Daily Archives: July 2, 2014

UBS, BofA Unit Freed From Insurers’ RMBS Suits

Case Title

CMFG Life Insurance Company v. UBS Securities, LLC

Case Number



Wisconsin Western

Nature of Suit

Contract: Other


William M. Conley

Law360, Los Angeles (July 02, 2014, 4:23 PM ET) — A Wisconsin federal judge on Wednesday freed UBS Securities LLC and Banc of America Securities LLC from suits brought by CUNA Mutual Group affiliates seeking to undo their purchases in stakes worth millions in mortgage-backed securities offerings they claim they were tricked into buying, ruling that the insurers’ claims are time-barred.

U.S. District Judge William M. Conley granted UBS’ and the now-defunct Banc’s motions to dismiss, agreeing that the claims brought by the CUNA Mutual affiliates are barred under Wisconsin’s six-year statute of limitations for contract…

Regulators Release Latest ‘Living Wills’ for Big Firms

WASHINGTON–U.S. regulators released plans by the nation’s largest financial firms detailing how they might dismantle themselves in the event of another financial crisis.

The so-called “living wills,” a requirement of the 2010 Dodd-Frank law, are intended as a blueprint to help regulators understand what to do in the event a financial firm faces collapse.

For the first time this year, three nonbank firms, American International Group, Inc., Prudential Financial Inc., and General Electric’s Co’s financing arm, GE Capital, submitted their plans to regulators. Those companies were brought under Federal Reserve oversight last year after being designated as “systemically important”.

Read on.

“The Bank” Does NOT Own Your Mortgage, They Have No Independent Right to Foreclosure (Notes from foreclosure trials)

All across this nation, “The Banks” and “The Servicers” are filing millions of foreclosure cases, pursuing loan modifications or concluding Short Sales.  But the reality that we all must start to understand is “The Banks” and “The Servicers” are not the real parties in interest in the vast majority of cases….they are merely straw parties, debt collectors, front organizations who are manipulating our nation’s legal system and hijacking the economy in the largest financial conspiracy that’s ever been exacted upon the citizens of this country.

Here’s what’s undisputed.  “The Banks” have no real interest in the mortgages of most Americans.  “The Banks” used federal dollars to write those loans and were paid quite handsomely to blast billions of dollars in federal dollars (in the form of originated mortgages) in communities from one side of this country clear across to the other side of the country.  And what we know from the OIG Office of Inspector General Reports and the National Mortgage Settlement was “The Banks” were far more interested in stealing billions of dollars in taxpayer funds than they ever were with fulfilling their contractual and legal obligations…but that’s an entirely different story.

The point of this post is to understand that when “The Bank” pursues a foreclosure and when “The Bank” sells the home of a citizen in foreclosure, they are merely a front for the real party that is directing the legal action in something like 70% of the cases, and that is Fannie Mae and Freddie Mac.  Now the rabbit hole has gotten even deeper now that “The Banks” have sold of their portfolios of servicing obligations to “The Servicers”, third party debt collectors that are even farther removed from the crime scenes.  The courtrooms of this nation and the foreclosure files that are flushed out in these courtrooms are crime scenes. The crimes being the financial fraud that lies at the heart of the entire mortgage financing sector of the nearly entirely fradulent American economy.  What’s the fraud you ask?  Well, how many more banking and trading and Wall Street crime schemes do we need to have reported before we all acknowledge that the entire financial system is rigged?  LIBOR, London Whale, HSBC drug cartel money laundering, black pool trading, high frequency trading, 401ks, retirement accounts, the whole of Wall Street, BNP Parabas, Goldman Sachs, Jamie Dimon.  For those that pay even just a little bit of attention and who have just one or two firing neurons, you have to recognize that the entire financial system is nothing but a Ponzi scheme of nearly unimaginable magnitude.  Shall we even consider trillions of dollars in student loan debt…compounding daily?  But (once again) I digress.

