Daily Archives: October 6, 2013


How the banks’ big foreclosure settlement cheated consumers

How the banks’ big foreclosure settlement cheated consumers

Remember that settlement? Trumpeted by the regulators as a huge victory for the consumer, it required five big banks to pay $25 billion and adhere to a long list of proper foreclosure practices. The improper bank practices that were supposed to be wiped out included submitting forged or fraudulent documents, “robo-signing” documents the “signers” hadn’t read, and banks’ foreclosing on homeowners at the same time they were negotiating with them for loan modifications. The banks were Wells, Bank of AmericaJPMorgan ChaseCitibank and Ally Financial (formerly GMAC).

Schneiderman, who was not a great fan of the settlement to begin with, alleges that Wells has failed to meet the mandated standards. He says the bank is still saddling applicants for mortgage relief withnitpicking and redundant document demands and missing deadlines, among other abuses. (Wells says it’s meeting its responsibilities.) Schneiderman says Bank of America was also guilty of some of the same abuses but that bank reached an agreement him to straighten up, so it averted legal action.

The foreclosure settlement was always a bank bailout in disguise. Of the headline number, $25 billion, only $5 billion of that was cash coming out of the banks’ pockets. The rest was “credits” they received for modifying underwater mortgage loans; since a loan modification that staves off a foreclosure almost always saves the lender money in the long term, the banks were actually getting credit for doing something that was in their interest anyway.

True, homeowners who had been abused in the foreclosure process got compensated — an average of $2,000 each for a total of 750,000 claimants. As the financial commentator Susan Webber, writing under her pseudonym Yves Smith, observed at the time: “We’ve now set a price for forgeries and fabricating documents. It’s $2,000 per loan.”


Citigroup Fined $30 million for Leaking to Hedge Funds

Citigroup Fined $30 million for Leaking to Hedge Funds

October 03, 2013

Yesterday, Massachusetts Secretary of State William Galvin demonstrated his interest in competing with Preet Bharara for the title of Sheriff of Wall Street by exacting a $30 million penalty from Citigroup (C). The case mirrors the widespread insider trading crackdown that’s been rattling hedge fund nerves across New York.

“Just a year ago, with Facebook (FB), we fined them $2 million, when they were playing the same game,” Galvin told the Boston Globe. When certain investors have inside information about a company, he said, it puts other investors at a disadvantage, similar to ”going to the supermarket and having a weighted scale.”

According to the settlement, a Citigroup analyst in Taiwan named Kevin Chang offered research, which pointed to lower shipments of the iPhone 5, to a select group of clients one day before the report was available to the rest of the market. The clients who got the advance research allegedly were T. Rowe Price (TROW) and hedge funds Citadel, GLG Partners, and SAC Capital.


Flyers coach Peter Laviolette suing Bank of America for fraud

Flyers coach Peter Laviolette suing Bank of America for fraud

The hot seat is the least of Peter Laviolette’s problems right now, as the Philadelphia Inquirer reports the Flyers coach is suing Bank of America for fraud.

Laviolette is seeking $3 million in damages, claiming Bank of America convinced him to mortgage his three properties and invest in funds that would, according to a 12-page brochure, increase his family’s assets by $14 million over 30 years. Laviolette made the investments when he was still coaching the Carolina Hurricanes in 2006.

The Laviolettes allege that they soon discovered the projections were based on “artificially inflated values” and are seeking a recession of their loans on the properties.


JPMorgan Chase & Co : Citi Rejects $2 Billion ‘Provisional’ Payout in Lehman Fight

JPMorgan Chase & Co : Citi Rejects $2 Billion ‘Provisional’ Payout in Lehman Fight

Citigroup Inc. (C) is firing back at Lehman Brothers Holdings Inc.’s “unprecedented” bid to cut off its right to hundreds of millions of dollars in interest payments tied to Citi’s $3 billion bankruptcy claim against the failed investment bank.

Lawyers for Citigroup on Wednesday blasted Lehman’s “scorched earth” tactics in its attempt to have a bankruptcy judge “provisionally allow” the remains of the failed investment bank to use $2 billion in cash in a Citi account to satisfy the bank’s claims against the failed investment bank.

Lehman wants U.S. Bankruptcy Judge James Peck to end what it calls Citi’s “interest rate arbitrage” with respect to rival claims on billions of dollars in assets.

By provisionally paying off the bank, Lehman would stem the flow of interest payments to Citi, which could total hundreds of millions of dollars by the time the two sides face off in court, which isn’t expected until 2015.

The bulk of Citi’s claims against Lehman are tied to the termination of derivatives trades between Lehman and Citi at the time of Lehman’s 2008 bankruptcy filing. The bank said it is entitled to the interest payments under bankruptcy and it doesn’t want the “provisional” $2 billion payment from Lehman because Lehman could claw it back if it emerges the winner in their legal fight.




We therefore conclude that the acknowledgment is materially and patently defective under Massachusetts law, such that it is incapable of providing constructive notice to a subsequent purchaser for value. To conclude otherwise would undermine the acknowledgment’s very purpose. Thus, the bankruptcy court erred in denying the Trustee’s motion for summary judgment on his complaint to avoid the Mortgage pursuant to his § 544 strong arm powers and in granting Wells Fargo’s cross-motion for summary judgment.