Daily Archives: April 17, 2014

REVEALED: Gov. Christie’s investment chief has major financial ties to firm that got $300M in NJ pension cash

“I think you perhaps don’t understand finance.”

It is Monday afternoon, and Bob Grady – the national Republican power-broker behind Chris Christie’s prospective presidential campaign – is angrily lecturing me on the murky world of investments. As one of Christie’s closest advisers and as the governor’s hand-picked chairman of the New Jersey Investment Council, Grady is specifically lecturing me about a decision by the council to hand $300 million of state pension money to private equity firm the Carlyle Group.

As I explained to him, I was calling about the deal because a Pando investigation has found that Grady also happens to be a former longtime executive at Carlyle whose financial disclosure forms (embedded below) show he still receives income from Carlyle investments, still owns a stake in Carlyle Group entities and now works at another fund that has investments with – you guessed it – Carlyle.

During our call, Grady insisted that he officially recused himself from involvement in the November Carlyle transaction — something which would typically signal a clear conflict of interest. He then insisted that the New Jersey investment is in “a new fund and there’s no overlap” with his own holdings. Further he insisted that it was “impossible” for his own holdings to preference him in any way that could allow him to benefit from New Jersey’s $300m deal with Carlyle.

In fact, as the results of our investigation — detailed in full below — show, it is far from “impossible” for Grady to benefit from the deal, as even the Carlyle Group admits. Also, while Grady is telling the truth about having recused himself from negotiations, that single act of transparency (which, as experts explain below, is largely symbolic) stands in stark contrast to the otherwise total secrecy surrounding the transaction.

Read on.


General Motors : U.S. judge declines to order ‘park it now’ notices for GM cars

General Motors : U.S. judge declines to order ‘park it now’ notices for GM cars

(Reuters) – A federal judge on Thursday rejected a bid to compel General Motors Co to tell customers to stop driving millions of cars that have been recalled for defective ignition switches.

Attorneys representing Charles and Grace Silvas, the owners of a recalled 2006 Chevrolet Cobalt, had sought an emergency order directing GM to issue “park it now” notices for the 2.6 million vehicles that have been recalled since February over the switches. The notices would have told owners that the cars were too dangerous to remain on the road.

GM opposed the motion, arguing that the vehicles were safe to drive as long as nothing extra was attached to the key while it was in the ignition.

U.S. District Judge Nelva Gonzales Ramos in Corpus Christi, Texas, denied the request in a ruling on Thursday, saying that she would defer to the National Highway Traffic Safety Administration, a federal agency that oversees auto safety.

“The court is of the opinion that NHTSA is far better equipped than this court to address the broad and complex issues of automotive safety and the regulation of automotive companies in connection with the nationwide recall,” Ramos wrote.

A spokesman for GM, Greg Martin, said the company respected the court’s decision.

Wells Fargo Hires Two CFPB Experts on Mortgage Rules

Wells recently hired Peter Carroll, the CFPB’s assistant director of mortgage markets, and Lisa Applegate, the bureau’s mortgage-implementation lead, to help Wells Fargo expand its focus on mortgage policies and the home loan capital markets, a Wells Fargo spokeswoman said.

Carroll became senior vice president of capital markets at Wells Fargo Home Mortgages last month, and Applegate will start April 28 as strategic quality manager within Wells’ home lending capital markets group.

Both had a hand in guiding the agency through its biggest rulemaking on the mortgage market that took effect in January. They will work in Washington.



In response to Ginnie Mae MSR transfer block by Bank of America: ‘We provide all required MSR documents’

In response to Ginnie Mae MSR transfer block by Bank of America: ‘We provide all required MSR documents’

After Ginnie Mae stopped the transfer of mortgage-servicing rights from Bank of America (BAC) to a nonbank, Bank of America emphasized that its servicing portfolios are on par with market requirements.  

“In the normal course of business, we sell segments of our existing servicing portfolio on standard market terms, which include providing all required documents to subsequent servicers and complying with investor and other requirements,” a Bank of America spokesperson said in general on the banks servicing business.  


Ocwen’s Erbey: NY regulator Lawsky hold has frozen all MSR deals

Ocwen’s Erbey: NY regulator Lawsky hold has frozen all MSR deals

Looks like Lawsky is putting the fear in God into the banks in transferring mortgage servicing rights. Good for him.