Let’s get back to the fraud in foreclosure…those two terms so synonymous that “foreclosure” should never be spoken without its partner, “fraud” and hence from now until forever we should always call it like it is, “Fraudclosure”.

Fannie and Freddie own the loans and rely on The Banks to be the bad guys in collecting their debts.  Nominally at least The Bad Guys have certain rules they should follow in collecting debts, otherwise know as the Fannie Mae and Freddie Mac Servicing Guidelines.  But The Banks are experts at ignoring all rules and laws and the contacts they signed so why should the follow them in the context of foreclosure or bankruptcy proceedings?  Why should The Banks be truthful in piddly state court and bankruptcy proceedings when they have clearance from the highest levels to continue their massive financial fraud. (Jamie Dimon cufflinks anyone?)

Take a look at this fantastic PowerPoint which drives part of this point home.

The powerpoint is a real AHA! Kind of presentation….but (again) I’ve gone way off the farm.  Let’s get down to application of all this to the typical foreclosure.  Here’s the legal analysis:


  1. In this claim for mortgage foreclosure, the entirety of Plaintiff’s allegations are contained within the Complaint filed on 12/04. The Complaint was never amended and the key assertion Defendant asserts is fatal to Plaintiff’s claim in their one-count prayer for relief is the statement that (Plaintiff)

“is now the holder of the Mortgage Note and Mortgage and/or is entitled to enforce the Mortgage Note and Mortgage.” Plaintiff’s Complaint, ¶4.

2.Initially, and as will be supported by case law which is directly on point, Plaintiff’s use of the conjunctive and disjunctive “and/or” renders Plaintiff’s pleading a legal nullity and therefore the complaint should be dismissed for        failure to state a cause of action. This paragraph is the very foundation upon which the entirety of Plaintiff’s cause of action is based and, as is detailed in case law which is directly on point, this allegation is fatal because it contains        mutually exclusive allegations within the same statement. Put plainly, which allegation is Plaintiff traveling under?

Is The Bank the holder of the Mortgage Note and Mortgage and entitled to enforce the Mortgage Note and Mortgage


Is The Bank entitled to enforce the Mortgage Note and Mortgage?

(but not the “holder” of the note)

Critical to this argument is the undisputed fact that The Bank did not institute this lawsuit on its own accord or for its own benefit. The Bank is pursuing this lawsuit and Wells Fargo is suing this Defendant on behalf of, and at the express direction of another party, Freddie Mac. The Bank is merely Freddie Mac’s agent and Freddie Mac is the Principal who is directing this action.

  1. The key failure for Plaintiff case is The Bank’s failure to present even a scintilla of admissible evidence that they have any authority to act on Freddie Mac’s behalf. And there is one key element of Defendant’s case which must be recognized by this court relating to this point:

Defendant has sought, through motion practice and extensive discovery, any proof that the agent, The Bank has any authority to act on behalf of its principal, Freddie Mac. Plaintiff’s attempts to provide any such proof are entirely lacking.

4.The failure of The Bank to produce proof of a proper agency relationship leads to one indisputable conclusion:

That The Bank has failed to establish the necessary factual predicate for the Court to determine that an agency relationship exists between Plaintiff and Freddie, and therefore has failed to establish its standing to sue.

And this from a deposition:

9 Q Okay. Does that statement there reflect a fact

10 that the owner of the loan is Freddie Mac?

11 AYes.

12 Q And just so the record’s clear, Freddie Mac is

13 Federal Home Loan Mortgage Corporation?

14 A Yes.

15 Q And Freddie Mac owns this; and for purposes of

16 the deposition, will we agree that if we say “Freddie,”

17 we are all understanding and referring to Federal Home

18 Loan Mortgage Corporation?

19 A Yes.

20 Q Okay. So does that statement reflect that, in

21 fact, Freddie owns the note and mortgage?

22 A They are the investor and own this loan, yes.

23 Q And does that statement also reflect that The Bank

24  services the loan, or acts on behalf of Freddie,

25 with respect to this loan?

