Daily Archives: April 29, 2014

CFPB: Help For Struggling Borrowers

Click the link below for this valuable report published by the Consumer Protection Finance Bureau

Click here.


RBS’s US Licence Should be Revoked on Libor Fixing Criminal Fine, says SEC Member Kara Stein

RBS’s US Licence Should be Revoked on Libor Fixing Criminal Fine, says SEC Member Kara Stein

US Securities and Exchange Commission member Kara Stein has slammed her own agency for allowing the Royal Bank of Scotland and others to break the law by attempting to manipulate some of the world’s most important financial markets.

In a scathing statement, Stein said that RBS should have had parts of its US licence revoked after the lender pleaded guilty to criminal charges over one of its units rigging interbank lending rates – Libor.

“We have a rule that confers a special benefit to issuers that have a good track record. And we have a rule that calls for automatically rescinding that benefit when the issuer misbehaves,” said Stein, who is also a Democrat.


Rep. Waters: Regulators used “nonsensical system” to setup mortgage settlement fund

Rep. Waters: Regulators used “nonsensical system” to setup mortgage settlement fund

Congresswoman Maxine Waters, Ranking Member of theHouse Financial Services Committee, issued a response to the Governments Accountability Office’s report on the Independent Foreclosure Review, which was conducted by the Office of the Comptroller of the Currency and theFederal Reserve in 2011 and 2012.

The GAO report, which is detailed here, found that the OCC and Fed negotiated with 16 mortgage servicers (the list of impacted servicers can be read here) for a $3.9 billion payout to distressed borrowers based on an incomplete review of the foreclosure process. The GAO report also found that the regulators established a $6 billion fund to aid in foreclosure prevention without defining specific objectives for what to do with the money.

Waters said that she is “troubled by the GAO report” because it “shows that just as the Department of Justice deliberately overstated its investigation and prosecution of mortgage fraud cases, regulators claimed $6 billion dollars of settlement payments that never truly occurred.”

Waters said that the regulators “used a nonsensical crediting system for the largest portion of the settlement,” which was meant to provide additional foreclosure relief activities to victims of “unscrupulous practices.”


Mortgage Complaints Overrun Wells Fargo Shareholder Meeting

Mortgage Complaints Overrun Wells Fargo Shareholder Meeting

Shareholders Reject a Motion to Split Chairman, CEO Roles

SAN ANTONIO— Wells Fargo WFC +1.08% & Co. Chairman and Chief Executive John G. Stumpf kicked off the lender’s annual meeting in San Antonio touting the bank’s achievements in 2013, while also grappling with a number of complaints about its home-lending practices.

In a strong showing of approval for Mr. Stumpf’s work, a shareholder proposal to split the roles of chairman and CEO received the least support since at least 2006, according to data from Proxy Monitor, which tracks shareholder proposals. That marks the ninth year in a row that such a proposal has failed. According to estimates from Wells Fargo, just 16% of shareholders voted in favor of the proposal, down from 22% last year.

Wells Fargo has performed well in recent years, surpassing J.P. Morgan ChaseJPM +1.10% & Co., the nation’s largest bank by assets, in both market value and net income. But Mr. Stumpf, who called 2013 “a very good year for our company,” also acknowledged Wells Fargo was unable to increase revenue last year because of the impact of low interest rates, which pressured an important measure of lending profitability. Wells Fargo and other U.S. banks have been relying on tighter expense controls and improved credit to bolster their bottom lines in a still-sluggish revenue environment. Mr. Stump said Wells Fargo’s loan-to-deposit ratio is weak, with the bank making 80 cents in loans for every $1 in deposits it receives.

Overall, however, he struck an optimistic tone at the meeting Tuesday, saying that “2014 is starting off to be a very good year,” and that while the U.S. economy hasn’t recovered as quickly or completely as it should have “we’re bullish on America.”

Still, the CEO’s mostly upbeat comments to shareholders were quickly overshadowed by a long line of questions from homeowners about the bank’s loan-modification and mortgage-servicing practices. Shareholders or their representatives spent the majority of the question-and-answer session lobbying Mr. Stumpf to reduce the principal amounts on loans or make the loan-modification process easier. The San Antonio meeting was rife with complaints about lost documents and the length of the loan-modification process, which some who spoke said could take over a year.

At times the meeting became emotional, with one woman bursting into tears while telling a story about how arduous it was to get a loan modification from the bank. Another said she recently had witnessed her house being auctioned off on the steps of City Hall. Her daughter said Wells Fargo had lost the paperwork they had sent in, which eventually resulted in the modification falling through.

Mr. Stumpf in response said Wells Fargo has reduced more principal on loans than any other bank in the country and that the bank holds hundreds of workshops to help homeowners that want to modify the terms of their home loans.

