge of, misconduct committed by others in the same company are going to lose their livelihood if we indict the corporation. In large multi-national companies, the jobs of tens of thousands of employees can be at stake. And, in some cases, the health of an industry or the markets are a real factor. Those are the kinds of considerations in white collar crime cases that literally keep me up at night, and which must play a role in responsible enforcement.

COMMITTED: Freddie Mac aims for 75% reduction in short-sale timelines | REwired

COMMITTED: Freddie Mac aims for 75% reduction in short-sale timelines | REwired.

In speaking with a source earlier today, one who is now completely out of the REO investments space, he remarked, “REO is a dying business.”

It’s a development he seems happy with and added, “there is no positive reward [to doing REO], it’s always a regrettable situation.”

It’s a sentiment shared by the industry, which by and large supports short sales as a foreclosure alternative. It’s a process that needs to move faster to gain support — these deals used to be painfully slow only a few years ago. Still, progress is being made, and future projections on timelines are pretty big.

Freddie Mac EVP Tracy Mooney put up a blog today, titled The Shorter Short Sale. In it, she outlines steps the government-sponsored enterprise is taking to streamline short sales.

Morgan Stanley Bankers Sold Off ‘Shitbag’ CDOs With ‘Nuclear’ Capabilities To Clients: Emails

It’s becoming depressingly familiar: Bankers joke openly in emails about a toxic investment they’re creating. Bankers sell said toxic investment to clients while betting against it. Everybody loses money, nobody goes to jail. Rinse, repeat, crash the economy.

The latest round of emails was produced in a lawsuit by a Chinese bank suing Morgan Stanley over a $500 million subprime-mortgage collateralized debt obligation the bank created and marketed as “Stack 2006-1.” ProPublica’s Jesse Eisinger writes that documents in the case show Morgan Stanley bankers had very different ideas about what it should be called.

Those names, according to internal emails from early 2007 unearthed in the case, included “Shitbag,” “Nuclear Holocaust,” “Subprime Meltdown” and “Mike Tyson’s Punchout.”

Rea on.

COMPLAINT | KENTUCKY v. MERSCORP HOLDINGS, INC., MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC. (MERS)

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DoJ “will never cooperate” with Frontline again due to a program that highlighted lack of Wall Street prosecutions.

DoJ “will never cooperate” with Frontline again due to a program that highlighted lack of Wall Street prosecutions.

Link

Florida couple beats Wells Fargo in foreclosure case

Florida couple beats Wells Fargo in foreclosure case

The couple, facing foreclosure, was going through a loan modification when the bank advised them to make a lump sum payment of nearly $7,000 to bring their loan out of default. After the couple made the payment, the bank moved to foreclose on the home a month later, prompting the couple to defend the foreclosure with an attorney, according to a news release.

The end game? The couple gets to keep their home, and continue to pay their original mortgage