1   A Yes.

Read on.

Goldman Sachs ‘Boy’s Club’ Accused of Mocking Women

Goldman Sachs Group Inc. (GS) was accused by two former employees seeking to expand their lawsuit of discriminating against women while male colleagues engaged in binge drinking and took clients to strip clubs.

The women asked a federal judge inManhattan yesterday to let them sue on behalf of current and former female associates and vice presidents. Support for their claims includes statements of former Goldman Sachs employees, expert statistical analyses and evidence on earnings and promotions from the firm’s own records, they said in a court filing.

“Women report a ‘boy’s club’ atmosphere, where binge drinking is common and women are either sexualized or ignored,” according to the filing.

The two women, H. Cristina Chen-Oster and Shanna Orlich, sued in 2010 and are seeking to broaden the case to include more than a decade of claimed discrimination at Goldman Sachs. A decision by U.S. District Judge Analisa Torres to allow the women to sue as a class would increase the risk to the New York-based company.

Read on.

Oh, and here is the complaint. Click here.

Morgan Stanley : California appeals court backs brokers in $5 million Morgan Stanley ruling

(Reuters) – A California appellate court has reinstated a nearly $5 million ruling against Morgan Stanley in a case initially filed by two brokers who said the company broke promises it made when recruiting them.

The three-judge panel of California 4th District Court of Appeal this week unanimously agreed with lawyers for brokers John Paladino and Todd Vitale, who argued that a lower court was wrong to overturn a 2012 securities arbitration decision in the brokers’ favor.

“We disagree with ruling and are considering our options,” a Morgan Stanley spokeswoman said.

Neither Paladino, Vitale nor their lawyer could be immediately reached for comment.

Morgan Stanley had argued that one of the three Financial Industry Regulatory Authority (FINRA) arbitrators who heard the case did not disclose ties between some of his family members and the securities industry. Among those details: the arbitrator’s daughter had previously worked in the brokerage industry and also had an account at Morgan Stanley at the time of the arbitration, according to court documents.

Read on.

Fed IG: CFPB office renovation skyrockets to $215 million

The regulatory bureau that holds accountable all before them is being called to account for the hundreds of millions it is spending to renovate and decorate its rented headquarters on G Street.

A report from the Federal Reserve’s Inspector Generalshows that the cost of renovating the Consumer Financial Protection Bureau’s rented headquarters has spiraled to more than $215 million – $65 million more than the agency’s estimate just six months ago and $120 million more than last year’s estimate.

It also equals more than $590 per square foot being renovated at the CFPB.  That means the CFPB is spending much more per square foot than it cost to build the Trump World Tower ($334/square foot) or the Burj Khalifa in Dubai ($450/square foot), according to congressional leaders critical of the CFPB’s unchecked spending.

Just weeks ago, CFPB Director Richard Cordray described the building as “a dump” in testimony before Congress.

Read on.


In Banking World, Fraud Is an Epidemic

In Banking World, Fraud Is an Epidemic

Truthout is serializing Beatrice Edwards’ book, The Rise of the American Corporate Security State. To read more excerpts from this book, click here.

Reason to be afraid #6:

Systemic corruption and a fundamental conflict of interest are driving us toward the precipice of new economic crises.

In the early spring of 2010, my phone rang, and the caller ID read “Unknown.” On the other end of the line was an AIG whistleblower. Until the 2008 financial crisis, AIG was a rogue elephant in the zoo of the US financial world, unknown to most Americans. After that, though, everyone who read a newspaper knew what AIG was. AIG Financial Products Division (AIG-FP), the London-based unit that took on the risk for the Wall Street banks, became a familiar villain in the developing story of fraud and corruption underlying the Great Recession of 2008–2009.

My caller spoke tentatively at first, without specifics, as cautious whistleblowers do, but she was concerned about the way in which the AIG compliance office at corporate headquarters worked. This was the office responsible for ensuring that the huge insurer did not break the law in any one of the 145 or so countries where it operated.