At the annual shareholder meeting here, investors voted to approve the compensation packages of Mr. Stumpf and other top executives, according to preliminary company calculations of the nonbinding advisory vote. Wells Fargo calculated Mr. Stumpf’s 2013 pay at $19.3 million.

Shareholders also approved all 14 of Wells Fargo’s directors and the appointment of its auditor, KPMG.


Widow devastated as judge rules her $280,000 home will be sold over unpaid $6.30 tax bill

Widow devastated as judge rules her $280,000 home will be sold over unpaid $6.30 tax bill



  • Eileen Battisti insists she paid all taxes in full and was unaware she owed the addition $6.30
  • The court ruled that she was given multiple notices about the looming sale and that she even acknowledged receiving them
  • The home sold for less than half market value at a 2011 auction

A widow has been told for the second time by a Pennsylvania court that her home’s sale at auction after she failed to pay property taxes is valid – she owed only $6.30 at the time it was sold.


Eileen Battisti, 53, of Aliquippa, lost legal rights to her $280,000 home over two years ago after failing to pay the paltry sum but has made multiple appeals on grounds she did not know it was owed.


The most recent decision made last week denied her request to reverse the September 2011 sale of a house she is still reportedly living in.


‘I paid everything, and didn’t know about the $6.30,’ Battisti said. ‘For the house to be sold just because of $6.30 is crazy.’


She had previously owed other taxes, the court noted, but at the time of the sale she owed just $235, including other interest and fees.


Beaver County Common Pleas Judge Gus Kwidis wrote in his ruling that the county tax claim bureau complied with notification requirements in state law before the auction. 


‘There is no doubt that (she) had actual receipt of the notification of the tax upset sale on July 7, 2011, and Aug. 16, 2011,’ the judge wrote. ‘Moreover, on Aug. 12, 2011, a notice of sale was sent by first class mail and was not returned.’


Battisti also admitted to receiving those notices, the judge asserted, according to the Pittsburgh Tribune-Review


He write in the ruling there “is no doubt’ Battisti “had actual receipt” of them.


The property sold for about $116,000, and she is entitled to $108,039 if subsequent appeals are unsuccessful, according to the paper.


LA Clippers Donald Sterling’s donations to NAACP led to latest 2nd Lifetime Achievement Award

Before the scandal:

After scandal from NAACP website:

NAACP honoreesRev4

LOS ANGELES — Donald Sterling donated money for years to the Los Angeles chapter of the NAACP, which honored the Clippers owner with a lifetime achievement award in 2009 and was planning to present him another in May until the controversy broke over his racially insensitive comments that went public over the weekend.

The amount Sterling has given to the L.A. NAACP branch was not revealed at a news conference Monday held by L.A. branch president Leon Jenkins.

“It’s an insignificant amount of money, and we’re going to return it,” said Jenkins, who added the NAACP and Sterling have had a relationship for “maybe 15-20 years.”

Sterling’s award from the NAACP in 2009 came just before he agreed to pay a $2.765 million settlement in a case that alleged he discriminated against African Americans, Latinos and others at apartment buildings he owned in Los Angeles County.

The NAACP no longer plans to honor Sterling at its event next month, at which Rev. Al Sharpton and L.A. Mayor Eric Garcetti will receive awards as Persons of the Year.


In an interview Monday with ESPN Radio’s Colin Cowherd, Alice Huffman said she was surprised Sterling was being given another lifetime achievement award.

“I thought to myself, ‘A second lifetime award? That’s kind of unusual. He hasn’t died and come back to life. He already has one lifetime award. Why the second one?’ And then this story broke,” said Huffman.

Read on.

And more from LA Weekly:

How much does an NAACP “Lifetime Achievement Award” cost? About $5,000, if Donald Sterling’s recent contribution to the organization is a clue.

A look through recent years of tax filings for The Donald T. Sterling Charitable Foundation (9441 Wilshire Boulevard, Penthouse Suite, Beverly Hills, California 90212) shows just one $5,000 contribution to the NAACP in 2010. The NAACP’s local president, Leon Jenkins, today called Sterling’s contribution “insignificant” and said “his donation” would be returned.

Interestingly, Sterling’s foundation has consistently given cash to minority and religious organizations, according to the tax records. It also gave to the University of California:

In 2012, the last year for which nonprofit private foundation 990 documents are available, Sterling’s organization contributed $10,000 to:

-The United Negro College Fund

-The Latino group Para Los Ninos

-The Union Rescue Mission.

-The Black Business Association in L.A.

-Nuevo Amancer Latino Children’s Services.

-The Museum of Tolerance.

