Daily Archives: May 6, 2014

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Breaking: FHFA COO arrested, charged with threatening Ed DeMarco

Breaking: FHFA COO arrested, charged with threatening Ed DeMarco

Richard Hornsby, the chief operating officer of the Federal Housing Finance Agency, was charged with threatening to kidnap or injure a person after he allegedly threatened the agency’s former acting director, Ed DeMarco, at the agency’s headquarters last week.

According to court records, Hornsby was charged with one felony count on April 30 and issued a “do not assault, threaten, harass or stalk” order, preventing him from taking any further action against DeMarco.

The Wall St. Journal provides more details on the events that led to Hornsby’s charges.

Mr. Hornsby allegedly threatened to shoot Mr. DeMarco after making “increasing threatening comments” about him over the course of several weeks, according to court records and Metropolitan Police Department report.

FHFA officials notified the agency’s inspector general about the threats on April 28, after an incident in which Mr. DeMarco was “escorted to a secure location following a report of a threat,” according to the court complaint used to secure the warrant for Hornsby. An FHFA employee, who wasn’t named in the report filed in court, said Mr. Hornsby had threatened to harm Mr. DeMarco and to kill himself.

Hornsby was also ordered to “stay away” from the FHFA’s Washington offices as part of the court order issued by Judge Karen Howze.

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Hornsby has a follow up hearing scheduled for May 14. 

Information about the case can be seen here.

 

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Low Bank Teller Pay Comes Under Fire

Low Bank Teller Pay Comes Under Fire

Big banks have faced heated public criticism for paying chief executives multimillion-dollar salaries and flush bonuses since the financial crisis. But little attention has been paid to wages for workers at the other end of the industry’s spectrum — even as many tellers reportedly struggle to make ends meet.

The issue of bank teller pay is starting to attract public scrutiny. Areport released late last year by the Committee for Better Banks, a coalition of community labor groups, made waves with the finding that almost a third of tellers and their families nationwide are on public assistance. With median pay for bank tellers hovering around $25,000 annually in 2012 and cost-conscious banks slashing tellers’ hours or replacing them with ATMs, economists and labor advocates say it’s hardly surprising these workers are having trouble paying the bills.

“Many, if not most, workers are facing this problem of low wages,” says Brigid Flaherty, who works on the Committee for Better Banks as the organizing director of the labor group Alliance for a Greater New York. “We’re hearing from a lot of bank tellers who are saying to themselves, ‘This is not that far off from working at a McDonald’s or a Walmart.'”

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American Homes 4 Rent plans single-family securitization

American Homes 4 Rent plans single-family securitization

An affiliate of American Homes 4 Rent (AMH) announced it plans to launch the offering of a securitization transaction this week.

The transaction was made in hopes of reducing the company’s cost of capital over the long term.

According to the report, “The transaction involves the issuance and sale of single-family rental pass-through certificates that represent beneficial ownership interests in a loan secured by a portion of the Company’s portfolio of single-family properties sold to one of its affiliates.”

Since the certificates will be offered and sold in the United States in accordance with Rule 144A, little information is given about the deal.  

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UBS : defeats shareholders’ U.S. appeal over mortgage losses, tax probe

UBS : defeats shareholders’ U.S. appeal over mortgage losses, tax probe

A federal appeals court in New York rejected appeals by UBS AG shareholders seeking to hold the Swiss bank liable for their losses for having concealed its exposure to risky mortgage-backed securities and helping clients evade U.S. taxes.

Tuesday’s decision by the 2nd U.S. Circuit Court of Appeals is the latest ruling to limit the reach of U.S. civil securities fraud laws, under a 2010 U.S. Supreme Court precedent that imposed a presumption against applying U.S. law to conduct outside the country.

Writing for a three-judge panel, Circuit Judge José Cabranes said that precedent, Morrison v. National Australia Bank, bars investors who buy foreign issuers’ securities on foreign exchanges from pursuing U.S. fraud claims against those issuers, even if their securities are cross-listed on U.S. exchanges.

