Daily Archives: July 15, 2014

Bank of America illegally copied $300 million in software, alleges Tibco lawsuit

Bank of America illegally copied US$300 million worth of Tibco’s enterprise software for use in a massive IT project at its Merrill Lynch subsidiary, Tibco alleges in a lawsuit.

The bank stockpiled large quantities of Tibco software while it was still within the terms of a license agreement that expired in February 2013, then used the software for the project when it was out of license, according to the suit.

As of Tuesday, Bank of America hadn’t filed a response to Tibco’s suit, which was filed last month in the U.S. District Court for the Northern District of California. But a spokesman said the bank had done nothing wrong.

“We have a long history of positive relationships with our third party partners,” spokesman Mark Pipitone said via email. “In accordance with that, we have acted in good faith to observe the scope of Tibco’s license at all times, and we intend to vigorously defend ourselves.”

Tibco’s lawsuit provides a detailed narrative of Bank of America’s alleged wrongful deeds.

Read on.

Massachussetts AG: CitiGroup Settlement Includes $45.7M Payment To Commonwealth

CitiGroup Inc. will pay $7 billion in a joint federal-state settlement over its mortgage-backed securities activities, Attorney General Martha Coakley said today.

That figure includes $2.5 billion to be set aside for consumer relief like loan modifications, $500 million to be used to compensate investors and other state relief and $4 billion in civil penalties. Of the $2.5 billion for consumer relief, $10 million will be made available for only Massachusetts borrowers, with additional relief available as needed.

The settlement between CitiGroup and the Department of Justice along with four other states also includes a $45.7 million direct cash payment to the commonwealth, of which $6.5 million will go to the Pension Reserves Investment Management Board, more than $15 million to direct consumer relief and the rest to the common wealth.

“Since 2009 our office has led the way in holding Wall Street securitizers accountable, and this cooperative federal-state enforcement action uses that blueprint to recover billions across the country,” Coakley said in a statement.

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Lloyds Nears Libor Settlement With U.S., U.K.

Libor: What You Need to Know

What it is: Libor—the London interbank offered rate benchmark—is supposed to measure the interest rates at which banks borrow from one another. It is based on data reported daily by banks. Other interest rate indexes, like the Euribor (euro interbank offered rate) and the Tibor (Tokyo interbank offered rate), function in a similar way.

Why it is important: Hundreds of trillions of dollars of securities and loans are linked to the Libor, including $350 trillion in swaps and $10 trillion in loans, including auto and home loans, according to the Commodity Futures Trading Commission. Even small movements—or inaccuracies—in the Libor affect investment returns and borrowing costs, for individuals, companies and professional investors.

LONDON—U.S. and British regulators are nearing a deal with Lloyds Banking GroupLLOY.LN -0.38% PLC to resolve investigations into the bank’s alleged attempts to manipulate benchmark interest rates, according to people familiar with the matter.

Settlement talks have accelerated recently, and regulators are hoping to announce a deal in the next few weeks, these people said.

Lloyds, which is about 25%-owned by the British government after a taxpayer bailout, would become the seventh financial institution to resolve U.S. and British investigations into attempted rigging of the London interbank offered rate, or Libor, and other widely used benchmark rates.

Negotiations between Lloyds and the regulators are still in progress, these people said. The size of the financial penalty that Lloyds is likely to pay to the U.S. Commodity Futures Trading Commission, the U.K.’s Financial Conduct Authority and possibly other authorities isn’t clear.

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Elizabeth Warren presses Yellen to get tougher on big banks and their ‘living wills’

Senator Elizabeth Warren, Democrat of Massachusetts, on Tuesday urged Federal Reserve Chairwoman Janet Yellen to get tougher on so-called living wills prepared by the nation’s largest banks.

Under Dodd-Frank, these banks must submit plans on how they can be liquidated in the event of failure.

Warren said that the Fed didn’t seem to be following the Dodd-Frank statute than  required a ruling from the central bank on whether the plans were credible.

Warren used J.P. Morgan Chase JPM +0.28% as an example. The bank has $2.5 trillion in assets, four times the assets of Lehman Brothers when it failed in 2008,  and 3,391 subsidiaries, she noted.

J.P. Morgan has filed living wills over the past three years and the Fed has not rejected any of them, Warren said.

“Can you honestly say that J.P. Morgan can be resolved in a rapid and orderly fashion as described in its plans with no threats to the economy and no need for a taxpayer bailout?” Warren asked Yellen.

