Daily Archives: July 17, 2014

JPMorgan’s Dimon Gets $37 Million of Crisis-Era Options

JPMorgan Chase & Co. (JPM) will letJamie Dimon collect about $37 million in stock options created during the financial crisis, as the board stands by its leader after risk-management lapses and billions of dollars in legal settlements.

JPMorgan gave the chief executive officer 2 million stock-appreciation rights in January 2008, saying they would be available in five years if the board still deemed it appropriate. Last year, the firm delayed vesting by 18 months to address flawed internal controls exposed by botched derivatives bets. JPMorgan resolved a variety of probes in the months that followed.

Read on.

Process lawmaking: NY financial lawmaker asks Reddit for feedback on virtual currency regulations

Housing Ponzi Scheme Losses: American Homeowners Battling Wall Street

For years, homeowners have been battling Wall Street in an attempt to recover some portion of their massive losses from the housing Ponzi scheme. But progress has been slow, as they have been outgunned and out-spent by the banking titans.

In June, however, the banks may have met their match, as some equally powerful titans strode onto the stage.  Investors led by BlackRock, the world’s largest asset manager, and PIMCO, the world’s largest bond-fund manager, have sued some of the world’s largest banks for breach of fiduciary duty as trustees of their investment funds. The investors are seeking damages for losses surpassing $250 billion. That is the equivalent of one million homeowners with $250,000 in damages suing at one time.

The defendants are the so-called trust banks that oversee payments and enforce terms on more than $2 trillion in residential mortgage securities. They include units of Deutsche Bank AG, U.S. Bank, Wells Fargo, Citigroup, HSBC Holdings PLC, and Bank of New York Mellon Corp. Six nearly identical complaints charge the trust banks with breach of their duty to force lenders and sponsors of the mortgage-backed securities to repurchase defective loans.

Why the investors are only now suing is complicated, but it involves a recent court decision on the statute of limitations. Why the trust banks failed to sue the lenders evidently involves the cozy relationship between lenders and trustees. The trustees also securitized loans in pools where they were not trustees. If they had started filing suit demanding repurchases, they might wind up suedon other deals in retaliation. Better to ignore the repurchase provisions of the pooling and servicing agreements and let the investors take the losses—better, at least, until they sued.

Beyond the legal issues are the implications for the solvency of the banking system itself. Can even the largest banks withstand a $250 billion iceberg? The sum is more than 40 times the $6 billion “London Whale” that shook JPMorganChase to its foundations.

Read on.


Allegations » Former A.G., law firm deny he got post for his foreclosure case decision.

Then-Attorney General Mark Shurtleff interviewed for a job with a law firm that represents Bank of America just two months before he personally signed a settlement of a lawsuit against the financial giant over whether it was illegally foreclosing on homes in Utah.

He subsequently was hired for the post.

The disclosure of the two days of job interviews was included in criminal charges filed Tuesday against Shurtleff and his handpicked successor, John Swallow, who resigned in December in the wake of investigations that engulfed the two.

By agreeing at the end of 2012 to dismiss the federal lawsuit against Bank of America, Shurtleff scuttled what attorneys in his own office believed was the strongest case that the bank’s foreclosure arm, ReconTrust, had been illegally foreclosing on thousands of Utah homes. One estimate put the possible loss to Utah homeowners from the dismissal at tens of millions of dollars.

Among the 10 charges filed against Shurtleff was “Count 7, Accepting Employment That Would Impair Judgment,” a second-degree felony. Among the possible violations listed under that law is one for accepting employment “that he might expect would impair his independence of judgment in the performance of his public duties.”

The attorney general’s office intervened in 2012 in the lawsuit brought by homeowners Timothy and Jennifer Bell after U.S. District Judge Bruce Jenkins issued a ruling highly critical of Bank of America’s position that it was legally operating under the laws of Texas, where ReconTrust is located, when it foreclosed in Utah.

The Bells went on to settle their case based on terms of a nationwide legal deal with Bank of America but assistant Utah attorneys general wanted to continue their part of the case.

The state has now intervened in another federal lawsuit over the same issue, said Wade Farraway, an assistant attorney general.

“We’re just concerned Utah law be applied in Utah and not Texas law,” Farraway said Tuesday.

Shurtleff crossed off the names of Farraway and another assistant attorney general and personally signed a notice of dismissal of the Bell case on Dec. 27, 2012, just days before he left office after three terms.

Rest here…

Fed Board now required to have one community banker

The Board of Governors of the Federal Reserve Systemwill now be required to have at least one member with community banking experience after the Senate approved an amendment to the Terrorist Risk Insurance Act, which was reauthorized by the Senate on Thursday.

The amendment, which was introduced by Senator David Vitter, R-La., was added to the TRIA by a 97-0 vote in the Senate, with three abstentions. The subsequent reauthorization of the TRIA was approved by a 93-4 margin, with three abstentions as well.

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Calif. appeals court upholds dismissal of MERS wrongful foreclosure suit

The Court of Appeal of the State of California Second Appellate District affirmed a trial court’s order dismissing a wrongful foreclosure lawsuit against MERSCORP Holdings.

In Matlock v. J.P. Morgan Chase Bank, N.A., et al., the plaintiffs had taken out a mortgage loan secured by a deed of trust that named Mortgage Electronic Registration Systems as the beneficiary as nominee for the original lender.

The plaintiffs subsequently defaulted on this loan and were subject to a foreclosure action. In response, the plaintiffs brought an action against several financial institutions, including MERS, with a variety of claims alleging defects in the loan and foreclosure process.

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Fannie, Freddie making risky deals with small lenders: watchdog

U.S. housing finance companies Fannie Mae and Freddie Mac are making riskier deals as they increasingly purchase mortgages from smaller lenders, a federal watchdog said on Thursday.

The government-owned companies do not lend money directly, but underpin the U.S. housing market by guaranteeing most new mortgages in the country.

The Federal Housing Finance Agency Office of Inspector General said in a report that the purchases from smaller lenders raises the exposure of the two companies.

“Smaller and non-bank lenders may have relatively limited financial capacity,” the watchdog said. “The enterprises face an increase in the risk that those counterparties could default on their financial obligations.”

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