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Judge postpones Lotus Bank trial, urges attorneys to settle case over racist emails

Judge postpones Lotus Bank trial, urges attorneys to settle case over racist emails

April 30, 2014 2:43 PM

Attorneys in the lawsuit against Novi-based Lotus Bank over racist emails by two bank executives were urged Wednesday to try to settle the case by Oakland County Circuit Court Judge Denise Langford Morris.

Morris suggested attorneys for all sides meet with retired Wayne Country Circuit Court Judge James Rashid to help facilitate a settlement and postponed the trial, which had been scheduled to start May 27.

Morris made her comments in open court after meeting with attorneys in her chambers, where they agreed to waive oral arguments Wednesday over motions recently filed, most of them dealing with procedural issues regarding a possible trial.

Morris told attorneys when court was back in session that she is still considering motions for summary judgment they made on April 16 and that any decisions regarding motions about trial issues would come after she ruled on the motions for summary judgment.

In the meantime, the judge made it clear she wanted counsel to try to settle out of court. “This case has had serious settlement discussions among counsel,” said Morris. She urged them to resume talks, this time with Rashid’s help.

“I’ve had very good luck in the past with Judge Rashid,” she said.

Rashid is president of Farmington Hills-based Judicial Resource Services PC.

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The lawsuit was filed on behalf of Jasit Takhar and Anil Gupta. Through their Jackson-based firm, Four Pointe Investments LLC, Takhar and Gupta got a mortgage of nearly $1.5 million from Lotus in 2008 to buy a Travelodge motel in Jackson, but later had trouble making payments.

The case is particularly noteworthy because of allegations of racism by a bank founded in 2007 to serve the needs of the local Asian Indian business community. Most of those who invested in the bank were of Indian descent and most of its board members are Indian.

At the heart of the lawsuit are numerous emails, including:
• On May 24, 2010, Bauer referred to members of the board of the bank as “chimps.”
• On June 19, 2010, someone sent Bauer an email offering free tickets to a concert by an Indian singer if he wanted some for his customers. Bauer responded: “Only interested if someone is going to detonate an incendiary device. If so, I will get tics (sic) for all of them.”
• On July 9, 2010, Bauer, who was then acting as interim CEO as well as CFO, wrote to a friend: “We are close to hiring a permanent replacement, which can’t happen too quickly for me. I just want my job back, and someone else can deal with all these Indians. Working with them really is like herding cats, and I hate cats! … I will leave you with this sage advice from General Custer and most Pakistanis: The only good Indian is a dead Indian.”

The Lotus board found out about the emails more than a year before the lawsuit was filed. The executives’ pay was cut and they underwent sensitivity training.

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Bank of America To Pay $772m for Fraudulent Credit Card Practices

Bank of America To Pay $772m for Fraudulent Credit Card Practices

The Consumer Financial Protection Bureau (CFPB) investigated the Bank of America for fraudulent credit card practices and has levied a significant fine as part of the settlement. Bank of America will have to pay out roughly $772 million in the settlement that includes payments to customers and fines to federal regulators. According to the CFPB, “from 2000 to 2011, the Charlotte, N.C.-based bank billed 1.5 million customers a total of $459 million for various identity-protection products without the proper authorization. From 2010 to 2012, the bureau says Bank of America also exaggerated or misstated the benefits of two credit-protection programs that allowed some customers to cancel credit-card debt in instances of unemployment or other hardships, allegedly misleading another 1.4 million customers into paying $268 million.” (Time.com)

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JPMorgan shuts foreign diplomats’ accounts

JPMorgan shuts foreign diplomats’ accounts

Wow!

JPMorgan is shutting Chase banking accounts and cancelling credit cards of all current and former non-US senior government officials, according to the FT.

The bank cites rising compliance costs but critics wonder why US diplomats were left out.

José Antonio Ocampo, the former finance minister of Colombia who was once nominated to become president of the World Bank:

“Friday was hell for me,” Mr Ocampo told the Financial Times. “I had all my money frozen. I am being treated like a criminal.”

The move will affect about 3,500 individuals.