During the conference call for Home Loan Servicing Solutions (HLSS) first-quarter earnings, HLSS Chairman William Erbey said the New York Department of Financial Services’ indefinite hold on the $2.7 billion MSR deal between Ocwen Financial (OCN) and Wells Fargo (WFC) has put a freeze on all MSR deals in the market.

During the earnings conference call, Erbey, who also serves as executive chairman for Ocwen, was asked about ongoing MSR deals.

“Until we resolve – this relates to Ocwen – until we resolve New York State we’re not acquiring any new (MSR) portfolios at all. As a matter of fact the entire market – nothing is being put out for bid right now,” Erbey said. “The whole market has stopped until that gets resolved.”


BofA Reaches $950 Million Deal on FGIC-Backed Bonds

BofA Reaches $950 Million Deal on FGIC-Backed Bonds

Bank of America Corp. is paying $950 million to settle claims that its Countrywide unit pooled faulty mortgages into securities that helped hobble Financial Guaranty Insurance Co. and saddled buyers with losses.

The accords resolve outstanding litigation with FGIC, as well as claims and potential claims that the lender is required to repurchase defective home loans backing the bonds because they failed to match their promised quality, Bank of America said today in a statement. The second-largest U.S. lender entered into the deals with FGIC, which guaranteed the debt, and Bank of New York Mellon Corp., the trustee for the securities.


Delphi Automotive : GM faced a Cadillac ignition switch issue in 2006

Delphi Automotive : GM faced a Cadillac ignition switch issue in 2006

General Motors engineers reported accidentally turning off ignition switches in a Cadillac SRX with their knees more than eight years ago, and they ordered a similar fix to a similar problem in smaller, cheaper cars linked to 13 deaths, according to documents from parts maker Delphi Automotive.

The documents, provided to U.S. safety regulators, show GM (>> General Motors Company) used the same part, from the Cadillac Catera sedan, to make ignition switches more difficult to turn off on the 2007 Cadillac SRX crossover and the 2007 Saturn Ion and Chevrolet Cobalt sedans. Delphi supplied the GM-designed switches for all of those models.

The documents are the first indication that GM’s luxury Cadillac brand experienced ignition-switch problems similar to those that triggered the recall earlier this year of 2.6 million GM compacts, including the Cobalt and Ion.

GM did not immediately respond to requests for clarification.

The US is an oligarchy, study concludes



Report by researchers from Princeton and Northwestern universities suggests that US political system serves special interest organisations, instead of voters

The US government does not represent the interests of the majority of the country’s citizens, but is instead ruled by those of the rich and powerful, a new study from Princeton and Northwestern Universities has concluded.

The report, entitled Testing Theories of American Politics: Elites, Interest Groups, and Average Citizens, used extensive policy data collected from between the years of 1981 and 2002 to empirically determine the state of the US political system.

After sifting through nearly 1,800 US policies enacted in that period and comparing them to the expressed preferences of average Americans (50th percentile of income), affluent Americans (90th percentile) and large special interests groups, researchers concluded that the United States is dominated by its economic elite.

The peer-reviewed study, which will be taught at these universities in September, says: “The central point that emerges from our research is that economic elites and organised groups representing business interests have substantial independent impacts on US government policy, while mass-based interest groups and average citizens have little or no independent influence.”

Researchers concluded that US government policies rarely align with the the preferences of the majority of Americans, but do favour special interests and lobbying oragnisations: “When a majority of citizens disagrees with economic elites and/or with organised interests, they generally lose. Moreover, because of the strong status quo bias built into the US political system, even when fairly large majorities of Americans favour policy change, they generally do not get it.”

Read on.


AIG Wants To Speed Up Litigation Against NY Regulator

AIG Wants To Speed Up Litigation Against NY Regulator

Law360, New York (April 16, 2014, 5:01 PM ET) — American International Group Inc. is trying to get a New York federal judge to quickly decide whether a state insurance watchdog acted unconstitutionally while probing AIG over two former subsidiaries’ marketing of life insurance products without a state license, a court filing from Tuesday showed.


Bank of America : financial crisis costs become a recurring nightmare

Bank of America : financial crisis costs become a recurring nightmare

(Reuters) – Bank of America Corp’s (>> Bank of America Corp) financial crisis hangover is lasting longer than expected, leading some investors to wonder if the massive litigation expenses being incurred have become a recurring cost of doing business instead of being dismissed as one-time items.