-Los Angles Museum of Holocaust.

The group also gave $20,000 to the University of California regents that year.

Since 2009, our review of tax records found, Sterling’s foundation has consistently given to many of those groups with $5,000 and $10,000 annual checks. Frequent recipients include inner-city L.A. Unified School District high schools such as Garfield, Fremont, Hamilton, Roosevelt, Manual Arts, Jefferson and more.


First National Bank Says Former Execs Stole Trade Secrets

First National Bank Says Former Execs Stole Trade Secrets

Law360, New York (April 28, 2014, 6:43 PM ET) — First National Bancorp Inc. hit three of a subsidiary’s former high-level executives with a lawsuit Friday in New Mexico federal court, accusing them of breaking unfair competition laws and stealing trade secrets when they abruptly quit and within days began operating rival financial advisory firm Santa Fe Advisors LLC.

First National says in its complaint that the three former executives started SFA while still employed at First National subsidiary First Santa Fe Advisors, bringing with them proprietary information, clients and two employees in defiance of confidentiality…


G.A.O. Report Sees Deeper Bank Flaws in Foreclosures

G.A.O. Report Sees Deeper Bank Flaws in Foreclosures

Gee, ya think??

A new government report suggests that errors made by banks and their agents during foreclosures might have been significantly higher than was previously believed when regulators halted a national review of the banks’ mortgage servicing operations.

When banking regulators decided to end the independent foreclosure review last year, most banks had not completed the examinations of their mortgage modification and foreclosure practices.

At the time, the regulators — the Office of the Comptroller of the Currency and the Federal Reserve — found that lengthy reviews by bank-hired consultants were delaying compensation getting to borrowers who had suffered through improper modifications and other problems.

But the decision to cut short the review left regulators with limited information about actual harm to borrowers when they negotiated a $10 billion settlement as part of agreements with 15 banks, according to a draft of a report by the Government Accountability Office reviewed by The New York Times.


Suspicious Deaths Of Bankers Are Now Classified As “Trade Secrets” By Federal Regulator

Suspicious Deaths Of Bankers Are Now Classified As “Trade Secrets” By Federal Regulator

Submitted by Pam Martens and Russ Martens of Wall Street On Parade,

It doesn’t get any more Orwellian than this: Wall Street mega banks crash the U.S. financial system in 2008. Hundreds of thousands of financial industry workers lose their jobs. Then, beginning late last year, a rash of suspicious deaths start to occur among current and former bank employees.  Next we learn that four of the Wall Street mega banks likely hold over $680 billion face amount of life insurance on their workers, payable to the banks, not the families. We ask their Federal regulator for the details of this life insurance under a Freedom of Information Act request and we’re told the information constitutes “trade secrets.”

According to the Centers for Disease Control and Prevention, the life expectancy of a 25 year old male with a Bachelor’s degree or higher as of 2006 was 81 years of age. But in the past five months, five highly educated JPMorgan male employees in their 30s and one former employee aged 28, have died under suspicious circumstances, including three of whom allegedly leaped off buildings – a statistical rarity even during the height of the financial crisis in 2008.

There is one other major obstacle to brushing away these deaths as random occurrences – they are not happening at JPMorgan’s closest peer bank – Citigroup. Both JPMorgan and Citigroup are global financial institutions with both commercial banking and investment banking operations. Their employee counts are similar – 260,000 employees for JPMorgan versus 251,000 for Citigroup.

Both JPMorgan and Citigroup also own massive amounts of bank-owned life insurance (BOLI), a controversial practice that pays the corporation when a current or former employee dies. (In the case of former employees, the banks conduct regular “death sweeps” of public records using former employees’ Social Security numbers to learn if a former employee has died and then submits a request for payment of the death benefit to the insurance company.)

Wall Street On Parade carefully researched public death announcements over the past 12 months which named the decedent as a current or former employee of Citigroup or its commercial banking unit, Citibank. We found no data suggesting Citigroup was experiencing the same rash of deaths of young men in their 30s as JPMorgan Chase. Nor did we discover any press reports of leaps from buildings among Citigroup’s workers.

Given the above set of facts, on March 21 of this year, we wrote to the regulator of national banks, the Office of the Comptroller of the Currency (OCC), seeking the following information under the Freedom of Information Act (See OCC Response to Wall Street On Parade’s Request for Banker Death Information):

The number of deaths from 2008 through March 21, 2014 on which JPMorgan Chase collected death benefits; the total face amount of BOLI life insurance in force at JPMorgan; the total number of former and current employees of JPMorgan Chase who are insured under these policies; any peer studies showing the same data comparing JPMorgan Chase with Bank of America, Wells Fargo and Citigroup.

