Daily Archives: October 24, 2013


Bank of America Mortgage Fraud Case to Remain in Federal Court

Bank of America Mortgage Fraud Case to Remain in Federal Court

CN) – A mass action accusing Bank of America and others of deceptive mortgage lending belongs in federal court, despite minimal plaintiff commonality, the 9th Circuit ruled Wednesday.
     Carla Visendi and 136 others had filed the 2011 lawsuit in Sacramento County Superior Court against 25 financial institutions they blamed for tanking property values and messing up their credit scores with “deceptive mortgage lending and securitization practices.”
     Based on the large number of plaintiffs, Bank of America removed the case to federal court under the Class Action Fairness Act. In a subsequent amended complaint, the plaintiffs tossed their original claims and instead accused the defendants of invalid assignment, mistake and negligence – all state-level claims. The new complaint also increased the number of plaintiffs to 160 and dropped the number of defendants to 15.
     In a motion to dismiss, the defendants argued that the plaintiffs were misjoined because they were scattered throughout the country and got their loans from many different lenders. The plaintiffs argued that the banks could not challenge joinder because they had removed the case to federal court. The plaintiffs also moved to return the case to state court.
     U.S. District Judge Morrison England agreed with the plaintiffs and sent the case back to Sacramento County Superior Court, but the federal appeals court reversed on Wednesday.
     A unanimous three-judge panel in San Francisco found that the case was properly removed to federal court after the plaintiffs proposed a joint trial in state court. Proper plaintiff joinder has nothing to do with it, according to the ruling.


Greenspan Admits He “Knew There Was A Bubble” In 2008″, But Refuses To Apologize

Greenspan Admits He “Knew There Was A Bubble” In 2008″, But Refuses To Apologize

Alan Greenspan is out pitching his news book. We explained the miracle of revisionist history and questioned the sanity of anyone buying this ‘guide to economic forecasting’ earlier in the week, but in his appearance this morning on CNBC, the “maestro” did a great job explaining just how flawed his own logic was (without our help).

Flip-flopping from some rational efficient market based economic prognostication to the human nature based entirely non-random cyclical and feedback-loop engaging reality, he explains (sadly reflective of the current clairvoyance of Jim Bullard) that, speaking for himself and his FOMC colleagues, “all of us knew there was a bubble,” though failing to admit to being the progenitor, “but we badly missed the timing.”

Perhaps summing up the mantra of his ilk better than any other sentence, Greenspan concludes, “a bubble in and of itself does not give you a crisis…”adding, during a later Bloomberg TV clip, “I missed certain forecasts, you don’t apologize for that. Do you? I don’t. We are not omniscient. I am a human being.”



“I am in the business where, Harry Truman once said, ‘If you can’t stand the heat, get out of the kitchen’… I apologize for something I did wrong, and I do apologize. I don’t apologize…I was doing the best I can.


The arguments, some of which are quite accurate is I missed certain forecasts, you don’t apologize for that. Do you? I don’t. We are not omniscient. I am a human being. I cannot see beyond the horizon any more than anyone else can.


Now to apologize for not being Superman, I just refuse to do that because that never entered my mind.”


NOW we know who is buying as many as 200,000 foreclosures with defective titles

NOW we know who is buying as many as 200,000 foreclosures with defective titles

Steve Schwarzman’s Blackstone Group LP (BX) has spent $7.5 billion acquiring 40,000 houses in the past two years to create the largest single-family rental business in the U.S. The private-equity firm is now planning to sell bonds backed by lease payments, the latest step in turning a small business into a mature industry.

Deutsche Bank AG (DBK) may start marketing almost $500 million of the securities as soon as this week, according to a person with knowledge of the transaction. The debt will include a portion with the highest investment grade from at least one ratings company, according to another person. Both asked not to be identified because the deal isn’t public.

Senator Warren’s letter to OCC, SEC & Fed asking for number of criminal convictions they’ve gotten for the 2008 crisis

Lawyers take notes from JPMorgan legal woes

After watching JPMorgan Chase (JPM) take the front seat in numerous legal battles, lawyers specializing in bank mergers are looking for ways to protect their clients from similar cases in the future. Per Reuters:   

“People are talking about what kind of increased insurance against liabilities they can put in place,” said Donald Lamson, a partner at Shearman & Sterling in Washington, D.C. “Banks in general are going to be more leery of going into these kinds of deals.”

The reluctance of banks to buy failed institutions could cause headaches for regulators in future crises. While only 22 banks have failed so far this year, that pales compared with the 140 that succumbed in 2009 and 157 in 2010, a failure rate that stretched FDIC resources.

Source: Reuters

Investors seek $5.75 billion from JPMorgan Chase

Investors seek $5.75 billion from JPMorgan Chase

According to MarketWatch, investors are seeking at least$5.75 billion from JPMorgan Chase (JPM) in an attempt to recover losses from mortgage-backed securities sold to prior to the financial meltdown.

The group, which includes asset managers BlackRock Inc. and Neuberger Berman Group, previously received an $8.5 billion settlement from Bank of America on similar claims.

The two sides have had on-and-off settlement discussions over the past year, said the people close to the talks. They met last week to hash out a possible deal, but no final terms have been agreed to, these people said. Kathy Patrick, a Houston lawyer with Gibbs & Bruns LLP, who represents the investor group, declined to comment on any settlement talks.

The investors are potentially emboldened by a recent, unrelated settlement where JPMorgan agreed to a tentative $13 billion deal to escape Department of Justice claims. 

Source: MarketWatch

Bank of America could face three more MBS investigations

According to Bloomberg, Bank of America (BACcould face three more Justice Department civil probes over mortgage-backed securities. Most recently, attorneys sued the lender over an $850-million mortgage bond.  

U.S. attorneys offices in Georgia and California are examining potential violations tied to Countrywide Financial Corp., the subprime lender Bank of America bought in 2008, said the people, who asked not to be identified because the inquiries aren’t public. U.S. attorneys in New Jersey are looking into deals involving Merrill Lynch & Co., purchased by the firm in 2009, the people said.

 If claims are brought, Bank of America would join JPMorgan Chase & Co. dealing with government demands that it resolve liabilities inherited after buying weakened rivals at the government’s urging during the credit crisis. 

Source: Bloomberg

Jury finds BofA-Countrywide liable for defrauding GSEs

A federal jury has spoken, holding Bank of America (BAC) – and more specifically the Countrywide unit it took over –liable for defrauding Fannie Mae and Freddie Mac in the sale of toxic home loans, Bloomberg reports.

A federal jury in New York delivered a black eye not only to BofA, but to former Countrywide executive Rebecca Mairone, who was on trial for allegedly defrauding the U.S., the publication said.

The case revolved around accusations that Countrywide, which BofA took over during the financial crisis, did not represent some of the risks tied to the loans, causing major losses at the enterprises later on.

The government thus far has asked for $848 million in the case, but a penalty has yet to be set, Bloomberg said.

The publication has more on this precedential decision:

“The U.S. last year joined a whistle-blower action against Bank of America filed by former Countrywide executive Edward O’Donnell. The case is the first brought by the U.S. against a bank over defective mortgages to go to trial.”

“Mairone took the stand in her own defense, telling jurors she wasn’t part of a scheme to defraud Fannie Mae and Freddie Mac. She said Countrywide considered risks before instituting HSSL and came up with plans to deal with them.”

Source: Bloomberg