Daily Archives: May 1, 2014

PA Gov cuts $1.5B from schools since 2008, gives $1.5B to race horse owners

This is probably the most outrageous example of class warfare we’ve ever posted. Pennsylvania Governor Tom Corbett has cut $1.5 billion from schools since 2008, mostly in poor districts. Over the same period, wealthy race-horse owners have received $1.5 billion in tax subsidies. 

School cuts: http://bit.ly/1hW7cCO


Horse subsidies: http://bit.ly/PQYUoU


Horse subsidies: http://bit.ly/1jhWLyj


New York A.G. Shuts Down Debt Collection Agency

New York A.G. Shuts Down Debt Collection Agency

Swanson Walker & Associates Repeatedly Violated The Law By Harassing Customers

Schneiderman: Collection Agencies That Bully Individuals Will Be Held Accountable

BUFFALO – Attorney General Eric T. Schneiderman today announced that he has shut down Swanson Walker & Associates, a consumer debt collection agency located in Lockport, New York. The owner, Sean Millard, entered into an agreement with the Attorney General by which he was required to shut down the business and pay a $10,000 fine. The Attorney General’s Office, the Better Business Bureau and the Federal Trade Commission Sentinel Network had received dozens of complaints about the tactics the agency used when attempting to collect repayments.

“Attempting to get out of debt is a stressful and overwhelming process that countless consumers struggle with every day,” Attorney General Schneiderman said. “To threaten and bully these individuals is unacceptable and wrong, and my office will keep fighting to hold those who employ these tactics accountable.” 

According to complaints, Swanson debt collectors repeatedly and persistently violated the law by (i) improperly calling consumers at their places of employment; (ii) improperly accusing consumers of check fraud and violations of the penal law and threatening consumers with arrest or imprisonment; (iii) falsely representing that a lawsuit had been, or would be filed; (iv) improperly disclosing consumer debts to third parties; and (v) improperly threatening to seize a consumer’s property, freeze bank accounts and garnish wages. 

Swanson also maintained a website that was replete with false representations, including the following:

  • “We utilize two methodologies of collections, traditional collection services and litigation.”
    • Swanson never litigated a case.
  • “Litigation is a collection effort made by our associates (non-attorney assistants) under the direction of an attorney.”
    • Swanson never employed or retained an attorney, and an attorney never gave direction to its associates.
  • “Litigation efforts commence when a matter cannot be resolved by our recovery specialists.  At this point a retained attorney determines that an account is eligible for litigation, within our jurisdiction, & with the client’s approval the legal process begins.”
    • Swanson never retained an attorney to review matters and never filed a lawsuit.

IRS Chief Counsel Checks 1986 Committee Reports To Give Break On Foreclosed Real Estate

IRS Chief Counsel Checks 1986 Committee Reports To Give Break On Foreclosed Real Estate

It’s nice when the IRS Chief Counsel cuts down on their luck taxpayers some slack .  There was concern that when a wannabee real estate genius had it all fall apart their suspended losses might still be disallowed.  CCA 201415002 (sorry can’t find a free link) at least reassures them that the IRS will not be kicking them when they are down – at least not with that foot.  It is a complicated area, so a little explanation is in order.

Passive Activities – The Basics

The passive activity loss rules are probably the most complicated tax provisions that affect ordinary mortals.  A host of part-time landlords have, for the most part fruitlessly, fought them in Tax Court.  The rules require us to segregate our activities into those in which we materially participate and those in which we don’t – passive and non-passive.  Rental real estate is “per se” passive, unless you are more involved in real estate trades or businesses than anything else.  Losses in the passive bucket are only allowed to the extent of gains in the passive bucket.  Otherwise the losses are suspended and carry forward indefinitely.

Even in the absence of passive income passive losses will be allowed in the year that a passive activity is fully disposed.  There is a catch though.  You have to dispose of the activity in a fully taxable transaction.  So if you have a rental property that has accumulated losses, you will not be able to free up the losses by giving the property away or exchanging it for a property of like-kind.


Elizabeth Warren worries about Citigroup’s many government ties

Elizabeth Warren worries about Citigroup’s many government ties

In a column published by Politico, Sen. Elizabeth Warren expresses her “growing frustration over the concentration of people with ties to the megabank Citigroup in senior government positions.”

The comments come after her reluctant Senate Banking Committee vote supporting Stanley Fischer as vice chairman of the Federal Reserve.

Fischer is one of many former Citigroup execs to be nominated and/or serve in top federal jobs.

The trend, as illustrated by the interactive Muckety map above, didn’t begin with the Obama administration.

As Warren points out: “Three of the last four Treasury secretaries under Democratic presidents have had Citigroup affiliations before or after their Treasury service.”