The OCC responded politely by letter dated April 18, after first calling a few days earlier to inform us that we would be getting nothing under the sunshine law request. (On Wall Street, sunshine routinely means dark curtain.) The OCC letter advised that documents relevant to our request were being withheld on the basis that they are “privileged or contains trade secrets, or commercial or financial information, furnished in confidence, that relates to the business, personal, or financial affairs of any person,” or  relate to “a record contained in or related to an examination.”

The ironic reality is that the documents do not pertain to the personal financial affairs of individuals who have a privacy right. Individuals are not going to receive the proceeds of this life insurance for the most part. In many cases, they do not even know that multi-million dollar policies that pay upon their death have been taken out by their employer or former employer. Equally important, JPMorgan is a publicly traded company whose shareholders have a right under securities laws to understand the quality of its earnings – are those earnings coming from traditional banking and investment banking operations or is this ghoulish practice of profiting from the death of workers now a major contributor to profits on Wall Street?

As it turns out, one aspect of the information cavalierly denied to us by the OCC is publicly available to those willing to hunt for it. On March 24 of this year, we reported that JPMorgan Chase held $10.4 billion in BOLI assets at its insured depository bank as of December 31, 2013.

We reached out to BOLI expert, Michael D. Myers, to understand what JPMorgan’s $10.4 billion in BOLI assets at its commercial bank might represent in terms of face amount of life insurance on its workers. Myers said: “Without knowing the length of the investment or its rate of return, it is difficult to estimate the face amount of the insurance coverage.  However, a cash value of $10.4 billion could easily translate into more than $100 billion in actual insurance coverage and possibly two or three times that amount” said Myers, a partner in the Houston, Texas law firm McClanahan Myers Espey, L.L.P.

Myers’ and his firm have represented the families of deceased employees for almost two decades in cases involving corporate-owned life insurance against employers such as Wal-Mart Stores, Inc., Fina Oil and Chemical Co., and American Greetings Corp. (Families may be entitled to the proceeds of these policies if employee consent was required under State law and was never given and/or if the corporation cannot show it had an “insurable interest” in the employee — a tough test to meet if it’s a non key employee or if the employee has left the firm.)

As it turns out, the $10.4 billion significantly understates the amount of money JPMorgan has tied up in seeking to profit from workers’ deaths. Since Wall Street banks are structured as holding companies, we decided to see what type of financial information might be available at the Federal Financial Institutions Examination Council (FFIEC), a federal interagency that promotes uniform reporting standards among banking regulators.

The FFIEC’s web site provided access to the consolidated financial statements of the bank holding companies of not just JPMorgan Chase but all of the largest Wall Street banks. We conducted our own peer review study with the information that was available.

Four of Wall Street’s largest banks hold a total of $68.1 billion in BOLI assets. Using Michael Myers’ approximate 10 to 1 ratio, that would mean that over time, just these four banks could potentially collect upwards of $681 billion in tax free income from life insurance proceeds on their current and former workers. (Death benefits are received tax free as is the buildup in cash value in the policies.) The breakdown in BOLI assets is as follows as of December 31, 2013:

Bank of America    $22.7 billion

Wells Fargo             18.7 billion

JPMorgan Chase      17.9 billion

Citigroup                   8.8 billion

In addition to specifics on the BOLI assets, the consolidated financial statements also showed what each bank was reporting as “Earnings on/increase in value of cash surrender value of life insurance” as of December 31, 2013. Those amounts are as follows:

Bank of America   $625 million

Wells Fargo           566 million

JPMorgan Chase    686 million

Citigroup                     0

Given the size of these numbers, there is another aspect to BOLI that should raise alarm bells among both regulators and shareholders. The Wall Street banks are using a process called “separate accounts” for large amounts of their BOLI assets with reports of some funds never actually leaving the bank and/or being invested in hedge funds, suggesting lessons from the past have not been learned.



Free Mary McCulley copy

Edited press release received by LRM:

For the millions who have lost their homes to foreclosure, or are still losing their homes to the “too big to fail” banks, Mary McCulley is a hero. In February she stood up to those who caused the fraud which led to her foreclosure–and won. She obtained a $6 million award–including punitive damages—against US Bank. 

Yet on April 25, 2014, Mary was forcibly hauled off to federal prison for accusations by former American Title Land Company’s  Tom Cahill. Based solely on Cahill’s word, Mary was sentenced to one year in Federal Prison, plus another year of very harsh probation. She was immediately taken away by Federal Marshalls, and reported severe bruising after being roughed up. Mary is 56 years old.

On February 7, 2014, US Bank was found guilty in a jury trial of fraudulently foreclosing on Mary’s home. The jury found proof U.S…

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