The Fed chairwoman said she thought the living-will process was meant to be “iterative” and the central bank is working to give the firms “a road-map for where we see obstacles to orderly resolution under the bankruptcy code and to give them an opportunity to address those obstacles.”

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Debt Collection ‘Factory’ Preyed On Broke Americans: Lawsuit

A federal watchdog is suing a collection agency that allegedly operated like a “factory”churning out lawsuits against cash-strapped borrowers, often using misleading, deceptive and illegal practices.

The suit is the latest effort by regulators to crack down on debt collection abuse. The billion-dollar industry has ballooned in size over the past two decades and is under firefor filing wrongful lawsuits against vulnerable borrowers.

The Consumer Financial Protection Bureau (CFPB) announced on Monday that it had sued Frederick J. Hanna & Associates, a Georgia-based law firm that sues consumers for old, outstanding debts owed to banks, debt buyers and credit card companies.

The complaint against Hanna & Associates alleges that the firm operated as a lawsuit “factory,” cranking out more than 350,000 suits in Georgia alone since 2009. What’s more, the company operates with a skeleton staff of eight to 16 lawyers who merely put their signature on lawsuits, while the bulk of the work at the firm is performed by “automated processes” and non-attorney staff, according to the CFPB complaint.

In 2009 and 2010, the suit claims, a single lawyer at the company signed off on about 138,000 lawsuits, an average of about 1,300 a week. Such a feat would seem to test the limits of physical endurance. The firm’s lawyers were expected to spend “less than a minute” looking at each lawsuit before signing it, the suit contends.

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Class Claims U.S. Bank Chilled Home Auctions

HONOLULU (CN) – U.S. Bank manipulated the market to suppress public participation, drive down the price of foreclosed real property at auction and defraud Hawaii homeowners, a class action claims in state court.
The 30-page lawsuit is a virtual “how to” manual on unfair foreclosure sales.
Lead plaintiff Nancy L. Manchester claims the defendants “chilled competitive bidding” by changing the location of advertised auctions without publishing a new notice;
changed auction dates with such frequency that most sale dates advertised were not the actual auction dates;
changed sale dates unilaterally and without publishing notices of the rescheduled actions’ new dates and times;
advertised the auctions of properties by quitclaim deed when in fact all buyers other than defendants received limited warranty deeds;
included as a term of sale an unreasonable expectation that bidders were to close their sales within 30 days of their auctions;
and implied that a foreclosing mortgagee could render a sale illusory on a whim.
These practices, according to the complaint in the First Circuit Court, reduced the competition between U.S. Bank and bidders at nonjudicial auction, “allowing defendant U.S. Bank to purchase foreclosure properties cheaply on credit bid, with no or minimal competition from prospective third-party bidders, for later resale at higher prices,” in violation of state law that says a mortgagee exercising a power of sale must act as the “attorney of agent” of the mortgagor.

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Jamie Dimon Really Doesn’t Like FHA Lending

(Reuters) – JPMorgan Chase & Co, (JPM.N) the second-largest U.S. mortgage lender, is backing away from making home loans to less creditworthy borrowers after losing faith in its ability to recover much money from foreclosing on homes, even with government guarantees.

The shift reflects a change in the way the bank views its mortgage business: where before it viewed collateral and U.S. government lending programs as key backstops to most loans it was making, now it is determined to never have to foreclose.

To avoid loans that default, it is doing more work on establishing the capacity and willingness of borrowers to pay their loans. The bank is losing market share in government-backed loans, but is doing so consciously, JPMorgan executives told analysts Tuesday on a conference call.

“We maintained discipline regarding pricing to our required returns,” Chief Financial Officer Marianne Lake said.

Lenders have broadly been paying more attention to borrowers’ credit quality since the financial crisis, but JPMorgan is going a step further in its reluctance to rely on government loan guarantees.

If other lenders choose the same path as JPMorgan, it could be more difficult for first-time U.S. home buyers to secure financing, even though government programs are designed to help credit flow to these borrowers.

For now, JPMorgan seems to be going a different path from its smaller competitors, many of which have lowered their underwriting standards. Such lenders, particularly those that aren’t banks, are increasingly willing to make subprime loans. Over the last 18 months lenders have been making loans to borrowers with lower and lower credit scores on average, according to mortgage data provider Ellie Mae, although the mean is still well within the “prime” category.

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