That would be current Secretary Jacob Lew and former Secretaries Larry Summers and Robert Rubin, who served under Bill Clinton.

While Obama didn’t start the trend, he certainly is investing in it heavily. As our map shows, Treasury Assistant Secretary Marisa Lago and U.S. Trade Representative Michael Froman both have ties to Citigroup.

Nathan Sheets, nominated by Obama in February to be Treasury under secretary, is a Citigroup economist.


Two Days After Swearing Market Isn’t Rigged, SEC Slaps NYSE Wrists For Rigging Markets

Two Days After Swearing Market Isn’t Rigged, SEC Slaps NYSE Wrists For Rigging Markets

From the SEC complaint:


The Securities and Exchange Commission today announced an enforcement action against the New York Stock Exchange and two affiliated exchanges for their failure to comply with the responsibilities of self-regulatory organizations (SROs) to conduct their business operations in accordance with Commission-approved exchange rules and the federal securities laws.  Also charged was the NYSE exchanges’ affiliated routing broker Archipelago Securities.

The details:


“The order highlights instances where the exchanges conducted business without a rule in place due to weak or inadequate policies and procedures,” said Antonia Chion, an associate director in the SEC’s Division of Enforcement.  “In other instances, the exchanges did not operate in compliance with their effective rules.  Both failures reflect a troubling lack of compliance with the requirements and obligations imposed on securities exchanges.”

The violations detailed in the SEC’s order occurred during periods of time from 2008 to 2012.  The SEC’s order finds that the NYSE exchanges violated Section 19(b) and 19(g) of the Securities Exchange Act of 1934 through misconduct that included the following:

  • NYSE, NYSE Arca, and NYSE MKT (formerly NYSE Amex) used an error account maintained at Archipelago Securities to assume and trade out of securities positions without a rule in effect that permitted such trading and in a manner inconsistent with their rules for the routing broker, which limited Archipelago Securities’ activity primarily to outbound and inbound routing of orders on behalf of those exchanges.
  • NYSE provided co-location services to customers on disparate contractual terms without an exchange rule in effect that permitted and governed the provision of such services on a fair and equitable basis.
  • NYSE operated a block trading facility (New York Block Exchange) that for a period of time did not function in accordance with the rules submitted by NYSE and approved by the SEC.
  • NYSE distributed an automated feed of closing order imbalance information to its floor brokers at an earlier time than was specified in NYSE’s rules.
  • NYSE Arca failed to execute Mid-Point Passive Liquidity Orders (MPLOs) in locked markets (where the bid and ask prices are the same) contrary to its exchange rule in effect at the time.

In addition, the SEC’s order finds that NYSE Arca accepted MPLOs in sub-penny amounts for National Market System stocks trading at over $1.00 per share, in violation of Rule 612(a) of Regulation NMS.


The SEC’s order further finds that Archipelago Securities failed to establish and maintain policies reasonably designed to prevent the misuse of material, nonpublic information in connection with error account trading.  Archipelago Securities also violated and failed to give the SEC timely notice of its violation of the net capital rule – a critical federal securities law provision intended to ensure that brokers and dealers remain solvent and can meet their financial obligations.  


Freddie Mac To Enter Mobile Home Loan Business

Freddie Mac To Enter Mobile Home Loan Business

Law360, New York (May 01, 2014, 1:35 PM ET) — Government-sponsored mortgage finance firm Freddie Mac is moving into the mobile homes and trailer parks business, announcing Wednesday that it will start financing manufactured housing communities in an effort to expand affordable rural housing.

Under the new program, Freddie Mac Multifamily will start buying manufactured housing community loans, which are commercial loans made to community owners of land on which mobile homes reside, and then package them as securities to sell to investors. Freddie Mac said the new lending program will help infuse capital into rural…


Ocwen: Wells Fargo MSR deal on indefinite hold

Ocwen: Wells Fargo MSR deal on indefinite hold

Ocwen Financial Services’ (OCN) $2.7 billion mortgage-servicing rights transaction with Wells Fargo (WFC) remains on an indefinite hold, Ronald Faris, president and CEO of Ocwen, said during the first-quarter earnings conference call. 

Wells Fargo’s portfolio of residential mortgage servicing rights holds roughly 184,000 loans linked to the transaction. The portfolio represents approximately 2% of the banks total residential servicing portfolio.

However, Faris noted that the company continues to invest in its compliance and risk management systems.

Meanwhile, the company announced during the conference call that John Britti, current executive vice president and chief financial officer, will be promoted to chief investment officer.  

Thursday morning Ocwen Financial Services reported net income of $75.8 million, or $0.54 per share, for the first quarter of 2014 compared to net income of $45.1 million, or $0.31 per share, for the first quarter of 2013.