Daily Archives: March 1, 2014

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JPMorgan Chase Class-Action Settlement Is Approved

JPMorgan Chase Class-Action Settlement Is Approved

A federal judge approved a settlement Friday of a class-action lawsuit against JPMorgan Chase for its force-placed insurance practices, an agreement that could pay more than $300 million to about 750,000 mortgage borrowers.

The national settlement prohibits the bank for six years from getting commissions, kickbacks or reinsurance from the insurance, which it obtains when a homeowner’s policy lapses.

Under U.S. District Judge Federico Moreno’s order in Miami, class members will have to file claim forms to recover 12.5 percent of the net premiums they were charged between Jan. 1, 2008, and Oct. 4, 2013. Moreno also barred JPMorgan Chase and Assurant and its insurance subsidiaries “from inflating premiums” for six years.

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Citi Paid $400 Million in Fake Invoices

Citi Paid $400 Million in Fake Invoices

As far as I can understand it from Citigroup’s press release, which is not very far, here’s how Oceanografia S.A. de C.V. took Citi’s Mexican subsidiary, Banamex, for $400 million:

  • Oceanografia is an oil services company that, until recently, performed oil services for Pemex, the Mexican state oil company.
  • Oceanografia would perform some services and send Pemex a bill.
  • Pemex would be like, “thanks, we’ll get right on this,” and then put the bill in its files somewhere.
  • Meanwhile, Oceanografia would send another copy of the bill to Banamex.
  • Banamex would pay Oceanografia the amount of the bill (less some discount obviously), and then wait to be paid back whenever Pemex got around to paying it.
  • Oceanografia eventually realized that there was a more efficient system.
  • In the more efficient system, Oceanografia wouldn’t perform oil services, or send Pemex a bill.
  • They’d just make up a bill, write some numbers on it, and send it to Banamex.
  • Banamex would pay it and wait, in vain, to be paid back by Pemex.

This went on for years? That to me is the oddest part. Oceanografia is — somewhat obviously — not a public company, but a random assortment of pseudo-comps suggest that typical accounts receivable turnover in the oil-services industry averages around three months.1One imagines that Pemex gets more breathing room than the average customer, but still, at some point, wouldn’t Banamex call Oceanografia after not getting paid for a year or two? Did Oceanografia just say “yeah, I know, what jerks, they’re really slow, keep trying”?2 And Banamex kept extending more credit on more fake receivables, to a total amount of $585 million? And never called Pemex?

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Wall Street Hates JPMorgan Fee for $1 Trillion Junk Loans

Wall Street Hates JPMorgan Fee for $1 Trillion Junk Loans

On Wall Street, $3,500 goes further than anyone dared imagine in the 1980s when the predecessor to JPMorgan Chase & Co. charged the fee to trade each non-investment grade loan it sold.

That surcharge remains the same today and helps the biggest U.S. bank dominate the secretive $1.1 trillion junk-loan market while stifling profits for investors and rivals, which mostly stopped charging it years ago. The New York-based bankwaives it for exclusive customers: trade with JPMorgan, no fee; trade one of its loans with anyone else, pay up.

JPMorgan can dictate terms because of its size, according to 12 people with knowledge of the matter who are concerned they’d jeopardize their business if their identities were revealed. The bank brings more corporate debt to market than anyone, and competitors and investors say they might be shut out of future deals if they don’t play by JPMorgan’s rules.

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Goldman Sachs Group Inc : Goldman cites US probe of how it allocates bonds

Goldman Sachs Group Inc : Goldman cites US probe of how it allocates bonds

WASHINGTON (AP) — Goldman Sachs has disclosed that federal regulators are examining how it divides up newly issued bonds among investors.

In a regulatory filing Friday, Goldman said regulators are investigating the trading and allocation of its bond issues. The Wall Street Journal reported Friday that the Securities and Exchange Commission is examining howGoldman Sachs Group Inc., Citigroup Inc. and other Wall Street banks allocate new corporate bond issues and whether they unfairly favor some investors over others. It cited people familiar with the matter.

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Citigroup Inc : FBI monitoring Citi Mexican loan losses for possible crime

Citigroup Inc : FBI monitoring Citi Mexican loan losses for possible crime

The U.S. Federal Bureau of Investigation is aware of Citigroup’s loan losses due to fraud by a Mexican company and is monitoring the situation for possible criminal activity, a person familiar with the matter said on Friday.

The source said it was too early to determine whether an investigation was merited, but the FBI was continuing to look at new developments in the case before making a decision.

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Blind Manchester teen helps stop foreclosure auction of her house

Blind Manchester teen helps stop foreclosure auction of her house

MANCHESTER, N.H. —A 17-year-old legally blind girl’s written plea for help halted the foreclosure auction of her family home in Manchester.

Lindsey Vachon suffers from a series of genetic conditions so rare that she is only one of five people in the world who has them. With just hours left before their house could be sold, Lindsey and her mother, Lynn Vachon, were in court trying to avert disaster.

A lawyer filed a motion Tuesday afternoon to stop the process less than 18 hours before the house was supposed to go up for sale.

“The foreclosure and the auction just became too big,” Lynn Vachon said. “Too big for me to help or understand or take care of, and then my hero stepped in.”

Lindsey was inspired to act when she heard the story of “Batkid,” the young California boy the Make-A-Wish Foundation made a superhero for a day.

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First Horizon settles reps and warrants claim with Freddie Mac

First Horizon settles reps and warrants claim with Freddie Mac

First Horizon National Corp. entered a definitive resolution agreement with Freddie Mac over the loan repurchases process.

The agreement between the two entities follows a recent agreement between Fannie Mae and First Horizon in the fourth quarter 2013.

According to a Compass Point report, the agreement settles all representation and warranty claims related to loans sold from 2000 to 2008.