According to the caller that morning, the mainstay of AIG’s compliance program was “a joke,” and it had been for a long time. For years the program consisted mainly of a list of about four hundred email addresses for compliance and law enforcement officials around the world, many of which were defunct (either the addresses, the officials, or both). Whenever AIG wanted to inform the offices abroad and their government counterparts of a new legal or ethical obligation, AIG Compliance would blast out the news using this listserv. Then the office director would order the deletion of the plethora of bounce-backs and consider her mission accomplished.

Over the next few weeks, we started getting names and numbers of other sources at AIG who would validate the fact that much of the compliance work there was substandard, leading up to and away from the weekend in September 2008 when the financial captains at the helm of the banking world finally realized they had steered it off a cliff. The AIG allegations we heard were awful, and the people who made them were afraid to have their names used in any public way. All of the claims hung together, though. One corroborated another. And the charges were quite specific.

Everyone I talked to mentioned James Cole, who worked in the office as an independent consultant for the SEC. He was positioned in the compliance office, went to AIG board meetings, wrote reports, interviewed people, and generally hung around. The Wall Street Journal reported that this assignment earned his law firm, Bryan Cave, around $20 million, for about five years work.

Sources at AIG pointed out that an independent consultant/ monitor for the SEC in the compliance and regulatory office was a condition of a deferred prosecution agreement that AIG struck with the SEC, the Bush administration’s Department of Justice, and the New York State Department of Insurance to settle allegations of aiding and abetting securities fraud dating back to 2000. At the time, deferred prosecution agreements (DPAs) were typically used to deal with low-level narcotics cases, and the New York Times called the agreement “somewhat unusual in white collar cases.”

Under the terms of the DPA, AIG paid a fine and appointed Cole to report to the SEC and the Justice Department on compliance. In this position, he reviewed the dubious financial transactions from 2000 forward, structured by AIG that supposedly violated accounting regulations and securities laws. These transactions were developed and handled by AIGFP PAGIC Equity Holding in London, headed by Joseph Cassano. At the time, Cassano was also the also the head of AIG Financial Products Corporation, the unit that sank AIG, its banking counterparties, and the US economy in 2008.

Then US deputy attorney general Eric Holder established the first guidelines relevant to DPAs for corporations in 1999 in a document that came to be known as “the Holder memo.” In the years since then, the memo has been criticized for its failure to address the DPA scenario specifically and the nebulous standards it set out. Among other things, the Holder memo failed to define compliance or to specify the requirements for selecting external monitors of corporate governance. The lack of definition caused great power to default to prosecutors, and left the door open to more and more flexible DPAs. These agreements have increased in number substantially, surging to thirty-eight in 2007, up from four in 2003.

Despite Cole’s monitoring after 2004, AIG was once again in trouble with the SEC and the Justice Department by 2006. The corporation faced charges of additional financial improprieties and bid-rigging but settled with a second DPA, despite the fact that one of the factors applied to assess eligibility for a DPA under the guidelines of the Holder memo is the lack of an earlier offense. Under the 2006 agreement, admittedly, the fine was much stiffer than that exacted in 2004: AIG paid $1.6 billion in 2006 and broadened the scope of Cole’s monitoring authority. At that point he became responsible for examining AIG’s controls on financial reporting as well as corporate governance in the compliance area. In exchange for this deal and the two payments, the charges against AIG were resolved two years before AIG-FP was identified as the epicenter of the 2008 financial cataclysm.

As the AIG monitor, Cole was to file reports with the Justice Department and the SEC. The reports, which were pages and pages of nothingness, were secret, but we obtained those Cole filed with the SEC. They were not for public consumption even in 2010, when the American public owned AIG, or 90 percent of it. Also, in light of what had happened there, the fact that Cole’s reports to the SEC in 2006, 2007, and 2008 were uniformly basic and abstract was important in itself. In August and September 2007, he issued 215 pages of stupefying, mundane recommendations that read as if they came directly from a fraud examiner’s manual somewhere. There was no meaningful interpretation, no analysis of how the law applied to AIG, even in the United States, never mind how it might affect overseas operations. There was no review of the corporation’s actual practices, nor of the adaptations required to ensure that the crimes addressed in the DPA did not recur. The whole job looked like a cut and paste, until page eight-seven of the September 30 report. There, Cole wrote:

The Derivatives Committee [of the AIG Board] should be responsible for providing an independent review of proposed derivative transactions or programs entered into by all AIG entities other than AIG Financial Products Corp. (“AIG-FP”).

He elaborated this exemption further:

For derivative transactions or programs entered into by AIG-FP, the appropriate independent review of the proposed derivative transactions or programs should be conducted by AIG-FP.

If AIG-FP reviews AIG-FP’s transactions, though, that isn’t really an independent review, is it?


Nationstar Temporarily Restricted in Servicing Mortgages Last Year

Nationstar Temporarily Restricted in Servicing Mortgages Last Year

Nationstar Mortgage Holdings Inc., NSM -4.27% a company that processes payments for millions of mortgages, was temporarily prevented last year from buying the rights to service home-loans backed by Fannie Mae FNMA +0.26% and Freddie Mac,FMCC -0.52% according to people familiar with the matter.

Although the restrictions on Nationstar were later lifted, the incident helps illustrate why a federal watchdog is raising concerns about rapid growth of nonbank financial firms in the mortgage market. A report released Tuesday by the inspector general of the Federal Housing Finance Agency, which regulates Fannie Mae and Freddie Mac, said some nonbank mortgage-servicing companies may lack adequate funding, putting the mortgage market at risk.

The report described the troubles of one particular company that breached Fannie Mae’s minimum capital requirement for servicers, which prompted Fannie Mae to limit the company’s ability to acquire servicing rights for additional mortgages.

The report didn’t mention the name of the company, but people familiar with the matter identified the servicer as Nationstar. In a statement, a Nationstar spokesman said the company “has strong working relationships with Fannie Mae and Freddie Mac.” The spokesman said the company currently meets “all capital requirements for conducting business.”


Regulator Benjamin Lawsky Is the Man Banks Fear Most

Regulator Benjamin Lawsky Is the Man Banks Fear Most

When France’s BNP Paribas, one of the world’s largest banks, was targeted by U.S. investigators for conducting billions of dollars of illicit business with Iran, Sudan and Cuba, it thought the Treasury Department and the Justice Department were its biggest headaches. It was wrong. It soon got body-slammed by an obscure New York banking regulator named Benjamin Lawsky.

The miscalculation was understandable. Unlike Treasury and Justice, the nascent civil agency Lawsky leads, the Department of Financial Services (DFS), has no power to conduct criminal investigations or file criminal charges. Still, Lawsky, a former federal prosecutor and former top deputy in the New York attorney general’s office, can subpoena confidential documents and force executives to testify as part of his civil investigations. But the cudgel that has made him a formidable—and controversial—player in international finance is the power to cripple or potentially kill a major bank by yanking its license to do business in New York, the nerve center for the global economy.


Ex-Goldman Workers Call For Class Cert In Gender Bias Suit

Ex-Goldman Workers Call For Class Cert In Gender Bias Suit

Case Title

Chen-Oster et al v. Goldman, Sachs & Co. et al

Case Number



New York Southern

Nature of Suit

Civil Rights: Jobs


Analisa Torres

Law360, Los Angeles (July 01, 2014, 10:20 PM ET) — A group of former employees at Goldman Sachs Group Inc. upped the ante on Tuesday in a lawsuit that alleges the bank pays women less, sexualizes women and undermines their success, asking a New York federal judge to certify them as a class.

Cristina Chen-Oster and Shanna Orlich sought certification in a motion filed Tuesday, arguing that, counter to what Goldman has claimed in the suit thus far, the women working in different departments across the giant bank can be grouped together for the suit because…